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.
Bookkeeping, CPA, Deductions, Small Business, Taxes
There’s nothing worse than realizing you could have saved money on your taxes after you’ve already filed them. It’s easy to overlook some of the lesser-known deductions that exist, but doing so could cost you a pretty penny. Sometimes business owners wait until the last minute to do their taxes, and that rush prevents them from researching money saving options at their disposal. If you don’t have a tax planner by your side, you’re left guessing about your best options. Start keeping records of your tax write offs now, and your 2017 tax day will go much smoother.
Home Office
Your home office probably doesn’t have to be as complicated as you think. So long as you have a dedicated computer for work and a space to get business tasks done, you can probably make a home office deduction on your taxes. That square footage isn’t the only thing that counts as business expenses – your mortgage, electricity and insurance costs count as well. Some people worry that a home office deduction is a red flag that invites an IRS audit, but if you are actually using it for business you have nothing to worry about.
Furniture
Buying office furniture may seem like a big investment initially, but it can save you money come tax day. Your office chairs, tables, filing cabinets and desks are all deductible if you’ve purchased them since your last tax filing. There are several types of furniture deductions you can take utilize. You can either deduct the total cost of the furniture at once, or you can reduce your tax burden incrementally over seven years. Base your choice on when you anticipate benefiting from that money most.
Driving Expenses
Hitting the open road doesn’t have to hit your pocket book hard. If you keep careful records of your driving miles, the government is more than willing to give you a break on your taxes. Some things you’ll want to keep on record are dates, miles driven, parking expenses and explanations for your trips. Make sure to keep your receipts on hand if you don’t have a receipt-scanning app on your phone. When you have that information at hand, you can easily save some money that would otherwise be gone forever. Gas mileage deductions vary by year, and for 2016 they are at 54 cents per mile driven.
Travel Costs
If you’re a frequent business traveller, you stand to save a significant amount of money with your expenses. You can deduct the total cost of your hotel stays from your taxes, so it’s worth springing for a few extra stars if you have the opportunity. Planes, trains and car expenses don’t have to set you back either. Exactly 100% of those costs can go directly towards deductions. That includes related expenses, such as tipping your flight attendant or visiting a laundromat while on the road. You can even write off your meal costs while travelling, albeit at a reduced deduction rate of 50%.
Education
If you want to be a master of your trade, you need to have the smarts to compete. Luckily, if you have education costs, you can write them off of your taxes if they relate to your current job. The IRS is strict about this write off though; you can’t own a bakery and go to school for your Masters of Architecture free of charge. If you want to improve your skills for your current position, this tax break gives you the chance to expand your career in a way that’s financially sensible. If you believe the best business owners are always learning, this incentive might be for you.
When it comes to taxes, every business owner wants to minimize their expenses. Tax deductions give you the chance to save money on the things you’d probably buy anyways, so it’s a no-brainer to take advantage of them. Of course, the examples above are just a few of the tax write offs you should be aware of. Our experts can help you reduce your tax burden, and ensure you won’t miss any deductions for the upcoming tax season. When we provide tax services, we work with businesses through the entire year, so no tax saving opportunity slips through the cracks. Learn more about our tax preparation services, and call today!
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, Small Business, Taxes
The Panama Papers leak has made waves across the globe and for good reason – celebrities, CEOs and even political leaders face accusations of widespread tax avoidance. An anonymous source leaked the implicating documents, and an international coalition of hundreds of journalists has sifted through each and every piece of evidence. The parties involved in the cover-up went to great lengths to avoid the law, and there have been calls for increased financial transparency among the super wealthy. The purpose of accounting is not to bend the rules, but to provide a wealth of knowledge for sensible financial decision-making. The Panama Papers leak shows us that accountability is the most important part of accounting and being an Accounting firm servicing many businesses in a metropolis like Chicagoland that has many businesses with global connections made us want to shed some light on what happened.
What Happened
Just over a year ago, the German newspaper Sueddeutsche Zeitung received 11.2 million documents from an anonymous tipster. These papers, sourced from the Panama law firm Mossack Fonseca, included the hidden financial transactions of everyone from public officials to sports stars. These people used offshore shell companies within Panama to hide their money from their own national governments, and avoid paying taxes. Those accused of funneling money were able to stay anonymous for years because of a complex network of offshore accounts run by Mossack Fonseca.
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Accountant, Taxes, Uncategorized
With each New Year comes an inevitable change to the federal tax code, prompting individuals, businesses, and accounting firms alike to reassess how their returns will be filled and filed. 2015-2016 brings us a host of changes, even an adjustment to the traditional tax deadline of April 15th.
Filing Deadline
Due to Emancipation Day, the official tax-filing deadline has been moved from Friday, April 15th to Monday, April 18th. Emancipation Day is a holiday celebrated by the city of Washington D.C. to commemorate the day in 1862 on which President Abraham Lincoln signed the Compensated Emancipation Act, freeing approximately 3,100 slaves in the District. This holiday is typically celebrated on April 16th, which falls on a Saturday, and therefore will be observed on the Friday prior. And because the IRS treats D.C. holidays as federal holidays, Americans have three more days to file their taxes, according to the Washington Post.
For those living in both Maine and Massachusetts, Patriot’s Day, which commemorates the battles of Lexington and Concord, pushes the deadline back yet another day to April 19th. (more…)
