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TAX TIP OF THE DAY... Spring is a favorite time to launch a new business!
You've been thinking about this for years. You have documented your plan in writing. Is now the right time? Take this test: 1) Do you have enough time to devote? Estimate the required time and double it. 2) Do you have enough cash to invest toward startup? Estimate cash requirements and double it. 3) Are you willing to lose the start up cash? Starting a business is an investment... a risky investment. 4) Is your family onboard with the plan? You will most likely be taking time and money away from them. And of course if you make it, they will be rewarded with your profits. 5) How is the overall economy? Do customers have disposable income to buy what you are offering? 6) How is the competition? Is the market already flooded with what you are offering? How are you different from the competition? How will you communicate this difference? 7) What is your advertising plan to reach customers? If customers don't know about you, they can't purchase. 8) ARE YOU READY FOR THIS? Business is an emotional rollercoaster. Years ago, a customer leaving our firm asked why I was taking it so personally? A small business is like a baby that you have given birth to... the business owner takes all customer interactions, business successes, business idea failures VERY PERSONALLY. Yes, it hurts when a new marketing plan fails. Prepare yourself now. You will have disappointment along the road to success. If you are still reading, you are ready. LET'S DO THIS!!! Who is ready to kick some aspartame? SHARE WITH A FRIEND. We offer small business start-up initial consultations... www.baboiancpa.com TAX TIP OF THE DAY... every small business needs an EASY bookkeeping system
You can't fake your way through business expenses without getting your butt kicked at tax time. Missing just one $100 deduction costs a profitable business up to $47!!! WHAT IS A BOOKKEEPING SYSTEM? Any system that helps you to capture ALL (not just some) business expenditures and business income. HOW? IS IT EASY? DOES IT INVOLVE MATH? There are many systems. You should choose the one that works best for you. YES, IT CAN BE MADE VERY EASY! No, you don't need a lot of math. There are just certain rules that must be followed concerning how you pay for things, which documents to keep, and where to keep them (hard copy vs online vs computer). EASY! If you are reading this, you probably need some help. Hire an accountant to make your life easier and to stop throwing your profits away on missed deductions. A seasoned business CPA will pay for themselves many times over. SHARE WITH A FRIEND. If you need tax help... www.baboiancpa.com TAX TIP OF THE DAY... small business #1 missed deduction
Small businesses convert personal items to business use all of the time... and generally miss the deduction. These are items that you origianlly purchased years ago for home use or before you even had a business: 1) tools out of your garage taken to work 2) home office desk, chair, carpet 3) you replaced your home computer and took the old one to the office 4) GPS for the car 5) old coffee maker taken to work 6) old telephones taken to work 7) waiting room chairs that came from your basement WHAT YOU NEED TO DO: Step 1: look around your work area and make a list of everything that came from home. Step 2: assign a fair market value (ebay value) to each item on the day that you moved it from home to work. Step 3: give list to your accountant for special conversion rule treatment. SHARE WITH A FRIEND. If you need tax help... www.baboiancpa.com TAX TIP OF THE DAY... #1 tax mistake
It's easy... donate clothing to the giant metal bin--- BUT NOT A DEDUCTION. Instead, get a receipt from a manned drop off center and pump up your refund an average of $25 per hefty bag given. SHARE WITH A FRIEND. If you need tax help... www.baboiancpa.com TAX TIP OF THE DAY... donate your car?
Generally not a good idea. If you donate a car worth $2k, the charity will sell it in a hurry for as little as $1k. Your tax savings would only be an average $250. Better... sell the car for $2k and split it with your favorite charity. You get the same $250 tax break, the charity gets their same $1k... BUT YOU GET AN EXTRA $1K in your pocket. SHARE WITH A FRIEND. If you need tax help... www.baboiancpa.com TAX TIP OF THE DAY... need an IRS payment plan?
SHOULD I SET UP A PAYMENT PLAN? Don't do it unless it's your last resort due to the high fees, interest and penalties. BETTER OPTIONS Bank loan, 401k loan, family loan, credit card, promotional low interest credit card cash advances that you can repay before the promotion ends. HOW TO APPLY FOR IRS PAYMENT PLAN... 2 ways 1) BY MAIL...complete IRS form 9465 and mail... https://www.irs.gov/pub/irs-pdf/f9465.pdf instructions... https://www.irs.gov/pub/irs-pdf/i9465.pdf 2) ONLINE APPLICATION if you owe $50k or less... https://www.irs.gov/Individuals/Online-Payment-Agreement-Application THINGS TO KNOW 1) What to do first... File your tax return on time with any partial amount you can afford. Now you are ready to apply for an IRS payment plan. 2) The IRS set up fee is $120... but reduced to $52 if you make your payments by direct debit. 3) Already are on an IRS payment plan? Don't bother completing the IRS application. Instead call 800-829-1040. 4) Can you pay in full within 120 days? Call 800--829-1040 to arrange repayment and avoid the $120 set up fee. Skip the application. 5) Terms... monthly payments and usually up to 72 months. 6) Approval... Your approval is guaranteed if you owe less than $10k, agree to repay within 3 years and have been tax compliant during the past 5 years. Otherwise, the IRS must approve your request and may take 30 days or longer. MORE INFO from IRS web site: https://www.irs.gov/Individuals/Payment-Plans-Installment-Agreements Do You Qualify for Online application?You owe $50,000 or less in combined tax, penalties and interest, and filed all required returns. You may also qualify for a short term agreement if your balance is under $100,000. What Do You Need to Apply Online?
SHARE WITH A FRIEND. If you need tax help... www.baboiancpa.com TAX TIP OF THE DAY... buying a pickup truck for business?
Maximize your pickup truck tax break: 1) Use truck over 50% for business. 2) Purchase truck with loaded weights over 6k pounds. 3) Purchase truck with cargo bed at least 6 feet long. 4) Purchase truck with bed NOT accessible from the cab. SHARE WITH A FRIEND. If you need tax help... www.baboiancpa.com TAX TIP OF THE DAY... how to pay the IRS by debit/credit card
1) If you're an individual taxpayer, IRS Direct Pay offers you a FREE, secure electronic payment method via BANK ACCOUNT DEBIT.https://www.irs.gov/Payments/Direct-Pay 2) When you owe the IRS a significant amount, sometimes a CREDIT CARD is the your only option. The fee is approximately 2%. See the middle column for credit card rates. https://www.irs.gov/uac/Pay-Taxes-by-Credit-or-Debit-Card SHARE WITH A FRIEND. If you need tax help... www.baboiancpa.com |
AuthorDavid S. Baboian, CPA Archives
February 2018
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