Doing business

Giving your taxes your full attention just once a year isn’t the best business strategy. Experts suggest that a year-round approach is better for your finances. Click through to learn the best ways to evaluate the impact of taxes throughout the year.

Numerous tax experts agree that addressing your tax liability effectively requires planning throughout the year. Those business owners who reap the most benefits consider their taxes year-round, rather than waiting to focus on tax payments just a few weeks before the filing date.

A typical small business qualifies for roughly a dozen tax deductions. For example, you may be able to claim deductions on the following:

• Cars operated for business purposes
• Business-related travel and entertainment expenses
• Purchases of office supplies, furniture, equipment, and software programs
• Telephone expenses
• Contributions toward insurance policies, retirement plans, and pension funds

It’s surprising how many small businesses never take advantage of these deductions, mainly because they suffer from the “tax-planning-happens-but-once-a-year” syndrome. To fully benefit from these deductions, it’s important to maintain your expense records throughout the year.

Your goal should be to reduce your tax liabilities by retaining records of your purchases and determining the proportion of business costs in combined expenses. By monitoring your expenses closely all year, you can analyze each expense for its tax impact as it’s made. Additionally, smart business owners should contemplate three key steps to tax planning:

1. Invest in the most effective tax record tools for your business. Whether it’s spending roughly $30 on journals and tax books with a set of refill sheets costing less than $10 to do manual bookkeeping or investing up to $2,000 on the latest online software tax-filing applications, you will benefit from more rigorous and accurate recordkeeping. Sure, the initial investment could be significant, but regular monitoring should facilitate tracking expenses and making advance payments, which will save you money in the long run.

2. Determine when you need professional tax tips and planning advice. At times you will be able to justify paying for professional tax services, particularly if you need advice on unclear requirements in tax laws that could be in your favor. To prevent unnecessary complications and aggravations, you must avoid violating tax laws that may be applicable to your small business. If you are unsure of these laws, using the tools at your disposal, such as current software and online recordkeeping, and complementing those capabilities with professional advice when needed, can help you keep your taxes under control.

3. Establish year-round tax planning goals. A good tax-planning strategy will help you accomplish some of these goals:

• Reduce the amount of taxable income
• Claim any available tax credits
• Lower your tax rate
• Control the time when taxes must be paid
• Avoid the most common tax-planning mistakes

Plus, a year-end review at the end of your fiscal year or “busy season” can be most effective if you’ve maintained clear records and an understanding of your financial position throughout the year.

Of course, this is just a general list. Not all deductions are available in all situations, and rules change frequently. Give us a call to discuss which deductions apply to your company.

Matthew J. Rice CPA offers reliable and comprehensive tax planning and preparation services to help ensure that you take advantage of current tax laws, submit accurate and on-time tax returns, and put together a plan that may significantly reduce your tax liability. Call us at 704-609-1119 now or request a consultation online to learn more.

Do you have a client or customer who won’t pay? Even when all attempts to collect a bad debt have failed, the IRS may give you a break at filing time. Click through to see how to take that bad debt off your taxes.

When can you use bad debt to reduce business income? Even when you take the customer to court and you still don’t get your money, there’s a way to make lemonade from this lemon of a customer.

If your business has already shown this amount as income for tax purposes, you may be able to reduce your business income by the amount of the bad debt. Look at bad debt as an uncollectible account—a receivable owed by a customer, client or patient that you are not able to collect.

Bad debt may be written off at the end of the year if it is determined that the debt is in fact uncollectible.

According to the IRS, bad debt includes:

• Loans to clients and suppliers.
• Credit sales to customers.
• Business loan guarantees.

How do you write off bad debt?

Your business uses the accrual accounting method, showing income when you have billed it, not when you collect it.

If your business operates on a cash accounting basis, you can’t deduct bad debt because you don’t record income until you’ve received the payment. If you don’t get the money, there’s no tax benefit to recording bad debt. You only record the sale when you receive the money from the customer.

Under accrual accounting, manually take the bad debt out of your sales records before you prepare your business tax return.

You must wait until the end of the year, just in case someone pays.

• Prepare an accounts receivable aging report, which shows all the money owed to you by all your customers, how much is owed and how long the amount has been outstanding.
• Total all bad debt for the year, listing all customers who have not paid during the year. Only make this determination at the end of the year and only if you’ve made every effort to collect the money owed to your business.
• Include the bad debt total on your business tax return. If you file business taxes on Schedule C, you can deduct the amount of all bad debt. Each type of business tax return has a place to enter bad debt expenses.

It makes sense in any kind of business—no income recorded, no bad debt.

A business bad debt often originates as a result of credit sales to customers for goods sold or services provided. The best documentation is likely to be a detailed record of collection efforts, indicating you made every effort a reasonable person would in order to collect a debt.

Take some solace by claiming a bad business debt deduction on your tax return. Not exactly a guarantee because you need to show that the debt is worthless, but it’s good to know there may be some relief.

We offer a variety of tax planning services to both businesses and individuals. Conscientious tax planning throughout the year can save you money and make tax time easier. Call us at 704-609-1119 and request a free initial consultation to learn more.

Your company is expanding — and that’s great! You’ve grown from one office to two, three, or even more. But you need to be able to manage all of them to continue to grow. Click through for some help in multi-office management.

Each new office seems deserving of all your time, but there are still your existing offices, whose need for attention hasn’t diminished. Building, disseminating and maintaining a cohesive business strategy across multiple sites is a challenge, but you need to get it right to continue to be successful.

Step one: Information needs to be shared.

This means that no one is behind on information, and you create a sense of community. Technology makes this happen because it allows immediate, widespread communication. You must ensure that there is one main method of digital communication — inconsistently used initiatives quickly become difficult to manage effectively. Use the one tool that works well and commit to communicating relatively frequently through it. You may want to send a brief weekly email newsletter to all staff. The tricky part is working across time zones, so if possible, send official communications when all offices are open.

Step two: Your leadership team is your greatest asset.

Employing an excellent senior management team to undertake communication on the company’s behalf is as important as digital communications. Have a senior management team member assist in running the firm, coordinating each office to provide local leadership. It’s wise to have a strong chain of command and a team that integrates as much as possible with each other to keep everyone informed about work across the company. Strong departmental management complements the businesswide strategic vision.

Step three: Timing is everything.

It’s essential to maintain a top-level presence across all offices and to be a recognizable face to all employees. If your company is based in one region, try to visit each office every month. If your firm is spread across the country, visit every two or three months. Time your visits within a week of each other and give a little more attention in your weekly email newsletter to any office that hasn’t been visited in a timely manner.

It makes sense to prioritize visits according to the size of the office, while maintaining a high level of inclusion in digital communications to show staff that they are highly valued.

Step four: Integrate wherever possible.

Encourage cross-office collaboration to develop a wider understanding of the business as a whole. It’s healthy to work with a number of different people and conducive to caring about the business beyond each office’s four walls. One means of doing this is to give staff opportunities to shape the company’s image, such as by participating in brand workshops or to be personally involved in company improvements.

Step five: Don’t be afraid to try something new.

Always try new things and commit to change. What suits one business may not suit another. Be prepared to innovate to find what works for you. That’s why building a personal relationship with as many employees as possible works — you’re giving people a chance to mix with others they would never normally work with.

Don’t forget the value of old-fashioned face time among and across teams. By encouraging this, you will contribute to successful integration and a corporate culture across geographies. Local offices need to be held accountable for quality control, scheduling and improving systems, and such efficiencies may work companywide.

All of this can seem like a lot of hard work, but splitting time between offices and building a system of shared information is crucial to the overall success of multi-office businesses. By trying to achieve equilibrium, you create a happy workforce that delivers the best results.

Matthew J. Rice CPA provides a variety of accounting, tax, and financial services to Charlotte business owners. Call Matt Rice at 704-609-1119 and ask for a free initial consultation today to find our how we can work together for your success.

Much like a map or a GPS provides clear directions to your destination, a business plan can help define your goals and spell out the steps your business must take to achieve them. It can also establish a set of benchmarks to measure your progress. A business plan is critically important when it comes to obtaining financing. Here are the key sections that a business plan should include.

Executive Summary

Your executive summary outlines the primary points in the subsequent sections and touches on your company profile and goals.

Company Goals/Mission Statement

This section summarizes your company’s purposes and goals. It defines who you are and what you want to achieve.

Market Analysis

Here you can demonstrate your industry knowledge and present conclusions based on your assessment of the industry, your potential market and its demographics, and your main competitors.

Company Description

Provide information on what you do, how you do it, the markets your business serves, and what differentiates your business from the competition. You can include examples of recent projects that were completed and, if advisable, the names of some of your major clients.

Organization and Management

Here you can outline your business’s organizational structure and identify the company owners, management team, and board of directors.

Service or Product Line

This section provides the opportunity to explain what you sell and how your products or services benefit customers.

Strategy and Implementation

It’s important to summarize how you plan to market your business and what your sales strategy is. This section should include information on how you will reach target customers and penetrate the market and should provide details about pricing, promotions, and distribution.

Financial Plan

This is where you present an overview of your finances. It is where you lay out your assumptions about revenue growth, operating costs, and cash flows. Include balance sheets, income statements, and cash flow schedules as well as details about capital requirements.

If you’re ready to fulfill your dream of starting a new business, call us at 704-609-1119 or request a free consultation online now to get started. Matthew J Rice CPA offers business advisory services and works with new business owners in a wide variety of industries.