Is a Health Savings Account right for you?
For eligible individuals, a Health Savings Account (HSA) offers a tax-favorable way to set aside funds (or have an employer do so) to meet future medical needs. Some of the tax benefits: 1) Contributions are deductible, within limits; 2) Earnings on the funds in the HSA aren’t taxed; 3) Contributions an employer makes aren’t taxed to you; and 4) Distributions to cover qualified medical expenses aren’t taxed. An eligible employee must be covered by a “high deductible health plan.” For 2021, a high deductible health plan has an annual deductible of at least $1,400 for self-only coverage or $2,800 for family coverage. An individual can contribute $3,600 ($7,200 for a family) to an HSA for 2021.
Tax depreciation rules for business automobiles
If you use an automobile in your business, you may wonder how depreciation tax deductions are determined. The rules are complicated, and special limits that apply to vehicles classified as passenger autos can make it take longer than expected to fully depreciate a vehicle. First, note that if you use the “standard mileage rate” (56 cents per business mile driven for 2021), a depreciation allowance is built into the rate and you don’t need to worry about the depreciation calculations. But if you choose to use the “actual expense method” to claim deductions on a passenger auto, depreciation is calculated each year based on the car’s cost, how much you use it for business and other factors.
Opening a new location calls for careful planning
Is your business doing well enough for you to consider adding another location? “Fortune favors the bold,” goes the old saying. However, strained cash flow and staffing issues can severely disfavor the underprepared. Ask yourself fundamental questions such as: Will we be able to duplicate the success of our current location? How might expansion affect business at both places? Look at how you’re going to fund the endeavor. Ideally, the first location will generate enough revenue to cover some of the costs, but you may need to take on substantial debt. Consider the tax ramifications as well, such as paying property taxes on two locations. We can help you assess the feasibility of the idea.
Selling a home: Will you owe tax on the profit?
Many people have seen their home values increase recently. Be aware of the tax implications if you sell your home. If you’re selling your principal residence, you can exclude up to $250,000 ($500,000 for joint filers) of gain, if you meet certain requirements. For example, you must have owned the property for at least 2 years during the 5-year period ending on the sale date. If you sell your main home, and you qualify to exclude up to $250,000/$500,000 of gain, the excluded gain isn’t subject to the 3.8% net investment income tax (NIIT). However, gain that exceeds the exclusion limit is subject to the tax if your modified adjusted gross income is over a certain amount. Questions? Contact us.
Tax breaks to consider during National Small Business Week
Sept. 13-17 has been declared National Small Business Week by the SBA. To commemorate, here’s a tax break to consider. Your business may be able to claim 100% bonus depreciation for asset additions. Under current law, first-year bonus depreciation is available for qualified new and used property that’s acquired and placed in service in 2021. That means your business may be able to deduct the entire cost of some or all asset purchases on this year’s return. To take advantage of this, you may want to make acquisitions before Dec. 31. The bonus depreciation tax break can also be used for eligible heavy SUVs, pickups and vans used over 50% for business. Contact us to help evaluate your options.
Think like a lender before applying for a business loan
As your business pushes forward, you may find yourself in need of cash. Before applying for a commercial loan, think like a lender to be as prepared as possible and know for sure that the loan is a good idea. Basically, a lender wants to know four things: 1) how much money you need, 2) what you’ll use it for, 3) when you need it by, and 4) when you’ll be able to pay it back. Discuss these questions thoroughly with your leadership team. Also consider the three C’s of your company: character (strength and reputation of management), capacity (soundness of your finances and financial plan) and collateral (viable assets to back the loan). Contact us for help with the loan process.
Claiming a theft loss deduction if your business is the victim of embezzlement
If your business is victimized by theft, embezzlement or internal fraud, you may be able to claim a tax deduction for the loss. Keep in mind that a deductible loss can only be claimed for the year in which the loss is discovered, and that you must meet other tax-law requirements. Keep records to substantiate the claimed theft loss, including when you discovered the loss. If you receive an insurance payment or other reimbursement for the loss, that amount must be subtracted when computing the deductible loss for tax purposes. Contact us with any questions you may have about business theft and casualty loss tax deductions.
Four Biggest Staffing Issues in the Maintenance Department
Maintenance requires workers that are flexible, diligent, and, above all else, skilled in what they do. Finding the right person to do the needed job has always been tricky in the maintenance industry, even at the best of times. The COVID-19 pandemic has turned work on its head, with old paradigms being shattered for employers […]
Unemployment Eligibility Changes Could Mean Opportunity for Manufacturers
More than 500,000 Michiganders will be more highly motivated to seek work soon as several federal unemployment programs end. This signals an end to what has become a major impediment to the return of the full workforce in the wake of the COVID-19 pandemic and a potential opportunity for Michigan manufacturers looking to hire. As […]
The Manufacturing Confusion: Process Versus Project
For years the industrial sectors, no matter how specific and nuanced, have conducted a battle of process versus project. Process came into focus 30 years ago when lean manufacturing became the rage. It was not a fad because the notion of efficiency, eliminating waste and best practice made sense then and still makes sense today. […]
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