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By Debbie Gregory.

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In the first part of this article, we discussed smart tax deductions, carryover deductions, changing your business structure, keeping a close eye on your Adjusted Gross Income (AGI), as well as tax-free ways to get money out of your business.

 

This second part will covert five more ways to lower your business taxes including abandoning rather than selling property, accountable plans for your employees, fringe benefits, retirement plans, and smart year-end tax planning.

 

More Ways to Lower Your Taxes:

 

6.) Abandon Property Instead of Selling It:

If you own a property that has no value to the business, you may wish to consider abandoning it rather than selling it for a nominal amount. Doing so could allow your business to take a loss on the property, that is fully deductible, rather than treating the loss as a capital loss, which is subject to limitations.

 

7.) Use Accountable Plans:

Accountable Plans allow you to reimburse your employees for such items as travel, entertainment, tools, or other costs and then deduct the expenses but not report the reimbursements as income to employees. This can potentially save your company money in employment taxes which will overall lower your business taxable income..

 

8.) Take Advantage of Fringe Benefits:

Paying employees more will increase your costs your business employment tax. However, if the business pays for certain fringe benefits for employees, these taxes can be avoided, which reduces your overall taxable income.

 

These types of tax-exempt benefits include:

  • Educational assistance
  • Transportation benefits
  • Meals provided for employee convenience
  • Health benefits
  • Long-term care insurance
  • Group term life insurance
  • Disability insurance
  • Dependent care assistance

 

9.) Shelter Profits in Retirement Plans:

A 401(k) or a similar tax-deferred retirement plan is easy to setup, you don’t pay taxes on the contributions, and the savings grow on a tax-deferred basis. These types of plans not only allow you to save money on taxes, they help incentivize your employees, and it also shifts most or all of the cost of savings to the employees while giving them choice and flexibility in planning for retirement, instead of a defined benefit pension plan where more of the burdens are on the employer. Employer contributions to an employee retirement plan are also tax deductible and you may qualify for a tax credit for setting up your employee retirement plan in the first place.

 

10.) Smart Year-End Tax Planning:

Planning for your taxes should be a year-round activity for a business. You can achieve dramatic savings by taking certain actions towards the end of the year including:

  • Delaying billing for work done late in the year so that payment will be received in the following year
  • Purchase fixed assets and claim a portion of depreciation immediately
  • Revalue the assets that are already listed on your books for their depreciation value
  • If you have a customer who is not paying, you might be able to write this off as an uncollected debt, also known as a Bad Debt Deduction
  • Make sure to have your taxes filed and submitted on time

 

DISCLAIMER: We have done a lot of research on all of the ways covered in this two part series to bring to your attention that may save taxes for your small business, but we are not professionals.  We strongly recommend that before you take any actions, that you consult your own licensed tax professional. It is always best to seek professional assistance if you have questions about taxes or their implication on your specific business. Working with a professional also provides you better opportunities to find and take advantage of legitimate tax breaks and opportunities to lower the amount of taxes that you pay.

 

 

By Debbie Gregory.

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Every year tax season comes around filled with the same major questions including:

  • How much will I have to pay?
  • Why do I have to pay so much?
  • How can I reduce my tax liability?

 

No one wants to pay one dollar more in taxes than necessary.  Finding legitimate ways to lower your taxable income is something that is very important to your business. A lot of business owners end up paying more than they should due to the simple fact that they missed out on certain deductions. However, if you consider that the U.S. tax code is approximately 70,000 pages long, it’s understandable why small business owners have challenges.

 

Ways to Save Paying Taxes for Small Businesses:

 

1.) Make Smarter Tax Deduction Choices:

Being strategic about your business expenditures can help lower your taxable income. For example, an established company purchasing a large dollar piece of equipment can deduct the entire cost of acquiring the machinery or equipment. However, a start-up would be better off spreading out the value of the purchases across your future tax years instead of deducting the full purchase price all at once.

 

Other deductions to consider:

  • Vehicle expenses (based on actual costs)
  • The IRS mileage allowance(currently 58 cents per mile)
  • Home office expenses (based on actual costs), or you can use the IRS simplified rate (which is currently $5.00 per square foot up to 300 square feet of space)
  • Claiming disaster losses on prior year returns rather than on the return for the year in which the disaster occurs
  • Your business insurance expenses

 

2.) Carryover Deductions:

Certain deductions and credits have limitations that can prevent you from using them fully in the current year, but carryover the remaining amount to future years. Keep track of any carryovers so that you won’t forget to use them in future years.

 

Examples of these include:

  • Net operating losses (limited to 80% of taxable income)
  • Home office deduction
  • General business credits
  • Capital losses
  • Charitable contribution deductions

 

3.) Change your Business Structure:

If you are currently doing business as a sole proprietor or partnership, it may be time to look at a new business structure. Many small businesses choose to do business as an LLC (Limited Liability Company), or a “pass-through entity”, since it may offer more flexibility on how income can be taxed.

 

4.) Adjusted Gross Income (AGI):

A number of tax breaks, limitations, and additional taxes are based off of the Adjusted Gross Income (AGI), or the Modified Adjusted Gross Income (MAGI), which for some is the same as the AGI. Keep a close eye on taxes taken out of the income, some may not be relevant to your business at all.

 

5.) Use Tax-Free Ways to Extract Income from Your Business:

Items such as your salary, bonuses, and any distributions of business profits are taxable.   There are other ways that may allow you to possibly benefit from your business’s success without necessarily triggering tax liability.

 

Items such as:

  • Tax-free fringe benefits, including items such items as medical coverage or retirement plans
  • Loans made to you by the business on a no or low-interest basis

 

Please stay tuned for Part 2 of this series with five more ways for small businesses to reduce or save on taxes.

By Debbie Gregory.

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Technology drives the ways in which companies operate and is the key to overall operating efficiency. The proper use of technology can also make a small business work and appear to be much larger than it is and this a great equalizer.

 

Businesses that go out of their way to adopt new technology and those that continuously make smart investments in technology are the ones that end up being more profitable.  They are also better prepared to weather challenges when they come, and they are the leaders in their industries.

 

Investing in technology, cyber security as well as data privacy are often critical for all types and sizes of businesses.  This does not just apply to healthcare providers, governments, and large corporations. In today’s world, employees, vendors, and customers expect rightfully so tight security as part of their experience working with any type of company.

 

IT security must be an integral part of all business operations in every sector. Below are a few tips to help keep your personal, business, and customer devices and information safer:

  • Cyber security techniques and practices are constantly changing; take the time to keep yourself and your employees up to date with the latest information on cyber security at regular intervals.
  • Use strong authentication, requiring more than a simple username and password to access accounts. This is especially important for critical networks to prevent access to stolen or hacked credentials.
  • In cases where you must use a traditional account and password combo, make sure that you utilize long, strong, and unique passwords to better harden your accounts against intrusions.
  • Never use the same password twice.
  • Change your passwords every 90 days.
  • Conduct regular backups of all systems. Any system can be restored. In cases of brute force attacks or ransomware, having current backups of all data speeds the recovery process quite a bit.
  • Keep your computer’s spyware and antivirus software up to date and make sure that you scan your computers regularly.
  • Make sure that your firewalls are always current and up and running.
  • Always be wary of emails asking for personal or financial information. Never click on links or open emails that seem suspicious that you do not know.
  • Always shred documents that you do not need, don’t just throw them in the trash

 

Need more help?

Here are a few links that may be worth your time:

 

 

Tax Credits to Check with Your Accountant

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By Debbie Gregory.

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Now is the time to take advantage of a few tax breaks that expire as the decade comes to an end.   You will need to check with your financial advisor.   Below are three use-it-or-lose-it opportunities for tax breaks that might make sense for you and your company.

 

  • Paid Family and Medical Leave Tax Credit:

Employers with 50 or more employees are required by law (the Family and Medical Leave Act) to provide up to 12-weeks of time off for certain family matters. There is no law that says those weeks must be paid time off. If your company offers that time off paid, and that policy is in writing, you may be eligible for a federal tax credit so check with your accountant and determine if you are eligible to file. The amount of the credit, which is figured on IRS Form 8994, is a minimum of 12.5% of the paid leave amount up to a maximum of 25%.

 

  • Tax Credit for Electric Powered Vehicle:

This credit applies to plug-in electric vehicles and is calculated on IRS Form 8936. If the vehicle is purchased for business use, the tax credit is then part of the general business credit. This credit was designed to encourage people to purchase and use electric powered, clean-fuel, vehicles. The credit amount can be a maximum of $7,500. Certain vehicle manufacturer restrictions apply.

 

  • Work Opportunity Tax Credit:

This credit is a federal tax incentive to hire a person who falls within a targeted group (as defined by the tax law). This incentive only applies to people who fall within one of the 10 eligible groups (listed below with a link to the IRS site about it) and who begins work before January 1, 2020. The credit can range from $2,400 to $9,600 per hire.   The Work Opportunity Tax Credit is usually renewed each year.

 

The targeted groups are as follows:

  • Summer youth employees
  • Recipient of SNAP benefits (food stamps)
  • SSI recipient
  • Member of a family receiving Temporary Assistance for Needy Families (TANF)
  • Qualified Veteran (there are 5 subcategories)
  • Qualified ex-felon
  • Designed community resident
  • Vocational rehabilitation referral
  • Long-term family assistance recipient
  • Long-term unemployed

 

In order to take advantage of this tax credit you will need to prove the employee falls within a targeted group and submit IRS Form 8850 to the state workforce agency within 28 days of the first day of that person’s employment with you. The basic credit for this is 40% of first year wages up to $6,000 (for a top credit of $2,400), as long as the employee works at least 400 hours. However, the credit for a veteran with a service-connected disability, who is employed for at least 6 months, is 40% of their wages up to $24,000 (for a top credit of $9,600). Not only is it the right thing to hire Veterans who make outstanding employees, but it makes financial sense.

 

If any of these three tax incentives are applicable for your business, jump on them now and discuss with your financial professional.

 

Creating Engaging Social Media Images : Part 2 of 2

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By Debbie Gregory.

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We all realize just how important it is to have top-quality, clean, clear, images as well as entertaining video or gifs to accompany our business messages. Part one of this blog article provided you eight very cool sites to help you create and share images, gifs, videos, templates, and more on your business social media accounts. These next eight free or inexpensive tools are ones you should also bookmark and consider using to create your next social media campaigns.

 

iStock

iStock is a collection of royalty-free photos, illustrations and videos. They offer a lot of great, less mainstream, items that can be collected into boards for easy retrieval or organization. Royalty-free doesn’t mean that the images are free however, this service does cost money to use.

 

Over

Over is a popular free mobile app (for phones only) that allows you to add text, overlays, and blend colors on images.

 

PicMonkey

PicMonkey offers easy-to-use tools to create attractive social posts, cover photos, ads, and more. Boasting over 6,000 graphics and textures, hundreds of fonts, thousands of design templates, and even collages. They currently do not offer a free version.

 

Piktochart

Piktochart is another place where you can create infographics, presentations, and printables. You can begin this service for free of charge as well, which allows you to create a limited number of items, or choose one of their paid packages.

 

Placeit

Placeit helps you generate mockups or demos of your website or product being used in real life as well as logos, videos, and other designs. They currently do not offer a free version.

 

Skitch

Skitch is an Apple-only mobile phone app that allows you to add comments to any visual. Basically you take a snapshot of your screen and use arrows, text, stickers, and a handful of other tools to make your point.

 

Stencil

Stencil is another image creation/editing site that has both free and paid options. They currently boast of over 2,100,000+ photos, 1,000,000+ icons and graphics, 100,000+ quotes, 2,500+ fonts, and 730+ templates that users can access.

 

Venngage

Venngage offers a large library of social-media-ready templates and has a great user-friendly editor that is easy for just about anyone to use. The site is free for all basic functions and also has a paid version with access to select features.

 

 

Words are great but a high-quality image will get noticed and shared more than text alone. Bookmark, download, and utilize these great tools to help your social media posts make more of an impact.

 

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