Bartering: A taxable transaction even if your business exchanges no cash
Small businesses may find it beneficial to barter for goods and services instead of paying cash for them. If your business engages in bartering, be aware that the fair market value of goods that you receive in bartering is taxable income. And if you exchange services with another business, the transaction results in taxable income for both parties. Many business owners join barter clubs that facilitate barter exchanges. If you join a barter club, you’ll be asked to provide your Social Security number or employer identification number. You may receive a form reporting barter transactions and you may have to file forms with barter partners and the IRS. Contact us for more information.
Grading the performance of your company’s retirement plan
Imagine giving your retirement plan a report card. Is it a straight-A student or could it use some help after school? Many plan sponsors track common metrics such as benchmarked fees, participation rates and average deferral rates. But don’t stop there. A sometimes-overlooked measure is average account balance size. Knowing your plan’s asset growth rate is also helpful. Ultimately, though, good plan performance isn’t measured by any one element but by aggregating multiple data points to derive an “on track to retire” score. We can help you accomplish this.
If your kids are off to day camp, you may be eligible for a tax break
Now that most schools are out for the summer, you might be sending your children to day camp. The good news: You might be eligible for a tax break for the cost. Day camp is a qualified expense under the child and dependent care credit, which is worth 20% to 35% of qualifying expenses, up to a maximum of $3,000 for one qualifying child and $6,000 for two or more. Note: Sleep-away camp doesn’t qualify. Eligible costs for care must be employment-related. In other words, they must enable you to work or look for work if you’re unemployed. Additional rules apply. Contact us if you have questions about your eligibility for this credit and other tax breaks for parents.
Which entity is most suitable for your new or existing business?
It may seem that the current, flat 21% corporate income tax rate makes C corporation status for your business the best choice. After all, 21% is much lower than the 37% top rate that applies to sole proprietors and pass-through entities (such as partnerships, S corps and LLCs). But C corps can still be subject to double taxation. And pass-through entity owners may be currently eligible for a 20% qualified business income deduction. The best entity type for your business depends on its unique situation and your situation as an owner. Taxes are only one consideration. You may also want the protection from business debts that certain entities provide. Contact us to learn more.
2019 Q3 tax calendar: Key deadlines for businesses and other employers
Here are some key tax-related deadlines for businesses and other employers during Quarter 3 of 2019. JULY 31: Report income tax withholding and FICA taxes for Q2 2019 (unless eligible for an Aug. 12 deadline). File a 2018 calendar-year retirement plan report or request an extension. SEPT. 16: If a calendar-year partnership or S corp. that filed an extension, file a 2018 income tax return. If a calendar-year C corp., pay the third installment of 2019 estimated income taxes. Contact us for more about the filing requirements and to ensure you meet all applicable deadlines.
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.