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28 10, 2022

8 Funding Options for Small Businesses

2022-10-27T21:36:29-05:00October 28, 2022|0 Comments

Starting and maintaining your own business is no easy task. Money—or lack thereof—can be a major issue. When it comes to funding options for small businesses, here are eight viable options to consider.

Banks

Banks are good funding options for small businesses that usually offer competitive terms and low interest rates. However, bank loans can be hard to qualify for.

Qualified applicants could receive typical business loans, equipment loans or commercial real estate loans, for example.

SBA loans

SBA loans are federally backed, which makes them less risky for lenders to lend you the capital. What’s more, the interest rates tend to be low, and there are multiple types of SBA loans.

On the other hand, SBA loans may require a down payment or collateral up front. They can also take a long time to process.

Credit cards

Applying for a business credit card can be a good option if you are looking for short-term funding needs. Business credit cards typically have higher credit limits than personal credit cards.

The catch is paying off the debt before the interest begins to accrue.

Grants

Next among funding options for small businesses is free financing in the form of grants! Grants can be issued from government agencies, corporations, nonprofits and economic development groups.

Funding varies along with the qualifications and application process. The application process can also be competitive.

Equity investors

Equity investors, or individuals, could support small businesses by purchasing shares of the company. Investors generally enjoy some sort of financial gain or return for a specific amount of time.

Crowdfunding

Is your product a crowd-pleaser? If so, crowdfunding is an option worth considering. GoFundMe is an example of a crowdfunding platform. Often, it’s a way of receiving capital without racking up debt.

It gives businesses a chance to test their product while also increasing brand awareness.

Online lenders

Before moving forward with online lenders, do your research. Take your time to find the right fit. Compare lenders, look at reviews and read the fine print.

Make sure you understand the actual cost to your business in terms of fees, interest rates and other possible penalties.

Credit union financing

Credit union financing is similar to funding for banks, but it’s usually just for members. Credit unions offer favorable rates and loans backed by the SBA.

Besides a typical loan, they can offer lines of credit as well as business credit cards.

Summary

Are you ready to launch your own business? Hopefully, these funding options for small businesses will help you get started. For additional help when it comes to business planning, schedule a free consultation with us. For more financial news, keep reading our blogs.

28 09, 2022

The Qualified Business Income Deduction: Is Your Business Eligible?

2022-09-28T19:41:48-05:00September 28, 2022|0 Comments

You might remember the 2017 tax reform called the Tax Cuts and Jobs Act. Part of that legislation includes the qualified business income deduction, which applies to certain businesses and self-employed people.

What is the qualified business income deduction?

In a nutshell, it allows eligible businesses to deduct up to 20 percent of their total taxable income.

In general, qualified businesses include those with pass-through income. Pass-through income refers to business income that is reported on an individual’s personal tax return.

This includes partnerships, S corporations, sole proprietorships and limited liability companies, for example. It does not include C corporations or money earned as an employee.

How is it calculated?

Typically, the qualified business income deduction is the smaller amount between one of two options.

First, it’s 20 percent of your qualified business income plus 20 percent of other income such as real estate investment dividends or publicly traded partnership income.

Or, it’s 20 percent of your total taxable income minus net capital gains.

Of course, figuring out if your business qualifies isn’t always so cut and dry. There are certain limitations that could affect if, or how much, you can claim.

What are the limitations?

For starters, there is the income threshold. To qualify for the full 20 percent deduction for 2022, for instance, your taxable income must be under $170,050 for a single filer. That figure jumps to $340,100 for joint filers.

However, once you pass the limit, the qualified business income deduction begins to decrease or possibly disappear altogether. At this point, things also get more complicated due to other factors.

So, it might be a good idea to work with a tax professional if your qualified business income is higher than the initial limit.

Summary

If you want to find out if your business is eligible for the qualified business income deduction, request your free consultation with us today. We can talk about topics like this and much more. Meanwhile, find additional business accounting tips and other news by reading our blogs.

29 08, 2022

4 Often-Missed Business Deductions at Tax Time

2022-08-24T16:58:41-05:00August 29, 2022|0 Comments

Keeping track of business deductions throughout the year is vital for reducing the amount of taxes you owe come tax time. But with so many possible write-offs, how are you supposed to keep track of them all? If you want to offset the cost of keeping your business open, knowing what deductions you qualify for is important. Check out these four often-missed business deductions at tax time.

Auto mileage

 The tax deduction for using vehicles for your business can sometimes be a significant amount. So, it is crucial to know what counts and what does not count as a qualifying tax deduction.

What counts:

  • Business vehicles are cars, SUVs, and pickup trucks that are used for business activities.

What doesn’t count:

  • Vehicles for hire, such as taxis and airport transportation vans.
  • Vehicles used as equipment, such as dump trucks.

For IRS purposes, it is very crucial that you keep a detailed log of your business miles. In June 2022, the IRS increased the federal auto mileage deduction for the remainder of the year to 62.5 cents per mile. To determine the number of miles driven for your business, you need to know two numbers: the total number of miles driven during the year and the total number of miles driven just for business. Miles that count as part of your business mileage deduction only include the number of miles actually driven for business.

What counts as business mileage:

  • Visiting a customer or meeting a client.
  • Going to the bank, office supply, or computer store.
  • Meeting with your lawyer or accountant on business matters.

What doesn’t count:

  • Driving from home to work and back—this is called commuting.
  • If you stop at a store on the way home from a business trip, this is considered personal mileage.

Home office

 The home office deduction allows businesses to deduct certain home expenses when filing taxes. To claim this deduction, the business must regularly or exclusively use part of its home or structure on its property as its place of work.

Here are some things to help you know if you can claim home office:

  • The home must generally be the employer’s primary place of business.
  • The term “home” includes: houses, apartments and condos, mobile homes, and other structures on the taxpayer’s property, such as an unattached garage, studio, barn, or greenhouse.
  • Employees are not eligible to claim the home office deduction.

Businesses can use the simplified method to calculate their home office expense deductions. The simplified method has a rate of $5 per square foot for business use of a home. The maximum size for this is 300 square feet.

Retirement contributions

 When owning a business, it is up to you to establish your retirement contributions. You can deduct the amount you contribute to a tax-qualified retirement account from your income taxes.

Retirement plans:

  • Pension Plan: An employee benefit plan established by an employer or an employee organization that provides retirement income.
  • IRA: A trust or custodial account set up for the benefit of an individual.
  • SEP: Simplified employee pension is similar to an IRA, but instead of being limited to an annual contribution, you can invest up to 25 percent of your net profit every year.
  • SIMPLE IRA: Savings incentive match plan for employees is another type of IRA that may be established by an employer for its employees.
  • 401(k): A retirement saving and investing plan offered by employers. This is a feature of a qualified profit-sharing plan that allows employees to contribute a portion of their wages to individual accounts.

Self-employed health insurance deduction

To wrap up these four often-missed business deductions at tax time, let’s talk about health insurance for the self-employed.

If you are self-employed, you may be eligible to deduct the premiums you pay for medical, dental, and other qualifying health coverage for yourself, your spouse, and dependents. Self-employed health insurance deductions cannot exceed the amount of earned income that you collect from your business. For example, if your business generated a tax loss for the year, you are not allowed to claim the deduction because the business did not generate any positive income.

This deduction must be in box one of your W-2 if you are taxed as an S corporation.

Summary 

Feeling overwhelmed trying to keep up with your business and what deductions you qualify for? Don’t stress! With the help of our team, you’ll never have to worry about these four often-missed business deductions at tax time or any others.

Schedule your free consultation today to get started discussing your next stress-free business plan. Continue reading our blogs to learn more about business financials and tax planning.

29 07, 2022

Tax Deductions vs. Tax Credits for Businesses: What’s the Difference?

2022-07-29T15:27:54-05:00July 29, 2022|0 Comments

Saving money is a good goal in business. Knowing the difference between tax deductions vs. tax credits for businesses is a good example of how doing a little math up front may save you more later.

What’s a tax deduction?

For starters, let’s look at what a tax deduction is. A tax deduction reduces your total taxable income. For instance, your new business has a taxable income of $70,000.

A small business tax deduction of $1,000 would bring your taxable income to $69,000.

What’s a tax credit?

On the other hand, a tax credit is a dollar-for-dollar discount. A tax credit directly lowers your tax bill by the specified amount.

For example, if you owe $35,000 in taxes, but you apply a $1,000 tax credit, your tax bill will then be $34,000.

There are certain tax credits that refundable, which can also help increase your tax refund.

What’s the difference?

In a nutshell, both tax deductions and tax credits can lower what you owe on a business tax return. The difference is in how they do it.

To simplify, a tax deduction saves you indirectly while tax credits are direct savings. The credit will save you instantly by lowering what you owe. Deductions save you by lowering what can be taxed.

Which is better?

Unfortunately, there is no cut and dry answer here. It depends. You can claim a tax credit. You can claim a tax deduction. In fact, you can do both.

But you can’t make two claims for the same expense. Thus, understanding tax deductions vs. tax credits for businesses will help you decide which will save you more.

A quick example would be in the case of education expenses. You can look at a variety of education-related tax credits that could reduce your tax bill by about $2,000 to $2,500.

Or, consider a tuition and fees tax deduction that could lower your taxable income by up to $4,000. This option could result in more money back on your refund.

Summary

Bottom line, it may help to talk to an expert when it comes to figuring out which tax deductions vs. tax credits for businesses are best for your business. If you are ready to crunch some numbers, start by calling us at 704.919.3226. Meanwhile, discover more small business tax tips and other industry news by reading our blogs.

29 06, 2022

3 Business Financial Reports Every Business Owner Should Know and Understand

2022-06-29T14:07:32-05:00June 29, 2022|0 Comments

Sometimes when it comes to business accounting, it’s good to start with the basics. Let’s review three business financial reports every business owner should know and understand as part of the essentials.

The basics

Before we jump into the first of three business financial reports every business owner should know and understand, we need to share the basic accounting formula.

Simply put, the accounting formula is Assets = Liabilities + Equity. To further clarify, we’ll briefly share what each element is.

First, assets refer to items such as bank accounts, fixed assets and accounts receivable. Secondly, liabilities include things like credit cards, long-term notes and accounts payable.

Lastly, equity is capital contributions, dividends and distributions. With these basics explained, we can move onto the first of the essential financial reports.

Balance Sheet

The balance sheet is a report that summarizes all of a company’s assets, liabilities and equity in two columns. The first column reflects assets with the second column showing liabilities and equity.

Generally, the balance sheet is created around the end of a specific time frame. For example, they are often produced quarterly or annually.

Ideally. total liabilities and equity should equal assets. Hence, the two columns represented on a balance sheet should match.

Income Statement

Next up, income statements. An income statement basically reflects the business’s income and expenses. The three main elements on this report are revenue, expenses and profit.

The income statement can be referred to as a profit and loss statement as well. Like the balance sheet, it is produced at a specific time such as monthly, quarterly or annually.

Projected Cash Flow Statement

Finally, the third must-have financial business report is the projected cash flow statement. Typically, this report illustrates a list of expected cash flow—both inflows and outflows.

Once again, it also involves a specified period of time. Usually, projected cash flow statements tend to reflect a 12-month period. Items included in the projected report are your opening balance, sales, expenses, uses of cash and a closing balance.

Summary

Now that we’ve covered the basics of three business financial reports every business owner should know and understand, are you left with more questions? That’s what we are here for! Schedule your free consultation today to discuss in greater detail these essential business reports and much more. For more industry news and guidance, keep reading our blogs.

27 05, 2022

S Corp vs. Sole Proprietorship Taxes: Explaining the Differences

2022-05-26T16:54:26-05:00May 27, 2022|0 Comments

Let’s get down to the business of starting a business. There’s much to consider before launching a new business, including how it’s structured. To get started, we’ll look at S corp vs. sole proprietorship and what makes them different.

What’s a sole proprietorship?

Basically, a sole proprietorship is owned and operated by you—the sole owner. In a way, this is business at its simplest. You are a self-employed business owner. All business assets belong to you. You make all the business decisions.

On the other hand is the big risk. You may be solely responsible for any damages caused by negligence. With sole proprietorship, there is generally no personal liability protection. If you decide sole proprietorship is best for you, you might want to consider liability insurance.

What’s an S corp?

A sole proprietorship can be organized as an S corporation with a sole owner. However, you would be considered a shareholder. But with sole ownership, you would still act as the president, executive and business manager.

The main difference between an S corp and sole proprietorship is the limited liability protection for shareholders. (There can be up to 100 shareholders; limited to individuals) Generally, shareholders are not responsible for corporate debts.

However, there are loopholes. That is one among many reasonswhy working with a team of experts who are familiar with the ins and outs of setting up a business is a good idea.

At Todd Greene, C.P.A., we start with listening to your needs. Then we offer guidance, answer your questions and work together to create what’s best for you and your business.

Tax time

In terms of taxes and S corp vs. sole proprietorship, think of it this way. As an S corp, the business owner pays FICA and income taxes on a “reasonable salary” and income taxes on distribution.

With a sole proprietorship, the business owner pays self-employment taxes and income taxes on the net profit of the business. Sole proprietor tax reporting is more streamlined and simpler.

Another important point is that LLCs can be taxed as either S corps or sole proprietorships.

Below is a table comparing the two in a basic scenario to help clarify the tax differences between them.

S corp vs. sole proprietorship

Summary

When it comes to S corp vs. sole proprietorship, this is just the tip of the iceberg. If you are ready to discuss the details, we are ready to listen. It starts with a free consultation. Keep reading our blogs for more money matters, tax planning and other financial information for businesses and high net worth individuals.

28 04, 2022

Exploring Todd Greene, CPA’s New Business Planning Services

2022-04-27T21:05:52-05:00April 28, 2022|0 Comments

Are you kicking around the idea of starting your own business? If you are ready to take your idea next-level, start by exploring Todd Greene, CPA’s new business planning services before jumping in the game!

Starting a new business

We get it. Starting a new business can be exciting and thrilling, but it can also be overwhelming. We’ve all heard the old saying, “The devil is in the details.”

That’s why exploring Todd Greene, CPA’s new business planning services should be number one on your to-do list.

A solid foundation

Our team of experts is ready to consider every detail of your proposed business. Then we can begin to help you get organized.

This includes deciding how you want to structure and legally set-up your new business.

We can review and explain the various types of business entities and what each would mean for you and your business in terms of taxes and more.

Strategic tax planning

Again, our experts stay on top of the latest developments and regulations when it comes to new business ventures.

We can help you maximize your profits while minimizing your tax liabilities, for instance.

Setting up accounting services

Start your new business on the right foot when you know we’ve helped you correctly structure important aspects such as payroll, Social Security and insurance from the beginning.

Securing funding

Struggling to secure funding? We can help with that too. From reviewing your business plan to structuring your existing finances, we’ll help you present the information clearly to those who can help you move forward.

Growing your business

Did you know you can incorporate in a state other than your own? We can explain why this might be a good idea—and we can help you expand your business to other geographic areas!

Summary

Finally, exploring Todd Greene, CPA’s new business planning services can help you find short-term solutions with long-term goals in mind. We offer free, confidential consultations for new clients. Call us today at 704.919.3220 to learn more about our new business services and scheduling your consultation.

For more money matters and tax planning, keep reading our blogs!

28 03, 2022

Types of Business Entities and Which One Is Right for You

2022-04-06T14:25:27-05:00March 28, 2022|0 Comments

Starting a new business is exciting—but it can also be overwhelming. You may have the name, concept, and logo all handled, but like many business owners, you may wonder which legal entity you should classify your company as. If you need help, this blog on the types of business entities and which one is right for you can help you start the incorporation process.

C Corporation

C corporations require the business to pay taxes. However, owners do not have liability.

A C corporation can have just one employee, but there are no limits on how many employees it can hire. So, if you see your business getting bigger and bigger, you may want to think about this option.

S Corporation

For those who like some of the main appeals of a C corporation, such as no owner liability, they may also want to consider an S corporation. It does have a major difference, though.

If you own an S Corporation, you should know that it does not need to pay any taxes. Still, there is a financial responsibility for shareholders. They will need to ensure that the income they earn from an S corporation is reflected on their filed individual tax returns.

Finally, it can have as few as one employee, or as many as 100. So, you could have a one-person business, a small business, or room to expand. Each employee must also have U.S. citizenship or permanent residence in the country.

LLP (Limited Liability Partnership)

This is the only option that requires your business have more than one member. After all, it is a partnership!

However, you do have a choice as to what type of LLP you will run. You can opt for a general partnership, but be aware that type will come with extra responsibility, since it requires personal liability for the company. A limited partnership, on the other hand, doesn’t have any liability. So, its employees must pay self-employment and personal taxes.

There’s one other big difference between the two. General partnerships allow management to have authority, while limited partnerships do not. It’s good to thoroughly explore the pros and cons of both types before making your decision. We can always help with that if you have any questions or concerns!

LLC (Limited Liability Corporation)

As you explore the types of business entities and which one is right for you, you might want to consider an LLC. Like the name suggests, the company’s owner is not personally liable for taxes. Instead, its employees must pay personal or corporate taxes in addition to self-employment taxes.

If you aim to employ contracted workers, this choice could suit your business’s needs. Or, if you just want to employ yourself, you can choose to do that as well. You only need one person to form an LLC, though you can hire as many people as you want.

Summary

Now that you know more about the types of business entities and which one is right for you, you’re on track for an incredible journey. Still have questions? Don’t stress! Todd Greene, CPA, can assist you with classifying your business.

And, if you need any additional support along the way, we can also handle taxes, payroll, and more. Reach out to us to get started. As for learning more about business financials and tax planning, browse our blog here.

28 02, 2022

Tax Audit Defense: What It Is and How It Can Help

2022-02-24T23:31:35-06:00February 28, 2022|0 Comments

Tax time. For some it can be a time of uncertainty, but it doesn’t have to be. Professional accounting firms can help. Some firms, like ours, go so far as to include tax audit defense, which we’ll explain below!

What it is

Perhaps a good way to think about a tax audit defense is a “probably not, but just in case.”

To clarify, tax audit defense means your professional accounting team can be by your side and help you through an audit should you receive a notice from the IRS or a state agency.

But this courtesy only extends to those who had the firm file on their behalf to begin with.

While we can’t predict the chance of your tax return getting audited, we can say if we file your return, you receive $1,000,000 Tax Defense Audit™ as well as Identify Theft Protection for our individual 1040 clients. These added bonuses last for the entire tax year.

How it can help

Being a Protection Plus partner means a lot of things—including $1 million in audit defense services used to help find a resolution in the event of an audit. It means having an experienced and qualified team on your side.

In a nutshell, we offer all of our clients the extra protection of tax audit defense as part of their returns.

So, you can rest easy when you let us handle your tax returns and filing up front. Then you can focus on growing your business, enjoying more you time and all the other important things in your life.

And on the rare chance, your tax return gets audited, we’ll invest up to $1,000,000 in services to help resolve it.

Basically, we can help with all the taxing details!

Questions?

This is what we are here for. In fact, we love this stuff! If you have questions about filing taxes, tax audit defense or other accounting inquires, get in touch with us! You can find us on Facebook, Instagram and LinkedIn.

Feel free to send us an email at info@toddgreenecpa.com or call the office at (704) 919-3220 to schedule your free consultation if you prefer.

Summary

Finally, discover more about our firm—who we are and what we do—among other financial news and tips when you continue to read our blogs!

28 01, 2022

Tax Tip: The Home Office Deduction for Small Business Owners

2022-01-26T21:18:25-06:00January 28, 2022|0 Comments

Have you recently started your own home-based business or transitioned to primarily working from home? The home office deduction for small business owners may be something you qualify for!

What to know

Taxpayers who use part of their home or a separate structure on their property as their primary place of business may qualify for the home office deduction for small business owners.

For the record, “home” in this case applies to a house, condo, apartment, mobile home, houseboat or similar dwellings. The home office deduction for small business owners is also available to both homeowners and renters.

Next, determine eligibility by seeing if you meet the two basic requirements. First, you must use a designated area of your home for regular or exclusive business use.

To clarify, you can’t claim the home office deduction if you bring work home from the office and complete it in the family den.

The space is not used exclusively, or regularly, for business purposes only. The family also uses the den for recreational activities.

This brings us back to the other basic requirement. Secondly, the space must be the principal place of your business.

However, it doesn’t necessarily have to be the only place you conduct business.

For example, you may have an office away from home. But if you still meet with clients or customers and conduct regular business from a specific area of your home, you may be able to deduct a portion of expenses.

Methods to calculate

There are two basic methods used to calculate the home office deduction for small business owners. For starters, there is the simplified option.

This option significantly reduces the burden of recordkeeping. It allows qualified taxpayers to multiply a specified rate by the square-footage of your home office.

In this case, the designated rate is $5 per square foot. The maximum amount of square footage you can claim with the simplified option is 300.

Another way to determine eligible expenses is to use the regular method. With this method, taxpayers figure out the percentage of the home used for business activities to deduct indirect expenses. Direct expenses with proper records may be deducted in full.

Summary

Now that we shared the basic requirements of eligibility and methods of calculating deductions, are you asking yourself if it applies to you? A good way to find out if this applies to you is to schedule a free consultation with us. A good way to find more financial news, tax guidance and more is by reading our other blogs!

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