No matter how you got there, I just want to help keep you there.  My goal is to KEEP SMALL BUSINESS IN BUSINESS.

Join us for a FREE teleseminar.  We will share the reasons “Why Businesses Fail and How Yours Can Succeed!”

Tuesday, September 9, 2009 @ Noon EST

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The purpose of this Club Call is to share the differences between each entity type and help you determine which type is right for you.  Join us for the power packed hour and leave a more informed business owner.

This call is open to all Club BTB members.  So if you haven’t joined yet….WHAT ARE YOU WAITING FOR?  Club BTB is only $1 for the first 60 days and IF you decide to stay, it’s $47/month.  How can you say no to such a value???

Note:  We will provide a replay to all club members with 48 hours of the live event.

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Here are some year end tax tips that could drastically change your tax situation.

Get Current. One of the most important tax tips I can give is to make sure your accounting is up-to-date. It is important that you have a complete understanding of your financial situation. Scheduling a year-end planning session with your accountant is a good idea and a good start.

Procrastinate. I know this may sound crazy, but hear me out. If your cash flow can sustain it, then wait until January to bill those end of the year clients. Any cash you receive in December must be included on your 2008 tax return as income, but if you wait just a few more days you can defer payment of taxes on that income for another year.

Shop ‘til you drop. Purchase items that your business will need in the near future. Again this is if your cash flow permits. Some things you should consider are office supplies, equipment purchases or pay some bills early (i.e. business cell phone bill, utilities, rent, etc).

More blessed to give. We’ve all heard the saying, “it’s more blessed to give than to receive”. And it’s true in more ways than one. Push an early 2009 charitable donation back to 2008, which allows you to take the deduction in 2009 instead of waiting until 2010. Be sure you get a receipt to support the tax deduction.

Sock it Away. This is a great time to make payments to your retirement plan or setup one to reduce your business income before the year ends. Meet with your financial planner to verify the contribution limits and deadlines.

That covers the business owners, now I hear the individual taxpayers saying, “What about us?” Here are some deductions for individuals that are often times overlooked.

1. Job-related moving expenses
2. Job-skill improvement classes (including travel)
3. Professional and investment publications
4. Union or professional dues
5. Job-hunting expenses (including travel)
6. Child care expenses
7. Costs associated with operating a business from a home-office
8. New or used clothes, toys, and household goods given to charity
9. Fees for tax or investment advice and tax return preparation
10. IRA fees
11. Client gifts

Note: These year-end tips will apply differently to each individual’s situation and accounting method. Seek professional advice to determine the best strategy for your transactions for tax purposes.

I am so grateful for the fact that 90% of my new clients have been acquired by referred by existing clients. I am so grateful for the fact that I have clients all over the country, many of whom I have never personally met. I am so grateful for the fact that after 15-30 minutes on the phone a potential client can see the value in the services we offer and are ready to move forward. I am grateful for the many clients like the one this week, that will refer someone to me before they even transact any business with me. 

So what’s my secret? Well…..I’m genuine. I truly love what I do and I believe people can immediately sense that. I sincerely strive to build a relationship with my clients. I like hearing about their kids, vacations, wedding plans and business goals. When the need arises, I patronize my clients businesses. I am always on the look out for potential referrals or gate openers for my clients. They know when they hire me….they get a new business partner. 

So I say again….who else needs a GREAT accountant?  A wise man once said….”it ain’t braggin if it’s true”

1. Commingling funds – So many business owners are guilty of either using the business account to pay for personal expenses or paying business expenses through the personal account. This is a big NO NO!

2. Misclassifying workers – Times are tough and staffs are getting smaller and smaller. Many business owners are classifying workers as independent contractors when they really are employees. This mistake can shut your business down.

3. Not reconciling books to bank statements each month – This is a practice that should be done each month. It ensures that all charges on your bank statement are legitimate and it also ensures that all charges on your bank statements are recorded in your books.

4. No backup – A paper trial of documentation should exist for all computer records. Technology is a wonderful thing when it works. Telling an IRS audit that your computer records were stolen or lost in a fire will not be sufficient.

5. Miscategorization or over categorization – This occurs when expenses are either recorded in the wrong category or there are too many categories created.

6. Improper use of petty cash – A system must be put in place where a set amount of money is placed in the petty cash fund and accurate records of expenses and replishments are recorded.

7. Missing deadlines – Filing returns late can create unwanted penalties and interest.

8. Excluding startup expenses – Failing to keep accurate records of the expense incurred prior to opening the business doors. These expenses are often time paid from the personal account and are often times overlooked.

9. Including equipment purchases with supplies – Equipment is a capital expenditure, and capital expenditures have to be depreciated, which means they get written off over several years.

10. Improper auto expenses – There are many options for calculating deductions when you use your car for business. (Actual expenses OR mileage)

11. Claiming too much for gifts – You may claim gifts given to your client but keep in mind that you can only deduct $25/per client/per year. So if you give a $50 gift you can only deduct $25/per client per year.

12. Writing checks out of sequence - Writing checks out of sequence opens your business up to theft from employees or vendors. 

Have you heard a tip that you didn’t know about?  Which one?  What are you going to do to clean up your books?  We’d love to hear from you.

Avoid Extra Tax With A Wise Business Purchasing Plan!

Avoid the dreaded Alternative Minimum Tax by postponing purchases of depreciable assets or leasing rather than purchasing depreciable assets in years when you have high income and itemized deductions.  The alternative minimum tax is calculated by adding to your alternative minimum tax base any accelerated depreciation taken in a tax year.

Most busy business owners are not paying attention to the tax consequences and real money saving ramifications of their purchases.  In many cases, armed with up-to-date sales and revenue figures (especially 6 or 8 months into the year) you can properly plan when the best time would be to purchase that next “big thing” you need to run your business.  And again, in most cases, you can wait a couple of months and buy after the first of the year or in other cases, spend the money before December 31st.  Hey, on large purchases, it really does make a huge difference on your tax return!

SECRET TAX TIP #7

Defer Taxes Owed By Following The Installment Sales Rules

Use the Installment Sales rules to defer the tax you have to pay when you sell property by structuring your transactions so that you receive payments from the sale in more than one year.   For example, if your gain on the sale of property would be $40,000, you would owe tax on only half of that amount if you arranged to receive only half of the cash for the sale this year.

Too often, greed sets in and people want to get paid all up front.  But, if a deal is structured properly, getting paid some now and some over the next couple of years tends to dramatically help on the tax side of things.  Now of course, you don’t know what is going to happen with your financial picture in the future, but you might as well defer as many tax dollars as possible now and make other adjustments with future money in those coming years.  If given a choice, most of us would choose to give Uncle Sam his money later rather than earlier.

Now, those are 7 STRATEGIC ways you can benefit from the existing tax code and increase your profits this year.  But obviously there are thousands more tax savings strategies available.  Depending on your specific tax situation, you can use them all (if they apply) if you wanted to.

Even Small Deductions Can Add Up To Big Tax Savings!

Don’t forget the “de minimis” fringe benefits for maximum tax savings.  Did you know that the tax code allows you to deduct for things such as (a) tickets to theatres and sporting events, (b) cocktail parties for employees and guests and (c) the holiday gifts you give?   Although these expenditures may not seem large, they can really add up!

Again, the reason most American’s do not take advantage of these kinds of “tax breaks” is they do not have a simple system to follow.  No, I did NOT say complex.  If tracking your tax deductions throughout the year is complicated, you won’t do it.  So choose any system you want, just make sure it is right for you, your lifestyle and your personality.  If you are a detailed person who likes to track expenses and you love technology gadgets, then you’ll go about choosing a monthly tax deductions organizer differently than someone who has a hard time balancing their check book. 

The problem is not the system you choose.  The problem is continuing to believe a bunch of little deductions will not add up to big tax savings.  They do and if you need to throw a wad of cash down your toilet this month to help you experience the pain wasting money, please do so.  But, if you rather not, then start tracking those tax deductions and watch the net gain back to you add up big time come tax time!

SECRET TAX TIP #5

“EAP” Offers Tax Relief Through Your Employees!

Use an Education Assistance Plan (“EAP’) to get a $5,250 deduction per employee and reimburse your employees for their college education expenses.  With an EAP you can also take the same deduction and help pay for your child’s education.  

Look, this is definitely a win / win proposition.  The people who work for you and represent your business get more education and you get to write off for over $5,000 per employee!  And what is the down side?  Well, what if your employees need more education and you need more tax deductions?  If you don’t use a EAP, sounds like to me you are in for a double whammy!

Let me introduce myself. My name is Bernadette and I run my own small business, too. However, in my business I specialize in knowing the VERY complex tax code we are all required by law to follow. Yes, understanding how to properly send (or receive) money to Uncle Sam by filling out certain specific forms at certain specific times is an ugly business, but someone’s gotta do it!

Truth be told, I actually LOVE helping regular middle to higher income folks minimize tax dollars so you keep more of YOUR money in your pocket! Plus, I really enjoy giving taxpayers real peace of mind, especially small business owners who have to deal with taxes year round, not just on April 15th! You should not have to live or run your business with the constant distraction of Uncle Sam looking over your shoulder month after month after month….

TAXES … Not Much Fun Dealing With The IRS Alone!

New Tax Laws and Regulations … Compliance Issues …Local, State and Federal Taxes … Quarterly Estimated Taxes … Payroll Taxes …Sales Tax … Unemployment Taxes … Personal Property Taxes … Personal and Business Tax Returns …and on and on – WHAT A BUREAUCRATIC MESS!

SECRET TAX TIP #1

“MERP” Offers Tax Benefits For Your Medical Expenses!

In order to get the full benefit from your medical expenses establish a medical expense reimbursement plan (“MERP”).  Generally, taxpayers who itemize their deductions can take a deduction for their medical expenses to the extent that the expenses are greater than 7.5% of their adjusted gross income.  Taxpayers who do not itemize get no deduction.  With a MERP taxpayers can take a dollar-for-dollar deduction whether or not they itemize for their medical care expenditures. 

 A great tip for keeping track of your medical expenses:  Since most people do a really poor job of tracking these kinds of expenses and in most cases are unable to get their hands on this information when tax time comes around, do yourself a favor right now.  Go into your storage closet, a kitchen drawer or wherever you keep file folders (if you don’t have any, a short trip to Office Depot or Staples today will do the trick) … then mark “Medical Expenses” on one for these folders.  Put this folder in the nearest drawer to your kitchen phone.  Now EVERY time you spend any money related to your medical care (even if you are not sure it could be deductible or not), put the receipt in the folder.  You will be glad you did next tax season.  The money you save in paying less in taxes will be a great incentive all by itself! 

SECRET TAX TIP #2

“SIMPLE” Plan Offers Even More Tax Savings Than Regular IRA!

Establish a SIMPLE IRA to boost your tax benefits from your retirement account.  Like an IRA, you can reduce your taxable income dollar-for-dollar for the amount you contribute to a SIMPLE plan.  A SIMPLE plan, however, comes with the added advantage over a tradition IRA of allowing a taxpayer to contribute even more money.  A Taxpayer can contribute up to $10,500 (2007) in a SIMPLE plan, as compared with the $4000 limit for a traditional IRA.

Hey, this is a BIG difference!  We’re talking about thousands of dollars more each year – tax free!  And as my dad used to say, “Give first, then SAVE for retirement and then pay your bills each month … do this all of your life and wisdom will follow you until the end.”  Yes, it IS wise to consistently sock money away, especially tax free!  And since the IRS gives you a great incentive to do so, might as well take them up on their offer …

The tax codes allow for business owners to take deductions for legitimate business expenses. As a realtor, you are considered self-employed (that’s if you have not formed a partnership or corporation). As a self-employed individual, you are required to report your business income and expenses separately on a Schedule C.

So what’s deductible? Here are a few that might fit your situation:

Auto Expenses. As a realtor, one of the major expenses you can deduct is the business use of your vehicle. You may either deduct the standard mileage rate or the actual expenses for the amount of business use. It is very important that you keep a mileage log. Your mileage logs should document all your business use of your vehicle. The standard mileage rate for 2008 is a flat rate of 50.5 cents per mile from January 1 – June 30.  It was increases to 5.5 cents per mile effective July 1, 2008. If you don’t use the standard mileage rate, you may be able to deduct actual expenses including depreciation, insurance, lease payments, registration, repairs, tire purchases, gas, oil and license fees. Even if you opt to deduct the actual expenses, you are still required to keep a mileage log. The mileage log is what is used to determine the percentage of use. For example, if you drive 500 total miles in one week, 250 are business and the other 250 are personal, your percentage of use is 50%. You would be able to deduct 50% of your actual expenses.

Gifts. For new or returning clients, you may choose to offer new home or closing gifts. Please note that for each client, you may deduct up to $25 per client per year for these gifts.  Any thing above the $25 threshold is not deductible.

Meals & Entertainment. Business and entertainment expenses are deductible as well. Travel away from home for business, conventions, or conferences are considered deductible expenses. The costs involved with entertaining clients at restaurants or clubs are also deductible. Good recordkeeping is a vital part of establishing your claim for these expenses. It’s a good idea to include details about the involved parties and the business purpose of the expenses. These records are not necessary for preparing the return, but are needed for audit purposes.

Health Insurance. Self-employed individuals are entitled to a health insurance deduction. You can deduct 100% of the amount paid for medical and qualified long-term care insurance for you and your family in a plan established under your business.

There are many other legitimate deductions for Realtors, and we can work together to realize your tax savings. Avoid needless overpayment on your taxes and seek our professional advice.

When determining whether your workers are employees or independent contractors, there are several factors you must consider.  The traditional test to determine a worker’s status involves the concept of control.  The IRS developed 20 factors to resolve a worker’s status as an independent contractor under the common law.  The burden of proof is also on the taxpayer.  It is understood that at least 11 of these factors should present evidence of an independent contractor’s status under the common law tests.

For the following questions, answering “yes” means the worker is an employee.

1. Instruction. Does the principal provide instruction to the worker about when, where, and how he or she is to perform the work?
2. Training. Does the principal provide training to the worker?
3. Business Operations. Are the services provided by the worker integrated into the principal’s business operations?
4. Exclusivity. Must the services be rendered personally by the worker?
5. Control of Assistants. Does the principal hire, supervise and pay the worker’s assistants?
6. Continuity. Is there a continuing relationship between the principal and the worker?
7. Schedule. Does the principal set the work hours and schedule?
8. Availability to Others. Does the worker devote substantially full time to the business of the principal?
9. Location. Is the work performed on the principal’s premises?
10. Directions. Is the worker required to perform the services in an order or sequence set by the principal?
11. Reporting. Is the worker required to submit oral or written reports to the principal?
12. Pay Frequency. Is the worker paid by the hour, week, or month?
13. Discharge at will. Does the principal have the right to discharge the worker at will?
14. Termination. Can the worker terminate his or her relationship with the principal any time he or she wishes without incurring liability to the principal?
15. Reimbursement of Expenses. Does the principal pay the business or traveling expenses of the worker?
For the following questions, answering “yes” means the worker is an independent contractor.

1. Tools. Does the worker furnish his/her own significant tools, materials and equipment?
2. Investment. Does the worker have a significant investment in facilities?
3. Profit or Loss. Can the worker realize a profit or loss as a result of his or her services?
4. Other Clients. Does the worker provide services for more than one firm at a time?
5. Availability. Does the worker make his or her services available to the general public?

Keep in mind that if you are found misclassifying an employee, you could face substantial penalties.  This article is intended to give the reader an overview.  It should not be taken as legal or accounting advice.  Seek our personalized, professional advice to guide you through the intricacies of tax matters.  Call us today for a business consultation  678-608-2775 .