Financial Moves for the End of 2017

Tax Planning

tax planning

I don’t know about you but I am not sad to see 2017 go! It has been a crazy year of political drama, fake news, and crazy natural disasters.  In fact there is still debris from Hurricane Irma in my neighborhood!  The good news is there is still time left to make some financial moves to finish off the year strong.  Here’s a list of things to do to wind down 2017.

For small businesses

1. Get your bookkeeping up-to-date for the year. If you fell behind, now is the time to catch up.  There is no way to make any last minute moves unless you know where you stand at this point.

Once you know what your net profits for the year are looking like you can decide what to do.  Want to show more income for 2017 than 2018?  Try to get some extra income in December. Some ideas for this are running a year end or holiday special promotion, or asking clients to prepay for next year now at a discount. You can also keep expenses down by holding off on making purchases until January. Think the new tax reform will mean lower taxes in 2018? Slow down your collection efforts for the rest of the year and start up again in January. Stock up on supplies or make major purchases (see 4. below) before the year is over.

2. Make sure you have W-9 forms for all of your contractors. All copies of the 1099-MISC forms for 2017 are due January 31, 2018!  Make sure you have all of this information now so you are ready to hand over that information to your CPA in the beginning of January. You need to file 1099-MISC forms for any individual, partnership, and certain LLCs that you paid over $600 to in 2017. You also need to give 1099-MISC forms to any lawyers that you paid in 2017, and possibly your landlord too.

1099-MISC filing has become a hot button issue for the IRS. Every audit I have handled in the last year looked at the 1099-MISC filings.  They issue penalties for slip ups. The 2018 penalties for not filing correct information is:

 

Up to 30 days late – $50 per return/$187,500 max

31 days late through August 1 – $100 per return/$536,000 max

After August 1 or Not At All – $260 per return/$1,072,500 max

Intentional Disregard – $530 per return/No limitation

 

On top of these penalties the IRS can also disallow the deduction, resulting in additional taxes owed!

3. Make major purchases. If you’ve been contemplating buying a car, new computer, or other big equipment for your business, now is the time. You can take advantage of accelerated depreciation and get a full deduction for the entire cost, even though you purchase it in December!

Here is how to get a huge deduction for a car purchase.  Use the “Hummer Tax Loophole,” or Section 179 deduction. Section 179 lets you deduct up to $510,00 in 2017 in fixed assets (vehicles, computers, furniture, etc.).  There are special rules in place for autos, but if you by a NEW car in December and document that it is 100% for business you can deduct $11,160. Document your mileage with by keeping a log or using a mileage tracking app.

4. Check your payroll. S-corporation owners must run payroll.  This is a big “red flag” for the IRS when you don’t.  If you have a lot of cash maybe run yourself a bonus payroll. This is good if you need to show a higher salary on a W-2 or increase your Social Security contributions. This is also a great way to pay in additional tax if you missed your quarterly estimated payments – and avoid penalties.

While on the subject of payroll – S-corporation owners need to make sure their health insurance premiums are included in Box 1 of their W-2.  Contact your payroll company to make sure it is correct. If you skip this step your business cannot deduct the expense of the health insurance and you cannot use the self-employed health insurance deduction on your personal return!

5. Set up or make a contribution to your retirement account. Retirement contributions will reduce your tax bill and set you up for financial success for the future.  Examples of these kinds of accounts are a SEP, simple IRA, or 401(k). They each have different rules such as participation and contribution limits, so choose wisely!

6. Write off business gifts.  This is especially useful during the holidays. Just keep in mind only up to $25 can be written off.

Sometimes gifts can also be considered “meals and entertainment” – think show or game tickets.  Meals and entertainment can only be deducted 50%.  Here is one instance where the IRS is kind and let’s you use whichever classification is more beneficial to you!

7. Make your s-election.  If you are an LLC or a c-corporation and have been meaning to become an s-corporation, now is the time to file Form 2553 Election by a Small Business Corporation. You can have the election go into effect for January 2018.

 

For Individuals

1. Check your withholding.  Did you under-withhold in your payroll this year to have more cash in your paycheck?  Ask your CPA to do a tax projection for you to see if you are going to owe additional taxes. You can make estimated payments or pay in April when you file, but you could have some penalties to deal with.

2. Did you skip some of your estimated payments during the year?  You should send them in ASAP to limit your penalties.  The good news is you have until January 15, 2018 for the fourth quarter estimated payment due date.

3. Double up on real estate tax deductions. There might be a lot of changes to various itemized deductions with the proposed tax reform. If you are concerned that you might not be able to take advantage of your deductions such as real estate taxes, you can take advantage of them in 2017 by paying them before December 31. It’s an extra bonus if you paid 2016’s real estate taxes in 2017 as well.

4. Make your fourth quarter state income tax estimated payment in December 2017 instead of January 2018.  This will allow you to deduct all of your state income tax payments in 2017 in case the deduction isn’t available anymore in 2018.

5. Be charitable. Now is a great time for charitable giving.  Make sure you give to a legitimate 501(c)(3) organization. Make sure you keep documentation of the gift. If you give more than $250 to a charity they are required to give you a written acknowledgement.  

Items other than cash can be donated as well.  Organizations will take cars, boats, stock, and other assets. If your donation property is worth over $5,000 you will need to get an appraisal.

6. Use your Flexible Spending Account funds.  FSA funds are “use it or lose it,” so make sure you drain those accounts by December 31.  Some employers give a grade period until March 15, but this is optional.

7. Max out your 401k.  If you haven’t contributed all year or just want to put away more money you can put an oversized amount into your 401k with the last few payrolls.  You might also be able to contribute from your year-end bonus (talk to HR).

 

As always, if there is anything I can do to help please feel free to reach out!

 

Tangible Personal Property Tax Returns Due TOMORROW in Florida

April 1 is the deadline for filing the Tangible Personal Property tax for businesses in Florida. Tangible personal property (TPP) is stuff you can feel or touch that is moveable – basically anything that is not real estate or attached to real estate. Inventory is not included in tangible personal property tax, and it should not be confused with intangible property, which is assets you can own that have no physical substance, such as investments, trademarks, patents, etc.

TPP returns are filed with the county your business is located in. If you aren’t ready to file your TPP return, you can request an extension for 30 or 45 days, depending on the county. Check with your county for more information on extensions, forms, and other filing information.

If you aren’t located in Florida this website gives you a list of personal property tax deadlines by state.

Contact me if you need help with filing your business tangible personal property tax form.

LLC That Sh!t

LLC That Sh!t

LLC That Sh!t


Yup.  I said that.  To a new client.  Luckily it was a friend who appreciated my sense of humor and wasn’t offended.  But this advice – not necessarily with the same delivery – is advice that I find myself giving out frequently.  There are usually two reasons:

  1. Someone is starting a new business.  The LLC is a super flexible business structure.  For a small LLC with a single owner you don’t need to file a separate tax return just for the business.  The information goes right on Schedule C.  If you grow and want to be treated like a corporation, you just make a few easy elections.  If you take on a partner, you are automatically set to be taxed as a partnership.
  2. Someone started a business and did not pick a structure when they started.  In this case the default is sole proprietorship.  This type of business puts ALL OF YOUR ASSETS AT RISK!  There is no separation between the business and the business owner.  When a sole proprietor gets sued, he or she has unlimited personal liability.

 

And that is why you should LLC that sh!t.

Have questions about what structure is appropriate for you?  Schedule a consultation.

How to Fully Deduct Business Gifts

Usually business gift deductions are limited to $25

recite-business gifts

Many business owners might not be aware of this, but gifts that your business gives out to vendors, customers, or other business associates are only tax deductible up to $25 per year, per recipient. This means that if you were thinking of passing out expensive bottles of wine (or tequila if you were thinking of sending your favorite CPA a gift! 😉 from your business, you would only be able to deduct $25 for each bottle on your tax return.

There are some exceptions to this $25 rule that will allow you to deduct the cost of gifts fully:

  • Any item that costs $4 or less and has the giver’s name imprinted on it – think pens, swag bags, etc.
  • Signs and promotional materials for the recipient to use on their business premises.

Tweet: Usually business gift deductions are limited to $25. Read more for exceptions: bit.ly/1qKWyc1 @BetteHochberger

How to Deduct Your Vacation

plan carefully to make your vacation tax deductible

It is almost summer and many people will be thinking about traveling. If you plan it right you might even be able to deduct a good part of your trip.

Travel Primarily For Business

The IRS says that travel primarily for business is fully deductible. If you take a trip that is primarily for business and while you are there you extend your stay for a vacation or take a personal side trip you can still deduct the business related travel expenses. Personal trips are not deductible, but you can deduct any expenses while at your destination that directly relate to your business.

How do you figure out if a trip is primarily business or pleasure? Generally this is determined by the amount of time you spend on business vs. personal activities. If more time is spent on business activities your trip is primarily for business purposes.

Travel Expenses

There are a multitude of expenses that qualify as travel expenses. Transportation, hotel/lodging costs, car expenses (gas, oil, repairs, etc.), taxis, tips, and telecommunication fees are all examples of deductible expenses. Meals and entertainment expenses, however, are subject to a 50% limitation.

Keep in mind that if your spouse or children travel with you, only your portion of the travel expenses are deductible. Even if other family members occasionally assist you in business, unless their presence is necessary for you to conduct business, their travel will not be deductible.

Tweet it! Plan carefully to make part of your vacation tax deductible if the trip is primarily for business. bit.ly/1o3K8KR @BetteHochberger 

recite-deduct vacation

Femfessionals Adds New Board Members and Community Ambassadors | South Florida Citybizlist

I am thrilled to be part of this fabulous group of professional women in Femfessionals Fort Lauderdale!

See the announcement in the CityBizList South Florida.

Femfessionals Adds New Board Members and Community Ambassadors | South Florida Citybizlist.

About Femfessionals and FemCity Ft. Lauderdale
Femfessionals connects ambitious professional women through “connection lunches,” original workshops, social media and www.femfessionals.com, creating individual communities within cities (FemCities) around the world. A Femfessional is a savvy business woman characterized as positive, open-minded, driven, professional, ambitious and desirous of forming strong strategic connections to benefit each other personally and professionally, and to the benefit of her community. Not only is she motivated to succeed, she is passionate about the success of others around her. For more information about Femfessionals, visit www.femfessionals.com For more information about FemCity Ft. Lauderdale, visit www.facebook.com/FemCityFtLaudy or @LauderFEMS on Twitter. – See more at: http://southflorida.citybizlist.com/article/femfessionals-adds-new-board-members-and-community-ambassadors#sthash.hLW2RzZB.dpuf