Business Taxes Archives - Accolade Accounting

Tips To Closeout Your Business Year

JD Longino — Tue, 24 Nov 2020 13:56:59 +0000

2020 has been a “wild ride” to say the least and it’s not over! Our resilience during this particularly difficult year is a testament to the human spirit! If you’re a business owner, as I am, you may have different planning needs as we close out this very unusual year and plan for 2021.

Consider your tasks to close a summer home. You’ll need to pack away the beach toys. With no one occupying your vacation home during the winter, you’ll want to lock and shutter the windows. All of these are on your checklist of things to do, to make sure all the steps are completed to close the house for the season.

To closeout your business year, you’ll need to:

Permanently file closed client accounts and securely store information for the required retention period. Remember to follow GDPR guidelines to secure clients’ private information.
Closeout HSA & FSA medical spending plans and other plans that end annually.
Check out our tax calculator, to get a tax payment estimation.

If you’re filing your 2020 taxes in December or March of 2021, use the checklist below to ensure you have all the documents to complete your 2020 closeout.

Don’t forget to document Direct Expenses and Indirect Expenses, Depreciation, and Improvements. As we have been working from home for most of this year, there may be additional expenses to consider that you didn’t consider in previous years? Contact us, we can tell you what those are.

Click and download the image below, gather the documents to file, and prepare them for your 2020 closeout.

Cheers!
JD Longino, CPA

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NEW TAX LAW CHANGES

JD Longino — Thu, 17 Sep 2020 21:28:52 +0000

The US Congress and President Trump have passed the largest tax reform legislation in over three decades. However, the bill, which will affect most taxpayers, will not affect taxes for 2017- it will be effective for taxes filed for 2018. For those wondering what the bill is all about, below is a summary of the major provisions in this new tax bill.

TAX RATE CHANGES

The bill did not alter the seven tax bracket provided for in the current law. However, it has lowered several tax rates. The income thresholds at which tax rates apply has also been changed.

In the current tax law, the brackets are 10, 15, 25, 28, 33, 35 and 39.6 percent. In the new law, the brackets will be 10, 12, 22, 24, 32, 35 and 37 percent.

Individual Rate Changes

There has also been a change in the income thresholds at which the tax rates apply;

For married joint filers

The current thresholds are up to: $18,650, $75,900, $153,100, $233,350, $416,700, $470,700, and greater than $470,700 respectively. The new thresholds will be up to: $19,050, $77,400, $165,000, $315,000, $400,000, $600,000, and greater than $600,000 respectively.

For those filling single;

The current threshold rose to $9,325, $37,950, $91,900, $191,650, $416,700, $418,400, and more than $418,400 respectively. The new threshold will rise to $9,525, $38,700, $82,500, $157,500, $200,000, $500,000 and more than $500,000 respectively.

Single				Married Filing Joint
Current Law		New Law		Current Law		New Law
9,325	10.0%	9,525	10.0%	18,650	10.0%	19,050	10.0%
37,950	15.0%	38,700	12.0%	75,900	15.0%	77,400	12.0%
91,900	25.0%	82,500	22.0%	153,100	25.0%	165,000	22.0%
191,650	28.0%	157,500	24.0%	233,350	28.0%	315,000	24.0%
416,700	33.0%	200,000	32.0%	416,700	33.0%	400,000	32.0%
418,400	35.0%	500,000	35.0%	470,700	35.0%	600,000	35.0%
> 418,400	39.6%	> 500,000	37.0%	> 470,700	39.6%	> 600,000	37.0%

Increase in the Alternative Minimum Tax (AMT) Exemptions

The new bill reduces the individual burden of the alternative minimum tax (AMT) by increasing the income exempted to $109,400 from $84,500 (after adjustment for inflation) for married couples filing conjointly. For single taxpayers, it was raised to $70,300 from $54,300. The result of this action means that fewer taxpayers will be impacted and have to pay the Alternative Minimum Tax

Higher standard deduction

In this new tax bill, the standard deduction amount has nearly doubled with single taxpayer’s standard deduction jumping to $12,000 in 2018 from $6,350 for 2017 while married coupled who file jointly will see an increase to $24,000 up from $12,700. The increase in the standard deduction means that there will be fewer taxpayers clamoring to itemize since the standard deduction will eclipse those benefits for some. Currently about 30% of taxpayers file a return with itemized deductions such as medical expenses and state and local taxes.

Increased child tax credit

Families with children will see their Child Tax Credit doubled to $2,000 from $1,000. In addition, the refundable amount has increased from $1,100 to $1,400. In addition, the bill adds a new credit for dependents that are not children are for an extra $500 non-refundable credit. The income threshold at which the benefits listed above phase-out has also been raised to $400,000 from $110,000 for a married couple.

DEDUCTION REDUCTIONS

The new bill removes the personal and dependent exemptions available to taxpayers. The exemptions are were set at $4,050 for each taxpayer and dependent, and were expected to increase to $4,150 in 2018.

Home Mortgages and State and Local Taxes

The bill will limit the amount of local and state property, as well as deductible sales taxes to $10,000. In the current law, these taxes are fully deductible. The also bill caps mortgage indebtedness on new home purchases from which the interest can be deducted. The deduction was reduced from $1,000,000 to $750,000.

Health Care

The recently passed bill eliminates the individual mandate under the Affordable Care Act. It also reduces the floor above which out-of-pocket medical expenses can be deducted to 7.5% from 10%. This means taxpayers will be able to deduct medical expenses that are greater than 7.5% of your Adjusted Gross Income (AGI), making this attractive to taxpayers.

Small Business and Self Employed

The new tax law includes a variety of changes for business. The corporate tax rate has been reduced to 21%, and a new 20% deduction for certain types of pass-through entities like Partnerships, S Corps, and Sole Proprietorships. The law includes new limites on expensing interest from borrowing, and doubling the §179 business expense to $1,000,000.

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CRITICAL DECISIONS TO MAKE WHEN STARTING A BUSINESS

JD Longino — Tue, 15 Sep 2020 21:42:04 +0000

When starting a business there are usually many questions swirling through an entrepreneur’s mind.

How will I find customers? Am I crazy for doing this? Where will I find funding?

The excitement and eagerness to get started doing something you love can be intoxicating. However, when starting a business there are additional considerations and questions that require attention and thought to get your business started off on the right foot.

How will should the business be structured? How will I separate the business from myself? Which taxes will my business be responsible to pay? Which accounting method should I use in my business?

This infographic will help the budding entrepreneur to better understand things they need to consider when beginning their business.

If you would like professional help in navigating these questions and more that will arise, contact us or make an appointment today.

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