24 Apr 2023
0

Choosing an Entity for Your Business? How About an S Corporation?

Roger Rossmeisl, CPA
Small Business Tax Briefs
Choosing an Entity for Your Business? How About an S Corporation?

If you’re starting a business with some partners and wondering what type of entity to form, an S corporation may be the most suitable form of business for your new venture. Here are some of the reasons why. A big benefit of an S corporation over a partnership is that as S corporation shareholders, you won’t be personally liable for corporate debts. In order to receive this protection, it’s important that: The corporation be adequately financed, The existence of the corporation as a separate entity be maintained, and Various formalities required by your state be observed (for example, filing articles of incorporation, adopting by-laws, electing a board of directors and holding organizational meetings). Dealing with losses If you expect that the business will incur losses in its early years,...

24 Apr 2023
0

2023 Q2 Tax Calendar: Key Deadlines for Businesses and Employers

Roger Rossmeisl, CPA
Small Business Tax Briefs
2023 Q2 Tax Calendar Key Deadlines for Businesses and Employers

Here are some of the key tax-related deadlines that apply to businesses and other employers during the second quarter of 2023. Keep in mind that this list isn’t all-inclusive, so there may be additional deadlines that apply to you. Contact us to ensure you’re meeting all applicable deadlines and to learn more about the filing requirements. April 18 If you’re a calendar-year corporation, file a 2022 income tax return (Form 1120) or file for an automatic six-month extension (Form 7004) and pay any tax due. For corporations pay the first installment of 2023 estimated income taxes. For individuals, file a 2022 income tax return (Form 1040 or Form 1040-SR) or file for an automatic six-month extension (Form 4868) and pay any tax due. For individuals, pay...

24 Apr 2023
0

Changes in Sec. 174 Make it a Good Time to Review the R&E Strategy of Your Business

Roger Rossmeisl, CPA
Small Business Tax Briefs
Changes in Sec. 174 Make it a Good Time to Review the R&E Strategy of Your Business

It’s been years since the Tax Cuts and Jobs Act (TCJA) of 2017 was signed into law, but it’s still having an impact. Several provisions in the law have expired or will expire in the next few years. One provision that took effect last year was the end of current deductibility for research and experimental (R&E) expenses. R&E expenses The TCJA has affected many businesses, including manufacturers, that have significant R&E costs. Starting in 2022, Internal Revenue Code Section 174 R&E expenditures must be capitalized and amortized over five years (15 years for research conducted outside the United States). Previously, businesses had the option of deducting these costs immediately as current expenses. The TCJA also expanded the types of activities that are considered R&E for purposes of IRC...

10 Apr 2023
0

The Tax Advantages of Hiring Your Child This Summer

Roger Rossmeisl, CPA
Small Business Tax Briefs
The Tax Advantages of Hiring Your Child This Summer

Summer is around the corner so you may be thinking about hiring young people at your small business. At the same time, you may have children looking to earn extra spending money. You can save family income and payroll taxes by putting your child on the payroll. It’s a win-win! Here are four tax advantages. 1. Shifting business earnings You can turn some of your high-taxed income into tax-free or low-taxed income by shifting some business earnings to a child as wages for services performed. In order for your business to deduct the wages as a business expense, the work done by the child must be legitimate and the child’s salary must be reasonable. For example, suppose you’re a sole proprietor in the 37% tax bracket. You hire your...

04 Apr 2023
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Protect the “Ordinary and Necessary” Advertising Expenses of Your Business

Roger Rossmeisl, CPA
Small Business Tax Briefs
Protect the Ordinary and Necessary Advertising Expenses of Your Business

Under tax law, businesses can generally deduct advertising and marketing expenses that help keep existing customers and bring in new ones. This valuable tax deduction can help businesses cut their taxes. However, in order to be deductible, advertising and marketing expenses must be “ordinary and necessary.” As one taxpayer recently learned in U.S. Tax Court, not all expenses are eligible. An ordinary expense is one that’s common and accepted in the industry. And a necessary expense is one that’s helpful and appropriate for the business. According to the IRS, here are some advertising expenses that are usually deductible: Reasonable advertising expenses that are directly related to the business activities. An expense for the cost of institutional or goodwill advertising to keep the business name before the public...

24 Mar 2023
0

Buying a New Business Vehicle? A Heavy SUV is a Tax-Smart Choice

Roger Rossmeisl, CPA
Small Business Tax Briefs
Buying a New Business Vehicle? A Heavy SUV is a Tax-Smart Choice

If you’re buying or replacing a vehicle that you’ll use in your business, be aware that a heavy SUV may provide a more generous tax break this year than you’d get from a smaller vehicle. The reason has to do with how smaller business cars are depreciated for tax purposes. Depreciation rules Business cars are subject to more restrictive tax depreciation rules than those that apply to other depreciable assets. Under the so-called “luxury auto” rules, depreciation deductions are artificially “capped.” Those caps also extend to the alternative deduction that a taxpayer can claim if it elects to use Section 179 expensing for all or part of the cost of a business car. (It allows you to write-off an asset in the year it’s placed in service.) These...

26 Feb 2023
0

Do You Run a Business from Home? You May be Able to Deduct Home Office Expenses

Roger Rossmeisl, CPA
Small Business Tax Briefs
Do you Run a Business from Home? You May be Able to Deduct Home Office Expenses

Many people began working from home during the COVID-19 pandemic — and many still work from their home offices either all the time or on a hybrid basis. If you’re self-employed and run your business from home or perform certain functions there, you might be able to claim deductions for home office expenses against your business income. There are two methods for claiming this tax break: the actual expense method and the simplified method. How to qualify In general, you qualify for home office deductions if part of your home is used “regularly and exclusively” as your principal place of business. If your home isn’t your principal place of business, you may still be able to deduct home office expenses if: You physically meet with patients, clients or customers on...

26 Feb 2023
0

May 15 Tax Deadline Extended to October 16 for California Disaster Area Taxpayers

Roger Rossmeisl, CPA
Automotive, Current Events, Individual Tax Briefs, Small Business Tax Briefs
May 15 Tax Deadline Extended to October 15 for California Disaster Area Taxpayers

As reported in IR-2023-33 on 2/24/2023 Disaster-area taxpayers in most of California now have until October 16, 2023, to file various federal individual and business tax returns and make tax payments, the Internal Revenue Service announced last Friday. Previously, the deadline had been postponed to May 15, 2023 for these areas. The IRS is offering relief to any area designated by the Federal Emergency Management Agency (FEMA) in on the page entitled California Severe Winter Storms, Flooding, Landslides, and Mudslides. There are four different eligible FEMA declarations, and the start dates and other details vary for each of these disasters. The current list of eligible localities and other details for each disaster are always available on the Tax Relief in Disaster Situations page on IRS.gov. The additional relief postpones...

20 Feb 2023
0

Key Tax Issues in M&A Transactions

Roger Rossmeisl, CPA
Small Business Tax Briefs
Key Tax Issues in M&A Transactions

Merger and acquisition activity dropped dramatically last year due to rising interest rates and a slowing economy. The total value of M&A transactions in North America in 2022 was down 41.4% from 2021, according to S&P Global Market Intelligence. But some analysts expect 2023 to see increased M&A activity in certain industries. If you’re considering buying or selling a business, it’s important to understand the tax implications. Two approaches Under current tax law, a transaction can basically be structured in two ways: 1. Stock (or ownership interest). A buyer can directly purchase a seller’s ownership interest if the target business is operated as a C or S corporation, a partnership, or a limited liability company (LLC) that’s treated as a partnership for tax purposes. The current 21% corporate federal income...

20 Feb 2023
0

Have Employees Who Receive Tips? Here are the Tax Implications

Roger Rossmeisl, CPA
Small Business Tax Briefs
Have Employees Who Receive Tips? Here are the Tax Implications

Many businesses in certain industries employ individuals who receive tips as part of their compensation. These businesses include restaurants, hotels and salons. Tip definition Tips are optional payments that customers make to employees who perform services. They can be cash or non-cash. Cash tips include those received directly from customers, electronically paid tips distributed to employees by employers and tips received from other employees under tip-sharing arrangements. Generally, workers must report cash tips to their employers. Non-cash tips are items of value other than cash. They may include tickets, passes or other items that customers give employees. Workers don’t have to report non-cash tips to employers. For tax purposes, four factors determine whether a payment qualifies as a tip: The customer voluntarily makes the payment, The customer has...

ROGER ROSSMEISL, CPA

Kho & Patel CPAs
160 E. Arrow Highway
San Dimas, CA 91773

(714) 325-0442
roger@khopatel.com

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