4 best practices for effective strategic planning meetings
At some companies, an excessive number of meetings can become a problem. However, there’s one kind of meeting that business owners and their leadership teams should never scrimp on: strategic planning. Regularly scheduled strategic planning meetings are critical for establishing, reviewing and, if necessary, adjusting your company’s short- and long-term objectives. Here are four best practices: 1) Set a firm agenda focused solely on strategic planning. 2) As needed, lay down rules for attendance, decorum and dispute resolution. 3) Name a facilitator or consider engaging a professional one. 4) Keep minutes of every meeting to preserve good ideas and curtail miscommunications.
Investment swings: What’s the tax impact?
Have your investments fluctuated wildly this year? You may have already recognized gains and losses. But nothing is decided tax-wise until all the gains and losses from 2023 trades are tallied up at year end. If you’ve had swings in the value of a tax-favored 401(k), traditional IRA, Roth IRA or SEP, there are no current taxes. These changes affect the account value but have no tax impact until you take withdrawals. At that point, your account balance(s) will affect your taxes. (Qualified Roth withdrawals after age 59½ are tax-free.) With taxable accounts, the cumulative gains and losses from trades during the year are what matter. Unrealized gains and losses don’t affect your tax bill.
Spouse-run businesses face special tax issues
Do you and your spouse operate a profitable unincorporated small business? If so, you face some challenging tax issues. For example, an unincorporated spousal business is generally classified as a partnership for federal income tax purposes. That means you must file an annual partnership tax return. And both spouses must be issued Schedule K-1s, which allocate the taxable income, deductions and credits between the two of you. With your joint tax return, you must also pay self-employment (SE) tax on your share of the net SE income passed through to you by your partnership. Your spouse must do the same, which may result in a big SE tax bill. Contact us to help identify tax-saving strategies.
Look carefully at three critical factors of succession planning
Succession planning is an important task for every business owner. Three critical factors related to planning for the future of your company are: 1) The involvement of your family; decide whether you’ll transfer the business to a child or other relative and how you’ll prepare that person. 2) The market for your business; if you’ll likely sell your company, you’ll need to get a good idea of precisely who would be the optimal candidate(s) to buy it. 3) The structure of the transfer or sale; whether you decide to give ownership to a family successor or sell the business to an outside person or entity, you’ll need to find a legally secure, tax-savvy manner to do so. Contact us for help.
Could your business benefit from interim financial reporting?
When many business owners see the term “financial reporting,” they think of their year-end financial statements. But engaging in other types of financial reporting more frequently can be helpful. Just how much more often you should engage in such “interim” financial reporting will depend on factors such as company size, industry and operational complexity. Nevertheless, monthly, quarterly and midyear financial reports can provide insight into trends and trouble before the situation spirals out of control. When reviewing interim reports, it’s important to recognize that internal accounting practices may cause certain anomalies that can be corrected by year end. Contact us for help.
Update on depreciating business assets
The amounts for depreciating business assets change every year due to inflation adjustments. Due to high inflation, the 2023 adjustments were big. For qualifying assets placed in service in tax years beginning in 2023, the maximum Section 179 deduction is $1.16 million. If your business puts in service more than $2.89 million of qualified assets, the maximum Sec. 179 deduction begins to phase out. Eligible assets include equipment, computer hardware and peripherals, vehicles and commercially available software. Also, for qualified assets placed in service in 2023, the first-year bonus depreciation percentage has dropped to 80% (from 100% in 2022). Other rules apply. Questions? Contact us.
Reviewing and adjusting your marketing strategy
Business owners, it may not be too late in the year to adjust your overall marketing strategy to ensure your sales numbers wind up where you want them. If your goal is indeed to increase sales, what metrics are you using to calculate whether you’ve achieved adequate growth? You should be able to lay out these metrics in a report or chart to help you determine whether your money has been well spent so far. It’s also imperative to track sources of new business, as well as leads and customers. Keep tabs on the impact of marketing efforts on brand awareness, too. We can assist you in analyzing your marketing costs and picking the right ways to measure this mission-critical activity.
Plan now for year-end gifts with the gift tax annual exclusion
Now that Labor Day has passed, the holidays are just around the corner. Many people may want to make gifts of cash or stock to their loved ones. By properly using the annual exclusion, gifts can reduce the size of your taxable estate, within generous limits, without triggering any estate or gift tax. The exclusion amount for 2023 is $17,000. It covers gifts you make to each recipient each year. Therefore, a taxpayer with 3 children can transfer $51,000 this year free of federal gift taxes. If the only gifts made during a year are excluded in this way, there’s no need to file a federal gift tax return. Contact us for the most tax-effective way to give large gifts to loved ones.
Selling your home for a big profit? Here are the tax rules
In recent years, many people have seen their home values rise. Be aware of the tax implications when selling. If you’re selling your principal residence, you can exclude up to $250,000 ($500,000 for joint filers) of gain, if you meet certain requirements. For example, you must have owned the property for at least two years during the five-year period ending on the sale date. If you sell your main home, and you qualify to exclude up to $250,000/$500,000 of gain, the excluded gain isn’t subject to the 3.8% net investment income tax. However, gain that exceeds the exclusion limit is subject to the tax if your modified adjusted gross income is over a certain amount. Questions? Contact us.
Disabled family members may be able to benefit from ABLE accounts
There may be a tax-advantaged way for people to save for the needs of family members with disabilities, without having them lose eligibility for government benefits. It’s done though a tax-free ABLE account, which can be used for disability-related expenses. Eligible individuals currently must have become blind or disabled before turning age 26. (However, the SECURE 2.0 law increases the age to 46, beginning Jan. 1, 2026.) ABLE accounts can be created by eligible individuals to support themselves, by family members to support dependents, or by guardians. Contributions up to the annual gift-tax exclusion amount ($17,000 in 2023) can be made to an account each year. Contact us with questions.