Tax Tips

What Type of Business Is Best?

The idea of starting a business is scary enough; then comes the difficult decision of what type of business entity to establish. You’ll need to consider your financial needs, risk and ability to grow. Choosing correctly at the start is critical because it can be difficult to change your legal structure after you have registered […]

Post-2018 Alimony Agreements: Irrelevant for Tax Purposes

There is no change in the federal income tax treatment of alimony and separate maintenance payments that are required by divorce agreements executed before 2019. As such, alimony payers take a deduction while alimony recipients include the payment in income post-2018. However, for any divorce or separation agreements executed in 2019 and later years, alimony […]

Tax Credit for Qualifying Dependents: What’s Your Eligibility?

Beginning in 2018, the child tax credit increases to $2,000 per qualifying dependent child age 16 or younger at the end of the calendar year. This is a huge benefit because a credit reduces your tax bill dollar-for-dollar! Also, up to $1,400 of the credit could create a refund if you have at least $2,500 […]

Shareholder Compensation

Tax laws define reasonable compensation as the amount that would ordinarily be paid for like services by like enterprises under like circumstances. Building a compensation plan into your business right from the start is a good idea. Depending on your business structure, there are many compensation options, including: * Standard salary-simple, easy to manage * […]

Employee vs. Independent Contractor: Which Is Best For Your Business?

All business owners hope to succeed at scoring good talent. Now, should that accomplishment come from hiring an employee, enlisting the services of an independent contractor, or both? An employee is a smart choice if you want complete control over that person. You decide the hours of work, tools and equipment used, training provided and […]

No Deduction for Out-Of-Pocket Business Expenses

Beginning in 2018, employees are no longer able to deduct out-of-pocket business expenses, including professional dues and licenses, tools and equipment, uniforms, continuing education, and work-related travel, meals and lodging. Instead of footing the bill for these business expenses, ask your employer to consider setting up an accountable reimbursement plan. If your employer sets up […]

Vehicle Depreciation: Higher Deduction Allowed

If you acquire and place into service a new or used passenger vehicle in 2018 and use it over 50% for business, you can depreciate up to $18,000 if you elect to claim first-year bonus depreciation. This is a dramatic increase from last year’s amount of $11,160. Even if you choose not to claim the […]

Party’s Over: Deduction for Entertainment Expenses No Longer Allowed

Starting in 2018, deductions for activities that are generally considered to be entertainment, amusement or recreation expenses, or with respect to a facility used in connection with such activities, are disallowed. Forget front row concert tickets or box seats at the MLB game on another company’s dime. Before the new law, if you took a […]

Income Taxes: Check Your Withholding To Avoid Surprises

The U.S. tax system is a pay-as-you-go process. Taxes must be paid as income is earned or received during the year. With the new tax laws, the way tax is calculated for most taxpayers has changed. In addition, any change in your tax situation for the year (e.g., selling stock, changing marital status, working multiple […]

To Incorporate, or Not: Factors to Consider

Now that the corporate tax rate has been reduced to 21% permanently, is it a good time to incorporate your business? There is no one-size-fits-all answer to this question but there are some general guidelines to consider. The primary nontax advantage of incorporating a small business is personal asset protection. Both corporations and LLCs allow […]