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Tax Tips

28 03, 2023

6 Strategies to Survive a Cash Flow Crisis

2023-03-22T16:27:53-05:00March 28, 2023|0 Comments

Sometimes there are ups and downs in business, just like in life. However, knowing what to do in a cash crunch can make or break you. These six strategies to survive a cash flow crisis will help you better manage the highs and lows.

What is cash flow?

Before we look at strategies to survive a cash flow crisis, let’s review what cash flow actually is. In a nutshell, cash flow shows how much money is coming in and how much money is going out.

You have a positive cash flow when you have more money coming in than going out. If you are struggling to cover your business expenses, your cash flow is negative.

That’s why planning for the expected and unexpected is good business practice. But even the best planning can go awry at times, which is why these strategies to survive a cash flow crisis may be useful.

Six strategies to survive a cash flow crisis

There are several tactics small business owners can apply before and during a cash flow shortage to help.

Assess your cash flow.

For starters, take a close look at your cash inflow and cash outflow to get a clear picture of your current financials.

Save your cash.

Review your fixed expenses closely. See where you can cut costs and conserve money, including rent, utilities, insurance and wages.

Negotiate lower prices or extended payment terms with suppliers and vendors, if applicable.

Create a cash flow budget.

Creating a budget is a must for managing your cash flow. Not only will it help you track your income, but it will also help you spot potential issues before they arise.

Manage your inventory.

Be mindful of your inventory. What is selling well? What isn’t? Consider offering specials and discounts to help move products that sit around longer.

Find new sources for cash flow.

Government grants, low-interest loans and financial investors are all possible sources of new cash flow.

Adjust your payment terms.

If you depend on customers’ payments for your cash flow, don’t wait around to send out invoices. It may help to offer incentives for early payments or let customers pay in installments if needed.

Summary

Finally, proper bookkeeping is a good way to avoid cash flow problems up front. Accurate cash flow reports and projections can give you enough time to make needed corrections before cash runs low. Looking for someone to help create your initial budgets and more? Contact us for a free consultation. For more industry news, keep reading our blogs.

17 02, 2023

Update: How to File the Employee Retention Credit with 2022 Returns

2023-02-17T20:11:50-06:00February 17, 2023|0 Comments

Did you know you can still claim the Employee Retention Credit if certain qualifications are met? But there is a limited window to save. If you are a small business owner, this overview of how to file the Employee Retention Credit with 2022 returns is a must-read.

What is the Employee Retention Credit?

Before we talk about how to file the Employee Retention Credit with 2022 returns, let’s first review what that is. The credit applies to wages and benefits distributed between March 13, 2020, and September 30, 2021.

To summarize, eligible businesses must meet specific qualifications. For instance, did your business have to partially or fully shut down due to the COVID-19 pandemic? Did your business experience a major decline in gross receipts in 2020 or the first three quarters of 2021?

Other qualifications could include that your supply and vendor chains were affected by the pandemic, the number of services you could provide were limited, business travel and on-site client visits were limited, or your business hours were altered.

What can your business claim?

Looking back, your business can retroactively claim up to 50 percent of the wages paid to full-time employees in 2020 and 70 percent in 2021.

As a tax credit, it is deducted from taxes owed and is refundable.

How to claim the Employee Retention Credit

Qualified business owners should file an amended payroll tax return to claim the credit. The filing must be completed within three years of the initial filing date. To clarify, you can claim 2020 expenses until April 15, 2024. The deadline to claim 2021 expenses is April 15, 2025.

The tax credit needs to be filed using Form 941-X. It can be submitted the month after each fiscal quarter. Or, it can be added as an amendment for under or over reporting estimates on your federal returns.

Summary

Another good way to find out how to file the Employee Retention Credit with 2022 returns is by working with a trusted tax professional like Todd Greene. Eliminate the guesswork and confusion by working closely with professionals who can help guide you through the process. Contact us to schedule a free consultation. In the meantime, continue reading our blogs for more industry news and tax prep tips!

27 01, 2023

5 Tax Season Preparation Tips

2023-01-23T22:15:02-06:00January 27, 2023|0 Comments

It’s that time of year again—tax time. Whether you’re doing it yourself or hiring a tax planning professional, like Todd Greene, tax prep can help make the process smoother. Here are five tax season preparation tips to help you get through this season with ease.

2023 tax season filing dates

First, it is important to know all the key filing season dates. Here are the 2023 dates to keep in mind this tax season.

  • January 13: IRS Free File opens.
  • January 17: Due date for tax year 2022 fourth quarter estimated tax payment.
  • January 23: IRS begins the 2023 tax season and starts accepting and processing 2022 tax returns.
  • January 27: Earned Income Tax Credit Awareness Day to raise awareness of valuable tax credits available to many people-including the option to use prior-year income to qualify.
  • April 18: National due date to file a 2022 tax return, request an extension and pay tax owed.
  • October 16: Due date to file for those who requested an extension on their 2022 tax returns.

Organize your tax paperwork

Currently, we are at the beginning of tax season. Businesses quickly began receiving and distributing essential tax documents during this time.

Making sure you have all your paperwork gathered and organized before filing will help you avoid surprises or delays later. A tax planning professional can help you categorize your documents and make sure everything is in place.

Understand the deductions and credits you qualify for

Tax deductions and credits are a vital part of the filing process. Deductions can reduce the amount of your income before you calculate the tax you owe, while credits can reduce the amount of tax you owe or increase your tax refund.

Get a better understanding of tax deductions versus tax credits by reading our blog about it.

For businesses, there are several business tax credits and deductions available. Be sure to check or ask your tax preparer before filing, and check out our blog, 4 Often-Missed Business Deductions at Tax Time.

Itemize business expenses

Another one of our tax season preparation tips includes itemizing your business expenses. Having your expenses itemized and categorized before tax day can save you time.

When working with an accounting team, they can help you claim the maximum benefit from your expenses. Check out the business expenses explainer from the IRS to learn more about what expenses can be claimed.

Know your state’s tax issues

Knowing your state’s tax issues is a key part of filing taxes for your business. Some states take out loans from the federal government to meet their unemployment benefit liabilities. If your state has taken out loans but not repaid them, there will be a reduction in the credit against the Federal Unemployment Tax Act rate.

This means that employers in those states have to pay more. There are a number of states affected by this, including North Carolina.

Having a tax planning professional helps during this time. They will prepare your state return as well as your federal return.

Summary 

Searching for a professional to help with your business tax prep? Contact Todd Greene! Please take note of our tax season preparation tips. These helpful reminders are sure to help make filing day a breeze.

Finally, continue reading our blogs to stay informed and up-to-date on more financial news.

28 12, 2022

7 End of Year Tax Planning Tips for Small Businesses

2022-12-28T15:17:20-06:00December 28, 2022|0 Comments

Put down the gifts. Let’s get ready to wrap up another year in business. These seven end-of-year tax planning tips for small businesses will help you finish strong and set you up for future success!

Get organized now.

Don’t wait until the last minute to organize your records. One way or another, planning ahead and getting prepared before filing time will pay off.

Make time in your schedule throughout the next few days this December to ensure your year-end tax planning is handled.

Review your statements.

Part of your year-end review should include looking over your financial statements.

Not sure what statements we’re referring to? Don’t panic! Read our blog, 3 Financial Reports Every Business Owner Should Know and Understand, to get started.

Make necessary purchases.

The end of the year is a good time to make certain tax-deductible purchases. Consider stocking up on necessary office supplies, equipment, or a company vehicle, for instance.

Know your tax deductions and tax credits.

Do you understand the difference between a tax deduction and a tax credit? Find out here and determine how they apply to your business.

Be sure to check out our blog, 4 Often-Missed Business Deductions at Tax Time, for more helpful tax deduction tips.

Re-evaluate your retirement plan.

This is one of the end-of-year tax planning tips for small businesses that may come as a surprise. However, it’s a good time to consider your options for establishing a retirement plan if your company currently does offer one.

Or, look over your retirement plan and make sure you are headed in the right direction.

Evaluate your accounting processes.

Again, the end of the year is the perfect time to review. This time, we’re referring to your accounting practices.

How you are managing your records? Do you manually enter information on a spreadsheet? Are you using accounting software, working with an accountant, or both?

No matter what your recordkeeping methods are, closely examining them to see if they are working in your best interest is a good idea. Then you can make any needed adjustments for next year.

Work with a tax professional.

There are several benefits to working with a tax professional. Higher tax refunds, lower liabilities, more profitability, more time, and peace of mind are just a few examples.

Not sure where to begin? Talking to an expert (like us!) is a good place to start your tax planning journey!

Summary

Last but not least, when it comes to end-of-year tax planning tips for small businesses, stay proactive. Keep your records organized. Book your free consultation with us. Those are just a few ways to start 2023 off with a bang! For more tax tips, keep reading our blogs. Wishing you all a happy, healthy, and prosperous new year!

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.

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 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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