Tips to Cut Your Tax Bill

Tips to Cut Your Tax Bill

This article provides some helpful tips on how you can cut your tax bill by making smart depreciation choices, maxing out your retirement contributions and buying the right items. Saving money is critical for everyone, but if you are self-employed or own a small business, these savings can be especially important.

If you follow these tips then you should be able to reduce your tax bill.

  • Tip 1  – Reduce taxes, cut taxes, tax refund
  • Tip 2  – Reduce taxable income, reduce business profits
  • Tip 3 –  Hire an accountant

Tip 1 – Reduce taxes, cut taxes, tax refund

For many years, you could reduce your taxes by depreciating the purchase of vehicles or equipment. However, in recent years, this deduction has been severely limited, thanks to the Tax Cuts and Jobs Act passed at the end of 2017. Before making any major purchases for your business, consider if it would be better to wait until when these limitations are likely to be repealed. However, speak with your accountant to know when that could be and to make the final determination. 

Tip 2 – Reduce taxable income, reduce business profits

Even if you can no longer reduce your taxes by depreciating items, you may still be able to reduce the amount of tax on profits from your business. You may reduce this amount by contributing as much as possible to a retirement account. You can reduce your taxable business income this way if the retirement plan provides a tax deduction for contributions and defers tax on earnings and contributions. There are also other ways to reduce taxes like deferring income and accelerating deductions, but it’s best you speak with your accountant to ensure you are doing it the right way.

Tip 3 – Hire an accountant

Getting an experienced accountant to help you manage your books and look for deductions you deserve is highly recommended. Our accountants at Motl accounting have identified several deductions for businesses they weren’t aware of. Accountants have the knowledge and experience to analyze your finances and get you the best deductions. So consider hiring a well experienced accountant like us to get the most out of your deductions.  

Tax laws are constantly changing based on politics, economic situations and events. Many of these changes present opportunities that you can act on if you know they exist. At Motl Accounting, we constantly take note of the changes in these laws and apply them to help our clients. We also provide our clients with the best advice on cutting their tax bill. So if you’d like us to look at how you are structured and treating all transactions, contact an experienced tax professional here at 847-426-2100. 

How Working from Home Affects Taxes

How Working from Home Affects Taxes

The pandemic led to a large number of professionals working from home instead of their office space. Many may be wondering how this will affect their taxes and if they’ll get a tax break.

The general thinking could be leaning towards you getting a break as an employee working from home, but that may not be the case. Tax breaks of the sort ended with the 2017 tax cuts with little exemptions. This means employees who don’t get reimbursed for their expenses by their employers can’t claim those expenses the way they used to. It’s more complex If you are self-employed and there are rules to be mindful of. You can still deduct a home office and some other expenses related to working from home, but want to ensure you are following the guidelines. It helps to speak with an accountant to get more clarity, but here is some helpful information:

What Can I Claim On My Taxes Working from Home?

Employee

You are not supposed to deduct your expenses when you work from home as an employee if your taxes, social security and medicare are deducted from your paycheck. Prior to the 2017 Tax Cuts and Jobs Act passed by the United States Congress, employees could deduct expenses like mileage, home office supplies, work outfits and more. The IRS now tends to qualify remote employee expenses of that manner as “miscellaneous itemized deductions” and since 2018 itemized deductions can only be taken if they exceed the standardized deductions. 

Self Employed 

Self employed professionals and business owners can still deduct for their office, meals, mileage supplies, marketing and more. Expenses you get in regards to working from home are tax deductible. It’s important to note that the expenses need to be exclusive to the business’s operations. A space used as an office by day and bedroom any other time would likely not be compliant. The space being used needs to be exclusively used for your business. 

Tax Breaks Due to Covid-19?

There aren’t currently any special tax breaks for those working from home due to the pandemic. You can however count on a good accountant to ensure you get any tax breaks related to the pandemic if there are changes in the future. 

In conclusion, the changes to the tax laws with regards to working from home may be confusing as time goes on. Having a professional assist you with your finances as an employee or business owner can make a difference. Accountant’s like us here at Motl Accounting are mostly aware of these changes and can help you get the most out of your taxes. 

If you need to know more about what you can claim on your taxes, contact a professional at We’ve helped several individuals, families and businesses with getting the most they deserve out of their taxes.

Benefits of Paying Taxes Quarterly

Benefits of Paying Taxes Quarterly

Many individuals are familiar with filling out W-4 forms provided by their employers to file taxes. Business owners, self employed individuals and contractors however don’t fill out traditional W-4 forms. They are professionals who might receive income without taxes taken out right away and are therefore expected to make payments quarterly. According to the IRS, you are expected to make quarterly estimated tax payments if the following apply.

  • You expect to owe at least $1,000 in tax for the current tax year after subtracting your withholding and refundable credits.
  • You expect your withholding and refundable credits to be less than the smaller of:
    • 90% of the tax to be shown on your current year’s tax return, or
    • 100% of the tax shown on your prior year’s tax return. (Your prior year tax return must cover all 12 months.)

Simply put, if you know you are going to owe a good amount of money, it’s beneficial to pay your estimated taxes. Here are a few reasons why.

Penalties

No one likes penalties and paying your taxes each quarter prevents that. Per the IRS if you owe over $1,000 you could be penalized for underpayment of your taxes. Knowing the exact figure could be challenging and hiring an accountant could help in estimating how much your payments should be. Your accountant should have all the right numbers and processes in place to give a figure to pay that should prevent you from underpaying your taxes.

Tax Bill

Paying your taxes quarterly let’s you avoid the potential surprise of a larger tax bill during tax season. Not paying could lead to having a large and unexpected bill at tax season. Paying your taxes quarterly can give you peace of mind knowing you aren’t likely to get an unexpected bill. This might be a task to deal with every quarter due to the nature of your business and how busy you are. If that’s the case, consider hiring an accountant who can assist you. For all you know, the cost of paying penalties could be more than what an accountant might charge to help you.

Efficiency 

Paying your estimated taxes each quarter should give a good overview of your books and less stress in managing your accounting. This is where a bookkeeper comes in handy as they can provide insights on your accounting through the year. Tax season is less of a headache when you’ve been managing your books and making quarterly payments throughout the year. 

In conclusion, the benefits to paying your estimated quarterly taxes can make life easier and provide you peace of mind. Quarterly taxes are typically due on April 15, June 15, September 15, and January 15, for the current calendar year. Most accountants and bookkeepers are aware of these dates and should work with you to get your payments in on time as needed. 

Want to know more about how accountants and bookkeepers can help with your taxes and grow your business? Contact one of our professionals here at Motl Accounting. We assist businesses and individuals with their accounting needs and look forward to assisting you. 

Tips to help with your taxes in 2021

Tips to help with your taxes in 2021

Prepare to file your taxes in 2021 with these in mind!

Many businesses and families went through unexpected changes in 2020. The effects of the pandemic upended financial plans, forecasts, family plans, business goals and much more. This undoubtedly will have an impact when filing your 2020 taxes due to changes in the tax code for 2021. With COVID-19 came stimulus checks, programs like the Paycheck Protection Program (PPP), Pandemic Unemployment Assistance (PUA) and more depending on your business or personal need. We’ve been assisting businesses and families with their accounting and tax needs through the pandemic and will provide you with some tips to prepare you for filing your taxes this year. 

Organize Records and Documents 

For many, the main hurdle is getting documentation together. It’s important to have all your documentation in order to have a seamless filing experience. Keep all the tax documents that start coming in the mail early January in a folder and do not throw out any tax document that may look irrelevant. Many tax documents can also be downloaded online depending on the provider of the documents in case you can’t locate them. For example, many financial institutions provide tax documentation that can be viewed and downloaded when you access your account. 

Review and Itemize Transactions for your Business

Whether you are self-employed, have a side business or own a home, you’ll need to ensure your transactions are correctly documented to claim certain deductions. The pandemic led to many working from home and you may be entitled to write-offs as a result. If you use a software like QuickBooks or use a spreadsheet for your records, take the time to review the transactions and put them in their respective categories. This will help your tax preparation process greatly. The benefits of having an accountant who assists with monthly bookkeeping is advantageous, as the monthly management of your books throughout the year keeps your transactions correctly labeled. This prepares you better for tax season and makes things easier for you and whoever is assisting with filing your taxes.

Note Life-Changing Events

Many life-changing events happen year over year, but have been commonly happening since the beginning of the pandemic. Changes like getting married, getting a divorce, a death in the family or retirement may qualify you for tax breaks. Your accountant or tax preparer should be aware of any life-changing event so they can help determine which tax breaks you qualify for based on how your circumstances changed in 2020. 

Here are a few things to consider to help prepare for filing your 2020 taxes. Having an experienced tax preparation service can be helpful due to the changes in the tax code. Finding the right tax forms or knowing what to fill out due to the changes caused by the pandemic can be confusing. It’s advisable in these uncertain times to consult with an experienced accountant or CPA to ensure you are getting the most out of your taxes, while being compliant under the current laws. 
Motl Accounting can handle the most complex returns providing you the peace of mind you would want through the experience. If you are looking to prepare your taxes, you can talk to a tax professional at our West Dundee location to get your questions answered and your taxes filed properly.
Contact us at 847-426-2100 or send us message via our Facebook Page to get started today.

5 Ways Accountants Can Help Businesses Grow

5 Ways Accountants Can Help Businesses Grow

Growing as a business is certainly of importance to most business owners. After all, you will want your company to flourish and continue to experience growth for many years to come. However, in order for your business to head in a positive direction, it helps to utilize proper financial planning and analyzing…that’s where an accountant comes into play!

Are you aware of how accountants can benefit your own business? Many might believe an accountant just helps with the crunching of numbers, but you’ll be surprised that great accounting practices actually help businesses grow and generate more profits in the process.

We understand just how beneficial an accountant can be for a business! We have helped several businesses in the Chicagoland area and provided them with great information that’s helped their businesses. That’s why we have gathered five ways in which accountants can help a business grow by working with an accountant like Motl Accounting in Dundee, Illinois. If you would like to discover what these ways are, be sure to continue reading:

  • Creates Budgets & Forecasts Reporting. It’s important that every business has a plan for their future. Therefore, you will want to set up goals to achieve over the next year, as well as create charts and graphs to keep yourself on track and complete them. By working with an accountant, you can have reports created which will showcase how your fixed and variable costs compare with your sales volume throughout the year, providing you with knowledge of the market conditions that you will need for profitable growth.
  • Discovers Key Performance Indicators. Every business has key performance indicators. If you are in retail, you might use inventory turnover for construction or it might be job costing. Your accountant should assist you with discovering yours, as well as advise on methods to set up reports, allowing you to see how they perform over time so that you can make the best decisions for your business for its future growth.
  • Maintains Cash Flow Projections. If there is one thing you want to understand as a business, it’s your cash flow! After all, without cash your business wouldn’t be able to operate at the level you’d want it to. An accountant will create financial reports right out of your accounting software which will assist you with planning your key performance indicators and properly maintaining your cash flow. It’s important to know how to expand your product lines, increase direct costs and add employees in a way that keeps your cash flowing just as it should.
  • Determines Your Businesses Value. It’s important that you know the value of your business so that you can plan for your future. Seeing as opportunities or life events can present themselves at any time, you will want to know how much your business is worth, given the current market conditions. An accountant can assist you with getting to determine your businesses value, so that you can maximize it and your tax liability. We have professionals we partner with at Molt Accounting that help our clients with business valuations. 
  • Creates Advisory Boards. For your business to remain fiscally strong and healthy, you will want to be advised and know what to expect for the years to come. An accountant will work with you to develop a system so that you can forecast budgets, cash flow management and an overall financial analysis for your business. This way you can monitor your goals and business growth through a dashboard and ensure that it is always headed in a positive direction.

These are just a few ways in which an accountant like us can assist your own business with growing.

Are you ready to work with an accountant in the Northwest Suburbs of Chicago to grow your own business and provide your peace of mind in the process? If so, please get in touch with us one of our accounting therapists at Motl Accounting, as we would be pleased with the opportunity to assist you with doing so!

Best Practices for Small Business Taxes

Best Practices for Small Business Taxes

Running a business is no easy task, especially when you have to file taxes each year to ensure that you are in compliance with current regulations. Having the expertise of an accountant throughout the year and especially during tax season can relieve much of the stress you may feel at tax time.  

Making financial decisions for your business without consulting an accountant can put your business at risk and even cost you more money in the long run. However, if you make yourself aware of some of the best practices for small business taxes, you can ensure that your business operations are headed in the right direction.

Every business should have confidence in their taxes! We have done thousands of small business taxes at Motl Accounting and have here for you some of the best practices for small business taxes.

  • Hire an Accountant. Hiring an accountant will greatly benefit your business! Throughout the year, your accountant will track your income and spending ensuring that you don’t have cash flow problems, as well as monitor your gross and net profits. This way, when it comes time to prepare your taxes, you will have all you need to properly file.
  • Keep Records. Keeping accurate records throughout the year of all of your business transactions will ensure that your tax return is correct. With inadequate record keeping, you could be leaving out deductions or even putting yourself at risk for an audit. It’s best to invest in an accounting software to assist you with keeping track of all of your income and expenses.
  • Understand the Difference Between Net & Gross Income. Business owners often forget to take into account the difference between their net and gross income. If your product costs more money to make than you charge for it, you will lose money, regardless of how many units you sell. It’s important to know what your gross and net profits are so that you can better forecast and ensure that your taxes are accurately prepared.
  • Correctly Classify Your Business. By failing to correctly classify your business, you could result in overpaying taxes. Each business classification will have a different effect on your taxes, whether it be Limited Liability or Sole Proprietor. It’s important to consult with your accountant or attorney to discover the best classification for your own business.
  • Manage Your Payroll. The IRS typically checks every quarter to ensure that a business’s payroll taxes have been paid. Therefore, it is recommended that you hire a reputable company to assist with your payroll. Whether you are working with classic fax reporting, paper checks, or even electronic reporting and direct deposit, you will want assurance that yours is handled as it should be.

By properly filing your taxes, you can have confidence in the overall operations of your business. These are just a few practices that you will want to keep in mind when it comes to your own business taxes.

With that being said, if you are seeking an accountant to assist your business, please get in touch with us here at Motl Accounting. With years of accounting experience in the Chicagoland area, we would be pleased with the opportunity to provide you with our tax services that provides business owners peace of mind.