Is an HSA right for you?
A Health Savings Account (HSA) offers tax-advantaged funding of health care costs. If you have a qualified high-deductible health plan, you can contribute to an HSA sponsored by your employer or set up by you. You own the account, which can bear interest or be invested. It can grow tax-deferred, similar to an IRA. Withdrawals for qualified medical expenses are tax-free, and you can carry over a balance from year to year. So unlike Flexible Spending Accounts (FSAs), undistributed balances in HSAs aren’t forfeited at year end. For 2019, the deductible contribution limits are $3,500 self-only, $7,000 family. Contact us with questions or if you need help setting up an HSA.
Put a number on your midyear performance with the right KPIs
It’s the middle of the calendar year. How are things going? You can answer specifically by choosing and calculating key performance indicators (KPIs). For example, the current ratio indicator helps you assess your cash flow by dividing current assets by current liabilities. But KPIs aren’t limited to widely used ratios. You can make up your own and apply them to any business area. Say your company wants to improve its closing rate on sales leads. A KPI could be to convert 50% of all qualified leads into customers over the next six months. Contact us for more info.
Hiring this summer? You may qualify for a valuable tax credit
If you hire from certain “targeted groups” and get proper certification, you can claim the Work Opportunity Tax Credit (WOTC) on your 2019 tax return. You can claim it for eligible workers whose employment begins before January 1, 2020. Targeted groups include qualified veterans, eligible summer youth, the long-term unemployed, ex-felons and certain government assistance recipients. The maximum credit employers can claim ranges from $2,400 to $9,600 per hire. (For the $9,600 credit, an employee must be a veteran entitled to compensation for a service-connected disability and be unemployed for at least six months during the one-year period ending on the hiring date.) Contact us for help.
Donating your vehicle to charity may not be a taxwise decision
Let’s say you’re buying a new car and want to get rid of your old one. You’ve heard ads claiming you can get a tax deduction for donating a car to charity. But this may not result in a big deduction — or any at all. It depends on whether you itemize and what the charity does with the vehicle. For cars worth more than $500, the deduction is the amount for which the charity sells the car. However, if a charity uses the car in its operations or materially improves it before selling, your deduction is based on the car’s fair market value at the time of donating. You also must itemize deductions. You can’t claim a deduction if you take the standard deduction. Contact us for more details.
Could you unearth hidden profits in your company?
Bottom-line potential may lie undiscovered in every company’s existing operations. How can you find these “hidden” profits? By digging into every facet of your organization. To do so, create a profit plan that outlines potential profit boosters and sets objectives for realizing these improvements. Among the best ways to put together such a plan is to ask three key questions: 1) What does our company do best? 2) What products or services could we cut? 3) Exactly who are our customers? We can help you conduct this self-examination and crunch the resulting numbers.
Your succession plan may benefit from a separation of business and real estate
The owners of many companies separate their business interests from the real estate interests related to their physical facilities. They typically do so to shield the real estate from the claims of creditors. But there’s another reason to consider: to benefit your succession plan. By holding real estate in a separate entity, you can sell or give shares in the company to successors or employees without transferring ownership of the property. And retaining title to the property will allow you to collect rent during retirement. Contact us for more information.
Thinking about moving to another state in retirement? Don’t forget about taxes
If you’re thinking about relocating to another state in retirement, consider the impact of state and local taxes. It may seem like a state with no income tax is a smart choice, but you also have to factor in property and sales taxes, as well as any state estate tax. If you make a move to a new state and want to escape taxes in the state you came from, it’s important to establish legal domicile in the new location. How? Take steps such as buying a new home, changing your mailing address, registering to vote and getting a driver’s license in the new state. Before deciding where to live in retirement, do some research and contact us. We can help you avoid unpleasant tax surprises.
Employers: Be aware (or beware) of a harsh payroll tax penalty
If payroll taxes withheld from employees’ paychecks aren’t remitted to the IRS, a severe tax penalty can be personally imposed on “responsible” individuals. The IRS can assess a penalty of 100% of the unpaid tax amount on shareholders, owners, directors, officers, employees and others. The Trust Fund Recovery Penalty (or “100% Penalty”) is assessed when there’s a willful failure to collect and pay over to the IRS taxes that are withheld from employees. Unlike some liability protections that a corporation or company may have, business execs can’t escape personal liability for payroll tax debts. Contact us for information about making tax payments.
Targeting and converting your company’s sales prospects
Identifying and converting a steady flow of prospects can safeguard a business against sudden sales drops or, better yet, push its profitability to new heights. How can you accomplish this? First, continually work on lead generation. Actively involve your marketing department and consider customer relationship management software. Qualify prospects according to criteria such as fulfillable needs and a timely desire to buy. Develop questions to encourage prospects’ interest, and devise well-researched solutions to their problems. Contact us for more information.
Tax-smart domestic travel: Combining business with pleasure
You may be going on a business trip in the United States this summer that you can tack some vacation days onto. If you’re a business owner or self-employed, you may be able to deduct some of your expenses. Transportation costs to and from the business activity location may be 100% deductible if the primary reason for the trip is business. Out-of-pocket expenses for business days are generally fully deductible. Examples include lodging, meals (subject to the 50% disallowance rule), seminar and convention fees, and cab fare. It’s important to keep good records in case you’re audited. Additional rules and limits apply. Contact us if you have questions about your situation.