Look closely at your company’s concentration risks
The word “concentration” is usually associated with a strong ability to pay attention, but it has an alternate meaning in a business context. Many companies struggle with customer concentration, that is, relying on only a few customers to generate revenue. A rule of thumb says that if any one buyer represents 10% or more of revenue, customer concentration may be too high. Similarly, vendor concentration occurs when a company relies on only a handful of suppliers. Geographic concentration takes place when a business depends on just one area for customers or on a specific global supplier. We can help you measure your concentration risks and develop strategies for mitigating them.
Answers to your questions about 2020 individual tax limits
Right now, you may be more concerned about your 2019 tax bill than you are about your 2020 tax picture. That’s because your 2019 individual tax return is due to be filed in less than 3 months. However, it’s a good idea to familiarize yourself with tax amounts that may have changed. For example, for 2020, the amount you can put into a 401(k) plan has increased to $19,500 (from $19,000). You may want to start making contributions early in the year because they’ll lower your taxable income. Keep in mind that not all tax figures are adjusted for inflation and some amounts can only change with new tax legislation. Contact us if you have questions or need more information about your situation.
Do your employees receive tips? You may be eligible for a tax credit
If you’re an employer who owns a business where tipping is customary, for you may qualify for a valuable tax credit involving the Social Security and Medicare (FICA) taxes that you pay on your employees’ tip income. You claim the credit as part of the general business credit. It’s equal to the employer’s share of FICA taxes paid on tip income in excess of what’s needed to bring your employee’s wages up to $5.15 per hour. In other words, no credit is available to the extent the tip income just brings the employee up to $5.15 per hour, calculated monthly. Other rules may apply. Contact us if you have any questions.
There still might be time to cut your tax bill with IRAs
If you’re getting ready to file your 2019 tax return, and your tax bill is higher than you’d like, there may still be an opportunity to lower it. If you qualify, you can make a deductible contribution to a traditional IRA right up until the Wed., April 15, 2020, filing date and benefit from the resulting tax savings on your 2019 return. For 2019 if you’re qualified, you can make a deductible traditional IRA contribution of up to $6,000 ($7,000 if you’re 50 or over). To be qualified, you must meet rules involving your income and whether you’re an active participant in an employer-sponsored retirement plan. If you’d like more information about whether you can contribute to an IRA, contact us.
Getting help with a business interruption insurance claim
Many companies buy business interruption insurance to cover revenues lost and expenses incurred while operations are limited or suspended due to a disaster. But buying a policy is one thing; receiving a payout is another. Insurers often enlist specialists to audit and reduce claims. Fortunately, your CPA can help you prepare the claim, quantify losses and anticipate insurer challenges. He or she can be the primary contact with the insurer, dealing with document requests. An accountant can also estimate lost profits by analyzing, identifying and segregating revenues and expenses. We’d be happy to provide whatever support you may need in pursuing a business interruption insurance claim.
Numerous tax limits affecting businesses have increased for 2020
An array of tax-related limits affecting businesses are annually indexed for inflation, and many have increased for 2020. For example, the Section 179 expensing limit has gone up to $1.04 million from $1.02 million. Also up are the income-based phase-ins for certain limits on the Sec. 199A qualified business income deduction for owners of pass-through entities. And most limits related to employer-sponsored retirement plans, such as 401(k)s, are higher this year. This includes employee contributions to 401(k) plans, which are up $500 this year to $19,500. If you have questions about the tax limits that will affect your business in 2020, contact us.
Get Ready for CRE’s ‘New Normal’
According to economist Hugh Kelly, there are reasons to believe the U.S. economy is already shifting into “an altered state that will require significant adjustments to conventional expectations for commercial property.”
Cents-per-mile rate for business miles decreases slightly for 2020
A slightly lower IRS mileage rate means smaller tax deductions for business miles in 2020. The optional standard mileage rate used to calculate the deductible costs of operating an auto for business has decreased by by one-half cent to 57.5 cents per mile. It was 58 cents for 2019 and 54.5 cents for 2018. This mileage rate comes into play 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. The mileage rate can also be used for reimbursing employees. Many rules and limits apply. Contact us for details.
Can you deduct charitable gifts on your tax return?
Many people who used to claim a tax break for making charitable contributions are no longer eligible. That’s because of some tax law changes that went into effect a couple years ago. You can only claim a deduction if you itemize deductions on your tax return and your itemized deductions exceed the standard deduction. Today’s much higher standard deduction combined with limits or suspensions on some common itemized deductions means you may no longer have enough itemized deductions to exceed the standard deduction. If you do meet the rules for itemizing, there are still other requirements to claim a charitable deduction. Contact us with questions.
3 best practices for achieving organic sales growth
Every company should strive for organic sales growth; in other words, increasing sales from existing operations rather than mergers or acquisitions. That’s not to say a merger or acquisition is out of the question, but you shouldn’t rely on such a major move to regularly boost your numbers. Organic sales growth tends to come from 3 best practices: 1) Providing attentive customer service that addresses problems quickly and maintains positive contact, 2) Choosing smart marketing strategies that adjust and evolve to changing trends, and 3) Hiring, training and retaining good employees at every level who contribute to sales. We can help you identify optimal strategies and measure the results.