POLK & ASSOCIATES EXPANDS REACH AND STRENGTHENS TEAM WITH STRATEGIC MERGER
New merger bolsters expertise, experience and industry-specific knowledge in key core competencies Bingham Farms, MI – January 1, 2023 – Polk & Associates (POLK) announces today a strategic merger that bolsters our Niche Industry competencies. Founded in 1979 POLK specializes in providing highly personalized services to clients in the manufacturing, real estate, healthcare and supporting […]
Inbound vs. outbound: Balancing your company’s sales strategies
Most businesses must balance inbound sales, which originate when a customer or prospect contacts you, with outbound sales, which arise from members of your sales team reaching out to customers and prospects. Inbound sales call for a strong brand-based marketing strategy and a well-trained, patient sales staff. They’re generally less work but may be harder to close. Outbound sales are usually more labor-intensive. They’re also typically more expensive because of higher marketing/advertising costs, travel expenses and staff turnover. But outside sales are more targeted and can generate more revenue. As we head into the new year, now’s a good time to find the right balance. Contact us for help.
Unused PTO a problem? Consider a contribution arrangement
A new year has arrived. For many businesses, this means employees’ paid time off (PTO) arrangements have reset, with some workers leaving a few or many unused hours on the table. There are various ways to help workers better use their PTO, including regular reminders from supervisors and helpful information about wellness. But if you offer a 401(k) plan, consider a PTO contribution program. One of these allows employees with unused vacation hours to elect to convert them to retirement plan contributions. You’ll need to amend your 401(k) plan and still follow the plan document’s eligibility, vesting, rollover, distribution and loan terms. Additional rules may apply. Contact us for more info.
How to minimize the S corporation LIFO recapture tax
If you’re considering converting your C corporation to an S corporation, there may be tax implications if you’ve been using the last in, first out (LIFO) inventory method. That’s because of the LIFO recapture income that will be triggered by converting to S corp status. As you’re aware, your corporation has been reporting a lower amount of taxable income under LIFO than it would have under the first in, first out (FIFO) method. The reason: The inventory taken into account in calculating the cost of goods sold under LIFO reflects current costs, which are usually higher. We can meet to compute what the tax on recapture would be and to see what planning steps might be taken to minimize it.
Renting to a relative? Watch out for tax traps
If you rent a home you own to a relative, there may be tax consequences. Renting out a home you own may result in a tax loss for you even if the rental income is more than your operating costs. You’re entitled to a depreciation deduction for your cost of the home (except for the portion allocated to the land). But if your tenant is related to you, special rules and limits may apply. For this purpose, “related” means a spouse, child, grandchild, parent, grandparent or sibling. No limits apply if 1) you rent to a relative who uses it as a principal residence (not just as a second or vacation home) for the year, and 2) it’s rented at fair market rent (not discounted).
Look forward to next year by revisiting your business plan
A new calendar year is about to arrive. Whether you’ve done a lot of strategic planning or just a little, a good way to double-check your objectives is to revisit your business plan. Traditionally, a business plan comprises six sections: 1) Executive summary. 2) Business description. 3) Industry and marketing analysis. 4) Management team description. 5) Implementation plan. 6) Financials. An executive summary is usually the first thing people read, but it’s the last section you should write. Instead, begin with your financials. That is, your business plan’s financial projections should support your strategic goals. Cash flow projections are particularly important. Contact us for help.
The standard business mileage rate is going up in 2023
The optional standard mileage rate used to calculate the tax-deductible cost of operating an automobile for business will be going up in 2023. The IRS recently announced that the cents-per-mile rate for the business use of a car, van, pickup or panel truck will be 65.5 cents. In 2022, the rate for the second half of the year (July 1 – December 31) was 62.5 cents per mile, and for the first half of the year (January 1 – June 30), it was 58.5 cents per mile. The standard mileage rate is useful if you don’t want to keep track of actual vehicle-related expenses. But you still must record certain information, such as the mileage, date and destination for each trip.
SECURE 2.0 law may make you more secure in retirement
The SECURE 2.0 Act, which was signed into law on Dec. 29, 2022, will help many Americans save more for retirement. However, many of the provisions don’t kick in for a few years. One provision that does take effect this year is an increase in the age for beginning required minimum distributions (RMDs). Employer-sponsored qualified retirement plans, traditional IRAs and individual retirement annuities are subject to RMD rules. They require that benefits start being distributed by the required beginning date. Under the new law, the required age used to determine distributions increases from age 72 to age 73 starting on Jan. 1, 2023. It will then increase to age 75 starting on Jan. 1, 2033.
Save for retirement by getting the most out of your 401(k) plan
Does your employer offer a 401(k) plan? If so, contributing to it is a wise way to build a substantial nest egg. If you’re not already contributing the maximum allowed, consider increasing the amount. With a 401(k), an employee elects to have a certain amount of pay deferred and contributed by an employer on his or her behalf to the plan. The contribution limit for 2023 is $22,500. Employees age 50 and older by year end are also permitted to make additional “catch-up” contributions of $7,500 in 2023, for a total limit of $30,000. The amounts are up quite a bit from 2022 due to inflation. In 2022, you could contribute $20,500 with a $6,500 catch-up contribution for those age 50 and older.
2023 Q1 tax calendar: Key deadlines for businesses and other employers
Here are a few key tax-related deadlines for businesses during Q1 of 2023. JAN. 17: Pay the final installment of 2022 estimated tax. JAN. 31: File 2022 Forms W-2 with the Social Security Administration and provide copies to employees. Also provide copies of 2022 Forms 1099-NEC to recipients and, if reporting nonemployee compensation in Box 7, file them, too. FEB. 28: File 2022 Forms 1099-MISC if not required earlier and paper filing. MARCH 15: If a calendar-year partnership or S corp., file or extend your 2022 tax return. Contact us to learn more about filing requirements and ensure you’re meeting all applicable deadlines.