Serving South Florida Business Owners and Professionals
Business – the way we make money. Whether dealing with large transnational corporations, or your neighborhood convenience store, accounting and tax policy mostly focus on business. As President Calvin Coolidge said, “chief business of the American people is business” — business is at the core of who we are as a nation as well as how we earn our livings.
2015 is almost over but there are still some ways to make the best of your tax situation before New Year’s is here. Spoiler-number 6 is the most important!
1. Do your 2015 bookkeeping now. If you aren’t current with your bookkeeping, now is a great time to catch up. You can’t know what your tax situation looks like if you don’t know what your income – or loss – is for the year.
2. Run bonus payroll. If your company is sitting on some cash consider running a bonus payroll. Didn’t make those quarterly estimated tax payments? Put all or part of the bonus to federal withholding to help catch up what you owe.
3. Set up a retirement plan. If you own a small business there are some easy ways to put away money for retirement. SEP and Simple IRAs make a lot of sense for micro and small business owners. There aren’t a lot of paperwork headaches or complicated filings required, and the contributions are tax deducible to the business. This is another good move if your company has some cash at the end of the year.
4. Buy equipment. On the fence about purchasing a computer or other office equipment? Take advantage of Section 179 and fully deduct big ticket items (aka fixed assets) in 2015, even if you only have them for a few days. Right now the deduction is limited to $25,000 but congress might change this.
5. Spend some money. Buy supplies and other business related items now for next year. Spend the money now and take the deduction now.
6. Find a fantastic CPA to work with. CPAs can do so much more than prepare tax returns! My firm offers a wide range of services such as bookkeeping, contract controller and CFO, financial modeling, and more. Take a look at my packages and services. Contact me for a free consultation!
It’s hard to believe how fast 2015 is going. The deadline for 2014 tax returns for businesses (corporations and partnership) on extension is quickly approaching! The deadline is September 15- that’s just two weeks away. Contact your CPA right away if you still haven’t filed. Need help filing your business taxes? Make an appointment with me!
If you are a Florida business owner, today – May 1 – is the last day to file your annual report with the state. You can renew here. If you don’t file the annual report today you face a $400 reinstatement fee that will NOT be waived.
The corporate tax filing deadline is usually March 15. This year March 15 is a Sunday so the deadline is pushed off until Monday, March 16, 2015. Make sure you get your corporate tax return to the IRS by that point. If you still need more time to prepare, be sure to file an extension Form 7004. Need help with corporate taxes? Contact me!
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.
What’s the difference between a hobby and a business? According to the IRS, it is whether or not you are trying to make a profit. If you are not trying to make a profit and just want to write off the cost of your hobby, then you are subject to the “hobby loss rules.”
Business losses (when expenses are greater than income) can offset other income on your tax return. The general rule is that your business must make a profit in at least three out of the last five tax years. Otherwise, the IRS is allowed to re-characterize it as a hobby. The reason this is a problem is because losses from hobbies can only be deducted up to the amount of income and only as a miscellaneous itemized deduction on Schedule A. This difference in treatment can significantly affect the amount of tax you pay.
The IRS provides this list to help you determine if you are in business or just enjoying your hobby:
Does the time and effort put into the activity indicate an intention to make a profit?
Do you depend on income from the activity?
If there are losses, are they due to circumstances beyond your control or did they occur in the start-up phase of the business?
Have you changed methods of operation to improve profitability?
Do you have the knowledge needed to carry on the activity as a successful business?
Have you made a profit in similar activities in the past?
Does the activity make a profit in some years?
Do you expect to make a profit in the future from the appreciation of assets used in the activity?
If you are not sure if your business is just a hobby contact me for an evaluation.
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.
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.
The business tax return deadline is quickly coming! Normally C- and S- corporation tax returns are due on March 15th, but this year that date is a Saturday so the kind folks at the IRS make the following Monday, March 17th the deadline instead.
At this point if you haven’t gotten your information to your CPA yet you are probably going to go on extension. This is done by filing IRS Form 7004. This gives you an extra 6 months- until September 15- to complete your tax return. For C-corporations if you owe any tax for the 2013 year this form allows you make a payment for the balance due.