Just like people, businesses need yearly checkups. Follow these seven suggestions and take some time this December to do a year-end business health check!
Business owners and managers spend most of their time monitoring operations and dealing with everyday problems. But just as an annual checkup from your doctor helps monitor and manage your personal health, an annual checkup can do the same for your business.
Here are seven checkup tasks that you should make time to do every year. These are important for your long-term business health and personal success:
Review your business insurance coverage. Don’t just automatically write a check to renew your insurance policies when they come due. Instead, you should sit down with your insurance agent every year. Review your business operations, focusing on any changes. Discuss types of risk that could arise. And ask about new developments in business insurance.
Look at your business tax strategy. Consider adjusting taxable earnings for the year, perhaps by accelerating expenses or delaying income at year-end. If you’re a cash-basis taxpayer, you could boost 2017 deductions by declaring and paying bonuses in December rather than in early January. Also, you may be able to defer invoices or make early purchases to reduce your 2017 tax bill.
Survey your customers. An annual customer satisfaction survey is a great way to assess performance, get insight on potential new products or services and to let your customers know how much you value their business.
Determine your marketing effectiveness. Are your current methods and channels working well, or are you simply doing what you’ve always done?
Update succession planning for your business. Review your succession planning annually. You should have a specific plan for each key manager position, including yourself. Be prepared for a short-term absence or a permanent vacancy. Your plan may include promoting from within or recruiting externally.
Review your business banking relationships. Every year you should go over your cash balances and banking relationships with your controller, CFO or accountant. Then meet with your banker. Ask about new products or services that could help your company. Address any service concerns or problems you might have had. And look for ways to boost interest earned and improve cash flow.
Update your personal estate planning (if needed). If you’re a business owner, your company is likely to be a significant part of your estate. Your company, your personal circumstances and the tax laws are continually changing. You should take time each year to make sure your plans are current.
If you are serious about improving your business, consider a yearly assessment of your operation. Contact our office today to learn more about how you can put your business in the best tax position possible for 2018.
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While the clock is ticking down to 2018, you still have a few weeks left to make some last minute tax moves. Take a look at these five tips and save a little more this year.
Check the amount of 2017 tax you have prepaid through withholding and quarterly estimates ASAP. If you’ve underpaid, consider increasing your withholding before year-end. Withholding is considered to have been paid evenly throughout the year. This is to help prevent you being charged underpayment penalties for 2017.
Make sure you have the correct tax status. If you got married or divorced this year, be aware that your marital status as of Dec. 31 determines your tax status for the whole year. If you are in the process of a marital status change, know that altering the dates of a year-end event to the new year may affect your taxes.
Plan for losses. Check your basis in any S corporation in which you are a shareholder and where you expect a loss this year. Be sure you have sufficient basis to enable you to take the loss on your tax return.
Use this year’s annual gift tax exclusion. If you make annual gifts to family members or others, make sure you complete your gifts for 2017 by Dec. 31.
Consider equipment purchases before Dec. 31. Taxpayers must usually deduct the cost of business property over several years. The Section 179 election allows taxpayers to expense up to $510,000 of new and used property purchased and put into service in 2017. Property such as machinery, equipment and furnishings usually qualify. Be careful with special rules that apply to vehicles and personal computers.
Contact our office today if you’d like more last minute tax moves or have questions about year-end tax savings. We are always here to answer your questions and serve your tax and financial planning needs!
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There are a lot of new things to get used to when you change jobs, from new responsibilities to adjusting to a new company culture. You may not have considered the tax issues created when you change jobs. Here are tips to reduce any potential tax problems related to making a job change this coming year.
ONE: Don’t forget about in-between pay. It is easy to forget to account for pay received while you’re between jobs. This includes severance and accrued vacation or sick pay from your former employer. It also includes unemployment benefits. All are taxable but may not have had taxes withheld, causing a surprise at tax time.
TWO: Adjust your withholdings. A new job requires you to fill out a new Form W-4, which directs your employer how much to withhold from each paycheck. It may not be best to go with the default withholding schedule, which assumes you have been making the salary of your new job all year. You may need to make special adjustments to avoid having too much or too little taken from your paycheck. This is especially true if there is a significant salary change or you have a period of low-or-no income. Keep in mind you’ll have to fill out a new W-4 in the next year to rebalance your withholding for a full year of your new salary.
THREE: Roll over your 401(k). While you can leave your 401(k) in your old employer’s plan, you may wish to roll it over into your new employer’s 401(k) or into an IRA. The best way is to get your retirement funds transferred directly between investment companies. If you take a direct check, you’ll have to deposit it into the new account within 60 days, or you may be assessed a 10 percent penalty and pay income tax on the withdrawal.
FOUR: Deduct job-hunting expenses. Tally up your job-seeking expenses. If they and other miscellaneous deductible expenses total more than 2 percent of your adjusted gross income for the year, you can deduct them on an itemized return. This includes things like costs for job-search tools, placement agencies and recruiters, and printing, mailing and travel costs. A couple caveats: you can only use these deductions if your expenses were to search for a job in the same industry as your previous job, and you were not reimbursed for them by your new employer.
FIVE: Deduct moving and home sale expenses. If you moved to take a new job that is at least 50 miles farther from your previous home than your old job was, you can also deduct your moving expenses. There’s another benefit for movers, too. Typically, you can only use the $250,000 capital-gain exclusion for home sales if you lived in your primary residence for two of the last five years before you sold it. But there is an exception to the rule if you sold your home to take a new job.
Finding a new job can be an exciting experience, and one that can create tax consequences if not handled correctly. Feel free to call for a discussion of your situation.
Giving on a yearly basis could trim both your estate and income taxes. First, there’s the annual exclusion for gifts. Currently, you can give $14,000 annually to any number of recipients without paying federal gift tax. Married couples can double this amount by gift-splitting – a gift of $28,000 from one spouse is treated as if it came half from each.
Why giving is a two-way street
Gifts do more than help out children who need the money. They also reduce your estate so your estate will pay less estate tax upon your death. Apart from annual gift giving, you can currently transfer (during your lifetime or through your estate) a total of $5.49 million with no estate or gift tax liability. On amounts above this threshold, you or your estate will be faced with taxes at the current top rate of 40 percent. So a consistent program of annual gift giving might create substantial tax savings.
Note that gifts to individuals do not entitle you to an income tax deduction. A gift isn’t a charitable contribution. Conversely, a gift doesn’t constitute taxable income to the recipient. Gifts of income-producing property may, however, reduce your taxable income. Once you’ve given the property away, the recipient (not you) receives the income it produces and pays any income tax due on it.
Giving can be easy
One advantage to annual gift giving is that it is relatively simple to do, especially if you’re giving away cash. Another advantage is flexibility. You’re not locked into anything; you can see how much you can afford to give away each year. You can give away anything – cash, stock, art, real estate, etc. Valuation is the fair market value on the date of the gift. Subsequent appreciation, if any, belongs to the recipient’s estate (not yours).
Before you give away assets, be sure you will not need them yourself to provide income in later years. Consider the impact inflation will have on your resources.
Proper planning is essential in this area; get professional assistance before you do any gift giving. Contact our office if we can help.
Planning for emergencies is like buying insurance: you pay into an account and hope you’ll never have to use it. But life happens. Cars break down. Roofs leak. Kids get injured. Having money in the bank to cover those unexpected expenses can reduce stress and keep you from relying on credit cards and loans to make ends meet.
Here are four easy and effective ways to establish and maintain an emergency fund.
Start small. Many financial planners advise setting aside enough money to cover at least six months of expenses. That’s a worthy goal. But for many people it’s also a daunting task, an objective that will take years – not months – to achieve. So set a realistic and achievable amount for your emergency fund, and then get in the habit of contributing regularly. Then don’t touch the account except for real emergencies. Leave it alone and it will grow.
Pump it up. When you get a bonus, cost-of-living adjustment, tax refund, or windfall, consider using a portion of that money to bolster your emergency account. Fight the temptation to increase spending with every new dollar that comes along.
Make it automatic. With online banking, it’s easy to set up routine transfers from your regular checking account to a separate savings account. If allowed by your employer, allocate a portion of each paycheck to an emergency fund. Consider establishing the account at a financial institution other than your regular bank. As the saying goes, “Out of sight, out of mind.” If the money never shows up in your regular checking account, you’ll be less likely to use it for everyday spending.
Sell stuff and slash expenses. Think about selling some of your unused stuff through yard sales, online auctions, or consignment shops. This can generate cash to bolster your emergency fund. Take a hard look at your budget and consider everything fair game: expensive dinners, vacations, cable television, and so on. You may find that a surprising number of dollars can be freed up and stashed away in savings. The key, of course, is to direct those savings – immediately, if possible – away from regular spending and into your emergency account.
If you’d like more ideas for setting financial goals or building up an emergency fund, give us a call.
Single people have different financial considerations than do those who are married. But this doesn’t mean they should overlook financial planning.
Whether you are a lifelong single person or you found yourself single through divorce or the death of your spouse, you have your own financial considerations and complications. Unfortunately, many single people overlook financial planning. Don’t make this costly mistake.
Financial and estate planning help you protect your earnings and your property. For single people who do not have someone to fall back on, planning for an unexpected financial setback is especially important.
Protecting your earnings (your ability to provide basic needs for yourself and your dependents) should start with creating an emergency fund that could pay for your basic living expenses for six to twelve months. The fund should be separate from your other investments, readily accessible, and reserved solely for emergency use.
Insurance is an important factor when it comes to protecting your income. Disability insurance provides a steady income stream when you’re sidelined by illness or injury. Employers frequently offer disability policies, but they are also available through private insurers. Life insurance may not be a priority for you if you do not have dependents, but if anyone relies on you financially, a term life insurance policy would offer an income stream to your loved ones in the event of your death.
Asset protection is more complex. Through powers of attorney, you can appoint trustworthy people to make financial or medical decisions for you in the event you become incapacitated. By creating a will (and perhaps a trust) and naming beneficiaries for your IRA or 401(k) plans, you can ensure that your assets will go to the individuals or charities of your choice.
Your financial planning needs are unique. If you’d like to learn more about protecting your finances and property, let’s talk.
