Blog - Holden Moss CPAs

How Do I? Deduct student loan interest

Wed, 04 Dec 2024 18:32:52 GMT

Deducting Student Loan Interest: What You Need to Know

Eligible taxpayers can deduct interest paid on qualified student loans for an eligible student's educational expenses at a qualified institution. Here’s a breakdown of the key details:

Deduction Limits and Income Thresholds

The maximum deduction for student loan interest is $2,500 per year. This amount is not adjusted for inflation .

For 2024 , the deduction begins to phase out for taxpayers with Modified Adjusted Gross Income (MAGI) above:

$75,000 (Single or Head of Household)
$155,000 (Married Filing Jointly)
The deduction is completely eliminated when MAGI reaches:
$90,000 (Single or Head of Household)
$185,000 (Married Filing Jointly)

Key Details About Student Loan Interest Deductions

Above-the-Line Deduction : Student loan interest is an “above-the-line” deduction, meaning you can claim it even if you do not itemize your deductions.

Eligible Student : To qualify, the student must be enrolled in a degree, certificate, or recognized educational program, carrying at least half the normal full-time workload during one academic period in the tax year.

Dependency Rule : You cannot deduct student loan interest if you are claimed as a dependent on someone else’s tax return. However, students may deduct interest in years after they are no longer dependents.

Legal Obligation to Pay

The deduction can only be claimed by the person legally obligated to repay the loan.

Examples :

A parent who co-signed a student loan and is personally liable for the payments can deduct the interest if they make the payments.

If a third party (e.g., an employer or parent) makes a payment on behalf of the borrower, the borrower can treat the payment as if they made it and may deduct the interest, provided they are legally responsible for the loan.

Important Changes: Home Equity Loans

Under the Tax Cuts and Jobs Act (TCJA) , interest on home equity loans is no longer deductible unless the loan is used to buy, build, or substantially improve the home securing the loan. Therefore, using a home equity loan to refinance student debt would not qualify for a deduction.

Planning Tip:

To maximize your tax benefits, consult with a tax advisor or CPA to evaluate your eligibility for the student loan interest deduction based on your specific financial situation.

If you have any questions, contact our office today!

Bunching of Itemized Deductions

Wed, 04 Dec 2024 18:29:16 GMT

Under the Tax Cuts and Jobs Act (TCJA), the standard deduction significantly increased, and for the 2024 tax year , it is:

$27,700 for those filing as Married Filing Jointly
$20,800 for Head of Household
$13,850 for Single or Married Filing Separately

Due to this increase, the number of taxpayers who itemize their deductions has dropped significantly—from around 30% prior to the TCJA to less than 10%. Additionally, the TCJA eliminated or reduced certain miscellaneous itemized deductions, such as those subject to the 2% income limitation.

Maximizing Deductions with a Bunching Strategy

Using a bunching strategy can help some taxpayers maximize the effectiveness of deductions. Bunching involves accelerating or delaying payments to optimize deductions. For example, instead of giving $5,000 to charity annually, you could give $10,000 in one year and skip the following year. This allows you to itemize deductions in the year you give more and claim the standard deduction in the next.

Examples of Deductions You May Want to Bunch:

Medical and Dental Expenses (exceeding 7.5% of AGI)
State and Local Taxes (SALT) (limited to $10,000 annually)
Mortgage and HELOC Interest (restrictions apply)
Charitable Contributions (consider using a Donor-Advised Fund for flexibility)

Bunching can make a significant impact, especially for taxpayers close to the standard deduction threshold. Before implementing this strategy, consult your CPA or tax advisor to review your unique financial situation.

Charitable Contributions from Your IRA

Wed, 04 Dec 2024 18:26:52 GMT

If you are 70 ½ or older, you are eligible to make a Qualified Charitable Distribution (QCD) from your IRA directly to a qualified charity. By electing to make a QCD, the distribution of these funds will be reported as a distribution and will count toward the required minimum distribution from the IRA, but will not be included in taxable income. This is an advantage for taxpayers who do not need the required minimum distribution to live on and are charitable givers.

The advantage in making a QCD is that by having the distribution excluded from taxable income, it may

Make less Social Security benefits taxable
Allow for a “deemed” deduction even if you take the standard deduction, or if your itemized deductions are limited (the QCD will neither be included in income nor allowed as a deduction).
Lower AGI as it relates phase-outs of deductions, exclusions, or tax credits that are limited or lost at certain AGI levels.

To make a QCD you must have the distribution sent directly from the IRA (by the trustee) to a qualified charity as defined in IRC Sec. 408(d)(8). Many trustees and custodians have forms in place to handle this distribution. The distribution cannot first be paid out to the beneficiary and then paid to the charity. This action would include the distribution in taxable income and would qualify the amount as a charitable contribution as an itemized deduction.

QCDs are limited to taxpayers who are 70 ½ or older at the time of the QCD and are limited to $100,000 per individual per year. They must be made directly from an IRA to the charity and the charity must still provide documentation that would be necessary to make an itemized charitable deduction. Also, the amount of QCD is limited to the amount of the distribution that would otherwise be included in taxable income.

Non-Cash Charitable Contributions: What You Need to Know

Tue, 03 Dec 2024 19:21:35 GMT

Non-cash contributions are deductible on Federal Schedule A of your personal income tax return as itemized deductions. The documentation required depends on the amount of the donation.

For all non-cash contributions, regardless of the fair market value, you will need the following documentation:

Name of the Charity/Organization
Location/Address of the Charity/Organization
Description of the items donated (must be in good or better usable condition)
Date of the gift
Fair market value at the time of the donation

Contributions Exceeding $500

For cumulative non-cash contributions with a fair market value over $500, you must attach Form 8283 to your personal income tax return. Filing this form requires additional details:

How the property was obtained (e.g., purchased, gifted, inherited)
Date the property was obtained
Original cost or adjusted basis of the property

Contributions Exceeding $5,000

For cumulative non-cash contributions of similar property with a total value exceeding $5,000:

A qualified appraisal is required.
The appraisal must be conducted by a qualified appraiser and completed before filing your tax return.
You will also need the appraiser's signature and acknowledgment from the charity for this property, attached to Form 8283.

Additional Considerations

For donations of vehicles, boats, or airplanes, the rules differ slightly, and specific IRS forms may be required.

Taxpayer's Responsibility

The burden of proof lies with the taxpayer. Always obtain contemporaneous receipts from the charitable organization and retain any other supporting documentation required. This will ensure compliance with IRS requirements if your return is audited.

If you have questions or need help determining how to document or value your non-cash charitable contributions, contact us for personalized assistance.

The Confusing IRS Code: 2% Shareholder Health Insurance

Tue, 03 Dec 2024 19:15:42 GMT

Health Insurance for S-Corporation Owners: A Complex Puzzle You Don’t Have to Solve Alone

The Internal Revenue Code is notoriously intricate, and few areas are as perplexing as health insurance requirements for S-Corporation shareholders. As we approach year-end, it’s important for 2% or greater S-Corporation shareholders to understand these requirements—or better yet, to partner with experts who do.

Why It’s Complicated

S-Corporations combine elements of partnerships and corporations. If you own 2% or more of an S-Corporation, the IRS treats you as both an employee (subject to reasonable compensation rules) and as a partner (for benefit purposes). This unique classification creates a complicated process for reporting and deducting health, dental, and vision insurance.

What Needs to Be Done

Here’s what you should know:

Insurance payments made by the company on behalf of a 2% shareholder must be handled carefully to ensure compliance with IRS rules.

The cost must be accounted for on your W-2 in a very specific way to ensure both the business and shareholder receive the appropriate tax benefits. There are unique reporting requirements that affect how this is reflected on your personal tax return.

It’s not as straightforward as it sounds, and even small missteps can lead to missed deductions or compliance issues.

Why You Should Partner with Experts

This three-step process is full of nuances that require a detailed understanding of tax law. At Holden Moss CPAs, we specialize in navigating these complexities for business owners like you. Our expertise ensures that your insurance costs are handled correctly—so you can focus on running your business while we focus on keeping you compliant and maximizing your tax benefits.

Let’s Simplify the Complex

Why spend hours trying to decode these rules when our team can handle it for you? If you’re an S-Corporation shareholder and want to ensure your health, dental, and vision insurance is compliant and deductible, give us a call.

We’re here to make the complex simple, so you can stay focused on what you do best. Reach out at (919) 556-6216 or via email at admin@holdenmoss.com . Let’s take the confusion off your plate.

Take Control of Your Financial Future with Holden Moss CPA

Tue, 03 Dec 2024 14:58:11 GMT

Planning for the future is essential, no matter where you are in your financial journey. At Holden Moss CPAs, our financial planners specialize in helping you create a clear and realistic picture of your finances, identify your goals, and uncover potential gaps in your financial strategy.

Start today by downloading your Personal Finance Scorecard and gain valuable insights into your financial health.

How to Use the Personal Finance Scorecard

Review Each Question Thoroughly: For every question, mark "yes" to earn a point. If you answer "no" or feel uncertain, assign yourself a 0. This approach helps you pinpoint areas where you can improve.
Analyze Your Score with a Professional: After completing each category, collaborate with a Holden Moss CPA financial planner. Together, we’ll create a step-by-step plan to strengthen your finances and improve your score.

Stay on Track with Annual Reviews

Life changes, and so do your financial needs. That’s why we recommend reviewing your scorecard with us annually. By setting up a regular appointment, you can monitor your progress, address new concerns, and stay aligned with your goals.

Trusted Tools Backed by the AICPA

This scorecard was developed by the AICPA’s Personal Financial Planning (PFP) Division and is designed to help you assess and enhance your financial wellness. As a member of the AICPA, we have access to an extensive library of resources, like this scorecard, to guide our valued clients on the path to financial success.

All information included in this article was sourced directly from AICPA.org .

The Power of Personal Scorecards

Mon, 02 Dec 2024 19:36:55 GMT

Is your work/personal life in balance?

Getting that ratio right is a big deal when you’re a busy owner.

It’s very easy, as the business owner, to get sucked into a vortex of running your business effectively where it takes up every minute of your waking day – at the detriment of your personal life, your relationships and even your health.

It’s an issue that’s relevant to most owner-managed businesses – and it’s incredibly easy to fall down the rabbit hole and (unlike Alice in Wonderland) to not come out the other side.

So how do you avoid falling down this rabbit hole?

Maintaining your quality of professional life

When you’re an owner-manager, it’s vital that you can maintain a positive ‘quality of professional life’ (QOPL).

If you’re keeping your professional life balanced effectively against your personal life then you’ll be happier, more fulfilled and (ultimately) a more effective leader. So making a determined effort to improve your QOPL is a big part of looking after yourself and your business.

One particularly effective way to control your QOPL is to use a personal scorecard.

The personal scorecard approach lets you set a series of questions relating to your personal wellbeing, which you then answer on a daily to determine how well you’re meeting your personal goals. Doing this daily will almost always ensure success at changing to our desired behavior.

This personal scorecard approach works well with managers and team members, but the most important place to start is with yourself – the CEO or business owner.

A personal scorecard keeps you focused on what’s important to you, instead of allowing you to be blown by the various winds and currents of your business. It helps you to stick true to your course and sail forward to your intended destination.

The items on your scorecard definitely don’t have to be focused on business matters. What’s important here is to pose questions that drive the right behavior and keep you on track with meeting those personal objectives.

For example, you could be asking the following kinds of question:

Have I pushed myself to find one morning every week to go for a run or do something healthy?
Have I done my best to take time out each day to spend quality time with my family?
Have I proactively managed my day so there’s enough free time to read a good book this week?

What you choose and prioritize will be unique to you and your personal goals and core values.

But the simple act of asking the question begins a process of measuring your performance on these personal goals, and proactively acting on your own advice and changing your behavior.

Passive vs active questions

When setting the questions for your personal scorecard, it’s imperative that you know the difference between passive and active questions.

An example of passive questions could be ‘Am I grateful for what I have?’ or ‘Have I been mindful of my choices today?’

A passive question allows you to get away with just answering ‘Yes’ or ‘No’ to the question, with no accounting for anything else following that answer. You give an affirmative answer and move on.

An example of an active question could be ‘Did I do my best to be grateful for what I have?’. That’s not a straight yes/no question – there’s an element of quality to the answer you give.

If you’re a workaholic, asking the question ‘Did I do my best to plan some form of adventure or social activity outside work this week?’ won’t just get a yes/no answer – it requires deliberation, thought and review; and, ultimately, will push you to do better.

Asking yourself these active questions on a regular basis will trigger certain responses, certain changes in behavior and certain improvements in your QOPL score. In short, it makes you proactive about your own development.

The triggers are what move you from being passive about your progress against personal goals to being active – something that Marshall Goldsmith identified in his excellent book Triggers: Creating Behavior That Lasts, Becoming The Person You Want To Be .

Marshall Goldsmith really is the #1 personal coach in the US, if not in the world. He’s specialized for many years in this area of persona coaching and has helped countless people to improve their QOPL balance and find a better way of living and working.

If you feel like your work/life balance is uneven, I’d heartily recommend reading the Triggers book and picking up on the concepts he talks about.

Don’t just plan; make sure you also do

Human being are great planners, but human beings are also the worst at actually doing. We plan, but we don’t do the things we’ve put into our plans. And when you’re trying to improve your QOPL that can be a real problem.

That’s why you need a personal scorecard: something to keep you focused and a means to drive your motivation to be doing the right things and not just sitting around planning and theorizing.

It’s your ‘personal conscience’ that is always there, checking that you’re meeting your own standards and taking the right steps forward.

The power of personal scorecards for your team

The personal scorecard is an amazing driver for you as a business owner. But imagine the power of creating a business-driven version of the scorecard and giving this to your managers and team members.

Immediately, you take business planning and management from being a theoretical idea and make it into a clear, actionable set of drivers.

So, for example, a question you could ask one of your team members is ‘What kind of training do you think you need to do your job better?’ and to then add that training into their personal scorecard and development program.

Maybe you have a team member who is rather abrupt with colleagues and customers and where they need to work on improving that behavior. So, on their personal scorecard, you may have a question that says ‘Did you do your best to be polite and open, rather than abrupt, when dealing with people today?’

It pushes the right behaviors, allows you to monitor change over time and provides clear goals to the people on your team – all benefits that will ultimately profit their careers, their personal happiness and the long-term success of your team.

Start being proactive about your quality of life

The personal scorecard is an extremely effective tool in your business toolkit. By putting scorecards in place you and your team, you can help everyone to improve that all-important work/life balance and also lead by example by maintaining a positive QOPL as the business owner.

Our goal here at Holden Moss is always to look at owner-managed businesses in a holistic manner – looking at the personal goals of you, the owner, alongside the strategic and growth objectives of your company.

If you’d like to improve your work/life balance, please do come and talk to us and let us help you get your own personal scorecard in lace.

Contact your local Holden Moss office to arrange an appointment and begin your journey to a more fulfilling balance between your business and your personal life.

Base Business Decisions On Key Profits

Mon, 02 Dec 2024 19:36:50 GMT

Knowing the true health of your business is crucial if you’re looking to make any big decisions about the future growth of your company.

Is your business currently on life support? Or are you thriving and meeting your profit targets? We’ve already talked about measuring your acceptable level of profit (ALP) and how you need to set a minimum level of profit for your business.

And this ALP can be a critical element when you’re scenario planning and asking the ‘What if…?’ questions about the future success of the company.

Knowing your minimum acceptable level of profit

Keeping on top of your profitability is a fundamental part of keeping your business on track and meeting its goals.

You need to agree on your minimum profit level, measure your profit numbers over time and see where you stand as far as your percentages go. Are you achieving that minimum acceptable level? And where is your business on the scale of success?

Life support
– there’s no money in the bank and you’re about to flatline.
Survival
– you’re covering your costs, but not making the profit you want.
Thriving
– you’re meeting your profit target and seeing growth.

Wherever you fall on the scale, there are ways to improve. But you need to have a focus on profit improvement at the center of the business to truly achieve greatness.

Feed your ALP into your decision-making

Pinning down your ALP doesn’t just give you a profit target to aim for. It also gives you an incredibly useful variable that can be plugged into your forecasting and decision-making processes.

Whenever you’re going to make a business decision, you can plug the numbers into your decision-making model and see what the effect will be on your acceptable level of profit (ALP) before you make your final decision.

And that’s an exceptionally powerful tool to have at your disposal when you’re about to make a big purchase, enter into a business deal, or make a decision that affects the long-term outlook for the company.

Always make your business decisions once you’ve looked at the potential impact on your ALP – only then can you make an informed decision

Moving offices
– maybe you’re looking to move to bigger offices and want to know how the increased rent will impact your ALP.
Increase the size of your team
– perhaps you need more people to help you handle your workload and want to calculate the effect of your increased payroll costs on profits.
Buying a company car or truck for the business
– you could be looking to invest in a car, or a bigger truck, to help you become more efficient, and want to know how this outlay could eat into your profit.

Whatever the next step is for your company, your ALP will be a critical element to consider – and when you know the potential outcomes it allows you to pivot, evolve and rethink your plans to preserve those precious profits.

Invest your profits back into the business

Typically, a business will end up at the close of the year with a certain amount of profit – let’s say $50,000 of profit, as a rough example.

And the typical mindset at this point is very much around how you can reduce the tax you pay on this $50k – the owner will be thinking ‘What can I do to get this profit number down and pay less in tax?’.

But that’s a fundamental misconception that many business owners hold. What you need to do is not look at ways to reduce that profit number, but ways to reinvest your profits back into the business.

How does that work in practice?

The answer is to look at the needs of the business and to use your profits to secure long-term value, rather than a short-term cash distribution to yourself.

Invest in your assets
– if you do need a bigger truck to speed up deliveries for your business, reinvest your profit into buying this vehicle and keep the capital in the business by investing in your assets (the truck).
Clear your debts
– rather than paying yourself a big sum from your annual distributions, why not pay down the outstanding debts that are in the business.

The possibilities are endless and will be driven by the needs of your particular company. But the key is to do something with these profits that are going to benefit the long-term success of the business, not just to reduce that tax bill.

Listen to the angel on your shoulder

Successful decision-making is about using the information you have at your fingertips and reaching an outcome that’s informed, long-term, and – crucially – maintains your minimum level of acceptable profit.

It’s about ignoring the emotional, greedy devil on your shoulder and listening to the practical, forward-thinking angel who’s sitting on the other arm. Look at the numbers, use your head and make decisions that will help you thrive in the long run.

If you want to know more about controlling your profit levels and making great decisions for your business, come and talk to us. We’d love to help you improve your profits and help you grow.

Establish Profit Motive for Business Activities

Thu, 31 Oct 2024 17:29:11 GMT

The IRS has rules that limit the deductibility of expenses and losses from a hobby or activity not engaged in for profit. If the IRS determines that an activity is not profit-driven, deductions from the activity are limited to the amount of income the activity generates. Losses from such activities cannot be used to offset other income, such as salary or investments.

In being able to deduct a net loss from a business - whether it is a business that normally has ups and downs or one in which the unexpected might occur - you must be prepared to show that an activity that generates deductions is a business from which you intend to profit. It is not necessary that the activity actually earns a profit, so long as a profit is one of the motives for participating in the activity.

The IRS assumes that an activity is carried on for profit if it makes a profit during at least three of the last five tax years, including the current year, or at least two of the last seven years for activities that consist primarily of breeding, showing, training or racing horses. Otherwise, the IRS applies non-exclusive tests and factors to the surrounding facts to judge whether activities are more like a business with a profit motive, or are for personal satisfaction. Under IRS rules and judicial precedent, the following nine factors are considered in determining whether an activity is engaged in for profit:

1. the manner in which the taxpayer carries on the activity;
2. the expertise or experience of the taxpayer's advisors;
3. the time and effort the taxpayer expends on the activity;
4. the expectation that the assets used in the activity may appreciate in value;
5. the success of the taxpayer in carrying on other similar or dissimilar activities;
6. the taxpayer's history of losses from the activity;
7. the amount of occasional profits earned from the activity;
8. the taxpayer's financial status; and
9. the elements of personal pleasure or recreation derived from the activity.

These factors are not exclusive in determining a profit motive, and if the circumstances warrant, are not given any weight.

To make sure you are properly claiming all of the deductions available to you, and to strengthen your position in the event of an IRS audit, it is important to consider all the facts and circumstances surrounding activities the IRS is likely to challenge.

If you would like assistance in documenting the for-profit characteristics of your activity, please call our office at your earliest convenience to arrange an appointment.

How to Create a More Profitable Business

Thu, 31 Oct 2024 17:28:26 GMT

At Holden Moss, we love working with business owners who are going places – the people with fire in their belly and a real vision for making a success of their company.

And the key thing that will help you achieve these business dreams is putting profitability at the core of everything you do as a business owner. When you’re turning a healthy profit, you’re more stable, more effective and more prepared for growth, expansion, and long-term stability.

So, to help you focus better on profit, we’re starting a series of blog posts that take you through the important questions to ask yourself as an ambitious business owner.

How to create a more profitable business

We’re going to make you a more profitable enterprise. And we’ll do that by helping you to consider the following key questions:

Where am I now? – this is about understanding your business position as it stands at the moment. Are you winning, or losing the business battle?
What can I do to make things better? – small efficiencies have a big impact, whether it’s on your finances, business ideas or people management.
How do I know I’m making progress? – tracking how well your improvements are progressing puts real impetus behind your evolution.

It’s a simple, easy-to-execute way to get more from your business. And if you need more help, we’re always here at the end of the phone to give you the support and guidance you might need.

Where am I now?

Let’s start right from the beginning.

You may be a brand new start-up, or you may be a long-running business that’s been trading for years. But the starting point is defining what kind of shape the business is in right now.

The initial assessment. We use two: the Scaling Up assessment and Cash Flow Story.

We are happy to provide you with access to these two tools, complimentary.

Incredible tools to see where you are.

A great view of your numbers

Your business numbers are the foundation of your financial health as a business. So it’s critical that you know as much as possible about your financial systems.

Do you know what accounting processes you use? – a good overview of your accounting set-up is vital. Knowing whether you’re accounting on a cash or accrual basis, or how you’re set up for tax with the IRS, will be a big help further down the line.
Does your accounting software system deliver real-time numbers? – the new breed of cloud accounting software can show you numbers that are 100% up to date – and that’s a huge benefit when looking at reporting and performance metrics.
Are you looking at your numbers regularly? – with the benefit of online accounting, you can check in on your numbers any time, anywhere. And the more often you look at your numbers, the more informed you are about your business health.

Finding your normalized profit

With a good grip of your financial systems, you can then start working our what your normalized profit number.

Normalized profit isn’t your tax profit, but the number that shows the real profit you’re making. By removing the non-recurring costs and gains (throwing away the rubbish, essentially) you get to see the true value of the business as an entity.

And this normalized profit number also helps you to set an ‘acceptable level of profit’ (ALP) for the business as a whole, but in essence, it’s the minimum profit you want the business to achieve to be able to meet your medium and longer-term goals.

By finding your normalized profit number, you can track which of the following three health categories your business falls into.

5% or less – profits are too low and your business is vulnerable. If you carry on at this profit level, you’re eventually going to fail.
10% or above – you’re doing ok, but there’s definitely room for improvements in your profits. This should be your minimum base ALP.
20-30% or above – you’re doing great and bringing in the level of profit needed to take the company to the next level of growth.

The next step: knowing where to look for improvements

So, you’ve had your physical, the doc has given you the honest truth about your state of health and now it’s time to start training!

Getting the best possible grasp on the current health of the business is such a foundational part of your profit improvement transformation. And that’s why we place so much emphasis on getting this step right.

If you’re looking to create a more profitable business, please do come and talk to us – our Awesome 8 approach to profit improvement will soon have you up to speed with your current business status, and looking for the efficiencies and financial changes that will drive the next step in your journey.

Get in touch with your local Holden Moss office to book a session with one of the team – we’d love to help you deliver more from your business.

In the next part of this series, we’ll ask ‘How do I improve my finances?’ and will give you the practical advice needed to start delivering better profits.

Lack of Contemporaneous Written Acknowledgement Nixes Donation

Thu, 31 Oct 2024 17:20:12 GMT

In a case that provides a lesson to anyone donating property to charity for which a deduction of more than $500 is claimed – get proof in writing and get it at the time you donate the property. After-the-fact substantiation, no matter have convincing, is not acceptable under the tax law to support a deduction.

Case in point: The Tax Court, in Izen, Jr. v. Commissioner, 148 TC No. 5, found that a failure to follow the substantiation rules for donation of an aircraft precluded a taxpayer from claiming a deductions. The taxpayer’s evidence of donation did not satisfy the substantiation requirements, which are heightened for donations of vehicles, including aircrafts.

The taxpayer was assessed a deficiency on his federal income tax return for the year at issue. He then filed an amended return on which he claimed that he had donated a 50 percent interest in an aircraft to a tax-exempt historical society. His interest in the plane was appraised at $340,000, and he claimed a charitable contribution deduction in that amount.

Accordingly, the taxpayer filed an amended return on which he claimed that he had donated a 50 percent interest in an aircraft to a tax-exempt historical society. His interest in the plane was appraised at $340,000, and he claimed a charitable contribution deduction in that amount.

The Tax Court observed that under Code Sec. 170(f)(12), contributions of used vehicles, including airplanes, whose claimed value exceeds $500, must satisfy special substantiation requirements. A taxpayer must obtain a contemporaneous written acknowledgment and include the acknowledgment with his or her return. Further, if the donee has not sold the vehicle or aircraft, the donee must certify the intended use or improvement to the property, among other requirements. Additionally, the donee must provide the IRS with a copy of the acknowledgment. The IRS developed Form 1098-C for this purpose.

The court found that the taxpayer did not include the requisite copy of Form 1098-C with his amended return, nor did the IRS receive the form from the historical society related to the taxpayer’s donation of the aircraft.

Although the taxpayer did include a copy of a letter to the IRS that was from the historical society thanking him for the donation, the court found that the letter failed to satisfy the contemporaneous written acknowledgement requirements. The letter failed to include the name and taxpayer identification number of the donor, among other items.

The court also rejected the taxpayer’s purported deed of a gift as satisfying the contemporaneous written acknowledgment requirement. The “aircraft donation agreement” did not meet the statutory requirements for a contemporaneous written acknowledgment. Like the letter, the deed failed to include the taxpayer identification number of the donor. The deed also did not include a certification of intended use.

Charity Volunteer Work Deductions

Thu, 31 Oct 2024 14:01:22 GMT

For many individuals, volunteering for a charitable organization is a very emotionally rewarding experience. In some cases, your volunteer activities may also qualify for certain federal tax breaks. Although individuals cannot deduct the value of their labor on behalf of a charitable organization, they may be eligible for other tax-related benefits.

Before claiming any charity-related tax benefit, whether for a donation or volunteer activity, you must determine if the charity is a "qualified organization." Under the tax rules, most charitable organizations, other than churches, must apply to the IRS to become a qualified organization. If you are uncertain about an organization's status as a qualified organization, you can ask the charity. The IRS has a toll-free number (1-877-829-5500) for questions from taxpayers about charities and also maintains an online tool at www.irs.gov/charities.

Time or services

An individual may spend 10, 20, 30 or more hours a week volunteering for a charitable organization. Precisely because the individual is a volunteer, he or she receives no compensation for his or her time or services and may not deduct the value of his or her time or services spent on activities for the charitable organization. Unpaid volunteer work is not tax deductible.

Vehicle expenses

Vehicle expenses associated with volunteer activity should not be overlooked. For example, many individuals use their personal vehicles to transport others to medical treatment or to deliver food to shut-ins. Taxpayers can deduct as a charitable contribution qualified unreimbursed out-of-pocket expenses, such as the cost of gas and oil, directly related to the use of their vehicle in giving services to a charitable organization. However, certain expenses, such as registration fees, or the costs of tires or insurance, are not deductible. Alternatively, taxpayers can use a standard mileage rate of 14 cents per mile (2024 and 2025) to calculate the amount of their contribution. Do not confuse the charitable mileage rate, which is set by statute, with business mileage rate (67 cents per mile for 2023), which generally changes from year to year. Parking fees and tolls are deductible whether the taxpayer uses the actual expense method or the standard mileage rate.

Uniforms

Some volunteers are required to wear a uniform, such as a jacket that identifies the wearer as a volunteer for the charitable organization, while engaged in activity for the charity. In this case, the tax rules generally allow taxpayers to deduct the cost and upkeep of uniforms that are not suitable for everyday use and that the taxpayer must wear while performing donated services for a charitable organization.

Hosting a foreign student

Qualifying expenses for a foreign student who lives in the taxpayer's home as part of a program of the organization to provide educational opportunities for the student may be deductible. The student must not be a relative, such as a child or stepchild, or dependent of the taxpayer and also must be a full-time student in secondary school or any lower grade at a school in the U.S. Among the expenses that may be deductible are the costs of food and certain transportation spent on behalf of the student. The cost of lodging is not deductible. If you are planning to host a foreign-exchange student, please contact our office and we can explore the possible tax benefits.

Travel

Volunteers may be asked to travel on behalf of the charitable organization, for example, to attend a convention or meeting. Generally, qualified unreimbursed expenses may be deductible subject to complicated rules. Very broadly speaking, there must not be a significant element of personal pleasure, recreation, or vacation in the travel. Special rules apply if the charitable organization pays a daily travel allowance to the volunteer. There are also special rules for attendance at a church meeting or convention and the capacity in which the volunteer attends the church meeting or convention. If you plan to travel as part of your volunteer activity for a charitable organization, please contact our office and we can review your plans in greater detail.

Manage Your Key Performance Indicators

Thu, 31 Oct 2024 13:41:25 GMT

Measuring your performance over time is what keeps you informed and in control of your business. And having your systems set up to track, measure and deliver key performance indicators (KPIs) is the bedrock of understanding your ongoing business story.

But what KPIs should you be looking at? And what do they actually tell you about your company’s current health?

Know your critical numbers

No two businesses are exactly the same. And that means that the numbers you view as ‘business critical’ will be unique to your organization.

The industry you work in, the type of product or service you deliver and the overall size of your operation will all define which of your business information numbers are the fundamental or ‘critical numbers’ that you want to measure over time.

These are just a few of the possible numbers that may be the key drivers in your business:

Cash flow – knowing your predictable costs and income and the current liquidity of the business.
Acceptable level of profit – having a clear view of the minimum acceptable level of profit within the organization.
Labor Efficiency Ratios (LERs) – being aware of the impact of salaries, reward and remuneration on your operating expenses.
Marketing leads per month – knowing how many new contracts the sales team have signed off this month and over the rest of the year.

Part of the good management of your business is having a very clear idea of which numbers are critical to your success, and setting up processes to track and measure them in your KPI reporting.

With KPIs tracking your critical numbers, you can hold your business stethoscope to the beating heart of your organization and hear whether the company is sounding healthy, or is in need of a speedy course of profit medication.

These are the numbers that give you hope and the leading indicators into how you’re running your business.

Leading vs lagging indicators

When it comes to KPIs, there’s a crucial distinction that is incredibly important to understand – and that’s the difference between leading and lagging indicators.

Leading indicators – these are KPIs that give you numbers on future activity in the business. So these could be the number of agreed (but as yet unfulfilled) sales in your manufacturing company or the number of future bookings at your beauty salon.
Lagging indicators – these are the KPIs that tell you about historic activity in the business. So, to use the same examples, this could be a number of actual deliveries made for the manufacturing company or the number of manicures delivered by the beauty salon this month.

Let’s imagine your run a party room business for kids. There are all sorts of inflatable things for the kids to jump on, bounce on and generally roll around on. Kids and parents alike love your business: but that company’s long-term success depends on securing the right number of appointments.

What this business needs is a measurement of appointments at any given time in the year, so they can make sure they’re profitable.

A KPI that shows the backlog of booked appointments is a leading indicator – i.e. the appointments booked but they’re still in the future.
A KPI that shows the number of parties the business has given is a lagging indicator – i.e. the parties have happened and are in the past.

In this particular kind of business, you don’t really care about historic bookings, so the lagging indicator doesn’t hold much value for you. But the leading indicator – the bookings that are still yet to take place – is hugely important.

When you know the future pipeline of appointments, you know the predicted sales you’ll make, the revenue it will generate, the costs you will incur and the end profit your appointment pipeline will generate.

And that is critical information for a business of this kind.

Counter KPIs

Delta Airlines set one of critical priorities to be on-time push away from the gate. Everyone wants to be on-time, so what’s the problem?

Delta, and we, should always ask the question: If we succeed in achieving our goal (of on-time push away for Delta), what else could go wrong in meeting this priority?

In Delta’s case, it meant that there was an increase in the number of bags that did not connect with passengers – thus a group of very unhappy passenger who, although they were on-time, arrived without their baggage.

Had Delta asked the key question, what else could go wrong if we achieve the goal, they would know to track the counter KPI – delayed baggage.

Counter KPIs are powerful.

Talk to us about defining your KPIs and critical numbers

Holden Moss’s vision is always to help our clients get the best possible control over their business. And a big part of this is providing business owners with the right KPIs and the right information to drive their decision-making.

One solution that helps us enormously with this is Fathom, a nifty reporting, and forecasting tool that plugs nicely into your Xero online accounting software to give you breakdowns of your sales, cash flow and profits in truly drilled down detail.

If you’re looking to get a handle on your critical numbers, but don’t know where to start, come and have a chat with us. We can give you a sample Fathom scorecard so you can see how these leading and lagging KPIs can work for your particular business model.

Contact your local Holden Moss office and let us show you what’s really going on in your business and the KPIs you should be focusing on.

Walking the Talk - Tom Peters

Thu, 31 Oct 2024 13:34:28 GMT

While at the recent Scaling Up Summit in New Orleans, I rushed from my room looking forward to the first speaker. Hopped on the elevator, and had forgotten my badge. So, back up the elevator to my room to grab the badge. Exited on the 25th floor, as a gentleman was walking to the elevator. Ran to the room, grabbed the badge, and back at the elevator. The gentleman was still there... commiserating about how slow the elevators were. Hold that thought.

Arrived at the conference room in time to hear Tom Peters. What a marvelous character! His message was simple - keep it simple. It's the little things that make a difference in business, not the big stuff. Talk to people, and just listen . They have a lot to say. And hire and use women in leadership. They do a better job than we men .

After his talk, I ran up to him, and Mr. Peters said Hi Steve, I remember you from the elevator ride down. And I told Mr. Peters how impressed that I was able to experience, first hand, his walking the talk.

Back to while we were waiting for the elevator, I commented that I was going to the same conference and very much looking forward to his wisdom. He laughed and asked where I was from. Commented that we were losing the Southern accent (which at one time I thought was a curse). Talked about Raleigh a bit.

Then we hopped on the elevator. It was like he had hopped on with friends. He commented on the colorful sandals of one passenger, then asked how others were doing, all from floor 25 to 3.

A remarkable man, with a remarkable message: it is indeed the little things that matter . People want the be heard . As business owners, we need to take time to listen and notice others.

Tom Peters walks the talk. And what a privilege it was for me to see it in action!

Independent Contractor vs. Employee - 2024 Update

Thu, 31 Oct 2024 13:18:37 GMT

Navigating the New Landscape of Worker Classification: DOL vs. IRS Rules

In March 2024, the Department of Labor (DOL) introduced new rules for worker classification, adding another layer of complexity to an already challenging area for businesses. This blog post will summarize the new DOL rules, compare them to existing IRS and tax rules, and offer guidance on managing compliance with both frameworks.

The New DOL Rules: A Summary

The DOL's new approach introduces a six-factor "economic reality" test to determine whether workers are economically dependent on their employers. This represents a significant shift from the previous two-factor test and aligns more closely with traditional employment analysis. The six factors are:

Opportunity for profit/loss based on managerial skill
Investments by worker and employer
Work relationship permanence
Nature and degree of control
Integration into the employer's business
Worker skill and initiative

This new rule generally makes it more challenging to classify workers as independent contractors, reflecting a broader trend towards expanding the definition of "employee."

DOL vs. IRS: Key Differences

While the DOL and IRS both deal with worker classification, they approach it from different angles:

Focus:

DOL: Concerned with worker protections under the Fair Labor Standards Act (FLSA), including minimum wage compliance, overtime eligibility, and benefits.
IRS: Primarily focused on tax-related issues such as withholding requirements, Social Security contributions, and Medicare tax obligations.

Classification Framework:

DOL: Uses the new six-factor "economic reality" test.
IRS: Employs a three-category common law test centered on control.

Emphasis on Control:

DOL: Considers control as one equal factor among six.
IRS: Places significant emphasis on behavioral control as a primary category.

Business Integration:

DOL: Explicitly examines whether work is integral to the employer's business.
IRS: Focuses more on relationship structure and financial arrangements - the agreement.

Managing Differences and Avoiding Penalties

Given the complexities of these overlapping but distinct frameworks, businesses must take a careful approach to worker classification:

Dual Compliance: Strive to satisfy both DOL and IRS criteria when classifying workers. While it's possible for a worker to be classified differently under each standard, this is rare and potentially risky.
Thorough Evaluation: Conduct a comprehensive analysis of your workforce using both the DOL's six-factor test and the IRS's common law test.
Regular Review: Given the evolving nature of work relationships, periodically reassess worker classifications to ensure ongoing compliance.
Documentation: Maintain detailed records of how and why classification decisions were made. This can be crucial if your classifications are ever challenged.
Consider Reclassification: With the DOL's broader definition of "employee" now in effect, some workers previously classified as independent contractors may need to be reclassified as employees.
Stay Informed: Keep abreast of any further developments or guidance from both the DOL and IRS regarding worker classification.
Seek Expert Advice: Given the high stakes involved - including potential back pay, benefits claims, taxes, and substantial fines - consider consulting with legal and tax professionals to ensure compliance.

The landscape of worker classification is becoming increasingly complex, with potentially severe consequences for misclassification. By understanding the nuances of both DOL and IRS frameworks and taking a proactive approach to compliance, businesses can navigate these challenges and minimize their risk exposure. If in doubt, err on the side of treating the worker as an employee.

THE FOLLOWING IS A SUMMARY OF THE 2021 DOL AND IRS RULES:

A common question business owners ask is:

Do I classify a worker as an independent contractor or as an employee?

Filing workers as independent contractors will result in fewer taxes for the business. But, the consequences of making the wrong choice can be costly. More on that later.

The US Department of Labor (DOL) approved final rules that would have become effective on March 8, 2021. President Biden has placed a freeze on any Trump-era rules that have not gone into effect. A leader of a Biden-designated agency must review or approve the rule before its next steps. The delay lasts 60 days from January 20, approximately March 20, or longer.

Here’s the Rundown

Businesses are facing a variety of federal, state, and local laws. These laws govern how to determine employee or independent contractor status. When faced with these rules, which should we follow? Which are we subject to? How do we make the decision?

This new Department of Labor rule may be a game-changer for many.

DOL’s Rulemaking Proposes to:

Adopt an economic reality that considers whether a worker supports themselves or is dependent on an employer.
Identify and explain two “core factors” to determine if there is economic dependence. Specifically:
a. the nature and degree of the worker’s control over the work; and
b. the worker’s opportunity for profit or loss based on initiative and/or investment.
Identify three other factors that may serve as extra guideposts in the analysis. These include:
a. the amount of skill required for the work;
b. the degree of performance of the working relationship between the worker and the potential employer
c. whether the work is part of an integrated unit of production; and
Advise that the essence and nature of the actual work are more relevant than what may be contractually written in determining whether a worker is an employee or an independent contractor. In other words, actions speak louder than words to the contrary.

A Closer Look at the DOL Rules

These new rules are similar to the IRS common law rules which provide evidence of the degree of control and independence. They fall into three categories:

Behavioral:

Does the company control or have the right to control what the worker does and how the worker does their job?

2. Financial:

Are the business aspects of the worker’s job controlled by the payer? Business aspects may include:

a. how the worker is paid,

b. whether expenses are reimbursed,

c. and the provision of tools or supplies.

d. Consider what other state laws, local or other employment, may be in effect.

3. Type of Relationship:

Are there written contracts or employee type benefits? For example, a pension plan, insurance, vacation pay, etc. Will the relationship continue? Is the work performed a key aspect of the business?

Key Takeaway

If the worker has an economic dependency on the business, then they likely classify as an employee, not an independent contractor.

This is all so confusing, you say. Do we follow the Department of Labor, or do we follow IRS or do we follow state rules? We're told that the answer lies with whichever law offers the best benefit to the worker. The answer requires an analysis of all laws which may affect your business. And then determine which law provides the worker with the greatest benefit.

This is not good news.

Every state has its own Labor Department rules and you may have to track many states at the same time. This is particularly true if you have workers located in California. Not to mention the DOL and IRS and other federal laws. Washington is not making it easier for us.

The consequences of misclassifying a worker can be devastating to a business.

For example:

You classify a worker as an independent contractor. But, later you determine that the worker was an employee. The government can require you to pay the taxes you should have withheld, as well as penalties, interest, and the worker's share of taxes. We have seen worker misclassifications almost bankrupt businesses. This is an area of the law that you must strictly adhere to and consider.

What You Can Do Now

Re-consider any existing independent contractor relationships.
Is the worker dependent upon your business for their economic welfare?
Are you their only or majority source of income?
How much control do you exercise over their work: how they work, when they work, etc.?
If you continue the independent contractor relationship you must have a written agreement. This goes for starting a new working relationship as well. Outline the terms of the relationship that would define an independent contractor. Terms may include:

a. they supervise their own work,

b. set their own hours,

c. are not economically dependent upon you,

d. are provided a 1099 at year-end, and

e. that no taxes will be withheld, etc.

f. but be aware that a contract will not protect you if the facts state otherwise.

What is Reasonable Compensation?

Thu, 31 Oct 2024 12:15:35 GMT

“WHAT IS REASONABLE COMPENSATION FOR MYSELF?” is a common question we are frequently asked by business owners and shareholders alike.

In 2005, the IRS began a comprehensive study of this crucial area of compliance and subsequently updated their guidelines to provide clearer expectations.

Reasonable compensation refers to the wage or salary that you pay yourself for the work you perform on behalf of your company, and it is calculated before any distributions are made. It is important to note that distributions themselves do not constitute compensation.

Establishing reasonable compensation is a vital requirement for all shareholders of an S Corporation who are actively performing services for the business. This concept can be viewed through two distinct options:

1. Replacement Cost - This represents the amount you would have to pay someone else to successfully carry out your current duties.

2. Fair Market Value - This reflects the amount you would earn by performing the same duties and providing similar services for another business, where you are not a shareholder.

One might wonder, “How can I accurately determine reasonable compensation for myself?” The good news is, we have developed specific tools to assist you in making this determination. These tools involve a series of questions tailored to the services you provide to your company, allowing you to rate your performance from below average to above average. Additionally, the tools will take into account the demographic factors relevant to the region in which you are providing your services, along with research on compensation for others working within the same field. Once all questions are fully answered, an unbiased report will be generated. This report will deliver a solid foundation for an acceptable level of compensation that aligns with IRS guidelines and regulations.

If you find yourself pondering this question, it is highly advisable to determine your reasonable compensation figure sooner rather than later—ideally before facing the potentially high costs associated with an IRS examination. Challenges related to reasonable compensation can become quite expensive, both financially and in terms of time.

If you have further questions or need additional insights on how to establish your reasonable compensation, please do not hesitate to reach out to us for more information. Together, we can ensure that you navigate this process successfully and steer clear of any costly reasonable compensation challenges from the IRS.

IRS Super Teams and Risk-Based Data Analytics

Thu, 31 Oct 2024 12:09:30 GMT

Why Would the IRS Audit High-Income or High-Wealth Tax Returns?

It’s no secret—the IRS targets high-income or high-wealth taxpayers because that’s where the most tax revenue can be recovered. For every dollar the IRS spends on enforcement, they collect four to five dollars in taxes. However, budget cuts in Congress have hindered enforcement efforts, contributing to the tax compliance gap.

The U.S. compliance rate hovers around 83% to 84%, which is respectable, but still leaves room for improvement, especially compared to other global leaders. One of the problems has been an overemphasis on lower-income taxpayers rather than focusing on where the bigger discrepancies lie—among high earners.

Why Focus on the Wealthy Now?

There are a few reasons for this shift.

First, the new IRS Commissioner, Charles Rettig, brings a strong background in tax controversy and is determined to level the playing field. His goal is to crack down on non-compliance across the board.

Second, the Treasury Inspector General for Tax Administration (TIGTA), which oversees the IRS, has been pushing for more high-income audits in reports spanning from 2015 to 2020. This pressure is now yielding results, with the IRS responding by reallocating resources and developing more strategic audit plans.

What's the Nature of the Problem?

According to a 2020 TIGTA report, the average annual tax gap is a staggering $441 billion, with $39 billion of that attributed to non-filers, particularly high-income non-filers. These taxpayers make up a significant portion of the problem, driving much of the tax gap.

How Is the IRS Responding?

The IRS has adopted a strategic approach. Here are some of their key initiatives:

Door-to-Door Enforcement: Teams have been sent to knock on doors of high-income non-filers. With COVID-19 keeping many people home, this approach has been especially effective.
Soft Notices: The IRS is sending notices that suggest discrepancies on tax returns, asking taxpayers to clarify specific transactions. While not a formal audit, ignoring these notices could lead to one.
Super Teams: The IRS has created specialized "super teams" to focus on high-risk, high-reward audits. These teams combine expertise across divisions, using data analytics to target high-probability issues. This is a far cry from the random audit system of the past, where 27% to 40% of audits resulted in no changes.

The Role of Data and Coordination

The IRS has taken a page from military strategy, assembling teams that work collaboratively to identify and address compliance issues. Just like General Stanley McChrystal’s ‘Team of Teams’ approach during the war on terror, the IRS is breaking down silos between divisions to fight tax evasion more efficiently.

A new Office of Fraud Enforcement has been established to coordinate these efforts, focusing on intricate financial details like partnerships, trusts, and other complex entities that wealthy individuals often use.

What's Next for High-Wealth Audits?

Audits are now more targeted and risk-assessed before agents even head into the field. The IRS is using data analytics to home in on high-risk areas, reducing the chances of wasted effort on audits that result in no changes. This more efficient use of resources is bound to yield better results in the coming years.

Final Thoughts

The IRS is evolving into a more sophisticated, strategic agency with a clear focus on high-wealth and high-income taxpayers. With better data analytics, targeted audits, and collaborative teams, the chances of being audited are no longer left to random selection.

If their budget were to increase, the results could be even more impactful.

What You Can Do

Report all your income—no exceptions.
File your returns on time, even if you use extensions.
Disclose any uncertain items on your tax return to preempt potential questions.

Stay compliant, and stay ahead.

Special Thanks

We extend a special thanks to the attorneys at Hochman Salkin Toscher Perez for their insights in continuing education, and we celebrate IRS Commissioner Charles Rettig, formerly a partner at this firm, for his leadership and commitment to fairness in tax enforcement.

10 Must-Have Business Productivity Apps

Tue, 22 Oct 2024 16:26:58 GMT

It is no secret that the events of the past year have thrown a wrench in the works of businesses everywhere. Many of us are still adjusting to working from home and managing a growing business remotely. How have you pivoted to the new normal? For many, we have relied on our mobile devices more than ever before.

Here are 10 must-have productivity apps to keep your business running wherever your office may be.

1) Genius Scan PDF scanner

Device(s): iOS and Android Price: Free and Paid Versions

Thousands of small businesses save time and money by using this genius scanning app. Genius Scan is a document scanner app in your pocket. Scan your paper documents on the go and export them as multi-page PDF files.

Highlights:

Free document scanning service
Batch scanning
Document merging & splitting
Multiple page PDF creation
Email export

How does Genius Scan work?

Use your device’s camera to capture any document. The app automatically recognizes the paper against the background, crops it, and cleans up the result. You get a crisp, legible scan. The batch scanning also lets you scan dozens of pages in a matter of seconds.

Visit https://www.thegrizzlylabs.com/genius-scan/ for more information.

2) DocuSign

Device: iOS and Android | Price: Free and Paid Versions

We are big fans of this software and excited to see it as a mobile app. DocuSign eSignature is the world’s #1 way to send and sign agreements from practically anywhere, any time. Millions of people around the world trust this eSignature solution. The free DocuSign mobile app allows you to streamline how business gets done.

Highlights:

Unlimited Free Signing
Send and manage files straight from your device.
Legally binding agreements—DocuSign’s complies with the eSign Act.
Complete audit trail to see who signed when and where
Encrypted Documents
Supports file types: PDF, Word, Excel, Images (JPEG, PNG, TIFF), and Text

How does DocuSign work?

Create your customized signature directly on your device. Upload documents easily via email, Google Drive, DropBox, Evernote, Salesforce, or photo scanning. E-sign your documents for free with no monthly limit. Import files to prepare and send out for signature directly from your device. Prepare your document with “Sign Here” tags that show where to sign, initial, or add information. Remind signers to sign with a single tap or void a document that was already sent for signature.

Is DocuSign right for you and your business? Find out more: https://www.docusign.com/products/electronic-signature/how-docusign-works

3) Forms.App

Device(s): iOS and Android | Price: Free and Paid Versions

Does your business rely on forms to collect data? If you are a fan of Google Forms then you know how disappointing it is that there is not a dedicated mobile app yet. Making surveys, quizzes, or event registration is easier with Forms.App. This app links your favorite tools for simple form creation and data collection.

Highlights:

Unlimited Form Answers Storage
Location-specific data collection
Features payment collection fields
Form Embedding
Choose when your form will be available and when it will be out of service
Integrate to your favorite tools like Zapier and Google Sheets

How Does Forms.App Work?

Forms.App is useful to conduct surveys online and to view responses on the go. You can create and customize your form in a single step. You can customize and edit both the design and general settings of your form according to the desired structure.

Start surveying today by visiting forms.app for details.

4) Microsoft Office Suite

Device(s): iOS and Android | Price: Free and Paid Versions

How many Microsoft Office programs do you use every day? You can have the power of the Suite in your pocket! The Office app combines Word, Excel, and PowerPoint into one convenient app. It is designed for getting work done on the go with a tap of your finger.

Highlights:

Word, Excel, and PowerPoint combined in one app
Create, edit, and work together on Office documents with others in real-time
Snap a picture of a document and turn it into an editable Word file with the press of a button
Transform a picture of a table into an Excel spreadsheet so you can work with the data
Create enhanced digital images of whiteboards and documents with Office Lens features
Transfer files between your phone and computer or share with nearby devices

How Does Microsoft Office Work?

This app offers a simplified experience with fewer apps to download or switch between. It requires far less phone storage than installing individual apps while maintaining virtually all the capabilities of the existing mobile apps people already know and use. Visit Microsoft for all the details!

5) HP Smart

Device(s): iOS and Android | Price: Free with an HP account

Print, scan, and share files by using HP Smart with your HP Printer. HP Smart makes it easy to get started and keeps you going with features like Print Anywhere or Mobile Fax!

Highlights:

Print, scan, copy, and share files directly from your mobile device
Manage or print to your printer using any network connection
Order supplies, get support, and manage your HP account from the app
Edit and enhance your photos
Send secure faxes from the app with Mobile Fax

How Does HP Smart Work?

Once you’ve installed the HP Smart app and connected your mobile device to wifi with Bluetooth enabled you’ll be able to set up a new printer or connect to a printer that has already been set up. Then you’re ready to copy, scan, and print in a variety of ways. Learn more about your device’s capabilities here: support.hp.com

6) Asana

Device(s): iOS and Android | Price: Free and Paid Versions

Asana is the work manager for teams. But better. Asana organizes work so teams are clear about what to do and how to get it done. More than 75,000 organizations and millions of users worldwide trust Asana to stay organized and in control of their work.

Highlights:

Unlimited storage
One shared space to coordinate plans, projects, and tasks with your team
Automatically transcribe voice memos to tasks
Convert photos of whiteboards, charts, or diagrams to tasks
Sync work between the app and web
Work offline

How Does Asana Work?

After downloading, invite your team via email to join the platform. Organize all your team projects and tasks, share files, leave comments and feedback in one location, and make it easy for everyone to get everything they need to turn ideas into action faster.

7) Dashlane

Device(s): iOS and Android | Price: Subscriptions From $3.99-$199.99

Dashlane is more than a password manager. It’s the app that makes the internet easier. 14+ million users across the globe trust Dashlane with all their passwords, on every device.

Highlights:

Store an unlimited number of passwords and access them anywhere
Sync your Dashlane data to every device automatically, even if your phone and computer run on different systems
Create secure passwords with Password Generator
Share passwords safely and conveniently
Import your passwords easily from Chrome
Get alerted about breaches and hacks that affect your data—and learn how to take action

How Does Dashlane Work?

Dashlane fills all your passwords, payments, and personal details wherever you need them, across the web, on any device. So you can get right to what you want to do. Sync your Dashlane data to every device automatically and it auto-fills forms, logins, and more with the click of a button. This program keeps data secure while making life easier.

Your Dashlane account starts with a 30-day free trial of the Premium plan. Find out if Dashlane is right for your business: https://www.dashlane.com/business

8) Slack

Device(s): iOS and Android | Price: Free and Paid Versions

Slack brings team communication and collaboration into one place. Get more work done, whether you belong to a large enterprise or a small business. Check off your to-do list and move your projects forward. Slack is available on any device so you can find and access your team and your work, whether you’re at your desk or on the go.

Highlights:

Communicate with your team and organize your conversations by topic, project, or almost anything else
Message or call any person or group within your team
Share and edit documents and collaborate with the right people all in Slack
Integrate tools and services you already use including Google Drive, Salesforce, Dropbox, Asana, Twitter, Zendesk, and more
Easily search your team’s past conversations and files

How Does Slack Work?

Download Slack’s desktop and mobile apps. Create or join a Slack workspace. Set up your profile. Find and join relevant channels in your workspace to get all the info you need. Once you find your channels, you’re ready to send and read the group or private messages.

Make your working life simpler, more pleasant, and more productive. Learn more at https://slack.com/

9) Calendly

Device(s): iOS and Android | Price: Free and Paid Versions

Take the work out of connecting with others so you can accomplish more. Calendly can connect with up to six of your calendars to automatically check availability and help you connect with your best contacts, prospects, and clients.

Highlights:

Google, Outlook, Office 365, or iCloud calendar integration
Set buffer times between meetings to give yourself a breather
Supports 1-on-1, round-robin, and collective availability meetings
Seamless timezone detection for your invitees
Automate tasks with Zoom, Google Meet, Salesforce, GoToMeeting, and more

How Does Calendly Work?

Let Calendly know your availability preferences and it’ll do the work for you. Copy and paste your Calendly links into an email, text, or other apps to save time while you’re away from your computer. The recipient picks a time and the event is automatically added to your calendar.

Learn more at Calendly.com .

10) Pushover

Device(s): iOS and Android | Price: Free 30-Day Trial then $4.99

Do you use more than one device to run your business? Pushover could keep all your accounts connected and coordinated. Pushover is a simple push notification service that integrates with web apps to send alerts to your devices. It consolidates push messages for all of your devices into one place. This app assists you in handling everything that’s happening with your business at once.

Highlights:

Unlimited push notifications on all of your devices from dozens of websites, services, and applications
Integration capability into your web app, network monitor, shell script, and more
Individuals can use Pushover with no subscription fees
Users and their devices are managed from one central dashboard

How Does Pushover Work?

Simply install the app on your device and it will walk you through creating a Pushover account and registering your device with their servers. You'll get a new User Key e-mailed to you which is randomly generated to allow other apps to send Pushover notifications to your devices. Copy and paste the User Key into any application that supports Pushover and it will instantly be able to start sending notifications to your devices.

You can start a free 30-day trial with unlimited usage. Beyond the 30-day trial requires a one-time $4.99 in-app purchase. Visit https://pushover.net/ to find apps, plugins, and services that support Pushover.

What You Can Do Right Now

Entrepreneurs like yourself are always looking for ways to improve how they operate and manage their businesses. Ensure your success by researching and experimenting with tools and apps made to help your business succeed.

Have you tried any of these apps? What did you think? Let us know in the comments below. We would appreciate the feedback and tell us of any other business apps you swear by.

Holden Moss CPAs is dedicated to aiding businesses in this difficult time. If you have any questions regarding your financial security, give us a call at (919) 556-6216 . Contact us via email at admin@holdenmoss.com . We look forward to working with you.

All information included in this article is sourced directly from the referenced application listings in the Google Play Store and Apple AppStore. Holden Moss CPAs does not claim ownership of their content nor is responsible for use of mentioned applications.

Heads Up: Beneficial Ownership Information

SMoss@holdenmoss.com (Steve Moss) — Tue, 03 Sep 2024 19:12:01 GMT

I hope you are doing well. Dealing with the government is filled with enough challenges without having to worry about new rules and paperwork. But there’s a new requirement that we need to talk about—it's called the Beneficial Ownership Information (BOI) reporting. It is expected that 32 million existing small businesses in addition to many newly formed will be subject to this newly formed will be subject to the reporting requirements.

Why This Matters:

A new law was passed in 2021 called the Corporate Transparency Act (CTA), administered by FinCEN (the financial crimes arm of the government), demonstrates a significant shift requiring entities including LLCs, Corporations, Partnerships and even some Trusts to file a BOI report . The reporting includes rental LLCs, and even many inactive LLCs.

The BOI report identifies and provides contact information for “beneficial owners” - the human beings who own or substantially control the entity formed under state law. This information will be used by law enforcement to combat money laundering and other illegal activities. While it's meant to fight crime, for small businesses, it feels like just another administrative hurdle. Here’s what you need to know:

Important Points:

Who Needs To File? Generally, if you have less than 20 full-time employees and reported less than $5M in income on your most recent tax return, you likely need to file if you conduct your business through an LLC, corporation, partnership, or trust (that is not exempt under specific criteria). Most inactive LLCs, rental LLCs, and corporations will need to fill out this report. Even some nonprofit entities may need to file. If in doubt, file it because the penalties are huge.

Why Just Smaller Business? The FinCen Deputy Director recently said: “… big businesses are often disclosing their ownership in some way. If you think of a big public company like Amazon or Shell…, they already disclose information about those who own or control them, and indeed, are frequently subject to greater regulatory scrutiny.”

What are the deadlines?

If your business was formed before 2024, you have until January 1, 2025, to file.
For new businesses started in 2024, you have 90 days from when you formed your LLC or corporation.
There is a draconian 30 day deadline for reporting changes in ownership or owner information like address or other previously submitted information.

What You Need to Report? The law requires you to list details like the full names, birthdays, addresses, and ID numbers of all “beneficial owners”, a very technical term.

How Often to File?

If ownership and their reported data does not change, you only need to file once.
If something changes with the ownership or other information reported, like address, file within 30 days.

Who’s Exempt? There are 23 exemptions one of which is the Large Operating Company (Exemption #21) which has six criteria, three of which are:

More than 20 full-time employees of the entity are employed in the United States;
The entity regularly conducts its business at a physical location in the United States that the entity owns or leases and that is physically distinct from the place of business of any other unaffiliated entity, and
The entity reported greater than $5,000,000 as gross receipts or sales (net of returns and allowances) on the entity’s most recently filed tax return.
So, potentially, home-based and cloud-based businesses, would not qualify for this exemption.
This is an example of the intricacies of this law.

Caution: each of the 23 exemptions have one or more criteria that will need documentation. The inactive entity exemption has six criteria, all of which must be met and documented. And, if after qualifying for an exemption you fail to qualify, the entity then falls under the reporting requirements. Documentation is critical.

Where Do File? You file online with FinCEN through a system called BOSS, and while there are no associated filing fees, and you can prepare it yourself for free, for other than simple ownership, the rules are extensive and penalties can be massive.

What Are The Penalties for Not Filing? There are hefty fines, up to $500 per day and even imprisonment for willful failure to file, so it's important to get this done. FinCen has said: “The CTA penalizes willful violations of the law—which Congress specifically defined as “the voluntary, intentional violation of a known legal duty.” Such willful violations of the statute is where we plan to focus our future enforcement activity.”

Penalties are so steep that we understand some state Bar’s and liability insurers are advising attorneys against being involved in these filings. Many CPAs are declining to be involved.

While we have made the decision to assist our clients with their reporting requirements, this law is so complex we are not allowing our team to answer ad hoc or “quick questions” about compliance with the law unless we are filing the report.

Complications:

There has been pushback against the CTA. Cases in Utah and Michigan claim it unconstitutional. An Alabama federal district court has ruled the law unconstitutional for only 65,000 of the 32 million subject to the reporting. The case has been appealed to the 11th Circuit by the Justice Department (oral arguments late next month). Many in Congress are in agreement that the law should stand. Many legal experts agree there are strong legal grounds to overturn this decision. Similar laws, like the Bank Secrecy Act cleared legal challenges. Conversely, there are lawmakers who have introduced legislation in both chambers of Congress to repeal the law. A constant back and forth. We cannot predict the outcome.

Timing:

The 11th Circuit typically takes 9 months, likely pushing the decision into next year. Even then, that decision will be appealed to the US Supreme Court. Since the deadline for filing for existing entities is January 1, 2025, it is likely this matter will not be resolved by the deadline. We will likely not be able to wait out this decision – either for the courts to act or Congress to act.

Next Steps:

Decide if you want to handle your own reporting, or do you ask your attorney or Holden Moss Knott to assist with the reporting.
If you are self-filing:
Here is the BOI site: https://www.fincen.gov/boi
A number of FinCEN small business resources are located here.
The 57 page FinCEN compliance guide is located here.
Confirm if your business needs to file the BOI report.
Caution: there are 23 types of exempt entities. You must read the details of the exemption checklist to confirm whether you qualify.
Consider “substantial control”. Trust administrators, executors, or companies with a CEO who is not an owner may be beneficial owners.
Keep track of your filing deadline based on when your business started or any changes in ownership or reported ownership information, even address changes.
Create a procedure. Set up a reminder, monthly, to file an update for any change of reported information or ownership.

We’re here to help. We know this is frustrating, especially when you're busy trying to focus on your business. Our team is here to help you handle these new requirements.

We will prioritize filing for newly formed entities (with the 90 day deadline). As we can, we will file for existing entities with the January 1, 2025 deadline.

These BOI reporting services are separate from, and not included as part of our tax reporting or any other services. If you desire our help, this link gets us started and takes you to our document site for completion of an engagement letter.

Unfortunately, due to the complexity of the issues involved and the steep penalties, we will not issue any oral advice about these matters unless we are preparing your BOI report.

Please do not wait until the end of the year to make decisions on filing. We will handle these filings on a first come, first served basis. Extensions are not allowed.

Watch Out: DOL Adding Auditors to the Wage & Hour Division

Fri, 25 Feb 2022 20:58:00 GMT

The U.S. Department of Labor is set to expand its enforcement team across the nation.

Announced Thursday, February 24th, the U.S. Department of Labor revealed that it is looking to add 100 investigators to its Wage and Hour Division. These 100 investigators are to support compliance and enforcement efforts which include:

The Wage and Hour Division handles the enforcement of some of the most comprehensive labor laws, laws that affect more than 148 million workers. This level of impact makes it one of the nation’s most crucial labor law enforcement agencies. The cornerstone of its enforcement team is the investigators. Investigators’ responsibilities include:

Acting Wage and Hour Administrator Jessica Looman says the addition of the 100 new team members is a significant step in the right direction. She anticipates more hiring activity later in the fiscal year 2022. Looman does warn appropriations will determine their course of action. But, she remains optimistic they'll have the ability to add new talented professionals on board and expand their team.

The Wage and Hour Division collected $230 million in wages owed to 190,000 workers in the fiscal year 2021 alone. Division representatives also held 4,700 outreach events. These events educate employers and workers alike about their workplace rights and responsibilities.

Go to usajobs.gov to learn more about the available Wage and Hour Division positions. You'll be able to apply there should the roles interest you.

Key Takeaways for Our Clients:

Reach out to us at Holden Moss Knott Clark & Copley P.A. with any questions. If you would like more information about business management or financial strategies, give us a call for a no-risk discovery session. Call (919) 556-6216 or contact us via email at admin@holdenmoss.com . We look forward to working with you.

Superseding Return: A Super Solution To IRS Delays

Tue, 22 Feb 2022 18:54:00 GMT

Supersede (verb): to take the place of or replace. A do-over.

The IRS suffers from its historic backlog of unprocessed filings and personnel shortages. But, this is not stopping them from placing speed bumps and other obstacles on the path to filing tax returns this year. Such obstacles include:

We are facing a lack of guidance, a much later start to tax filing season, and the addition of unavailable new forms. All this is causing a slew of delays and uncertainty. Spare guidance is making life much harder for us to file complete accurate tax returns. It is possible that corrections to tax returns may be necessary once the IRS has issued final guidance. Our strategy is to make the filing of any such corrections as easy as possible through the superseding return process.

To protect you, we are recommending that all our clients allow us to file for an automatic extension of time to file their returns. We recommend extensions even if we are to file by the original due date. Without an extension, an IRS interpretation may require we file an amended return exposing the return to IRS scrutiny. But with an extension, we are able to file a superseding or second return. This replaces the old return if filed before the extended due date, and obviates the need for an amendment and prying eyes.

Each year approximately 20,000 superseding returns are filed before the extended deadline. Benefits also include the ability to file or refile elections or revocation of elections and avoidance of penalties.

Further, certain returns of partnerships not eligible to elect out of the IRS’s centralized audit regime are prohibited from filing amended returns. These BBA partnerships have other partnerships or have trusts, disregarded entities, or certain estates as partners. These partnerships are not allowed to file amended returns. Instead, they must file an Administrative Adjustment Request (AAR). Which is an intensive process that also restarts the statute of limitation. But with an extension, we can file a superseding return before the extended due date, thus simplifying the process.

Accordingly, we will be preparing automatic extensions of time to file for our clients. This leaves the superseding option available to you if needed. We are working diligently to complete your returns. But to avoid potential penalties and minimize risks of audit, we will need the additional time for this year’s returns.

Please continue providing your tax information to us for preparation. Although an extension may be filed, we will continue preparing and filing your returns in a timely and thoughtful manner. We appreciate your understanding as we work through increased reporting requirements and delays.

We prefer to e-file returns, rather than paper-file, to speed up the processing of your return. E-filing delays by the IRS and states may delay your filing, particularly if your return contains certain of the forms subject to delay. E-filing and superseded e-filing are options we like and want to have available for you in light of the confusion with taxing authorities.

As always, feel free to reach out with any questions or concerns regarding our process. We are happy to help in any way we can. You can contact your Holden Moss representative directly or call (919) 556-6216.

How Your Assumed Business Name Might Be a Problem

Thu, 17 Feb 2022 16:37:00 GMT

“What's in a name?”

As a business owner, new or otherwise, you know that choosing the right company name is a crucial (and sometimes nerve-racking) step toward establishing yourself. Along your business journey, you may have heard the term “assumed business name” or even “doing business as.” But, what does that mean? And what could it mean for your business?

We have reached out to our attorney friends for guidance. And so should you. The safest way to make certain you are covered is to speak with your attorney.

What Is An Assumed

Business Name?

First, we need to define the term assumed business name. If you’re using a company name that doesn’t match the legal name on your tax returns, you’re using what’s known as an assumed business name. An assumed name is also called a fictitious name or a “doing business as” name.

If you're a business owner operating under assumed names, you need to know that North Carolina enacted the Assumed Business Name Act back in 2017. While the Act flew under the radar of many, this year, businesses operating under an assumed name could face severe consequences.

As a result of this 2017 Act, any business that is currently operating under an assumed name must re-file a new Certificate of Assumed Business Name on or before December 1, 2022. After this date, all existing certificates will expire and become invalid. Refile at your local Register of Deeds Office to keep the name active on the assumed business name statewide registry.

If your business is currently operating under an assumed name but you have not already filed a certificate, you need to file one immediately.

What Must My Assumed Business Name Certificate Include?

What Are the Consequences

If I Do Not File?

Our attorney friends remind us that you may not be able to avail yourself of all laws if suing. Further, failing to file an assumed business name certificate will make you liable for the reasonable expenses, including attorneys' fees, incurred by any person who is injured by the failure when trying to obtain information within the assumed business name certificate.

If you operate in other states, many have the same rules requiring registration of an assumed name.

How Do I Refile a New Certificate of Assumed Business Name?

Under the Assumed Business Name Act, a business has the option to file simultaneously in every county or combination of counties in North Carolina with a single filing. This option is great for businesses with a statewide presence or those trying to expand their market.

Up to five assumed names for the same business making the filing can be filed in a single certificate. There is a searchable electronic database available through the NC Secretary of State’s website. This digital database makes it easy to find all assumed names filed on or after December 1, 2017.

Don’t expect a formal notice or announcement either. Unfortunately, there will not be an update sent to existing holders of assumed names informing them of the requirement to re-file their assumed names by December 1, 2022. If you’re a business owner you must be proactive. Re-file a new assumed name certificate with the Register of Deeds before the deadline. Luckily, you can find downloadable forms that make refiling simpler on the NC Secretary of State’s website.

To Recap

If you filed an assumed business name with your local Register of Deeds Office before December 1, 2017, you must refile to keep the name active on the assumed business name statewide registry.

Please contact your attorney or reach out to us at Holden Moss Knott Clark & Copley P.A. for a referral. If you would like more information about business management or financial strategies, give us a call for a no-risk discovery session. Call (919) 556-6216 or contact us via email at admin@holdenmoss.com . We look forward to working with you.

3 Simple Tools to Meet Your 2022 Finance Goals

Mon, 24 Jan 2022 15:06:00 GMT

A new year finds many of us with the motivation to take stock, buckle down, and make improvements in our lives. Getting your financial fitness in check this year should be at the top of your resolutions list.

We all want a big, fat piggy bank to crack open when faced with challenges and opportunities. But, it is often the self-discipline some of us lack that is necessary to get us there. What are some of your 2022 financial goals? We asked our team to give you their best suggestions for a better money year.

Here are our top three 2022 finance goals and how you can meet them.

1) Keep business and personal financial records separate.

Many first-time business owners make the mistake of not separating their business and personal finance accounts. From the very beginning, they end up hurting their bottom line. Save yourself the headache and potential heartache by setting up for success from the get-go.

But, why?

Well, one of the biggest reasons to separate business and personal finances is for tax purposes.

It is of extreme importance that your business and personal tax records support the income, deductions, and credits claimed on returns. Therefore, taxpayers must keep such records in the event the IRS inquires about a return or amended return. Making sure these remain updated and secure can make a huge impact, especially if you are to be subject to an audit.

Not to mention the tax deductions you could be missing out on. As a business owner, you could and should deduct business-related expenses like travel and supplies. To claim these deductions, you must have proper supporting documentation.

Need help separating your business and personal accounts?

Tools: We like Xero and QuickBooks Online for business accounting. We use both and are happy to help out with implementation. They also work well in tracking your personal information. As far as personal tax documents, we also use TaxCaddy to collect these.

2) Keep records up-to-date and organized.

This is a preventative action to keep you in the best financial shape possible and avoid common pitfalls down the line.

Business AND personal recordkeeping?! What a hassle.

Tools: We find that frequent, even daily, recording of transactions is best. Use programs like Xero and QBO. Make it a habit to log into your accounting system daily, tracking either business or personal transactions. That way, end-of-month financials are complete and accurate.

Also important is keeping documentation for deductions. We like paper files but are finding that many can benefit from Cloud storage solutions. Solutions offered by Xero and QBO can safely store bills, documents, and files.

3) Set a debt retirement goal. (If no debt, then a savings/investing goal)

What is the status of your debt retirement? Do you have a plan? If not, make 2022 your year to discuss your options with your financial advisor. (shameless plug here) And get started planning a safer financial future.

What is debt retirement?

The act of paying off debt completely, so that it no longer exists and you don’t have to be haunted by incurring fees again.

Getting out of debt is the biggest step toward bigger savings. Once the debt is off your shoulders (and wallet), you can truly make a big impact on your savings accounts.

Repayment options can be tricky and the more firm you are with your plan the stronger your finances will be. Check out our article on reducing debt here for more details on how you can be done for good!

Tools: We do not like to use the word “budget”, because it is deemed to be a license to spend. We prefer "forecasts." Forecast your spending and set up an account named “LastName’s Future” in either your business and/or personal books. Then, write yourself a check/or transfer, at the beginning of each month. This is a savings plan, a habit, and it is recorded so you can see what you are doing each month - making progress toward a goal.

Make 2022 Your Year

What are your 2022 financial goals? Make sure to share your thoughts with us in the comments.

No matter what your needs are, planning for the future is important. Our Holden Moss CPA financial planners can help you build a realistic picture of your finances, your goals, and what you might be overlooking. Get a head start by filling out your own personal finance scorecard.

Reach out to us at Holden Moss Knott Clark & Copley P.A. to start meeting your aspirations. If you would like more information about your taxes or other financial strategies, give us a call for a no-risk tax discovery session. Call (919) 556-6216 or contact us via email at admin@holdenmoss.com . We look forward to working with you.

*This entry was written with contributions from Michael Feldbusch, Steve Moss, and Caitlin Billings.

Important Tax Dates & Deadlines

Wed, 29 Dec 2021 15:07:00 GMT

Updated for the tax year 2021.

Overview

The IRS has outlined important tax deadlines in this calendar . Dates and details are listed below for your convenience. Make sure you add pertinent dates to your calendar.

We have also included announcements regarding tax relief for the victims of the recent severe storms and tornadoes, as well as COVID-19 updates.

Schedule an appointment with us to go over any questions you may have and start your tax plan today.

Deadlines by Date

Jan. 10, 2022: Deadline for employees who earned more than $20 in tips income in December 2021 to report this income to their employers on Form 4070

Jan. 18, 2022: Deadline to pay the fourth-quarter estimated tax payment for the tax year 2021

Jan. 31, 2022: Deadline for employers to mail out W-2 Forms to their employees and for businesses to furnish 1099 Forms reporting non-employee compensation, bank interest, dividends, and distributions from a retirement plan

Jan. 31, 2022: Deadline for financial institutions to mail out Form 1099-B relating to sales of stock, bonds, or mutual funds through a brokerage account, Form 1099-S relating to real estate transactions; and Form 1099-MISC , if the sender is reporting payments in boxes 8 or 14

Jan. 31, 2022: Deadline for catching up on unpaid fourth-quarter estimated taxes without additional penalties by filing 2021 tax returns

Feb. 10, 2022: Deadline for employees who earned more than $20 in tip income in January 2022 to report this income to their employers

Feb. 28, 2022: Deadline for businesses to mail Forms 1099 and 1096 to the IRS

March 1, 2022: Deadline for farmers and fishermen to file individual income tax returns

March 10, 2022: Deadline for employees who earned more than $20 in tip income in February 2022 to report this income to their employers

March 15, 2022: Deadline for corporate tax returns ( Forms 1120 , 1120-A , and 1120-S ) for the tax year 2021, or to request an automatic six-month extension of time to file ( Form 7004 ) for corporations that use the calendar year as their tax year, and for filing partnership tax returns ( Form 1065 ) or to request an automatic five-month extension of time to file ( Form 7004 )

March 31, 2022: Deadline for businesses to e-file Forms 1099 and 1096 to the IRS, except Form 1099-NEC

April 11, 2022: Deadline for employees who earned more than $20 in tip income in March 2022 to report this income to their employers

April 18, 2022: Deadline to file individual tax returns ( Form 1040 ) for the tax year 2021 or to request an automatic extension ( Form 4868 ) for an extra six months to file your return and for payment of any tax due

April 18, 2022: Deadline for household employers who paid $2,200 or more in wages in 2021 to file Schedule H for Form 1040

April 18, 2022: Deadline for first-quarter estimated tax payments for the 2022 tax year

May 10, 2022: Deadline for employees who earned more than $20 in tip income in April 2022 to report this income to their employers

June 10, 2022: Deadline for employees who earned more than $20 in tip income in May 2022 to report this income to their employers

June 15, 2022: Deadline for second-quarter estimated tax payments for the 2022 tax year

June 15, 2022: Deadline for U.S. citizens living abroad to file individual tax returns or file Form 4868 for an automatic four-month extension

July 11, 2022: Deadline for employees who earned more than $20 in tip income in June 2022 to report this income to their employers

Aug. 10, 2022: Deadline for employees who earned more than $20 in tip income in July 2022 to report this income to their employers

Sept. 12, 2022: Deadline for employees who earned more than $20 in tip income in August 2022 to report this income to their employers

Sept. 15, 2022: Deadline for third-quarter estimated tax payments for the 2022 tax year

Sept. 15, 2022: Final deadline to file corporate tax returns for the tax year 2021, if an extension was requested ( Forms 1120 , 1120-A , 1120-S )

Oct. 11, 2022 Deadline for employees who earned more than $20 in tip income in September 2022 to report this income to their employers

Oct. 17, 2022: Final extended deadline to file individual tax returns for the year 2021 ( Form 1040 )

Oct. 17, 2022: Deadline for taxpayers who earned $69,000 or less in adjusted gross income (AGI) for the tax year 2021 to use Free File to prepare and file their returns

Nov. 10, 2022: Deadline for employees who earned more than $20 in tip income in October 2022 to report this income to their employers

Dec. 12, 2022: Deadline for employees who earned more than $20 in tip income in November 2022 to report this income to their employers

What If You Can’t Pay Your Taxes?

Can’t pay now? Go to IRS.gov/Payments for more information about your options.

You could apply for an online payment agreement ( IRS.gov/OPA ) to meet your tax obligation in monthly installments if you can’t pay your taxes in full. Once you complete the online process, you will receive an immediate notification of whether your agreement has been approved.

Another option is to use the Offer in Compromise Pre-Qualifier to see if you can settle your tax debt for less than the full amount you owe. For more information on the Offer in Compromise program, go to IRS.gov/OIC .

IRS Tax Relief Updates

Coronavirus Tax Relief

The Internal Revenue Service is offering tax help for individuals, families, businesses, tax-exempt organizations and others – including health plans – affected by coronavirus. Assistance Programs include Advance Child Tax Credit and continuing Third Round of Economic Impact Payments. See the agency's article for details.

Tax Relief for Victims of Arkansas Severe Storms and Tornadoes

The Internal Revenue Service announced on December 28th, 2021 that following the recent disaster declaration issued by the Federal Emergency Management Agency, affected taxpayers in certain areas will receive tax relief.

In addition, Victims of severe storms and tornadoes beginning December 10, 2021 now have until May 16, 2022, to file various individual and business tax returns and make tax payments. Learn more.

All information included in this article was sourced directly from IRS.gov .

Are You Missing Out On Unclaimed Funds?

Wed, 01 Dec 2021 15:27:00 GMT

Let the treasure hunt begin. Yes, you could be owed money by the State or US Government and not know about it. Let’s find it!

Money Owed to Me, How?

Yes, unclaimed money or unclaimed funds are held by all states and the federal government. If a business or bank owes you money and cannot locate you to pay it – like maybe you moved – they are not allowed to just keep the money. They are required to turn that money over to the State as unclaimed funds.

This goes back to 12th century England, feudal times when the common law doctrine of escheatment came into existence. Escheat presumes property always has an owner, and that owner was the Crown if there is no other owner to claim the property.

Escheat also applied if the owner went to jail for a crime, or worse, for treason. Then, all their property would be forfeit to the Crown. This forfeiture exists today in many forms including assets used or purchased with proceeds from the drug trade with the forfeitures typically funding law enforcement efforts.

So, escheat refers to the right of the State or Government to take control and ownership of the estate and assets of anyone who dies without a will, heirs, or when a property is otherwise unclaimed. All states have escheat laws requiring disclosure and forfeiture of unclaimed funds.

Note: If you are a business that either writes checks to individuals or businesses, has other amounts due that have not been claimed or you cannot find, you have a legal obligation to turn those funds over to the state or other jurisdiction.

How Much Unclaimed Money is There?

A variety of sources estimate the amount of unclaimed funds at around $50 billion! By doing a search as explained below, millions of dollars have been discovered and returned to rightful owners.

For Example:

Jack and Jill each were born in separate counties and moved around quite a bit within the same state. They met in college, married, moved around a bit more from their childhood. They had multiple addresses with some in other states, multiple names, multiple accounts, and so on.

One day, Jill received a solicitation letter offering to help her claim funds held by the State’s Unclaimed Property Division that had originally been in her maiden name jointly with her mom. It was a nice sum. And the fee was a healthy 12% to claim the funds. So, they called to confirm the letter was legitimate.

Is This Legitimate?

Yep, it was. But they did not need to pay that fee at all. They could apply for the funds for free.

How Can I Find Any Unclaimed Money Owed to Me?

Here Are the Links:

NC Residents: https://unclaimed.nccash.com/app/claim-search

All States: https://unclaimed.org/

Matured, Uncashed Savings Bonds: https://www.treasurydirect.gov/indiv/tools/tools_treasuryhunt.htm

IRS: https://www.irs.gov/refunds

If you had a HUD mortgage: https://entp.hud.gov/dsrs/refunds/

If your bank closed: https://closedbanks.fdic.gov/funds/

If your credit union closed: https://www.ncua.gov/support-services/conservatorships-liquidations/unclaimed-deposits

Unclaimed Funds in Bankruptcy: https://www.uscourts.gov/services-forms/bankruptcy/unclaimed-funds-bankruptcy

Any Tips on How to Search for Unclaimed Money?

Of course. Make a list of all your names if you have married or changed your name. Include your parents, as they may have opened joint accounts in their and your name. Also, make a list of all the states and cities where you have resided. Try combinations of these searches.

What About Those Fees?

Well, you can agree to pay fees. But generally, you should be able to claim your property without paying a fee by following the instructions on the website. If you do choose to pay a fee, make certain it is reasonable in relation to the amount sought.

We hope you have success on your treasure hunt.

And if you are fortunate to find unclaimed funds, consider contributing a small portion to help those in need in your community. To make it a better place, visit https://www.thehealingplace.org/ .

2021 Tax Planning: Retirement Savings for Individuals

Thu, 21 Oct 2021 18:24:00 GMT

It is always a good time to review and evaluate your retirement savings. The tax code provides significant incentives for contributions made to traditional and Roth IRA’s, as well as to employer-sponsored 401(k) plans. The tax law is designed to make it easy for individuals to save for retirement.

Depending on the type of investment account, tax incentives can include deductible contributions, tax deferral on the growth of assets in the plan, and potential tax-free distributions. The choice of investment that may be best for you depends upon your individual tax and overall financial situation.

401K Plans

Employees can elect to make 401(k) plan contributions through their wages using pre-tax dollars. To encourage employee participation in a 401(k) plan, employers often make matching contributions.

For 2021, participants can make 401(k) contributions of up to $19,500. Those who are age 50 or older can make additional “catch-up contributions” of up to $6,500, for a total of $26,000 in 2021.

Individual Retirement Account

Unlike a 401(k) plan, which employers offer, most IRAs are set up by taxpayers themselves. The types of IRAs are:

Self-Employed

Self-employed taxpayers may also participate in a SEP (Simplified Employee Pension Plan) IRA or SIMPLE (Savings Incentive Match Plan for Employees) IRA Plan.

The rules applicable to the types of investment can be complex. We are happy to help you maximize your tax benefit and overall savings.

About Holden Moss CPAs

We take the mystery out of tax strategy with step-by-step plans to save you on taxes and keep more money in your pocket.

Holden Moss works with small to mid-size family businesses, many of which are multi-generational, to focus on one of the biggest reasons new clients tell us they want to change CPAs: Ideas, including tax strategy, business strategy, and growth.

Holden Moss CPAs is dedicated to aiding our community during this difficult time. If you would like more information about your tax returns or other aspects of new legislation, Give us a call for a no-risk tax discovery session. The risk is on us, not you, to deliver valuable ideas. (919) 556-6216 or contact us via email at admin@holdenmoss.com . We look forward to working with you.

*Updates and guidance are issued daily by governmental authorities. The information above may change with new laws and rulings.

How a Business Framework Can Change Your Life

Wed, 29 Sep 2021 14:03:00 GMT

No great business stands still for long. And if you do, you’re likely to end up on life support, coasting through and failing to grow or make profits. Or even worse, experiencing disruption over a relatively short period of time.

The businesses that scale up and make the best profits are those with a repeatable, reliable, predictable framework. A framework that will deliver a more streamlined and profitable business model. The proven framework we use is Metronomics.

And, as we’ve previously highlighted in this series of blogs, progress comes from asking yourself:

1. Where am I now?

Gain an understanding of your company’s key functions through a process called the Key Function Flow Map. This map becomes a scorecard or dashboard for your business.

2. What can I do to make things better?

Come up with new ideas and look for a better strategy in the marketplace that clearly differentiates you from your competition.

3. How do I know I’m making progress?

Track how well your differentiators are progressing and put real drive behind the evolution of your new business strategy.

In this final blog of the series, we’re pulling it all together. Read on to discover how you measure and push the progress and execution of strategy with an awesome team.

Aligning Your Priorities

Ultimately, your team will be responsible for executing most profit improvement changes and process efficiencies. It’s vital that your people be cohesive and have a clear idea of what they should be doing and how it fits into the bigger picture.

Every owner of a business thinks their people are mind readers, or that is the way they act. Good communication and clear direction are essential. Keeping it all in your head doesn’t work.

You want the direction and priorities of the business to be 100% transparent. You want to have the “right people” in the “right seats” doing the “right things”.

The optimal way to achieve this is by using one of the many cloud-based workflow and project management systems that are now available.

Without a doubt, the best cloud-based workflow we’ve seen is Metronome Growth Systems (MGS). MGS provides you with clarity over the 7 systems of your business framework and aligns your strategy and priorities across the whole business. Here are the 7 systems:

1. Cultural System – the rules for working with us.

2. Cohesive System – pulling the team together.

3. Human System – hiring and retaining the best team.

4. Strategy System – to adopt a unique and valuable position through differentiated actions

5. Execution System – to accomplish milestones toward your priorities.

6. Cash System – to predict where you will be in the future.

7. Coach Cascade System – to make everyone a coach to cascade the system throughout the organization.

MGS is a game-changer in terms of speed of execution. So much so that its use is a requirement of our coaching clients. And we pick up the tab since it makes such a massive difference to:

Execute Your Key Actions

What you get with Metronome Growth Systems is a brilliantly clear overview of your business, its people, and how you’re performing. This clarity relieves stress and inserts accountability into your processes.

Every person on the team knows what everyone else is working on and when it is due. There is real openness and transparency, as well as a shared feeling of purpose. And, ultimately, all this helps the business to execute plans better, faster, and more effectively.

Plus, as the owner or management team, you have much more control over how your people are working as well as where some work may be needed to keep the whole priority process on track.

You see everyone’s progress at a glance with stoplight charts that show red, yellow, or green, depending on performance.

You see who’s doing what and where they need help, making you more effective at resolving any bottlenecks.

And, you have clear visibility of issues that could clog the execution process, allowing you to fix them quickly.

The combination of a clear leadership style with the functionality and benefits of cloud business framework software gets everyone working together toward company priorities.

It’s about meeting rhythms, along with software, to keep things moving. That’s the secret sauce of running a business. No one talks about it, but it’s a vital condiment to add to your basic business menu.

Team Performance

Your team is your most important asset and such a key element in the quality of your execution. Every person has their defined role within the bigger business structure, central to keeping the machinery running smoothly and delivering on your priorities.

Every team member will have a job scorecard along with metrics. This scorecard is a list of the key priorities and corresponding metrics of their job. Your best hires want to know how the game is played and the scorecard is the solution.

HR is full of job descriptions that are mostly of little use to you.

They give you a list of responsibilities, but they give no measurements against those same responsibilities. In short, they don’t help you to know if this person is performing well or otherwise.

To understand each team member’s role in the business, you have to:

Topgrading scorecards are one way to measure the performance of each role in the business, based on the Topgrading concept developed by Brad Smart.

Topgrading starts by breaking down the talent and performance ability of your people into As (the top 10%), Bs (the top 20%), and Cs (the bottom 65%). The key aim is to make sure that everyone in the business is graded as an A or to work toward that hypothetical ideal goal.

By looking at the main activities for each role and logging what’s expected, you can set a performance standard. Then, measure how each employee tracks against that ideal over time.

Each person has their own scorecard with scores, a personal record of their performance over time, making it easier to see where alignment is slipping or where improvements can be made.

It also helps to drive increased performance from the whole team and to keep them aligned with those all-important key priorities.

Progress with Drive

By focusing on a strategy that distinguishes you in the marketplace through differentiated actions, and using all the benefits of driven leadership, measured performance, and software tools, you can change the speed, efficiency, and long-term profitability of your business while enhancing the joy of running a successful business.

Kick the tires with a mini Metronomics Bootcamp as an introduction to the framework at no charge. It's on us. We will explore the Metronomics framework together and discover how it can save you time and money to get the business and life you want. By using two of the tools, you will walk away with a Functional Organization Chart and the Key Process Flow Map both ready to put into action and start your framework.

Get in touch with Steve Moss at smoss@holdenmoss.com to book a session. We’d love to develop the business and life you want.

A Tax Strategy for Gain On The Sale Of Your Home

Fri, 17 Sep 2021 16:06:00 GMT

Will I Be Taxed On The Sale Of My Home?

Tax Strategy No. 116: Exclusion of gain on sale of your home – full and prorated exclusion.

Have you noticed the housing market boom? It is wild here in the RDU area of NC - as it is in many areas of the US. And there is good news. Tax rules allow you to exclude up to $500,000 ($250,000 if you are single) of gain on the sale of your home.

To qualify for the full exclusion, you must meet both an ownership test and a use test:

But wait, there’s more!

There is a partial exclusion loophole if you do not meet the rule above because you sold before the 2-year period.

This prorated gain exclusion equals the full $500,000 ($250,000 single) applicable amount multiplied by a fraction:

The prorated exclusion loophole is only available when there is an early or premature sale. This prevents you from holding it for the entire 2 year period if the reason for the sale is:

Example: You have owned and lived in Home A as your principal residence for 11 months (are married and filing jointly). If you qualify under one of the exceptions listed above, you are allowed to exclude up to $229,167 ($500,000 × 11/24) of gain. That will go a long way toward diminishing or even eliminating a tax on the gain.

Employment Change

IRS rules say you are eligible for the prorated gain exclusion if the early sale is primarily due to a change in your place of employment. Or, you are a “qualified individual”, which I will call a “QI”, which is defined as:

A premature sale is automatically considered to be primarily due to a change in place of employment if any QI passes the following distance test:

The distance between the new place of employment/self-employment and the former residence (the property that is being sold) is at least 50 miles more than the distance between the former place of employment/self-employment and the former residence.

(Almost any close relative of a person listed above also counts as a qualified individual. Any descendent of the taxpayer’s grandparent, like a first cousin, also counts as a QI.)

Health Reasons

If a premature sale is primarily due to health reasons, you are also eligible for the prorated gain exclusion if your move is to:

Whenever a doctor recommends a change of residence for reasons of a QI’s health, the premature sale is automatically considered to be primarily for health reasons. Otherwise, the facts and circumstances of your situation must indicate that the premature sale was primarily for reasons of a QI’s health.

An early sale that is only helpful or beneficial to the general health or well-being of a QI will fail the test.

Other Unforeseen Circumstances

This is one of those difficult “facts and circumstances” rules.

The occurrence of an event that you could not have reasonably anticipated before purchasing and occupying the residence might qualify for the partial gain exclusion.

IRS has ruled that a sale that is largely due to a preference for a different residence or an improvement in financial situations will not qualify.

But wait, there’s more.

The Safe-Harbor Rule

If any of the following events occur while you own and use your principal residence, the partial exclusion will be deemed to apply due to unforeseen circumstances:

Refer to Publication 523 for the complete eligibility requirements, limitations on the exclusion amount, and exceptions to the two-year rule.

Tax Shelter Strategy No. 116: Exclusion of gain on sale of your home – full and prorated exclusion.

About Holden Moss CPAs

As we receive legislative language or more details, we will share that information with you. Subscribe to our blog for email updates and never miss another article by clicking here.

We take the mystery out of tax strategy with step-by-step plans to save you on taxes and keep more money in your pocket.

*Updates and guidance are issued daily by governmental authorities. The information above may change with new laws and rulings.

SBA Changes Forgiveness Process on Loans of $150,000 or Less

Tue, 17 Aug 2021 19:37:00 GMT

New Initiative

On July 28, 2021, the Small Business Administration decided to allow PPP borrowers with loans of $150,000 or less to apply for forgiveness online.

Under this new initiative, the borrower's lending bank or institution has to opt-in to allow the SBA to process these forgiveness applications. And they will still issue a decision on whether to grant forgiveness. The portal with the SBA opened on August 4, 2021.

Banks and other lending institutions have been dealing with the cost of processing applications from borrowers who want forgiveness for about a year now. Through May 2021, nearly $800 billion in forgivable PPP loans have been funneled to Main Street USA businesses.

Details

According to Consumer Bankers Association CEO Richard Hunt, "the creation on a new PPP forgiveness platform will allow more small businesses to focus their time and resources on successfully reopening, while also providing lenders the choice to retain oversight of their customer relationships."

The SBA has received many comments from borrowers and lenders stating that "the loan forgiveness process is overwhelming and difficult to manage".

During 2020 more than $521 billion PPP loans were issued. Loans totaling about $279 billion have been forgiven, and another $81 billion in loans are currently in review according to SBA data. Loans of $150,000 or less account for about 93% of the outstanding PPP debt, again according to the SBA data.

Deadline

According to SBA instructions, borrowers can apply for forgiveness any time up to the maturity date of the loan. If borrowers do not apply for forgiveness within 10 months after the last date of the covered period, then the PPP loan payments are no longer deferred and the borrowers will begin making loan payments to their PPP lender.

Stay Tuned!

As soon as we receive legislative language or more details, we will share that information with you. Subscribe to our blog for email updates and never miss another article by clicking here .

Holden Moss CPAs is dedicated to aiding businesses during this difficult time. If you would like more information about your tax returns or other aspects of new legislation, give us a call at (919) 556-6216 . Contact us via email at admin@holdenmoss.com . We look forward to working with you.

*Updates and guidance are issued daily. The information above may change.

2021 Tax Planning: Charitable Giving

Mon, 12 Jul 2021 19:21:00 GMT

You probably know that you can get an income tax deduction for a gift to a charity if you itemize your deductions. But there is a lot more to charitable giving. We would like to take the opportunity to introduce you to some of these requirements and tax-saving techniques.

Nonitemizers

The Coronavirus Aid, Relief, and Economic Security (CARES) Act allowed an above-the-line deduction for up to $300 paid to charity which non-itemizers could take in the tax year 2020. But, for 2021, the deduction is now moved down the return and used in calculating taxable income. No longer an above-the-line deduction in calculating adjusted gross income.

Individuals can take a $300 deduction against taxable income even if they do not itemize. In the case of a married-filing-joint return, this bumps up to $600.

The contribution must be made in cash. The cash must be contributed to churches, nonprofit educational institutions, nonprofit medical institutions, public charities, or any other organization.

Itemizers

For the tax year 2021, an individual may deduct any qualified charitable contribution as long as the contribution does not exceed the individual’s adjusted gross income.

An individual may carry forward any qualifying cash contributions that exceed his or her adjusted gross income for five years. Partners in a partnership and shareholders in an S corporation may deduct qualified charitable contributions that do not exceed their adjusted gross income.

Contributions to certain private foundations, veterans’ organizations, fraternal societies, and cemetery organizations are limited to 30% of adjusted gross income. A special limitation also applies to certain gifts of long-term capital gain property.

Taxpayers over 70 ½ years of age are allowed an exclusion from gross income for distributions from their IRA made directly to a charitable organization of up to $100,000 ($100,000 for each spouse on a joint return). A qualified charitable distribution counts toward satisfying a taxpayer’s required minimum distributions from a traditional IRA.

Contributions must be paid in cash or other property before the close of your tax year to be deductible, whether you use the cash or accrual method. Your donations must be documented.

Generally, a bank record or written communication from the charity indicating its name, the date of the contribution, and the contribution amount is adequate. If these records are not kept for each donation made, no deduction is permissible. Remember, these rules apply no matter how small the donation.

At the End of the Day

Please do not hesitate to contact us if you have any questions about any of the matters raised in this article. Holden Moss CPAs is dedicated to aiding individuals and businesses during this difficult time.

We will provide you with all the tools and information necessary to succeed. Give us a call at (919) 556-6216. Contact us via email at admin@holdenmoss.com. We look forward to working with you.

Shannon Susko Releases Metronomics

Tue, 22 Jun 2021 17:28:00 GMT

METRONOMICS by Shannon Susko has arrived!

Are you having FUN as a CEO?

Are you happy to come to work and happy to leave at the end of the day?

You don’t have to sacrifice the life you want to get the company of your dreams – you can have both. METRONOMICS will take you there and have you answering yes to the questions above.

What You Need to Know

For the first time, Metronomics is accessible to everyone looking for the “silver bullet” to grow their company. Shannon Susko has spent the last two years writing this book, which explores what we now know as Metronomics.

Metronomics is a system utilized by hundreds of coaches and thousands of companies of all sizes around the world. After using the system as a CEO for decades, coaching the system to thousands of leaders, and teaching coaches how to teach it themselves, Shannon is releasing the best-kept business secret for the past twenty years.

Must-Have Business Book

METRONOMICS unites top business thought leadership with over twenty years of proven practical experience. The outcome is a prescriptive progressive growth system for every business.

In this book, you’ll learn how to build a high-performing business team that achieves superior results with ease, speed, and confidence. You’ll learn the practical progression that ensures your team is fiercely connected to your strategic execution system.

No matter what level you and your team are on right now, METRONOMICS will meet you where you are—and grow with you to the next level and beyond.

METRONOMICS will allow your company to win your business Olympics every year, and as a leader, it will set you free.

What You Get

Final Thoughts

Having worked with Shannon for years, we cannot recommend this book enough.

Shannon is also the author of two bestselling business books, 3HAG WAY (2018) and The Metronome Effect (2014). She is the founder and CEO of Metronome United, a community of more than eighty coaches worldwide who use the system every day to create a lasting impact for their clients, teams, and communities.

If you’re looking to boost your management skills, this book is a great place to start.

Click here to order your copy today.

SB 116 Amendment and Vote

Thu, 03 Jun 2021 20:10:00 GMT

June 4th Update:

The House passed SB 116 by a vote of 71-36 today. The split was mostly along party lines; seven Democrats broke ranks and voted in favor. Debate on the bill was spirited and focused mainly on the proposed withdrawal from the Federal Pandemic Unemployment Compensation Agreement.

The House adopted a floor amendment by Speaker Moore adding a provision that would appropriate $250 million from federal Child Care and Development Block Grant funds to be used for subsidized childcare for eligible children.

The bill is headed back to the Senate for further consideration.

June 3rd Update:

The House Finance Committee on Wednesday adopted an amendment to rewrite SB 116 . Previously, it dealt with easing attendance restrictions at high school sporting events. Now, retitled as the Putting North Carolina Back to Work Act , the bill would:

SB 116 is scheduled for a House floor vote on the second and third reading at 11 am today. If adopted, this will be the second bill that the House has sent to the Senate with PPP expense deductibility provisions. The Senate’s tax relief and IRC conformity bill, which contains language creating a grant program for recipients of PPP loans and other federal pandemic assistance, still awaits action in the Senate Rules Committee.

Stay Tuned!

As soon as we receive legislative language or more details, we will share that information with you. Subscribe to our blog for email updates and never miss another article by clicking here .

Holden Moss CPAs is dedicated to aiding businesses during this difficult time. If you would like more information about your tax returns or other aspects of new legislation, give us a call at (919) 556-6216. Contact us via email at admin@holdenmoss.com . We look forward to working with you.

*Updates and guidance are issued daily. The information above may change.

PPP Expense Deductibility Tax Proposal

Thu, 27 May 2021 13:30:00 GMT

On Tuesday, May 25th, the Senate Finance Committee co-chairs unveiled a sweeping tax proposal. The 41-page amendment rewrites HB 334. There has not been a vote on the proposal yet.

Instead of allowing a state tax deduction for expenses associated with forgiven PPP loans, the bill would create the Job Opportunity and Business Saving (JOBS) Grant Program. The program would provide grants to North Carolina businesses that were approved for an award amount on or before June 30, 2021, from the:

The maximum JOBS grant a qualifying business may receive is 7.5% of either the award amount or $250,000, whichever is less. (i.e., the maximum grant per business would be $18,750).

The bill would appropriate up to $1 billion of federal funds from the American Rescue Plan Act for the JOBS Grant Program. Grants would be awarded automatically by the Department of Commerce based on available data from the department, the SBA, or other sources. Any qualifying business that does not automatically receive a grant by September 30, 2021, may apply for a grant. The bill includes a provision that would allow for a state corporate and personal income tax deduction from federal taxable income for the amount received under the JOBS Grant Program.

Other provisions of the proposal would:

The bill also contains the IRC conformity provisions and other tax law changes that we saw in SB 322, including NC Association of CPA’s legislative priorities of creating a graduated late tax payment penalty.

Senator Rabon said that the bill could be voted out of the Finance Committee next week. From there it will be referred to Appropriations, then to Rules and the floor. If the bill stalls in the House or is vetoed by the governor, the Senate will put these provisions into its budget proposal.

Continued Investigation

We asked Robert Broome, CAE of the North Carolina Association of CPAs,

His short answer was…not really. This is what Broome had to say:

Budget reconciliation in the U.S. Congress is a rarely used procedural method of fast-tracking certain tax, spending, and debt-limit bills. It’s been getting a lot of buzz in the news lately because, in the Senate, reconciliation bills aren’t subject to filibuster, and the Senate majority doesn’t need 60 votes to invoke cloture. The Congressional Budget Act of 1974 sets time limits on debate for reconciliation bills and requires that amendments to reconciliation bills be germane to the bill (thereby keeping the process from getting sidetracked with unrelated amendments).

Back in North Carolina, adding the provisions to the Senate budget bill is mostly about creating tactical advantage because:

Stay Tuned!

As soon as we receive legislative language or more details, we will share that information with you. Subscribe to our blog for email updates and never miss another article by clicking here .

Holden Moss CPAs is dedicated to aiding businesses during this difficult time. If you would like more information about your tax returns or other aspects of new legislation, give us a call at (919) 556-6216. Contact us via email at admin@holdenmoss.com . We look forward to working with you.

*Updates and guidance are issued daily. The information above may change.

What We Know About the PPP Expense Deductibility Bill

Thu, 20 May 2021 17:46:00 GMT

Senate leaders remain opposed to adopting the House version of the HB 334, but an alternative proposal is on the horizon. Following the tumultuous back and forth, here is the latest news about the PPP expense deductibility bill.

On Monday, Senate leaders re-referred HB 334 from the Rules Committee to the Finance Committee. Senate Republicans caucused privately on Monday and met again yesterday. The discussion concerned a proposal to provide a grant to businesses that received PPP loans.

Nothing in writing has come to our attention yet. But, we have seen that they are discussing a grant amount equal to 7.5% of the first $250,000 of PPP loans received. Senate sponsors say that they intend for the grant to be automatic. It would not require an amended tax return or even an application. No additional details have been released at this time.

If the caucus endorses the proposal, we expect the Finance Committee to schedule a vote next week. There are many factors that could alter this timeline. One such factor is that the House and Senate still have not reached an agreement on a spending cap for the biennial budget. Senate leaders may also decide to run their tax relief bill, SB 337, ahead of or concurrent with changes to HB 334. (Or incorporate their grant language into the appropriations bill or other legislation).

Stay Tuned!

As soon as we receive legislative language or more details, we will share that information with you. Subscribe to our blog for email updates and never miss another article by clicking here.

Holden Moss CPAs is dedicated to aiding businesses during this difficult time. If you would like more information about your tax returns or other aspects of new legislation, give us a call at (919) 556-6216. Contact us via email at admin@holdenmoss.com . We look forward to working with you.

*Updates and guidance are issued daily. The information above may change.

North Carolina House Fast-Tracks PPP Deductibility

Fri, 16 Apr 2021 13:24:00 GMT

Updated April 30th, 2021

The North Carolina House of Representatives approved legislation that would align the state tax code with two recent federal tax changes.

The House was expected to adopt HB 334 on the third reading on Tuesday. As previously reported, the bill would allow businesses to deduct expenses associated with forgiven Paycheck Protection Program (PPP) loans received in 2020 and reinstate the expense add-back for PPP loan recipients effective January 1, 2021.

Instead, House members adopted an amendment to the bill that would do two things:

On Thursday, HB 334 passed the House on third and final reading by a vote of 112-1. The sole dissenting vote was Rep. Julia Howard (R-Davie), who was removed from her position as Senior Chair of the House Finance Committee earlier in the week after an intra-caucus dispute over the issue.

The changes approved by the House made HB 334 much more expensive. Although the official fiscal note has not yet been released, legislators say that the estimated revenue reduction will swell from $400 million to roughly $1.2 billion.

What Now?

On Wednesday, April 28th, the Senate Finance Committee approved its version of the annual IRC conformity bill (SB 322).

The 28-page bill updates from May 1, 2020, to April 1, 2021, the reference the Internal Revenue Code in North Carolina tax statutes. It decouples from several federal tax provisions, most notably the income exclusion for unemployment compensation found in the American Rescue Plan Act.

The bill also retains the add-back requirement for expenses associated with forgiven PPP loans and broadens this provision to include other similarly treated federal programs, such as emergency EIDL grants and targeted EIDL advances, loans under the Debt Relief Program, grants for Shuttered Venue Operators, and Restaurant Revitalization grants.

In short, the Senate appears to be taking a position in direct contrast to the position adopted by the House in HB 334. It appears highly unlikely at this point that the two chambers will agree on this issue.

Important Details:

Example: A business receives $50,000 from PPP. Current NC law would require that the $50,000 be added back to NC income since it was deducted from US income. (Note that US income is the starting point for NC income). At a 5.25% tax rate, NC tax would be $2,625. The proposed income exclusion and the deduction would eliminate the tax.

Stay Tuned

Holden Moss CPAs is dedicated to aiding businesses in this difficult time. If you would like more information about your tax returns or any other aspects of new legislation, give us a call at (919) 556-6216. Contact us via email at admin@holdenmoss.com. We look forward to working with you.

*Updates and guidance are issued daily. The information above may change.

New Business Meal Tax Provision

Thu, 15 Apr 2021 16:07:00 GMT

The recent stimulus legislation included an important provision. This provision removes the 50% limit on deducting business meals provided by restaurants in 2021 and 2022. Which makes those meals fully deductible. Here are the details.

Breakdown

In general, the ordinary and necessary food and beverage expenses of operating your business are deductible. However, the deduction is limited to 50% of the otherwise allowable expense.

The new legislation adds an exception to the 50% limit for expenses of food or beverages provided by a restaurant. This rule applies to expenses paid or incurred in calendar years 2021 and 2022.

The use of the word "by" rather than "in" a restaurant makes it clear that the new rule isn't limited to meals eaten on the restaurant's premises. Takeout and delivery meals provided by a restaurant are also fully deductible.

Qualifications

It is important to note that, other than lifting the 50% limit for restaurant meals, the legislation doesn't change the rules for deducting business meals. All the other existing requirements continue to apply. Thus, to be deductible:

• The food and beverages can't be lavish or extravagant under the circumstances.

• You or one of your employees must be present when the food or beverages are served.

• The food or beverages must be provided to you or to a "business associate." This "business associate" is defined as a current or prospective customer, client, supplier, employee, agent, partner, or professional adviser with whom you could reasonably expect to engage or deal in your business.

If food or beverages are provided at an entertainment activity, they must either be purchased separately from the entertainment or their cost must be stated on a separate bill, invoice, or receipt. This is required because the entertainment, unlike the food and beverages, is nondeductible.

Bottom Line

As with all business and finance techniques, we highly suggest you consult with your financial advisor. The information presented above is appropriate in most general cases, but specifics to that particular applicant may preclude a technique’s applicability.

Holden Moss CPAs is dedicated to aiding businesses in this difficult time. If you would like more information about deducting business meals or any other aspects of the new legislation, give us a call at (919) 556-6216. Contact us via email at admin@holdenmoss.com. We look forward to working with you.

*Updates and guidance are issued daily. The information above may change.

Which Business Structure is the Best Fit for You?

Fri, 26 Mar 2021 16:36:00 GMT

Starting your own business is thrilling, not to mention liberating. You become your own boss, do what you love, and make money while doing it. Once you have your product or service solidified, getting your business off the ground is no small task. While registering your business and deciding which insurance you need, you also must decide on a Business Structure.

There’s more than one way to structure your business. It is important you keep in mind things like liability, taxes, flexibility, and cost when choosing your business structure. Which business structure best fits your needs and goals? By the end of this article, you’ll have a better understanding of which structure is most conducive to your work.

Types of Business Structures:

Sole Proprietorship

Sole proprietorships are the easiest and most common business structures. You may also hear a sole proprietorship referred to as a sole trader or a proprietorship.

As an unincorporated business, the individual owner pays personal income tax on profits earned. The business income and expenses are reported in the same personal tax return as your other income and deductions. There is no distinction between you and the business you own. This type of business is popular among sole business owners, self-contractors, and consultants for the simplicity of operation and tax reporting.

Being solely responsible for the business, you are entitled to all profits. You are then responsible for any business debts, losses, and liabilities. However, you do get to enjoy limited government regulation.

Though, there is an important distinction to make here. Say you are the sole member of a domestic limited liability company (LLC). You are not a sole proprietor if you elect to treat the LLC as a corporation. More on this later.

Partnerships

A partnership forms when two or more people or entities join together to manage business operations and share profits and liabilities. There are two different kinds of partnerships, general and limited. And in a limited partnership, there are two types of partners, general and limited. Lots of two’s.

In a general partnership, you work as co-owner with the other partner(s). All partners share both profits and liabilities. In a partnership, the partnership does not pay taxes; instead; you and your partner(s) will be taxed at your personal level on your share of the profit. If you choose to pursue this business structure, consider drawing up a partnership agreement to define specific shares for each of the partners.

In a limited partnership, one or more partners are not involved in the daily operations of the business. This is sometimes called a “silent partner.” For example, many real estate partnerships are often formed as limited liability partnerships. Consider the limited partner more akin to investors of the business. They share ownership without the risk or responsibility

Whether general or limited partnership, the profits are reported as income in the personal tax return of the individual partners. The partnership does not pay income tax. But, the partnership does file an income tax return and reports its income annually to its partners so they know what to include in their personal tax returns.

Corporation or C-Corp

A corporation is a legal entity that is separate and distinct from its owners. C-Corps are subject to a corporate income tax under Subchapter C of the Internal Revenue Code. The taxing of profits in a C-Corporation can create a double tax situation - once at the corporate level, and then a second time at the personal level. This is one of the perceived disadvantages of a C corporation.

Corporations share similar rights and responsibilities that individuals have. They can enter contracts, loan and borrow money, sue and be sued, hire employees, own assets, and pay taxes. Keep in mind, C-corporations are required to hold annual meetings and have a board of directors that is voted on by shareholders. This very formal structure, and documenting such, is another disadvantage.

One of the key advantages of a C-Corporation is that it separates or shields owners' or shareholders' assets from liabilities of the corporation. In this way, C-Corps limit the liability of investors and firm owners. The most they can lose in the business's failure is the amount they have invested in it.

Although the C corporation can result in double taxation, there are certain tax scenarios where it is preferred: high growth companies may be able to exclude large amounts of gain on the sale of the business, and in a situation where the corporation will not be able to distribute profits, then paying tax at the corporate level makes sense.

S-Corporation or S-Corp

An S-Corporation (derived from Subchapter S of the Internal Revenue Code) is also known simply as an S-Corp. S-Corporations are corporations that elect to pass corporate income, losses, deductions, and credits through to their shareholders for federal tax purposes. (this is much like the pass-through of income from a partnership or proprietorship, where the income is taxed to the owner(s)). A corporation with 100 shareholders or less can enjoy incorporation while being taxed like a partnership. Generally, electing Subchapter S avoids the double taxation disadvantage.

To qualify for S-Corporation status, your corporation must meet the following requirements:

Limited Liability Company

An LLC is a more formal legal arrangement offering limited liability much like corporations. It requires a legal document called articles of organization to be filed with the state. The law surrounding limited liability companies (LLCs) varies from state to state.

Owners of LLCs are called members. There is no maximum number of members. Most states also permit “single-member” LLCs, those having only one owner. These members are not personally liable for the company's debts or liabilities. Many states don't restrict ownership so anyone can be a member. Though, some entities cannot form LLCs, like banks and insurance companies. Check your state’s requirements for further information.

You can form an LLC for your proprietorship, and it will be taxed in the same manner as the proprietorship discussed above. Additionally, an LLC may be owned by two or more members, in which case it will be treated for tax purposes like a partnership.

And just to keep you on your toes, we can file an election to treat an LLC as either an S corporation or a C corporation!

We really like the attributes of an LLC, particularly when starting out a new business.

By the Numbers

Just in case you are curious, based upon the most recent data available from the IRS, here is how businesses are organized:

C Corporations 1.6 million

S Corporation 4.5 million

Partnerships:

General 0.6 million

Limited 0.4 million

LLCs 2.5 million

Proprietorships

(excluding farms

Including single-

member LLCs) 25.2 million

The numbers tell a story. An entity that limits liability, and passes through income, seems to be the winner - LLCs and S-Corps. We are betting that many of the proprietorships are single-member LLCs.

Dig Deeper

One of our research partners, Bradford Tax Institute, has prepared an incredibly detailed resource detailing the major attributes involved in entity selection, and you can download the PDF here.

Bottom Line

You’ve got the drive and the motivation to take your business idea to the next level. Once you’ve decided on your business structure, you’re ready to officially register your business with your state. Make that journey easier with an experienced business coach on your side.

As Gazelles Scaling Up Certified Coaches, we empower you with strategic tools to help your business flourish. We become your trusted advisor and sounding board.

Holden Moss CPAs is dedicated to aiding businesses in this difficult time. If you have any questions about starting your own business or are seeking coaching for an established business, give us a call at (919) 556-6216 . You can also contact us via email at admin@holdenmoss.com . We look forward to working with you.

Resources:

“Sole Proprietorships,” Internal Revenue Service, accessed March, 2021

https://www.irs.gov/businesses/small-businesses-self-employed/sole-proprietorships .

“Limited Liability Company (LLC),” Internal Revenue Service, access March, 2021

https://www.irs.gov/businesses/small-businesses-self-employed/limited-liability-company-llc .

“S Corporations,” Internal Revenue Service, accessed March, 2021

https://www.irs.gov/businesses/small-businesses-self-employed/s-corporations .

7 Tips on How to Hire and Keep Top Performers

Thu, 18 Mar 2021 19:02:00 GMT

Hiring the right talent is one of the most crucial elements of managing your business. When you want to grow and expand the skill set of your workforce, it’s vital that you hire the right people for the job. But that can be easier said than done.

Research shows that as little as 25% of hires and promotions turn out to be high performers. This means 75% of hires aren't delivering the performance their employer expects.

The team you assemble handles your customers, drives your internal processes, and upholds the values of your brand. Having the best possible support system behind you is key to the longevity of your company.

So, how do you supercharge your hiring process to guarantee a better success rate?

Here are our top 7 tips on hiring and keeping the team you want.

1) Don’t Rush

Give yourself ample time to deliberate the potential of your candidates. If you’ve backed yourself into a corner and are desperate for a new hire, then you aren’t going to find the best candidate. Like every other aspect of running a business, recruiting takes time and careful planning.

Instead of making a mad dash toward the first person through your door, allow yourself the time to make an informed decision. Develop a hiring plan to follow through with and ease the filtration process. With a hiring plan in place, you’ll be able to apply a consistent method and have a chance to get to know your prospects each time you’re ready to make a hire.

If you still aren’t finding the talent you need after your initial search, rather than hiring from the pool of less-than-appealing applicants, return to the drawing board. Maybe your job description could use a rewrite to become more specific and alluring to the people you are looking for. Maybe your job posting isn’t hitting the best sites. Think like a marketer and brainstorm the best verbiage and ad placements to draw in more talent.

2) Examine Resumes and References

One key area to focus on when going through resumes and interviews is gaps in the employment history.

Take a close look at any prospective employee’s career and check that there are no unexpected periods where they weren’t working. There may be completely innocent reasons for a gap in employment but, there may also be something more worrying hidden by this omission.

Dig into their history and ask the right questions about any gaps. Were they fired from a previous role? If so, why were they fired? And could that same behavior re-appear if you took them on in your own team?

If you’re starting to see question marks around a particular interviewee, it’s well worth getting in contact with their references. Get some much-needed first-hand feedback on your applicant's abilities and performance.

Beyond employment gaps, resume fluff is also something to be wary of. We have all seen the too-good-to-be-true resume beefed up and dressed to the nines only to meet the candidate and be let down by their now apparent exaggerations. One way to achieve the most honest depiction of your prospect is through a reference check.

Even just the ‘threat of a reference check’ (TORC) can serve to weed out those candidates who have been less than honest in their job applications. If an interviewee has boosted their experience, been untruthful about their qualifications, or given an unfair view of their abilities, a reference check will reveal the truth.

The mere threat of a reference check will often chase the undesirables away. Try it by placing a statement like this in the instructions to applicants: “An important part of our screening process includes having you make appointments with your references to speak with us about your qualifications.” A-players are proud of their record.

3) Search for Soft Skills

Soft skills are ever-growing in popularity as the job search evolves. While technical skills still hold priority, it is the innate personality traits that are becoming highly sought after in today’s job market. Employers are realizing more and more that operating machinery or plugging inventory on a spreadsheet are trainable actions. But, cultivating the right personalities to fit your clients’ needs and team culture would be near impossible.

Reflect on who had been previously successful in the role. What characteristics did that team member have? What made them a great fit, beyond simply accomplishing tasks. These are the traits you want to discover in your next hire.

But, uncovering these traits will take a little extra effort on your part. Be sure you line up provoking and introspective questions to help shed some light on their true personality. Give hypothetical scenarios, maybe based on real struggles your team has tackled prior. How would this applicant react in a similar situation?

Ask for a detailed description of their work style, what role they typically take in group projects, or for an example of when they helped a previous coworker in a bind.

Remember, hard skills are trainable skills. Soft skills are innate. You can train someone on your procedures, you can’t change their personality.

4) Energize Your Interviews

At this stage, you have conducted telephone interviews and chosen candidates to meet in-person. Now is the time to throw all your preconceived notions of what a job interview must look like out the window.

Don’t burden yourself with the same repetitive and boring list of interview questions we’ve all heard before. To identify the candidates who will bring more to the table than just the brains for the job, but also the culture-add and personality, you’re going to need to take the interview out of the conference room.

Walk candidates through the office for a chance to see how they interact with your other employees. As you introduce the interviewee to your team, study their behaviors. Do they seem genuine and excited about the position? Are they asking employees questions about their experience with the team? Does the candidate show an interest in what we do?

Sitting in a stuffy office chained to a desk recapping what is already included on the applicant’s resume won’t cut it anymore. Gauge their potential work performance on their interactions. When the interview has concluded, request feedback from those employees your candidate met. Get a sense of how your team feels about the applicant. After all, your team is who has to work with the new hire every day.

5) Invest in Your Managers

Managers tend to hire people who match their own level of ability. That being said, you need A-players at the top of your organization. A-players gravitate toward and hire other A-players. If a B or C-player carries out interviews, you won’t get A-grade hires.

Get involved. Have one of your top people shadow you during a hiring process. This guarantees the right outcome and a level of objectivity in future decision-making.

Make sure they’re up to speed on your preferred techniques. And that they understand the power of lengthy, detailed interviews. Once trained, your managers will be the A-players. They then can carry out interviews and hire their own team members.

6) Implement a Scorecard Approach

Very few businesses measure the effectiveness of their hiring processes. To be a top-grade business, you should be measuring the performance of your hired and promoted people. Checking whether they attain that A-player standard and maintain it.

If you do decide to hire a new team member, it’s extremely helpful to measure their performance once they’re in a role and working within the team.

Applying a scorecard approach instead of having an unchanging job description can be effective. The scorecard is solely for the team member being hired and it should be shared with the prospect. A-players want to know how the game is played. C-players are threatened by scorecards. By measuring the important aspects of your new hire’s role, you can track performance and see if they are achieving the A-class performance you need.

The elements you choose must be measurable, trackable, and built into the performance review process. For example, say you’re hiring an in-store salesperson. One indicator of success could be the number of customers greeted daily. Another could be the number of inquiries converted into sales. Or, the quality of customer feedback on this individual.

Very soon, you’ll know if you have an A-player on the team or a C-player who won’t make it through their probation period.

7) Cultivate Your Company Culture

Make sure that the high-quality standard is always in place. An A-player doesn’t see high quality as ‘outstanding performance’ they see it as ‘meeting the expected performance’.

Uphold your expectations with quarterly performance checks, maybe even monthly. These recurring meetings will keep you and your staff on the same page and develop a transparent dialogue between you two.

Within these monthly recaps include highlights of the team member’s performance. Did they work well on a task force? Did they land a new client? Are they receiving positive feedback from customers? And then give them notes on what should be improved upon. This balance is important to maintaining team morale and motivate your people to keep growing.

Remember to always ask what you can be doing to further support your team. Success is a group effort. This way you’ll be able to avoid potential chasms in communication or missteps in a procedure before they occur.

The Bottom Line

60% of business owners say hiring qualified employees is their biggest challenge. Get it wrong, and you have a disappointing workforce of C-players who miss goals and deliver sub-standard results. But get it right, and you’ll have a team of high-achieving A-players who have the skills, drive, and ambition to take your company to the next level.

We recommend reading Bradford Smart’s book, Topgrading, 3rd Edition: The Proven Hiring and Promoting Method That Turbocharges Company Performance , for more proven hiring techniques. Read it cover to cover before you make that next important hire.

Start a Business from Scratch in 10 Steps

Fri, 12 Mar 2021 18:25:00 GMT

Thinking of taking the plunge into entrepreneurship? You’re not the only one. The Wall Street Journal reports the number of people starting their own businesses in the US surged to a 13-year high last year.

Small businesses across the country shut down as a result of the coronavirus pandemic. Many of those recently unemployed decided to set out on their own ventures.

Launching and scaling a startup business is risky. About half survive their first 5 years says the US Small Business Association (SBA).

This doesn’t have to be you. With a little help from our business coaches, you’ll be set up for success from the very beginning.

Here are our 10 Steps to Starting a Business From Scratch:

1) Conduct a Self Evaluation

You can’t build a business without a firm foundation on which to stand. Do an honest evaluation of yourself and your business idea. This step will require considerable self-reflection and candor.

Lay out your strengths and weaknesses. Examine your work ethic, available time, and business skills such as delegation and management. What are you good at? Public speaking? Networking? Budgeting?

Run it by your trusted mentors and peers for feedback and criticism. Ask others for a truthful perception of you and your abilities.

This evaluation will give you a good idea of where you are now. And, a clear picture of the gaps you’ll need to fill either with personal training or the hiring of team members.

Next, do the research. Evaluate your business idea.

According to Business Insider , the majority of startup founders conclude their business proposition wasn’t as competitive as they once thought.

You can avoid this by diving deep into your desired market. Is your idea original? If not, how can you differentiate yourself and your product? Is there a high demand for what you have to offer? You’ll need to discover if the market is big enough for your specialty. Learn if enough people are searching for the solutions you have to offer.

This research will determine which direction to take your product or service. Pivot toward the demand. Fill any industry gaps you discover.

2) Build a Business Plan

Every ambitious business needs a plan for success. Simple is best. The more complicated your business plan, the less likely it is you and your team will understand it. If you don’t understand the plan, how are you going to deliver on it?

You will also need to decide on a Business Structure. When debating the different types of business structures, keep in mind things like liability, taxes, flexibility, and cost.

Types of Business Structures:

More on how to build a business plan here.

3) Understand Your Finances

It is vital that you look closely at your finances and budget for both the highs and lows. With the right amount of planning, you can assure your business rides out any potential stormy weather.

Can you afford to take this leap? As a rule of thumb, you should set aside at least six months of living expenses before quitting your day job. We also recommend you wait until you have your first major client.

Studies estimate it to take at least half a year before you’re generating enough money to start paying yourself a salary. Often, this timeline looks more like 12 to 18 months.

Get a grip on cash and always overestimate your expenses.

For more budgeting tips, click here.

4) Make It Official

5) Protect Your Business

Every single business needs insurance, no matter the industry. This could mean the difference between small inconveniences and bankruptcy. What kinds of insurance you should invest in depends on your unique needs. A few types of insurance businesses generally sign to include:

6) Hire Your Team

Your people are the foundation on which your whole business enterprise is built. They handle your customers, drive your internal processes, and uphold the values and strengths of your brand. So, having the best possible team behind you is vital to the short and long-term success of your company.

Build a team of diverse minds. When assembling your support system, you will want to surround yourself with those unlike you. Hiring folks with different skillsets and points-of-view ensures you cover any blind spots you may have.

But how do you find those A-class people in the first place? And how do you keep the best people in the team and manage their performance over time? 60% of business owners say hiring qualified employees is their biggest challenge. We’ve pulled together some top tips on hiring and keeping the team you want.

7) Just Do It

A common mistake we see budding business owners make is stressing over the details before jumping in. Don’t waste time trying to make things perfect before starting your business. Launch and improve as you go.

8) Start Branding Yourself

Once you have workshopped and finalized your company name, it’s time for the real fun: developing your brand. Remember that these materials do not need to be perfect to start making a name for yourself. These will simply be the building blocks to your much bigger picture down the line.

Get started with a strong value statement that resonates with you, your team, and your future customers.

Your company’s website will be your hub for sales, communications, customer feedback, and so much more. It is imperative that it be accurate, easily navigable, and informative. WordPress is a popular web builder that is beginner-friendly. They have a wide variety of free templates for you to get started.

You’ll want to develop a recognizable logo. Something simple that reflects you and your services. And don’t believe you have to cough up exuberant fees for a professional graphic designer to create your collateral. The free online graphic design tool Canva has great logo templates and is easy to use. For a new business with limited funds, beginning here is a great way to save until you can afford other design services.

Another fantastic and free marketing tool is something we all use every single day. Social media. Build your social media presence on various applications such as Facebook, Twitter, LinkedIn, and so on. Keep in mind where your core customers are hanging out. An interior designer may find great results with Pinterest but a Pharmacist may not. These platforms are all as unique as the various businesses out there. Find your match and focus on that until you are able to scale up and maybe even dedicate a team member to your social media management.

9) Write a Marketing Plan

Now that you’ve developed your product, brand, and business model: How are you going to get customers to buy your products or services?

This is where a Business Marketing Plan comes in. A good Business Marketing Plan outlines your marketing strategy for the coming year, quarter, or month. Consider it a summary of the market you want to enter.

Map out who and where your core customers are, your company goals, and how you’re going to achieve them on organizational and individual levels.

We recommend you start customer-focused and more targeted on customer needs. Great business owners analyze their customers and find out what makes them tick. Plot out what their core needs are and sell them solutions that serve their genuine needs and improve their quality of life.

Having the customer at the start of your sales and marketing strategy helps inform your product development, target the right products and services, and deliver a targeted sales approach.

This customer-focused approach will keep your customers engaged and happy. And as we all know, it’s happy customers who come back to spend more money!

10) Prepare for Anything

We’ve all heard it, probably too many times: “Expect the unexpected.” This mindset is crucial to maintaining strong and steady business growth.

Investopedia defines crisis management as the process of identifying a threat to an organization and developing an effective response.

Preparing for and managing any disruptive or unexpected emergency situations that can affect business, employees, customers, and/or revenue is an essential skill for every business owner to hone.

What’s Next?

Have you tried starting your own business?

There is no better time to start planning your business than today. Right now. You’ll never get anywhere if you don’t start somewhere. So, how can we help?

Holden Moss CPAs is dedicated to aiding businesses in this difficult time. If you have any questions about starting your own business or are looking for coaching for an established business, give us a call at (919) 556-6216 . You can also contact us via email at admin@holdenmoss.com . We look forward to working with you.

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10 Must-Have Business Productivity Apps

1) Genius Scan PDF scanner

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Highlights:

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6) Asana

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