Sticking to the rules when making charitable contributions can save tax dollars.
Here are three tips. (more…)
August, 2011
Tax Tip Tuesday! Check The Tax Rules For 529 Plans
If you are thinking of opening a 529 college savings account for yourself or your child, a review of the tax rules should be on your to-do list. Here’s a summary.
- Qualified tuition programs — the official name for 529 college savings plans — are established by individual states with the goal of providing a tax-advantaged way to save for college expenses. You can set up a plan in any state, no matter where you live or what your income is, and you can open more than one plan. As owner, you control the funds.
- Contributions are not deductible on your federal income tax return. You can make them at any time during the year. Depending on how much you contribute, you might need to file a gift tax return.Your state may have different rules.
- Earnings on the assets in your plan are tax-deferred and can be tax-free. That means you pay no tax on income accumulated within the account until you start taking withdrawals – and you may not have to pay tax even then, assuming you use withdrawals for tuition, fees, books, and other qualified education expenses.
- Withdrawals are reported to the IRS by the plan at year-end on Form 1099-Q, “Payments From Qualified Education Programs,” which you’ll need in order to complete your federal income tax return.
Give us a call to discuss additional tax benefits and rules for 529 college savings plans, including estate planning opportunities.
A Critical Business Question: Should You Incorporate Or Not?
One of the first decisions you face as a new business owner is whether or not to incorporate the business. The biggest advantage of incorporating is limitation of your liability. Your responsibility for debts and other liabilities incurred by a corporation is generally limited to the assets of the business. Your personal assets are not usually at risk, although there can be exceptions to this general rule. The trade-off is that there is a cost to incorporate and, in some cases, tax consequences. (more…)
Advice On Firing Team Members
The process of letting a team member go is uncomfortable and upsetting. However there are a few guidelines that can help soften the blow called the five Ws – who, what, when, where and why: (more…)
Financial Mistakes You Should Avoid
We all make mistakes in managing our finances, but some mistakes are worse than others. Here are four of the biggest mistakes to avoid. (more…)
What’s New: Animal-Rescue Volunteers Win Tax Deduction Case
If you provide care for stray or feral animals in your home for an IRS-approved charity, you may be able to take a tax deduction for your out-of-pocket expenses. (more…)
Seminar: Keep Going with QuickBooks 2011 – Intermediate
Date: 2011-08-25 Time: 10:30 AM – 3:00 PM Location: Brockport, NY
Computer lab setting, training manual with practice files and post-class business diagnostic
Cost: $127 Pre-Registration is required as space is limite: 877-223-5740
After completing this course, you will be able to:
* Working with memorized transactions * Customize forms * Create reports and graphs * Track and pay sales tax * Use different account types, such as credit card transactions and asset, liability & equity accounts * Writing letters with QuickBooks
This class is geared towards those with QuickBooks® experience, INCLUDING:
* Students of our beginner course * Bookkeepers who are interested in learning about some of the more complicated and detailed features that QuickBooks® has to offer * Business Owners who would like concise reports on many different types of accounts
Better Ways To Back Up
It seems like backing up should be an obvious daily activity in this technology-dependent world of business where one spilled latte can destroy months of data. With such a simple slip up constantly on the horizon, backing up your data should be the last thing you do each day to ensure that whatever happens, you will not be backtracking and re-doing work. (more…)
New Business: Should You “ROBS” Your 401(k) To Start A New Business?
ROBS is an acronym for a relatively new financing arrangement known as a “rollover as business startup” being touted on the Internet and arranged by some investment firms. (more…)
Tax Tip Tuesday! Buying A Business Creates Tax Issues
Since there are no federal income taxes imposed on the purchase of a business, as the buyer of an existing company your focus may be on other areas, such as obtaining credit or valuing inventory.
Yet tax issues can impact your to-buy-or-not decision. Here are two examples.
- Outstanding tax liabilities. It’s generally true that when you buy the assets of a business (as opposed to the capital stock), you’re not liable for prior debts. However, depending on the laws of your state, you could be responsible for unpaid sales, excise, or payroll tax.
Steps to protect yourself include a signed statement by the seller about pending or ongoing tax disputes, notifying the appropriate state office of the purchase, and requesting a certificate or other verification from the state regarding investigations or delinquencies.
You can also ask the seller to provide Form 8821, “Tax Information Authorization,” so you can check tax records with the IRS.
- Allocating the cost of assets. When you buy the assets of a business, you may be required to file Form 8594, “Asset Acquisition Statement,” in the year of the purchase. Form 8594 shows how the sales price is split up between various types of assets.
Why does it matter? Because different assets are treated differently on your new business’s tax return. For instance, inventory can be written off as you sell goods, while noncompete agreements have a longer life.
Give us a call before you finalize that business purchase. We can help you structure the deal to your best advantage.
