Small Business Notes

TAXES ON FORGIVENESS OF DEBT PDF Print
 
Small Business Notes
Written by Cathy Cavanagh   
Saturday, 25 June 2011 22:12

 

As more and more taxpayers have to negotiate on everything from credit card debt, to investment real estate, cars, boats, and homes they need to be aware of the tax consequences of receiving that 1099-C reporting the debt that has been forgiven.  This is a complicated issue since you need to look at your entire financial position both before and after the debt was forgiven.  If you were considered insolvent both before and after you probably will not owe taxes BUT this has to be done correctly.

 

If you had either a short sale or foreclosure, you could have some capital gains to report and possible recapture of depreciation is the property was a rental.  Primary residences receive the “Primary Residence Exemption” treatment. 

 

These computations need to be made before you make any final agreements so you are prepared.  Taxpayers also need to be aware of any State Income Tax or Capital Gain tax consequences if they live in a State with Income Taxes OR if the property is in a State with Income Taxes.

 
 
Gas Prices Increase Mileage Rates PDF Print
 
Small Business Notes
Written by Cathy Cavanagh   
Saturday, 25 June 2011 22:09

MILEAGE RATE CHANGES as of July 1, 2011.  The business mileage rate will increase to 55 cents per mile as of July 1st.  It has been at 50 cents per mile for the first six months. 

 

This is just a reminder of the extreme importance of keeping mileage logs to document your business mileage.  This area is highly audited – in fact the only audits my clients have had in the past 3 years have included all auto and travel expenses.  You can keep detail records of 3 months of the year and use that percentage for the entire year OR one week per month.  Of course, you have to record the odometer reading Jan. 1st of each year so you have to total miles for the year.
 
Staging your Financial Position PDF Print
 
Small Business Notes
Written by Cathy Cavanagh   
Sunday, 07 November 2010 20:02

It is more important than ever the people learn exactly what their own financial position is and how a bank will view that position.  We hear all the time the importance of staging your home when you put on the market.  Well, you need to do the same with your financial position before you go to the bank to apply for a loan or get a Line Of Credit extended.  I have been told the banks can no longer extend the LOC's for small businesses if those businesses cannot show that they are truly viable.  We expect a lot of LOC's to be called this winter. 

 

What can you do to avoid that:

 

     1. Do not deduct any expenses that are not truly 100% necessary to create income.  You know what I am saying - the trip to Vegas was more personal than business!!!  The new business vehicle is used for some personal use - track it and don't deduct that portion.  You really do not use your home office ten hours or more per week.  Don't deduct it.
Read more...
 
Staging your Financial Position PDF Print
 
Small Business Notes
Written by Cathy Cavanagh   
Sunday, 07 November 2010 20:02

It is more important than ever the people learn exactly what their own financial position is and how a bank will view that position.  We hear all the time the importance of staging your home when you put on the market.  Well, you need to do the same with your financial position before you go to the bank to apply for a loan or get a Line Of Credit extended.  I have been told the banks can no longer extend the LOC's for small businesses if those businesses cannot show that they are truly viable.  We expect a lot of LOC's to be called this winter. 

 

What can you do to avoid that:

 

     1. Do not deduct any expenses that are not truly 100% necessary to create income.  You know what I am saying - the trip to Vegas was more personal than business!!!  The new business vehicle is used for some personal use - track it and don't deduct that portion.  You really do not use your home office ten hours or more per week.  Don't deduct it.

 

    2. If you are truly not making a viable profit, figure out why.  Don't just keep going hoping something will change.  It's amazing how many small business people never do any business planning.  Like or not, social media marketing is huge.  If you are not doing it, you are losing income.  Track every single expense you have to the exact amount of income it produces.  If it is not producing any income, cut it out.

 

   3. Constantly compare the current year's income and expenses to the prior year.  Export the past 3 years Income Statements to excel and constantly compare.  Be aware of what is changing month to month so you can change it early.

 

 

Everyone simply has to more financially and business literate if you have your own business.  You cannot simply let the bookkeeper track everything, get it to the CPA for taxes and never really look at it.

 

Unfortunately, this means paying more in taxes.  The Banks all expect your tax return to match what you have given them.  Remember, if you owe taxes that means you made money.  Our current tax brackets (since the year 2000) are lower than they have every been since the 70's (when the top bracket was 70%).

 

 
 
Small Business and Health Insurance PDF Print
 
Small Business Notes
Written by Cathy Cavanagh   
Saturday, 05 June 2010 18:48
The single most important mis-understood fact affecting small business employers is that ONLY employers that have over 50 full-time employees will pay a penalty starting in 2014 if they are not offering affordable health insurance coverage.  Obviously, that means a lot of small businesses will not have this requirement.

However, employers with 25 or fewer full-time employees who offer health insurance from 2010 to 2013 with average annual wages less than $50,000 may be eligible for a tax credit of up to 35% of the Employer’s total premium cost.  This is a powerful incentive for Small Businesses to offer health insurance to Employees.

Check with your Accountant to see how this might benefit you over the next several years.
 
More Articles...
Goto Top