$6 Million Appropriation Will Provide Long-Term Solutions to Talent Crisis
As part of MMA’s effort to provide solutions to the acute need for manufacturing talent now and in the future, I am proud to announce that this week Governor Gretchen Whitmer signed into law a $6 million appropriation secured by MMA to double the number of schools participating in the Partnership Response in Manufacturing Education […]
Get serious about your strategic planning meetings
Businesses should take strategic planning seriously. One way is to hold meetings focused on plotting your company’s future. To get the most from these gatherings, follow some best practices for any formal business meeting. Set a clear and feasible agenda so there will be no surprises. If necessary, lay down rules to preserve decorum and prevent (or resolve) conflicts. Choose a facilitator to oversee the meeting. If no one at your company feels up to the task, you could engage a qualified outside consultant. Record the minutes of the meeting to document what took place and which (if any) decisions were made. Contact us for help with the financial aspects of strategic planning.
The deductibility of corporate expenses covered by officers or shareholders
Do you play a major role in a closely held corporation and sometimes spend money personally on corporate expenses? In general, you can’t deduct an expense you incur on behalf of your corporation even if it’s a legitimate business expense. That’s because you can only deduct expenses that are your own and the corporation is a separate legal entity. What’s more, the corporation won’t generally be able to deduct them either because it didn’t pay them. One solution is to arrange to have the corporation reimburse you for expenses you incur. Turn the receipts over to the corporation and use an expense reimbursement claim form or system. Then, the corporation can deduct the reimbursement amount.
You may have loads of student debt, but it may be hard to deduct the interest
If you have student loan debt, you may wonder if you can deduct the interest you pay. The answer is yes, subject to certain limits. However, the deduction is phased out if your adjusted gross income exceeds certain levels. The maximum amount of student loan interest you can deduct per year is $2,500. For 2021, the deduction is phased out for single taxpayers with AGI between $70,000 and $85,000 ($140,000 and $170,000 for married couples filing jointly). The deduction is unavailable for singles with AGI of more than $85,000 ($170,000 for married couples filing jointly). The interest must be on funds borrowed to cover qualified education costs of the taxpayer or his spouse or dependent.
Keeping remote sales sharp in the new normal
Many experts predicted that companies’ experiences during the COVID-19 pandemic would accelerate the existing trend toward more digital sales interactions. Indeed, this seems to be coming to pass. Here are three tips for keeping your remote sales activities sharp in the new normal: 1) Focus on targeted sales to existing customers and well-researched prospects. 2) Leverage the most up-to-date, well-suited technology tools, but don’t forego in-person sales calls where safe and feasible. 3) Create an outstanding digital experience that includes an easily navigable website and perhaps even a convenient mobile app. Contact us for help managing your technology costs.
There’s currently a “stepped-up basis” if you inherit property — but will it last?
If you’re planning your estate, or you’ve recently inherited assets, you may be unsure of the “cost” (or “basis”) for tax purposes. The current rules Under the current fair market value basis rules (also known as the “step-up and step-down” rules), an heir receives a basis in inherited property equal to its date-of-death value. So, […]
Getting a new business off the ground: How start-up expenses are handled on your tax return
Despite the COVID-19 pandemic, government officials are seeing a large increase in the number of new businesses being launched. From June 2020 through June 2021, the U.S. Census Bureau reports that business applications are up 18.6%. Entrepreneurs often don’t know that many start-up expenses can’t be currently deducted. Some likely have to be amortized over time. You might be able to elect to deduct up to $5,000 currently, but the deduction is reduced by the amount by which your total start-up costs exceed $50,000. You can also deduct $5,000 of the organizational costs of creating a corporation or partnership. Contact us if you have tax questions about a start-up business.
Can taxpayers who manage their own investment portfolios deduct related expenses? It depends
Do you have significant investment-related expenses, including subscription costs and home office expenses? Under current tax law, these expenses aren’t deductible through 2025 if they’re considered investment expenses for the production of income. But they’re deductible if they’re considered trade or business expenses. The U.S. Tax Court has developed a 2-part test that must be satisfied in order to be a trader. Under the test, investment activities are considered a trade or business only if: 1) the taxpayer’s trading is substantial, and 2) the taxpayer seeks to profit from short-term market swings, rather than from long-term holding of investments. Contact us if you have questions.
Who in a small business can be hit with the “Trust Fund Recovery Penalty?”
There’s a harsh tax penalty that you could be at risk for paying personally if you own or manage a business with employees. The Trust Fund Recovery Penalty applies to the Social Security and income taxes required to be withheld by a business from employees’ wages. Because taxes are considered government property, the employer holds them in “trust” on the government’s behalf until they’re paid over. The penalty is also sometimes called the “100% penalty” because the people liable and responsible for the taxes will be penalized 100% of the taxes due. The amounts the IRS seeks when the penalty is applied are usually substantial, and the IRS is aggressive in enforcing the penalty.
5 ways to take action on accounts receivable
No matter the size or shape of a business, one really can’t overstate the importance of sound accounts receivable policies and procedures. If your company’s collections aren’t as efficient as you’d like, consider the following five suggestions: 1) Redesign your invoices to ensure they’re clear and easy to understand, 2) Appoint a collections champion who has the primary responsibility of following up on past due invoices, 3) Expand your payment options to include the latest mobile technology, 4) Acquaint (or reacquaint) yourself with your B2B customers’ procedures for invoice formatting and submission, and 5) Generate accounts receivable aging reports. Contact us for help.
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