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FINANCE |
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Discover the Secrets to Surviving Income Tax Reporting |
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Many business owners are concerned about paying their income tax liability, but far fewer are capable of accurately calculating their tax obligation. Although the burden of tax return preparation is best outsourced to professional accountants, entrepreneurs can take steps to ensure timely and thorough income tax reporting. After all, tax professionals can only know the financial details about your business that you convey to them.
Start by choosing a suitable system for maintaining your business records. This untangles the taxable events of an entire year. The use of technology is typically beneficial. Even a simple electronic spreadsheet of business revenue and expenses permits a computer to perform mathematical functions and minimize human error.
And this is far superior to a haphazard pile of receipts. The spreadsheet provides totals for annual revenue collected and amounts spent on each category of business expense.
Accounting software is even better because it balances revenue and expenses to cash sources, such as bank accounts and credit cards. This double-entry accounting system ensures you haven't missed recording any transactions. However, professional assistance in knowing how double-entry bookkeeping works is crucial to obtaining accurate output from accounting software.
If you do have regular bookkeeping procedures, aim to examine and understand all the components that make up your financial statements. Go over any uncertainties with your bookkeeper to tie up loose ends.
Lastly, be at the starting line with your accountant to finish your tax return on time, obtain tax-related bookkeeping adjustments, and get suggestions for improvement in the year ahead. |
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HOT BIZ TRENDS |
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Help Clients with Reasons to Celebrate Every Month |
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Are you challenged to produce marketing content that is fresh and relevant? Monthly marketing themes offer ways to humanize your business and connect with customers. There are events and reasons to celebrate practically every day of the year.
In February, of course, love is in the air and on everyone’s mind (Valentine’s Day, Feb. 14), so it’s a perfect time to show affection and gratitude to your customers.
Heart health is another angle that’s appropriate in February. Also, don’t forget Groundhog Day (Feb. 2) and Mardi Gras (Feb. 25).
March ushers in spring (Mar. 20) and an opportunity to hail World Compliment Day (Mar. 1) and Women’s Day (Mar. 8). In April, you might get into the spirit of April Fool’s Day (Apr. 1), or you could honor Vitamin C Day (Apr. 4) or Earth Day (Apr. 22).
In addition to Mother’s Day (May 10), May provides a chance to celebrate and have fun with Cinco de Mayo (May 5) and International Hamburger Day (May 28).
Some lesser-known events in June that might have relevance to your business include Cancer Survivors Day (June 7), Fudge Day (June 16), and Social Media Day (June 30).
As you can see, the calendar offers numerous opportunities to market your business throughout the year. Don’t forget to make the most of Fight Procrastination Day (Sep. 6) as well as World Kindness Day (Nov. 13). Plan content around themes that are relevant to your business or your industry and be sure your content supports your business’s long-term goals. |
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MARKETING |
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Email Campaigns that Boost Your Business |
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Retail Dive reports that today's consumers will often go out of their way to shop at small and local businesses, especially if they have developed a relationship with the companies, their owners, or their employees. One of the easiest and most cost-effective ways to hone this personal connection is through email marketing.
A welcome email can serve as the first handshake with a new customer. Encourage patrons to sign up to receive your emails by offering a discount code, access to exclusive offers or product updates, or how-to tutorials. Then take advantage of the opportunity to share your story and emphasize what makes your business special and unique.
Follow up with emails in which you introduce and promote your top products or services. Once someone has established a purchasing pattern, make personalized recommendations, introduce related products, or offer ancillary products or services that might interest them.
Consider creating an email campaign that features user-generated content, such as posts, tweets, and images created by your customers. As more people interact with you online, a sense of community will develop that further encourages them to stay involved and connected to you.
Don't forget to implement a follow-up program that automatically sends a thank-you email whenever people interact with your brand. Reach out whenever a customer makes a purchase, requests a return, or posts a review. Even if they had a problem with your product or service, reaching out and following up via email lets them know they are valued. |
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FINANCE |
| So ... When Can I Deduct a Business Loss? |
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If you think a business loss can always be deducted on your income tax return, you might be in for a surprise. Beware that there are rules that limit this deduction. The bottom line is that the IRS insists taxpayers risk their own money in an enterprise when claiming a tax-deductible loss. Consider the following limits as you prepare to deduct a loss.
At-Risk Limit
At-risk limitations apply to individual sole proprietors, partners, and shareholders in S corporations. If your business has more allowable expenses than income, the excess money spent is limited from the deduction on your tax return. You must be losing your own money or borrowed funds that you are personally liable to repay.
Borrowing money from a friend or family member may result in business funds for which you are not at risk. To qualify as being at risk, any loan should have a formal promissory note that bears interest and has a specified due date for repayment.
Keep track of how much money you invest in your business. If you do have a deductible loss, it reduces the amount you still have at risk. Any money or other property you withdraw from your company for personal use decreases your at-risk amount.
A loss of other people's money that is denied as a tax deduction carries over to subsequent years. That carryover loss can be deducted against future year profits.
Shareholder Basis Limit
Business owners of S corporations are confronted by an even greater burden known as the basis limitation.
Meticulous records for each shareholder are necessary to account for cash and property contributed to an S corporation. Added to these amounts is a shareholder's proportional share of profit. The sum comprises the shareholder's stock basis in the S corporation. But some of the profit is typically distributed to shareholders. These distributions reduce the stock basis.
Additionally, corporate profit for tax purposes is not profit in your bookkeeping. Some expenses paid by a business are not deductible on the income tax return. Nondeductible expenses reduce shareholder basis, just like distributions of profit.
Moreover, certain types of income and deductions are not included in an S corporation's profit. Capital gains, for instance, retain their distinctive character and pass through to S corporation shareholders as a category of income that's different from business profit. A Section 179 tax deduction is also separate from other business expenses. These and more are additions or subtractions from a shareholder basis.
Lastly, shareholders may loan money to their S corporations and establish "loan basis" as a different figure from stock basis. But loans are only valid when they bear interest. A minimal amount of interest must be calculated, even if it's not being paid every year.
The upshot: losses triggering negative amounts of basis are nondeductible. This typically arises from borrowing to acquire fixed assets, such as machinery or equipment. When the cost of these items is rapidly deducted as depreciation, the business has a loss. But the loan still has an unpaid balance. The loss reduces shareholder basis.
Keep in mind that nondeductible losses carry over to future years. They are deducted when basis is restored by a shareholder's cash investments or loans to the company or by future profit. |
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Gold Gerstein Group
505 Pleasant Valley Avenue
Moorestown NJ 08057
856-727-0100 Office
856-727-0772 Fax |
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| www.g3cpa.com |
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| info@g3cpa.com
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| How to Win Big in Today's Economy |
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| The altered economic landscape presents innovative and nimble businesses
with opportunities to thrive. |
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Find out how by requesting my free report
"How to Win Big in Today's Economy" by
replying to this email. |
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| Just reply to this email and I'll send it right out to you. |
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| Quick Quiz |
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Each month I'll give you a new question.
Just reply to this email for the answer.
What U.S. state produces the most roses for Valentine's Day? |
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| Worth Reading |
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How to Start a Podcast: Every Single Step
By Colin Gray |
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The Podcast Host
Podcasts are now available about virtually anything and everything. For podcast creators, they are a versatile medium, allowing creativity and the exploration of topics in an in-depth way. They also allow engagement with audiences (and potential clients) in a personal way. But they’re also a lot of work. This 18-chapter guide walks you through creating a podcast, from idea generation to launch to promotion.
What Is the Gig Economy? How It Works, Benefits, and More
By Angela Stringfellow
Wonolo
The term "gig economy" is often thrown about, but if you need a refresher about its importance, check out this article. It outlines different types of freelancers and freelance arrangements, such as having one’s entire income come from gigs or pursuing gigs in addition to full-time employment. The article also summarizes the benefits of such arrangements and things to be mindful of if you’re considering joining the gig economy, either as a worker or an employer.
Have a Seasonal Business? 4 Tips for Year-Round Profitability
By Saige Driver
Business News Daily
Businesses exist all year, even if most of their profitable activities are restricted to one season. Success in this seasonal environment requires more than following a simple budget. As this article outlines, it involves being creative about how to repurpose your skills, employees, and physical assets throughout every season.
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LINKS YOU CAN USE
This Month - Business Insurance |
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Protecting your company with the right insurance coverage is a vital aspect of business management. But what type of insurance do you need, and how much coverage is necessary? Use the following links to find out what you need to know about business insurance.
Start here for a general overview of business insurance:
Get Business Insurance
Get the scoop on BOPs (business owner policies), a common commercial insurance solution:
Understanding business owners policies (BOPs)
Exactly what types of insurance policies do you need? Find out here:
The 9 Types of Small Business Insurance Coverage You Need
For further insight, check out these 25 insurance tips to use when starting a business:
25 Expert Insurance Tips When Starting a Business
Here, insurance experts share what mistakes to avoid regarding business insurance:
Top 25 Small Business Insurance Mistakes to Avoid
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