Accountant, CPA, Deductions, Taxes
Tax season is underway for businesses across the country, which means it’s time to start thinking about any charitable tax deductions for small businesses you’ve made that can reduce your tax burden. One of the most commonly claimed deductions is for charitable donations — about 75% of small business owners allocate a portion of their profits to charitable donations. There are many reasons to support charities beyond tax savings. Giving back reminds business owners that they can make a positive change in the world, and it’s also great for a company’s overall reputation. Learn how to go about smart small business charitable giving before you take action.
Do: Find a cause that aligns with your business
While it’s great to donate to any cause you’re passionate about, there are extra benefits to donating to charities that align with or relate to your business. For example, if your company sells the majority of its products for mothers, it makes more sense to donate to a breast cancer charity than one for disaster relief. Your customers choose your business for a reason, and donating to causes they’re likely to care about is bound to get them excited.
Don’t: Fall for a scam
Unfortunately, there are plenty of charities that masquerade as good causes, when they’re actually scamming good-hearted people, so it’s important to do your research before you give any organization your money. Even with legitimate charities, the majority of your contribution may be going directly to administrative, overhead and marketing costs rather than what is advertised. You can find out if a charity is valid and how your money is allocated by specific charities on Charity Navigator.
Do: Decide how you can help
There are a variety of ways to support causes beyond one-time monetary donations. Volunteer work, event sponsorships, fundraising and donating goods are all ways to make an impact. Each type of contribution must be recorded and filed differently, so it’s worth working with an accountant to ensure you get the proper tax deduction. The type of charitable work you should do largely depends on time commitments, the enthusiasm of your employees to participate and budgetary considerations. Don’t overcommit yourself — it’s not worth the headache.
Don’t: Forget to involve employees
If you’re unsure what type of charity makes sense for your business, it’s a good idea to ask your employees what they think is a worthwhile endeavor. If they care about a certain cause, they are more likely to feel enthusiastic about your company’s direction and want to participate. It is a great way to retain talent for your business and improve workplace culture. In addition to these benefits, getting your employees to volunteer or participate in fundraising makes your company eligible for additional tax deduction benefits.
Do: Publicize to customers
There’s nothing wrong with bragging about doing a good thing! Your current customers are bound to have a positive reaction if your company is giving back. If you publicize your charitable efforts, you may even attract new customers who believe in supporting businesses with philanthropic behavior. While this might not bring direct tax benefits, more customers is good for your bottom line, which no business owner will complain about. Consider the positive PR that comes with giving.
Don’t: Ignore paperwork
When it’s time to file your tax deduction, there are some important things to remember. Be sure that your charity is eligible for a tax deduction by using the IRS search tool and learn about the limitations of each type of charitable deduction on the IRS charitable contribution topic page. You must report your charitable contribution on Form 1040 Schedule A of your taxes before the end of the business tax year. Remember that your deduction cannot amount to more than half of your adjusted gross income. Always have your records of charity contributions close at hand, in case of a tax audit.
Business owners benefit in many ways from charitable donations, so including them in your next filing is a worthwhile goal. We understand that choosing the right charities, keeping records of your contributions and filing tax deductions is a complicated process. If you are looking for a helping hand when you’re giving back, our team can assist you with our business tax services to help reduce your tax burden as much as possible. Contact us today to get started with tax savings.
Accountant, Bookkeeping, Taxes
The U.S. Public Interest Research Group Education Fund recently published a study indicating that small businesses pay $5,128 on average in taxes per year to make up for revenue lost to offshore tax havens. Small businesses generally aren’t the ones taking advantage of offshore locations with low (or zero) taxes. Huge corporations are more likely to have the means and motivation to create corporate headquarters in offshore tax havens like Switzerland, the Cayman Islands and Singapore. The amount of federal money lost is staggering — $128.5 billion in corporate tax revenue is kept in foreign countries harboring offshore accounts for large companies. Unfortunately, this affects small businesses because they end up shouldering more than their fair share of the tax burden.
The problem only seems to be growing, as more large companies are considering the advantages of moving corporate offices to tax havens. While the ethics of such decisions are up for debate, there’s no denying that many businesses will save money on taxes any way they can. Without legislation to bar a company from abusing the availability of tax havens, the behavior is sure to continue. The current tax code tends to favor large conglomerates, while putting small and medium-sized businesses on the hook for more tax expenses. Globalization has created a race to the bottom for federal taxes as nations vie to attract international businesses.
It is still unclear what the future holds for corporate tax avoidance, but tax laws tend to change with new presidential administrations. Of course, it’s not just the president who debates tax policies, and the 115th US congress will need to reach a consensus on how to move forward with the growing problem. It’s not just accountants or small business owners who benefit from a stricter corporate tax system — the money that is sent to foreign countries could be used to directly benefit the general public. Infrastructure improvements, a strong national defense, education and paying down the national debt all rely on tax dollars.
As large businesses move towards increasingly international models, it’s important to keep a watchful eye on their behaviors. Chances are, most companies aren’t moving their corporate offices to micro nations because they think there are loads of potential customers there. Although technically legal, tax avoidance by multinational corporations disproportionately hurts small businesses, and that’s a problem. Small businesses face enough challenges as it is to get established in the marketplace. Making up for other companies’ tax avoidance is an extra obstacle for an already challenging endeavor. Thankfully, there are tax write-offs that the federal government encourages small businesses to use, and we can help you save as much as possible for your 2017 filing. Explore our tax preparation services to see what your business can do to level the playing field for taxes.
Accountant, Deductions
If your business requires any driving, you owe it to yourself to make a vehicle tax deduction. It’s one of the most common business tax deductions because so many industries require vehicles to get work done. Every year, the Internal Revenue Service sets a standard mileage rate so business owners can calculate their deduction accurately. For 2017, the rate is dropping slightly to 53.5 cents per mile as opposed to 54 cents per mile in 2016. The new rate goes into effect on January 1st 2017, so be aware of this small adjustment within the next month. Keep in mind that you must keep accurate records of your travel dates, destinations, and reasons for driving if you’re hoping to capitalize on the deduction.
How It’s Calculated
You might be wondering what determines the transportation tax deduction rate, as it seems to fluctuate randomly on a yearly basis. The truth is, there is a method to the madness, and the IRS calculates the rate based on changing market conditions. The government agency reviews a study of the fixed and variable costs of operating a motor vehicle for a given year before changing the deduction standards. The largest factors for the 2017 rate were declining fuel prices that slightly outweighed rising vehicle insurance and maintenance costs. While you may not receive quite as much of a deduction next year, it also costs slightly less to get from Point A to Point B.
An Alternative Option
If you prefer not to use the standard rate for business transportation, you have the option to calculate the actual cost of operating your vehicles. This method requires much more detailed record keeping, but can potentially result in a larger deduction. You can rack up extra deductions for gas, oil changes, repairs, licenses, parking fees, insurance costs, car washes, and more when you calculate every vehicle related expense.
What’s Right for Your Business
Choosing between standard mileage rates and actual vehicle expenses can be tricky — if you have a small, old, or inexpensive car, you’re more likely to benefit from standard mileage. If you’re willing to track every expense, and you drive a more expensive vehicle, actual vehicle rates may be worth the effort. At Charles Motl & Associates, we are always available to consult your business on its vehicle tax deductions. Learn more about our tax services to get the most out of your 2017 filing.
Accountant, Bookkeeping, expenses, Small Business, Taxes
It’s one thing to plan on improving organization around the office, but another to actually go through with it. Getting organized does more than make the office look tidy – a more structured workplace can actually help you grow and earn money. It’s easier to be productive when you don’t have stacks of papers, lost receipts and file cabinets filled to the brim. It’s not just physical clutter that gets in the way – digital files, profiles and accounts can quickly become disorganized and that creates an avalanche of problems.
We’ve provided our bookkeeping and accounting services to many Chicagoland businesses through the years and our past client experiences have made us understand that being organized at work and with your finances will aid productivity. Here are a few tips we’ve suggested to our clients that you can use to help you stay more organized.
Remove Trash
No, it’s not spring quite yet, but that doesn’t mean you can’t do a little cleaning around the office to free up some space. A cluttered office environment can make people feel stressed, and removing unnecessary items will create a more welcoming space. It’s common to want to hold onto knick-knacks, old office papers and other items because we often overestimate their importance. Problem is, once these items are no longer necessary, they just get in the way when you’re looking for something you really need. The next time you come across a form or document that’s over a year old, ask yourself whether it’s causing more problems than it’s worth. If you haven’t missed it, you probably won’t in the future.
Put Away Paper Receipts
If there’s one thing nobody ever feels like doing, it’s organizing a fistful of receipts after a long day. Chances are, you’ll toss those papers into the trash just to get them out of the way. That, or you’ll add to the ever-growing Mount Crumpled Paper – before long it’s sure to reach the ceiling. It’s impossible to completely avoid paper receipts, so it’s worth doing the next best thing: get a scanning app that turns that ink into digital receipts. It only takes a few seconds, and it will make your business tax write offs a whole lot easier to manage. Shoeboxed, Expensify and Wave are three great mobile apps that automatically scan and extract receipt information. If you need to know more about how you can use a scanning app for your receipts with our bookkeeping service, contact us and we’ll be more than happy to discuss with you.
Clean Up Your Inbox
Computer screens aren’t always immune to clutter. If your number of unread emails is in the hundreds or thousands, it’s probably time to do a little organization. You don’t necessarily need to delete old emails, because you might need to look back at a conversation thread with a coworker or client, but you should create folders to store them away. Most email services allow you to archive old emails that you don’t use on a daily basis, while keeping a separate folder for more current messages. You can go a step further and create categories in your inbox for the types of emails you commonly receive. Most email services already have a spam folder, but you should unsubscribe to any pesky promotional emails that escape the filter.
Stop Battling Your Books
Chances are, you already have a bookkeeping service like Motl Accounting in Dundee, IL, or you leave it all to an accountant. Whatever your situation, it’s worth reevaluating the processes you have in place to see if you can manage your records more efficiently. Processing payments, recording expenses and tracking projects is essential if you want your business to grow. At the very least, look over your income statement and balance sheet every month to ensure that your records are accurate and every expense is accounted for. Look into smartphone apps like Mint or Freshbooks that allow you to record your transactions on the go, and ensure that any computer software you’re using is up-to-date. You can make your life easier by taking advantage of the bookkeeping services provided by Motl Accounting– we’ll ensure your records are managed correctly whenever we step in to assist with your bookkeeping needs.
A client of ours who owns restaurants in Batavia and Naperville lost his general manager and other restaurant staff within a short period of time. He had to take on some of the accounting work for the business and this obviously hindered him from focusing on his usual responsibilities as the owner. Motl Accounting offered to assist and we stepped in to handle his accounting needs until another general manager was hired and trained by us to get up to speed with the restaurants’ operation. Our client was positioned to be successful even through a transition and trying time by working with us and he was extremely grateful for our assistance.
This is the kind of passion and commitment our team of Motl accountants aim to provide. We strive to guide all our clients down the right financial track.
It only takes a few weeks for a mess to get out of hand. When the office is orderly, your whole team can perform at its best and productivity increases. It’s impossible to know how much time you waste digging through emails, searching for documents or wondering how much you spent on equipment, but it adds up. Make your life a little less hectic with accounting services at Motl that help you stay organized. We can integrate with your existing bank accounts and Quickbooks software, so the transition is simple. Let the Motl Accounting professional’s help you get on top of the day-to-day and start focusing on year over year growth. You’ll wonder why you didn’t sooner.
Accountant, Bookkeeping, CPA, Small Business
Nobody knows the value of a dollar quite like a small business owner. Whether you’re just getting started or have been building your business for years, you want to make every penny count, so you can grow as quickly as possible. One of the best ways to save money is to develop new habits that add some frugality to your daily routine. Part of our duties at Motl Accounting is to provide the best advice to our Chicagoland clients in order to help them be more profitable and successful. It takes a little motivation to change how your business operates – but as an entrepreneur, we’re sure you’re up for the challenge. Here are some small things you can do to make the most of every dollar:
Pick Up Deliveries
It might be a little less convenient, but the amount of money you can save by picking up nearby equipment and products really add up over time. Skip the middleman and you could avoid a few hundred dollars in delivery costs per year. You can set your own guidelines, but anything within a half hour that fits in your car or truck is usually worth picking up yourself. Your time is valuable, so don’t overdo it and become a one-person delivery service, but there are plenty of situations where the extra effort is worth the cost savings. (more…)
Accountant, Bookkeeping, Business Expenses, expenses, Small Business
Tax season is behind us, but that doesn’t mean it’s time to stop thinking about business expense documentation. In fact, now is the ideal time to get organized and create record-keeping habits that make sense for your company. Nobody wants to waste time digging through receipts and records just before tax day. Document your expenses now and you’ll save yourself and your accountant a headache later on.
Working with the Motl Accounting bookkeepers affords you the opportunity to not deal with all the effort and time it takes to stay organized with your expenses. We assist many businesses with bookkeeping services in Dundee, IL and the Chicagoland area. Below we share some of the things we recommend to our clients to keep their finances organized throughout the year.
Set up a Business Bank Account
One of the biggest mistakes people make when starting a small business is not creating a bank account dedicated to business funds. If you’re using the same account for personal and business spending, it’s easy to mix these expenses up and harder to locate specific purchases. Any business-related income should be pooled into a dedicated account. Only use business checking or credit cards when making purchases. Losing track of purchases will become a thing of the past. (more…)
