Business Taxes – Michigan Flow-through Entity (FTE) Elective Tax
Re-Election FTE Reminder or FTE First-Time Election If the first year that your business elected the Michigan Flow-Through Entity (FTE) Tax was 2021, and your business would like to remain in the Michigan FTE program, then you will want to read this article. If you have not elected the Michigan Flow-Through Entity Tax in the […]
Reinvigorating your company’s sales efforts heading into the new year
Business owners, as we head into the new year, look for ways to reinvigorate your company’s sales efforts. For example, given the “new normal” of less business travel, you may be able to revise your sales territory plan so it’s less focused on travel and more aimed at aligning salespeople with regions that contain their most winnable prospects. Also, outdated or overly complicated software can slow sales momentum. Gather feedback on whether you should upgrade or change your systems. Last, identify optimal ways to incentivize your sales staff. This might include boosted commissions or bonuses based on increased sales to current customers or number of prospects converted. Contact us for help.
Court awards and out-of-court settlements may (or may not) be taxed
Monetary awards and settlements are paid for many reasons. For example, a person could receive payments for personal injury or discrimination. By law, individuals can exclude from gross income damages that are received on account of personal physical injury or physical sickness. For purposes of this exclusion, emotional distress isn’t considered physical injury or sickness. So an award under state law that’s meant to compensate for emotional distress caused by age discrimination would have to be included in gross income. However, if you require medical care for treating the consequences of emotional distress, the amount of damages not exceeding those expenses would generally be excludable.
2024 Q1 tax calendar: Key deadlines for businesses and other employers
Here are a few key tax-related deadlines for businesses during the first quarter of 2024. JAN. 16: Pay the final installment of 2023 estimated tax. JAN. 31: File 2023 Forms W-2 with the Social Security Administration and provide copies to employees. Also provide copies of 2023 Forms 1099-NEC to recipients and file them with the IRS. FEB. 28: File 2023 Forms 1099-MISC if paper filing. (Otherwise, the filing deadline is April 1.) MARCH 5: If a calendar-year partnership or S corp., file or extend your 2023 tax return. Contact us to learn more about filing requirements and ensure you’re meeting all applicable deadlines.
How businesses can get better at data capture
Almost every kind of business today is data-driven. For this very reason, “data capture” has become a critical yet often overlooked capability of most companies. Simply put, data capture is the process of extracting information from a physical source and converting it into a digital format. Of course, it doesn’t work the same way for every company. That’s why you should identify your mission-critical data and where it comes from. Also train and equip your employees to optimally capture data. Naturally, you must also secure your data so hackers and unauthorized users can’t corrupt, steal or kidnap it in a ransomware attack. Contact us for help managing your company’s technology costs.
The “nanny tax” must be paid for nannies and other household workers
You may have heard of the “nanny tax.” But if you don’t employ a nanny, you may think it doesn’t apply to you. Check again. Hiring a housekeeper or other household employee (who isn’t an independent contractor) may make you liable for federal income tax, Social Security and Medicare (FICA) tax and unemployment tax. You may also have state tax obligations. In 2023, you must withhold and pay FICA taxes if your worker earns cash wages of $2,600 or more. This will increase to $2,700 in 2024. You pay household worker obligations by increasing quarterly estimated tax payments or increasing withholding from wages (not by paying a lump sum). Employment taxes are then reported on your tax return.
Giving gifts and throwing parties can help show gratitude and provide tax breaks
It’s holiday time again! Your business may want to show its appreciation to employees and customers by giving them gifts or hosting parties. It’s important to understand the tax implications. Are the expenses tax deductible by your business and taxable to the recipients? Gifts to customers are generally deductible up to $25 per recipient, per year. “De minimis” noncash gifts to employees (such as a holiday turkey) aren’t included in their taxable income but are deductible by your business. Holiday parties are 100% deductible if they’re primarily for the benefit of employees who aren’t highly paid and their families. Holiday cards are also likely to be deductible. Contact us with questions.
Is your business underestimating the value of older workers?
When hiring, underestimating the value of older workers could represent a costly blind spot for your business. This segment of the workforce tends to have many positive attributes, including being experienced, budget-savvy, well-connected and self-motivated. Adding older workers can present challenges to company culture, however, so be ready to communicate well and perhaps adjust your approach to onboarding. Emphasize your commitment to an equitable approach to hiring and performance management. Also consider providing training to managers, who might find themselves supervising workers with longer employment histories. Contact us for help managing your company’s employment costs.
4 ideas that may help reduce your 2023 tax bill
You may still have time to cut your 2023 federal tax liability by taking certain steps. For example, contribute the maximum to your retirement plans, including traditional IRAs and SEP plans. Another idea: If you make your Jan. 2024 mortgage payment in December, you can deduct the interest portion on your 2023 tax return (assuming you itemize deductions). You can also make charitable contributions (if you itemize) and “harvest” any investment losses by Dec. 31. If you have more losses than gains, you generally can apply up to $3,000 of the excess to reduce your ordinary income. Remaining losses are carried forward to future tax years. Contact us with questions about your 2023 tax liability.
A company car is a valuable perk but don’t forget about taxes
One of the most appreciated fringe benefits for owners and employees of small businesses is the use of a company car. This perk results in tax deductions for the employer and tax breaks for the owners and employees using the cars. (And of course, they enjoy the nontax benefit of using a company car.) For tax deduction purposes, a business treats the car much the same way it would any other business asset. Providing an auto for an owner or key employee comes with complications and paperwork. Personal use needs to be tracked and valued under the fringe benefit tax rules and treated as income. Contact us for assistance. We can help keep you in compliance with the rules.
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