Are you ready to expand to a second location?
Are you thinking about expanding your business to a second location? If so, make sure your company is truly ready. First ask whether you can duplicate the success of your current location at another one. Also look into how an expansion might create conflicts between the two locations. Explore the financial aspects, too. How will you fund the expansion? Can your cash flow keep up with building costs? And don’t overlook potential tax issues, especially when crossing state lines. We can help you fully assess the pluses and minuses of a potential business expansion.
Tax planning for investments gets more complicated
For investors, fall is a good time to review year-to-date gains and losses. Doing so can help you determine whether to buy or sell investments before year end to save taxes. You also need to consider the TCJA. While it didn’t change long-term capital gains rates, it did change the tax brackets. For 2018 through 2025, these brackets are no longer linked to the ordinary-income tax brackets for individuals. So, for example, you could be subject to the top long-term capital gains rate even if you aren’t subject to the top ordinary-income rate. Questions? Contact us.
Taxpayers can connect with the IRS on their phone using IRS2Go
Taxpayers who need tax help can simply pull out their phone and download the IRS mobile app. IRS2Go is available to use for free on any iOS or Android device.
Keeping a king in the castle with a well-maintained cash reserve
They say cash is king. Well, one way to ensure there’s always a king in the castle is to maintain a cash reserve. But what’s the optimal amount? There’s no simple answer. Your bank’s liquidity covenants are a good place to start. To take it further, identify various liquidity metrics and compare them to industry benchmarks. Believe it or not, many companies suffer from hoarding too much cash. Maybe the best way to find the right balance between excessive and insufficient liquidity is to create financial forecasts for the next 12 to 18 months. Contact us for help.
The tax deduction ins and outs of donating artwork to charity
If you collect art, appreciated artwork can make one of the best charitable gifts from a tax perspective. In general, donating appreciated property is doubly beneficial because you can both enjoy a valuable tax deduction and avoid the capital gains taxes you’d owe if you sold the property. The extra benefit from donating artwork comes from the fact that the top long-term capital gains rate for art is 28%, as opposed to 20% for most other appreciated property. To maximize your deduction, plan your gift carefully and follow all the rules. Contact us to learn more.
Be sure your employee travel expense reimbursements will pass muster with the IRS
Does your business reimburse employees’ work-related travel expenses? If you do, you know that it can help attract and retain employees. If you don’t, you may want to start. Changes under the TCJA make such reimbursements even more attractive to employees: Employees are no longer allowed to deduct such expenses. Travel reimbursements also come with tax benefits, but only if you follow a method that passes muster with the IRS. To learn more, contact us. We can help you determine whether you should reimburse such expenses and which method is right for you.
You might save tax if your vacation home qualifies as a rental property
If you own a vacation home and both rent it out and use it personally, classification as a rental property might save tax. Expenses attributable to a rental property aren’t subject to the TCJA’s tightened limits on itemized deductions for property tax and mortgage interest, and losses may be deductible. A rental property generally is one you use for 14 days or less, or under 10% of the days you rent it out, whichever is greater. Adjusting use between now and year end can ensure it’s classified as a rental property. Contact us for details.
2018 Q4 tax calendar: Key deadlines for businesses and other employers
Here are a few key tax-related deadlines for businesses and other employers during Quarter 4 of 2018. OCT. 15: If a calendar-year C corp. that filed an extension, file a 2017 income tax return. OCT. 31: Report income tax withholding and FICA taxes for Q3 2018 (unless eligible for Nov. 13 deadline). DEC. 17: If a calendar-year C corp., pay fourth installment of 2018 estimated income taxes. Contact us for more about the filing requirements and to ensure you’re meeting all applicable deadlines.
Prepare for valuation issues in your buy-sell agreement
When creating or updating your buy-sell agreement, be sure you’re prepared for valuation issues. Some owners have the business valued annually to minimize surprises when a buyout occurs. This is often preferable to using a static valuation formula in the buy-sell, because the value of business interests tends to change along with a company’s fortunes. At minimum, the agreement needs to prescribe valuation protocols to abide by following a triggering event. These include how “value” is defined and who will perform the valuation. Our firm would be happy to help.
How to reduce the tax risk of using independent contractors
Classifying a worker as an independent contractor frees a business from payroll tax liability and responsibility for withholding income taxes and the worker’s share of payroll taxes. But if the IRS reclassifies a worker as an employee, your business could be hit with back taxes, interest and penalties. When assessing worker status, the IRS typically looks at the level of behavioral and financial control the business has over the worker and the relationship of the parties. Fortunately, there are strategies for minimizing your exposure. Contact us to learn more.