Archive for the ‘2018, tax planning, deduction, real estate investment, inventory, automobile, reduce taxes’ Category

Hiring Critical in 2019

April 9, 2019

Hiring is still the name of the game for small business leaders.

By a two-to-one margin, small business leaders say they plan to hire more staff the rest of year versus laying off employees.

This statistic, echoed in our own Information Strategies, Inc. (ISI) surveys, comes from a new Clutch report.  In its survey, more than half (51%) of small businesses say they plan to hire, and only about a quarter (23%) plan to lay off employees this year.

Most tellingly, job growth in small businesses is expected to focus on the types of positions that support customer growth.

As soundings from many sources indicate, there is a need for salespeople who are going to create the initial demand as well as customer service people who insure fulfillment of that demand.

In demand are staffers who understand how to execute marketing campaigns with the right strategy; particularly sought after are digital strategists and marketing automation experts.

IT professionals are always in high demand and increasingly so with digitization.

As of March 2019, there were approximately 1+ million more job openings than unemployed people in the U.S.  Small businesses must consider how they can entice talented candidates in an economy that offers job seekers options.

With employee demand that high, recommendations from existing employees often work out as they already know your business’ culture, what is needed in the position and vouch for the new applicant.  Don’t ignore this vital internal resource channel and reward the successful referral in some way.

 

Small businesses may lack the HR expertise and higher compensation packages of larger companies, so they should think creatively about their recruitment processes and benefits packages.  Consider joining a PEO that offers flex-packages with a variety of benefits.  While there is a management fee, the PEO’s volume purchasing power often compensates. 

For more information on PEOs, please see my May 6, 2018 blog, PEOs Can Be Advantageous.

On the flip side, if your small business needs to let one or more employees go, take care in doing so professionally.  Prepare a consistent message that is honest and give the employee(s) as much heads up as possible.  It is also important to be aware of how your business’ remaining employees learn about the departure(s) to avoid misunderstandings.  Doing it right will make it easier when your company is ready to hire.

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Pleasant 2018 Tax Filing Surprise Possible

November 9, 2018

A nice surprise is in store for many small businesses at the end of this year’s tax preparation cycle.

Uncle Sam’s tax bite will be less for many companies according to experts because of the reforms implemented by President Trump’s new tax bill will lessen the tax bite Uncle Sam gets from ongoing companies.

But changes made by The New Tax Cuts and Jobs Act of 2017 means it is important to talk to your Tax Advisor now. There is still time to implement changes to your business based on the new tax bill.

While savings can differ from company-to-company most experts think small businesses really benefit from the tax bill.

To help small business taxpayers maximize savings legally with the changes that impact 2018 returns, here are some year-end tax planning questions you should consider.

Business Tax Changes:

Does your business income qualify for the 20% pass-through deduction? If not, should you switch to a C corporation to take advantage of the 21% corporate tax rate?
If your business does not qualify for the 20% pass-through deduction because it is one of the Specified Services Trades or Businesses, consider taking steps to reduce your income below the thresholds ($157,500 for a single taxpayer, $315,000 for a married taxpayer) to avoid this limitation.
If you are planning on starting a new company, are you planning to sell the company in 5-10 years? If so, consider forming as a C corporation to take advantage of the Section 1202 tax-free gain rules.
If you live in a high-tax state, consider your alternatives to paying tax as a business instead of personally to receive the deduction for state taxes or make state-tax-credit-effective contributions in your business to avoid the limitation on individual state-tax-credit contribution deductions.

Maximize Real Estate Investment Deductions:

Do you need to invest in real estate to take advantage of the bonus depreciation to offset other taxable income?
If you are a commercial real estate investor, consider if you need to replace your roof or any HVAC units as these are now deductible.

As a real estate investor, are you maximizing the new 20% pass-through deduction?

Maximize Retail Deductions:

If you own a retail establishment, consider whether to change your accounting method to maximize new inventory deductions.

Maximize Business Automobile Deductions:

Can you establish a home office to increase your automobile deductions?

Do you need a new car? If so, do you want to consider an SUV or truck over 6,000 pounds to take advantage of the 100% write-off of the business use portion?

Finally, Make Critical Personal Decisions:

Are you contemplating a divorce? If so, the divorce must be finalized by 12/31/18 if you still want to deduct your alimony going forward.

Do have children and want to share money with them? There are changes in the way you can legally shift some of your 2018 income to your children.

Keep in mind, the IRS still haven’t ironed out or published all of the new changes. What it has done is give professionals road signs to help them guide clients.

Talk to them now, not when it is too late.

* Note: The New Tax Bill Is Positive For SMBs was the topic of my February