No one wants a visit from the Internal Revenue Service. But if you get too generous with your calculations, you may need to back up your tax return. “For individuals, it usually comes down to being too overly aggressive with tax deductions or benefits that could invite the IRS in,” says Logan Allec, a certified…
A number of end-of-year tax planning strategies are available to business owners that can be used to reduce their tax liability. Here are a few of them: Deferring Income Businesses using the cash method of accounting can defer income into 2020 by delaying end-of-year invoices, so payment is not received until 2020. Businesses using the…
Under the IRS rules, a taxpayer is allowed to deduct expenses related to business use of a home, but only if the space is used “exclusively” on a “regular basis.” To qualify for a home office deduction you must meet one of the following requirements: Exclusive and regular use as your principal place of business…
A safe harbor is now available for taxpayers seeking to claim the section 199A deduction with respect to a “rental real estate enterprise.” What this means is that certain interests in rental real estate – including interests in mixed-use property – are allowed to be treated as a trade or business for purposes of the…
As a small business owner, figuring out which form of business structure to use when you started was one of the most important decisions you had to make; however, it’s always a good idea to periodically revisit that decision as your business grows. For example, as a sole proprietor, you must pay a self-employment tax…
When it comes to accounting, you may get easily confused amid the sea of acronyms. But a solid understanding of certain accreditations is key if you’re looking for a licensed tax professional to guide you through your financial needs intelligently. When making your decision about whom to work with, you may wonder about the differences…
It is without a shadow of a doubt that automation is the future of doing business. Cloud technology has made it possible for companies to bring together previously separate applications, such as email and CRM, which was all but impossible no more than a decade ago. This simple, yet ingenious invention now allows managers to make better…
Cash flow is the movement of cash in and out of your business. Cash inflows are your sources of income and cash outflows are your expenses. Let’s say you own a donut shop. When customers buy donuts, the money they pay for the donuts generates a cash inflow. However, when you buy flour and other…
The main difference between accrual and cash basis accounting lies in the timing of when revenue and expenses are recognized. The cash method is a more immediate recognition of revenue and expenses while the accrual method focuses on anticipated revenue and expenses. The Cash Method Revenue is reported on the income statement only when cash is received. Expenses are only recorded when cash is paid…
Gross income and net income can mean different things depending on the situation. In general, gross income is the total income you earn on your paycheck, and net income is the amount you receive after deductions are taken out. Gross income and net income are fairly easy to understand, but the terms can have different…