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TAXES |
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Self-Employment Taxes: Watch Out for the Double Whammy |
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Freelancers and small-business owners alike are required to make quarterly estimated tax payments. If you're in this boat, you've probably noticed that Q1 estimated payments have the same deadline as the tax return for the previous year. If you owe more tax for the previous year, plus an estimate for the current year, this date can loom large on the calendar.
Fortunately, you can take steps to make these tax payments go smoothly. A good tax accountant can prepare your quarterly forms to send with estimated tax payments. Additionally, he or she can help complete tax returns on time so your estimated tax forms are ready when the first payment is due.
To estimate your tax for this year, your accountant can use the prior year as a guideline. In fact, the IRS permits you to avoid an underpayment penalty by paying estimated tax payments the current year that are equivalent to your tax from the prior year.
A byproduct of this "safe harbor" method is that you might eventually owe more tax (without penalty) if profit is higher in the current year than it was in the previous year.
To avoid this additional payment in Q1, your accountant can use an alternative process of estimating this year's tax by projecting current-year profit. This makes accurate current-year records essential, so an optimal forecast of this year's profit can be made. This includes up-to-date tracking of business revenue and expenses. In other words, don't wait to identify your profit for this year until the tax return is due next year. Remain in regular contact with your accountant in order to manage these numbers and avoid surprises at the end of Q1. |
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HOT BIZ TRENDS |
| Small Businesses Go Big with Augmented Reality |
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According to Wikipedia, "augmented reality (AR) is a live direct or indirect view of a real-world environment in which elements are augmented (or supplemented) by computer-generated sensory input such as sound, video, graphics or GPS data."
Unlike virtual reality, which creates an entire virtual environment, augmented reality layers in existing reality to create a virtual experience.
For example, a contractor, real estate agent, or interior designer can use AR technology to take clients on an interactive 3D tour to demonstrate what an interior, a renovation, or a home improvement project might look like when completed.
In retail, AR technology enables try-and-buy experiences in which customers can view items, virtually try on clothes, and even customize products using videos and image overlays.
AR apps can take potential travelers on virtual tours, showing computer-generated views of cities, hotels, and potential travel sites. They can also provide personalized itineraries, maps, and recommendations about restaurants and points of interest.
Using AR, a customer can scan an item on a shelf with a smartphone and obtain immediate information about the product, including reviews and specs. Not only does this enable the customer to make an informed purchasing decision, but it also reduces the likelihood that the item will be returned.
As AR technology becomes increasingly feasible for small and medium enterprises, it opens the door to promising opportunities for small businesses. Many companies are capitalizing on its immersive, fun, engaging potential to attract customers and increase sales.
By implementing this innovative technology, small businesses are able to stand out among same-size companies and can even start competing with bigger brands. |
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LEADERSHIP |
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Want to Lead Your Team to Success? Try Serving |
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Traditionally, business leadership starts with the owner and cascades down to frontline employees. But there is another style of leadership, servant leadership, which inverts this structure and puts employees at the top of the pyramid. Through personal growth, these workers then become more productive and more servant-like themselves.
A servant leader's priority and foremost responsibility is to help the people who work under him or her to learn, grow, and become more autonomous. The tenets of servant leadership include personal accountability; openness to feedback; continuous learning and skill-building; ownership of the role; owning responsibility of the job; and a commitment to coaching and developing others.
Servant leadership principles can transfer to any business in any industry. It is a planful model that is governed by reality and measured with objective goals in each area of the company.
The model recognizes that no single individual acting alone can deliver superior performance. Business success requires everyone to participate with passion and integrity and live up to their commitments. This is why true servant leaders invest heavily in training, mentoring, and building leaders who, in turn, become coaches to other people.
For business owners, servant leadership offers an opportunity to influence and change lives for the better. Plus, once the philosophy takes hold, the company excels due to employees' dedication and engagement.
A number of organizations have adopted this leadership model and, in some cases, the results are impressive. Many have found that employees' passion drives better performance and superior results. |
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ACCOUNTING |
| That Expense Was Business-Related
- Can I Deduct It? |
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Business owners share the common goals of maximizing sales and minimizing expenses. But when it comes time to prepare income tax returns, their focus shifts to maximizing expenses in order to make the most of write-offs. Entrepreneurs typically look for opportunities for deductions in every area of the business. This can prove beneficial to boosting their bottom line.
Unfortunately, not all business purchases are tax-deductible. An entrepreneur is confronted with limitations on deducting several types of expenditures that may seem like legitimate costs of doing business. Keep in mind, simply having your business pay for these things does not make them tax-deductible.
Customer Relations
Tax-deductible business meals are arrangements where the primary purpose is conducting business. Buying lunch for a customer so that business matters may be discussed is a deductible business expense. Dining solo is not. Stopping for lunch alone between business appointments is not tax-deductible. This holds true even if you would have avoided the restaurant cost were it not for your appointment schedule outside the office. The exception is meals you consume while traveling overnight away from home for business purposes. Additionally, only half of the cost for business meals is tax-deductible.
Giving gifts to customers is a common business practice. It builds goodwill and aims to garner referrals. But the IRS limits the tax deduction of a business gift to $25 per person for each gift. So if you give a gift of $100 to a customer, your deduction is limited to $25.
Appearances at Meetings
Getting to business meetings using your personal vehicle triggers a tax deduction based on the miles driven. Don't count the miles commuting from home to your principal place of business. Going to a meeting before going to your office necessitates a little arithmetic. To determine the business miles, subtract the home-to-office commuting distance from the miles driven between home and the meeting location.
Looking sharp for a business meeting is certainly beneficial. Maybe you always prefer casual clothing, except when seeing customers. Nevertheless, clothing adaptable to other situations is not a tax-deductible business expense. Only uniforms, including clothing with a company name or logo, are deductible. Nothing else you buy that is common attire for occasions other than business is eligible for tax deduction.
Protection from Trouble
Life insurance on a business owner is definitely prudent, especially when the company is expected to survive the current owner. Tax deduction of the premiums is not allowed if the business is the policy beneficiary. If the owner's heirs are the beneficiaries, the business may deduct the premiums, but doing so could be unwise as it jeopardizes the future income tax exclusion of life insurance death benefits.
Keeping out of trouble with the law is clearly a crucial business matter. But fines and penalties levied on an enterprise are not tax-deductible. A penalty for late payment of a tax assessment must be accounted for separately from the tax itself. You cannot deduct the penalty. Likewise, no deduction is allowed for parking tickets or traffic citations issued when traveling for business, such as making deliveries or attending meetings.
To ensure appropriate accounting, consult with your financial professional regarding deductions for your particular circumstances. |
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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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Cats are feline; cows are bovine; what are eagles? |
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| Worth Reading |
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Is LinkedIn Poised to Be the Next Big Social Network ... for Brands?
By Ryan Holmes |
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Forbes
Instagram and Facebook might get more attention (Celebrity influencers! Political scandals!), but, as this article points out, LinkedIn has quietly cemented itself as a social media tour-de-force. With 500 million members, most of whom are engaged business professionals, LinkedIn could be the next big marketing tool for brands, and one that nets tangible results.
5 Ways Smart People Sabotage Their Success
By Alice Boyes
Harvard Business Review
Natural intelligence is a gift that can help us excel in life. But intellect on its own is not enough to guarantee career success. This article describes how smart people often sabotage their own success through behaviors such as ignoring relationship-building, letting boredom take over, and becoming frustrated with teamwork.
Why You Can't Multitask
By David Burkus
Psychology Today
The pace of life seems to be ever quickening, and, as a result, our worth often becomes tied to our productivity. Completing multiple tasks all at the same time is a prized skill. It's also impossible. This article discusses why, as research has shown, humans aren't wired for effective multitasking. Trying to complete two or three tasks at once is more like a juggling act in which progress is happening slowly or one ball gets dropped.
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LINKS YOU CAN USE
This Month-Business Growth |
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Increase sales revenue. Launch more product lines. Expand to new markets. What dreams do you have for your business? If growth is on your goal list, use the following resources to propel your business onward and upward:
Want to move from small shop to growing enterprise? Here are six things to avoid and six skills you need:
6 Skills That Help You Pivot From Small Business To Growth Venture
Scaling a business is challenging. Use these tips to create a core strategy that works:
15 Ways to Grow Your Business Fast
Is your business growing faster than you expected? Learn how to manage this rapid expansion:
5 Strategies for Managing Rapid Growth
To achieve growth, you need all elements of your business to work together. Find the resources to create a well-oiled machine here:
These 10 Small Business Growth Tips Will Take You from Novice to Expert
Business growth requires short-term, mid-term, and long-term planning. Here's the breakdown:
13 Tips and Tactics to Propel Your Small Business Growth
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