Timing is everything when it comes to accounting software upgrades
Many businesses stick with their accounting software too long because it’s familiar and just good enough. But, when it comes to accounting system upgrades, timing is everything. Although you don’t want to spend money unnecessarily, you also don’t want to wait too long and risk losing a competitive edge, suffering data loss or incurring a security breach. Start by asking yourself: How long has it been since we meaningfully upgraded our accounting software? There may be better and even industry-specific products on the market. Work with your staff and leadership team to gain a detailed understanding of your specific needs and the technological savvy of your users. Contact us for help.
Governor Signed Remote PPT Fix for 2023
From Mike Johnston, Executive Vice President of Government Affairs & Workforce Development I am pleased to report Governor Whitmer signed HB 4378 and HB 4379, which contained our fix for tracking personal property held by remote workers for 2023. This is the third year in a row in which MMA drove the solution to avoid […]
Selling stock by year-end? Watch out for the wash sale rule
Are you thinking about selling stock at a loss to offset gains that have been realized during 2022? If so, it’s important to be careful of the “wash sale” rule. Under this rule, if you sell stock or securities for a loss and buy substantially identical stock or securities back within the 30-day period before or after the sale date, the loss can’t be claimed for tax purposes. The rule is designed to prevent taxpayers from using the tax benefit of a loss without parting with ownership in a significant way. Note that the rule applies to a 30-day period before or after the sale date to prevent “buying the stock back” before it’s even sold. We can answer any questions you may have.
Do you qualify for the QBI deduction? And can you do anything by year-end to help qualify?
Are you eligible to claim the qualified business income (QBI) deduction? Taxpayers other than corporations may be entitled to a deduction of up to 20% of their QBI. For 2022, if taxable income exceeds $170,050 for single taxpayers, or $340,100 for a married couple filing jointly, the QBI deduction may be limited in certain cases. Taxpayers may be able to save taxes with this deduction (or be subject to a smaller phaseout of the deduction), by deferring income or accelerating deductions at year-end so that they come under the dollar thresholds. You also may be able to increase the deduction by increasing W-2 wages before year-end. The rules are complex, so consult with us before taking steps.
Does your family business’s succession plan include estate planning strategies?
When a family business owner creates a succession plan, it’s important to address whether you should separate ownership succession from management succession. Transferring ownership of assets to the younger generation as early as possible allows you to remove future appreciation from your estate, thereby minimizing estate taxes. Another reason to separate the two is to deal with family members who aren’t involved in the business. Providing heirs outside the business with equity interests that don’t confer control is often a good strategy. There are various ways to transfer business interests without immediately giving up control, including trusts, FLPs and ESOPs. Contact us for more info.
Answers to your questions about taking withdrawals from IRAs
As you may know, you can’t keep funds in your traditional IRA indefinitely. You must start taking withdrawals from a traditional IRA (including a SIMPLE IRA or SEP IRA) when you reach age 72. You must take your first RMD by April 1 of the year following the year in which you turn 72, regardless of whether you’re still employed. The RMD for any year is the account balance as of the end of the immediately preceding calendar year divided by a distribution period from the IRS’s “Uniform Lifetime Table.” If you take money out of a traditional IRA before age 59½, you may be subject to a 10% penalty tax, in addition to income tax on the distribution. Contact us with any questions.
Choosing a business entity? Here are the pros and cons of a C corporation
If you’re launching a new venture, you’re probably wondering which form of business is most suitable. There are advantages and disadvantages of doing business as a C corporation. For example, a C corporation allows the business to be treated and taxed as a separate entity from you as the owner. A properly structured corporation can protect you from business debts yet enable you to control day-to-day operations and corporate acts such as redemptions, acquisitions and liquidations. Plus, the corporate tax rate is 21%, which is lower than the highest noncorporate rate. One potential drawback: Earnings can be subject to double tax, once at the corporate level and again when distributed to you.
Take a look at stock options as a recruitment tool
Is your business struggling to fill its open positions? Many companies use equity-based compensation to attract, retain and motivate executives and other key employees. Stock options confer the right to buy a certain number of shares at a fixed price for a specified time. They come in two flavors: 1) Incentive stock options, which offer attractive tax advantages for employees, but they must comply with strict rules and offer no deduction for employers. 2) Nonqualified stock options, which offer more flexibility, don’t expose recipients to the alternative minimum tax and do generate a deduction for employers. Contact us for help reviewing the pros and cons of either type of stock option.
Choosing a retirement plan for your small business
Most growing small businesses reach a point when it’s time to offer employees a retirement plan. Perhaps the most well-known plan type is the 401(k), which is available to any size company. Contributions to a traditional 401(k) are made pretax, reducing taxable income, but distributions are taxable. Another option: a Simplified Employee Pension (SEP) plan, which is also available to any size business. SEP plans are funded entirely by the employer, though you can decide annually whether to contribute. Small businesses (those with 100 or fewer employees) may want to consider looking into a Savings Incentive Match Plan for Employees (SIMPLE) IRA. Contact us for more info about possible plans.
Intangible assets: How must the costs incurred be capitalized?
These days, most businesses have some intangible assets such as patents, trademarks, customer lists and leases. The tax treatment of these assets is complex. IRS regulations generally require the capitalization of costs to acquire or create an intangible asset, as well as take other actions involving intangibles. Capitalized costs can’t be deducted in the year paid or incurred. If they’re deductible, they must be ratably deducted over the life of the asset (or, for some assets, over periods specified by the tax code or under regulations). However, capitalization generally isn’t required for costs not exceeding $5,000 and for certain other amounts. Contact us with any questions.
You must be logged in to post a comment.