April 16, 2018
Employing family members can be a rewarding experience for business owners. With tax season underway, some questions are hard to answer. What forms do I have to file for my kids? Do I need separate forms for family and non-family employees? What if my spouse works with me? These are all great questions and often have situational answers. For instance, your children will have different tax requirements than other employees that are minors. Children also have different tax needs based on whether your family business is a corporation. To help simplify some of the confusion, here are a couple requirements for both children and other family members to help you during tax season.
Employing Your Children
For most small business owners, children are an invaluable part of the business. They can provide much-needed help during busy times and are more likely to be productive employees than other minors. While some children do work for free, there are a few things you need to know for those that are paid.
- Federal unemployment tax is not required on the wages of your children.
- Social security and Medicare (FICA) taxes are only required if the business is not a corporation.
- You are required to withhold income taxes from your children’s wages.
Employing Adult Family Members
Children aren’t the only family members in a family business. Siblings and parents are often staples of a family business and are usually more loyal to the business than traditional employees. If you pay wages to any family member, make sure you know these key points.
- Each family member needs a W-4 when hired and you are required to withhold federal income taxes.
- Family member pay should be included in your unemployment tax.
- Overtime works the same as a regular employee; One and a half times base pay after forty hours.
Employing family members is a great route for many small business owners. BIG can help make your family business’ taxes a breeze with our small business accounting services.
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March 30, 2018
Is your company profitable enough for a CFO? The answer is yes. A CFO can provide invaluable strategic advice that keeps your company moving forward. The problem that most small businesses face is the cost of hiring a CFO.
Because of the cost, most CEOs also function has a defacto CFO. This is fine until the company starts to grow. Then the CEO becomes preoccupied with finance-related tasks and can’t focus on long-term revenue-generating activities. This is where a CFO-like business consulting services can be beneficial. A few areas where a consulting services can be helpful are by creating a strategic business plan and performing crucial tasks like a cost and profitability analysis.
Creating A Strategic Business Plan
Improving performance should be a top priority for any company. Without continual improvement, a company fails to thrive and grow. Analyzing current business problems can expose troubled areas that need improvement. In order to develop a proper action plan, three different types of strategy need to be created.
- Business Strategy
- Market Strategy
- Pricing Strategy
By creating these types of strategy, you’ll get a better overview of where your company needs to improve and what actions are needed to improve.
Cost & Profitability Analysis
Tracking and controlling costs is the first step to improving profitability. Most businesses won’t last long without a plan. Unfortunately, the data can seem overwhelming for many business owners and they can end up with a subpar pricing strategy.
By using a cost and profitability analysis, the consulting service can provide strategic advice based on a variety of factors to help you determine the best business opportunities and pricing models to help you maximize your profits. A few include:
- Quantifying historical data
- Reviewing inventory values
- Review current pricing structures
Hiring a full-time CFO isn’t a necessity, but every company needs strategic advice that the CEO can’t provide.
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March 15, 2018
Do you work as a freelancer or independent contractor? Chances are you’ll receive a 1099 form. If you make more than $600 with a client, they are required to send you a 1099 form by the end of January. Instead of of receiving a typical W-2 that traditional employees receive, most freelancers will receive the 1099-MISC form that is used to confirm that all their earnings are reported to the IRS.
While this can be overwhelming for new freelancers and independent contractors, a little organization can go a long way. Proper organization allows you to maximize your tax write-offs and keep more of your earnings. Deductions such as car expenses and home office deductions are a couple of the biggest tax breaks you can get.
Car expenses including mileage can provide one of the biggest tax write-offs for freelancers. The easiest method to use is to claim the standard mileage rate. This allows you to write off 54 cents off every mile you drive for business-related purposes. These miles include:
- Driving while working
- Going to meet clients at a seperate location
- Heading out of town on business
The standard mileage rate takes into account gas, insurance, maintenance, depreciation, and insurance. While you can use the actual method of deducting your car expenses, the standard mileage rate is far easier to track and report.
Home Office Expenses
If you’re running an independent business from your home, you can potentially write off part of your home expenses. As long as you have a dedicated space that serves as your primary place of business and is used exclusively for work, you can use it as a tax write-off. Using the simplified method is the easiest way to deduct your home office. It includes everything in your home office and can be figured out by finding the square footage of your home office. Here are a few things you need to know:
- You can deduct $5 per square foot.
- You can only deduct up to 300 square feet per year.
- Total deduction cannot exceed $1500.
Make sure you don’t miss out on any deductions. BIG offers professional tax services to make sure you get the most tax write-offs possible.
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February 28, 2018
Tax identity theft is frequently the single biggest type of identity theft according to the Federal Trade Commision. Finding out you’re a victim of tax identity theft can be a nerve-racking experience. By the time you learn you’re a victim, it’s usually too late. At that point, your options are slim and usually limited to preventing future damage.
The best approach is to take preventative measures and avoid identity theft altogether. While there are multiple methods to be proactive, you can make the biggest impact by protecting your identity and avoiding scams. These two approaches will limit the exposure of your personal information to unauthorized eyes and dramatically lower your risk.
Protect Your Personal Information
Information such as your Social Security number, birth date, and other personal information should be protected at all times. The only types of people that should see this information are banking institutions, tax advisors, lending companies, and similar businesses. These types of institutions are mindful on how they ask for personal information as well. They will never have you send your SSN through email or any other unsecure method.
In addition to only giving personal information to certain types of people, here are a few more tips that will help keep you safe:
- Don’t carry your Social Security card with you
Regularly change your passwords online
Keep your firewall and antivirus on your computer installed and up-to-date
As we move deeper into the digital age, scammers are more creative and deceitful than ever. Their scams are becoming more elaborate and harder to detect. Many tax identity theft victims unknowingly give away their personal information without knowing they are dealing with a fraudster.
Most victims willingly give their information when they receive threatening phone calls, emails, or postal mail claiming the IRS will take some type of action if the victim doesn’t cooperate. Threats of foreclosure and jail time are usually enough to scare someone enough to send whatever information is requested.
To avoid scams, there a few things the IRS recommends knowing:
You’ll never receive a call demanding immediate payment or any tax-related call from the IRS without first mailing you a bill. If you haven’t received the bill in the mail, be aware you could be dealing with a scam.
If you’ve completed your tax plan and don’t believe you owe any taxes, you can report any potential scam you encounter to the Treasury Inspector General for Tax Administration.
If you’re unsure on whether a person is who they claim, contact the institution directly and ask.
Tax identity theft can be a scary situation if your caught in it. By protecting your personal information and being mindful of scams, you can greatly reduce your risk.
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February 15, 2018
According to a recent Gallup study, 43% of Americans report at least part of their time working from home. With more employees making the transition to home offices, the question inevitably comes up; What can I deduct?
The IRS has two requirements that need to be met in order to claim the home office deduction. The first requirement is the space you intend to claim needs to be used as a home office regularly and excessively. The second is your home office has to be the principal place of your business.
Regular and Exclusive Use
The IRS is very particular about this portion. You must use your home office frequently for it to be considered eligible. This means that if you use your laptop on the couch, kitchen table, and the bedroom, you’re not eligible for the home office deduction. To keep your audit risk low, make sure your home office is:
- An established place where you complete the majority of your work
- Preferably a separate room that is designated for work only
- A place where you work for a minimum of 12 hours a week
Principal Place of Your Business
Flexibility is a benefit here when it comes to your home office. The IRS is fairly understanding to the location of your home office as long as it’s used primarily for work. That means your garage, a corner of the living room, or a spare bedroom can all be used as a home office. To take advantage of the home office deduction, here are a few things you should know:
- Choosing the simplified home office deduction allows you to allocate a percentage of your home as your home office.
- Separate stand-alone buildings can be deducted if they are used primarily for business purposes.
- Your home office should not be a communal area such as a family computer room.
Follow these two guidelines and you’ll be well on your way to claiming your home office tax deduction. To help maximize your deductions, BIG can help you get the most back with our tax preparation services.
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January 29, 2018
Freelancers are getting a big help from the new tax plan's pass-through deduction.
You may not realize you are doing this as a freelancer, but you are. If you end up claiming the revenue your LLC or S-Corp makes as your income and use itemized deductions to lower your taxes owned then you are participating in the pass-through deduction.
This pass-through provision will allow you / freelancers to deduct 20% of your revenue from your taxable income.
With the new law it has loosened restrictions so that not only the rich will benefit. You will get a nice savings as well.
This deduction, paired with new, lower tax rates means most freelancers will pay less in federal taxes in 2018 than they would have under the former tax code.
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December 30, 2017
Choosing the right business structure is key to making the most out of your small business. It can be difficult to decide what type of entity to register as. The most common types of entities include sole proprietorships, partnerships, corporations and limited liability companies. Read up on our cheat sheets to decide what the best type of business entity is right for your business.
A sole proprietor owns an unincorporated business by him or herself.
Easy and least expensive to establish
Owner can deduct net business loss from personal income taxes
Owner is liable for any debt, judgements or other liabilities
Harder to raise capital
A partnership is a relationship existing between two or more people who come together to create or carry on a business. Each individual contributes property, labor, money or skill and has a share in the profits or losses.
Greater possible capital
Easy to form and operate
All owners are personally liable
Divided authority amongst owners
S-corporations are corporations that elect to pass corporate income, losses and deductions to their shareholders for federal taxes.
Limited liability to stockholders
Lifespan, the business is a legal entity and can grow
Expensive with more paperwork
Interest of owners determines their incomes from business profits
In a corporation, shareholders exchange money and property and can take special tax deductions. A corporation distributes profits to shareholders and recognizes net income or loss.
Unlimited number of shareholders
Some benefits can be deducted as business expenses
Must pay its own taxes as a separate tax entity
Extensive paperwork must be filled out to start a corporation
5. Limited Liability Corporation (LLC)
This is a business structure where owners are called members and allowed by state statute.
Owners can choose how the entity should be taxed
Allows great flexibility on business structure
Most expensive to establish
Some states only allow one member in the LLC
No matter what type of business entity you are interested in or that is the best fit, our experienced team here at BIG can help you get started.
December 15, 2017
Business mentoring provides companies of any size number benefits that range from boosting company morale to providing industry expertise. Many businesses don’t see the need for business mentors however, these signs will tell you if you should invest in one.
Often times, when someone new comes on in the sole leadership position, they try to be exactly like the person before. A business mentor can help bridge the gap between the old and new leader. They can discuss new ways to manage the company or business while keeping the same values.
No Business Growth
An obvious sign of needing a business mentor is if you aren’t seeing any real growth within the business such as revenue, clients, etc.
Business often struggle to retain employees and lose talented workers. If you are noticing a high turnover rate, it may be time to invest in a business mentor. Mentors have reduced turnover rates by helping you create an inviting atmosphere for employees. Mentors suggest ways for you to better support and empower employees.
Need for Change
The more a business grows, change is inevitable. Whether it is bringing on more employees or internal structure changes, a business mentor can help guide you. They can talk you through the necessary steps to get you to where you want to be and give realistic advice to help you reach your business goals.
Employee motivation and morale are low
The morale and motivation of company employees is crucial to success. Business mentors can suggest ways to increase internal comradery to motivate employees to put their best foot forward day in and day out. Through this, business leaders will gain support and personal motivation as well.
Business mentoring can guide your business to success. From basic morale suggestions to ways to reduce turnover rates. Contact us for your business mentor needs at http://www.bizimprove.com/contact/.
November 30, 2017
Management accounting generates monthly or weekly reports for a company or business’s employees including managers and the CEO. These reports show the available money, sales revenue, state of accounts payable, debts, charts, analysis and other statistics.
This system and type of reporting is used by company leaders to make decisions about day to day operations. Management accounting allows for forecasting the market and trends.
The main difference in financial account and management accounting is financial accounting is important for future investors and management accounting helps executives make important decisions that impact the company and business’s future.
Management accounting can also serve as a motivator for other employees. Not only does it help the company solve problems but it can also motivate employees to reach specific goals that this form of accounting has set.
While this form of accounting encourages executives make decisions, the main purpose is to analyze information. They find problem areas within the company and suggest ways to correct these things. This in turn, leads to the recommendations for company leader’s decisions.
Management accounting comes in many different forms. These forms include forensic accounting, business check-ups, turnaround management, receivership, crisis management and more. No matter the size of your company or business, management accounting is crucial. It can help set future business goals as well as find any potential risks and stop them before they happen.
Our team at here at BIG offers a wide variety of management accounting services. To learn more contact us at http://www.bizimprove.com/contact/.
November 15, 2017
Company fraud or theft can happen without you even realizing. Fraud can mean a number of things including embezzlement, employee diversion of cash, improper use of cash from the company, etc. Even though you know you’re not guilty of committing fraud, hiring a forensic accountant could make or break your company down the road.
What is forensic accounting?
Forensic accountants analyze and interpret complex financial situations. These accountants are often hired in legal situations to aid in the lawsuit.
Fraud can happen when you least expect it. Whether you’re a thriving company or ending a partnership, fraud exists. It could be a shareholder that was responsible for managing accounts and started to spend company money for personal use. When you and your partner split and dissolve the company, you’re going to need to know where all money went to.
Even with your current business, fraud can be present. It’s smart to hire a forensic accountant to be another set of eyes on all money going out as well as coming in. You don’t want to be punished for something that could have been avoided had you had someone looking at all transactions.
The problem with most businesses is that they don’t want to admit there could be a problem such as fraud or theft occurring inside their own walls. Simple forensic accounting begins by auditing financial records and risk areas are presented then.
Even if fraud or theft isn’t occurring quite yet, forensic accountants can find potential risks that could lead to a problem later on. Even if you don’t think your company needs forensic accounting, you do.
Here at BIG, we specialize in auditing financial records, company methods and employee structures to prevent potentially dangerous activity.