May 2017 Blog Posts
May 30, 2017
Building and growing a small business may seem like an insurmountable task initially and often seems to get even more confusing and stressful as time goes on. That’s why it’s wise to seek the advice from those who have been there before. These are some of the most universal tips:
1. Have a support network – often business owners like to think of themselves as lone wolf entrepreneurs who can do it all by themselves; this is a very bad idea. It’s important to avoid isolating yourself. Learn from other business owners through networking events and the Internet, stay in touch with family and friends for motivation, and remind yourself that while you’re setting an unforged path, you don’t have to do it alone.
2. Delegate when possible – speaking of not doing it alone, it’s important to have others work for you. Many business owners are either control freaks who spin themselves silly by trying to do everything, or try to save money by not paying for services like accounting and bookkeeping. Why you shouldn’t do this is actually pretty simple; if you can generate $100 of revenue doing what you’re really good at, but have to spend an entire day doing all of your bookkeeping when it could cost just $20 for an accountant to do it in an hour, wouldn’t you actually be saving/making more money by hiring the accountant? The facts speak for themselves.
3. Keep your day job…for now – we get it; your idea is awesome, you’re excited, and you want to spend all of your time working on it. And you will need to eventually do this; just not yet. It is very easy to run out of money during the early stages of a business venture, which will usually lead to entrepreneurs giving up. You’d be doing yourself a huge disservice not to start your company off on the best foot for a lucrative future.
This is only some of our advice to keep in mind when building your business. We understand that the beginning is the hardest part, so don’t hesitate to reach out to us with your questions!
May 17, 2017
Just because tax season is over, doesn’t mean that you’re done with nasty taxes for good (though even we wish this were the case!). Do yourself a favor and avoid the toxic anxiety tax season welcomes by taking just a few easy steps to stay organized for next year.
1. Look over your withholdings – no one wants to have more money taken away from them than necessary obviously. So it always shocks us when people who have employers that withhold money from their paycheck automatically don’t take the time to make sure the correct amount is getting taken out!
2. Evaluate your retirement plan – be honest; are you really saving enough for retirement? Most Americans have no idea, as a Bank of America Merrily Lynch survey found that 81% of Americans don’t know how much money they will need for retirement! So it’s very important to be aware that IRS limits on tax-deductible IRA contributions can change from year to year.
3. Make an income forecast and estimate possible taxes – all businesses regularly project how much revenue they expect to gain over the year in order to gauge expenses. Treat yourself and your family like your own business and do some serious thinking about how much money you’ll think you’ll have over the year, including possible major expenses (especially unexpected ones), and what you might have to pay in taxes.
Taxes aren’t fun, but that doesn’t mean they have to be torture. Do your future self a big favor and ease the stress by taking some easy proactive steps. Your future self will want to hug you for your efforts!
May 3, 2017
Tax and Health-Care Reform Back in the Spotlight
Republican efforts to repeal and replace the Affordable Care Act (ACA) failed in late March. In the immediate aftermath, it appeared that health-care reform efforts would be set aside in favor of advancing a tax reform agenda.1 Then, in a one-two punch that surprised many, the White House called for a vote on a revised repeal-and-replace health-care plan and announced the broad outline of a new tax reform plan.2 It would be a mistake to consider the two completely separate efforts, because in some ways they are actually closely connected.
White House announces new tax proposals in broad terms
The tax reform plan announced by the White House includes reducing the current seven tax brackets to just three: 10%, 25%, and 35%. It proposes doubling the standard deduction amount and eliminating both the alternative minimum tax (AMT) and the federal estate tax. The plan would preserve existing deductions for home mortgage interest and charitable donations, but would eliminate most other deductions, including the ability to deduct state and local taxes.3 Essentially, this was a "stake in the sand" to establish a starting point for negotiations with Congress. Details must be determined, and changes are likely as discussions progress.
Tax provisions also a part of health-care reform
The ACA contains significant tax provisions, including the 3.8% net investment income tax and the 0.9% Medicare payroll surtax, which both target high-income individuals. The initial repeal-and-replacement effort would have eliminated or modified many ACA tax provisions — that's almost certain to be true for a revised plan as well. And any health-care reform package is likely to balance lost tax revenue with reductions or limits to subsidies and Medicaid outlays. If the ACA tax provisions are not addressed in a health-care reform package, they're likely to be included as part of the tax reform discussion, increasing the scope and complexity of the tax debate. In fact, the White House tax reform announcement specifically called for repeal of the 3.8% net investment income tax.4
Further complicating the issue, Republican legislators — who lack 60 votes in the Senate to overcome a Democratic filibuster — plan to use a process called budget reconciliation to pass both health and tax reform legislation with a simple majority vote. Under budget reconciliation rules, any reform measure must not increase the federal deficit beyond a 10-year period. This restriction means that unless tax cuts are offset by revenue savings elsewhere (e.g., spending cuts or reduced deductions), they must expire after 10 years.
1) See for example Nick Timiraos and Richard Rubin, "GOP Shifts Focus to Next Target: Tax Code Revamp," Wall Street Journal, March 25, 2017
2) John T. Bennett, "White House: Final Health Care Deal Unlikely This Week," Roll Call, April 26, 2017, and Briefing by Steven Mnuchin, Secretary of Commerce, and Gary Cohn, Director of the National Economic Council, April 26, 2017, whitehouse.gov
3,4) Briefing by Steven Mnuchin, Secretary of Commerce, and Gary Cohn, Director of the National Economic Council, April 26, 2017, whitehouse.gov