Recent security breaches at Equifax and other companies have left many people thinking once again about identity theft. The best thing is to do everything you can to prevent it from happening to you. Here are a few tips to help you reduce your risk of being a victim of identity theft as well as how to reduce the damage from security breaches of your personal data from sources you can’t control. Discontinue paper statements that are mailed. Paper bank, brokerage, and credit card statements that are mailed can be misboxed, intercepted, lost, or stolen, and the information can fall into dishonest hands. Instead, discontinue paper statements, and access them via your online account where you can review, print, or save them each month for your records. Rent a private mail box. If you have trouble with mail theft in your area and cannot check your mailbox as soon as the mail is delivered, consider renting a post office box or a private mail box. These are especially handy if you travel a lot or have many packages delivered and no one is home to sign for them. They cost up to $300 per year, and you can find them at places like The UPS Store, Mailboxes Etc., Postal Annex, or your local post office. Shred your trash. If you throw out junk mail offers for new credit cards or bank accounts, be sure to shred that paper and anything else that might contain private information. Don’t email secure data. Credit card numbers, social security numbers, and passwords should not be sent via email unless the email is encrypted or secure. The odds of something happening are low, but could happen. Use different passwords for different account groups. Even the most secure-minded person uses the same password for many different accounts. You can too, but be smart about it. Use a unique password for your bank that you do not use anywhere else. Be smart about your password use, and make your password difficult based on the level of information that is at risk. Choose hard passwords. It is painful, but choosing long, hard passwords can help throw off thieves. Include at least one capital letter, one special character, and one number in your password. Make it nice and long. And do not use common words, your birthday, parts of your social security, or your phone number in your password. When it is provided, use a random password generator. And do not let your browser automatically save your banking passwords for you. Close inactive accounts. If you no longer use an account you signed up for, close it rather than let it linger. It will reduce your risk. Be mindful, though; if you close some credit card accounts, your credit score could be adversely affected even if there has been no activity for a while. Consider freezing your credit. If you do not need a new credit card or loan or are not planning a large purchase soon, consider freezing your credit. When you credit is frozen or secure, no one can run checks against it. Any identity thieves would not be able to take a loan out in your name. Avoid unsecured Wi-Fi. Although the ambience is nice at a Starbucks, the Wi-Fi is not secure, and connecting and doing your work all day long there is a big security risk. Consider signing up for a private, secure VPN service instead. Monitor all account activity. Check your bank and credit card accounts frequently, and turn on all alerts and fraud notifications. You can turn on alerts for when transactions exceed a dollar amount and when your bank balance goes below a certain amount. Getting emails or text messages on your activity can help you stay on top of things. Consider identity theft insurance. Identity theft insurance is now common, and you can get it and fraud protection for your business as well as for individuals. If you are a victim, it reimburses you for the cost of restoring your credit. Check with your local insurance agent for more information. We hope it never happens to you. Try these tips to reduce your risk of identity theft. This is general information and should not be acted upon without first determining its application to your specific situation. Please contact your attorney, CPA or tax advisor for additional details.
There are many to choose from, and one way to narrow it down is to find one that will help you do your job better. Look for an app that supports your administrative work, such as a new phone system, video conferencing, scheduling, cloud storage, shipping, document management, or data entry automation. Or you might have a need for apps in marketing and sales, such as social media, customer relationship managers, email list management, or web applications. If you are not sure where to look, ask your friends what has saved them the most time. Also, feel free to reach out to us to discuss apps that may support your accounting needs. Upgrade your accounting system. If your accounting system is not updated to the current version, it may be time to perform the upgrade. Check with us for advice on the current version and any new features that you can benefit from. Develop your 2018 prosperity plan. The word “budget” has somewhat of a negative connotation, but a prosperity plan sounds like fun. They are the same, of course, and the idea is to determine what goals you want to reach so that you have a clear path to making your desired prosperity a reality. Create a theme or mantra. Want to stay more focused in 2018? A theme or mantra can remind you to stay on track with a particular project or goal. Brainstorm a phrase that will guide you in 2018. Here are some examples:
Delegate something that is not getting done. One way to feel amazingly rejuvenated and re-energized about your business is to give someone an item that has been on your to-do list for far too long. It amazingly gets done right before your eyes. We look forward to working with you this next year in support of your business goals and success! Please contact us for a review of your accounting processes and systems to ensure you are getting the best support for your business. This is general information and should not be acted upon without first determining its application to your specific situation. Please contact your CPA or tax advisor for additional details.
For small businesses formed as an S Corporation and with plenty of profits, reasonable compensation is a term you may want to be familiar with. Many small businesses have organized as an S Corporation form of entity. In many cases, the S Corp election allows a business owner to save money on self-employment taxes, especially if they are operating as a sole proprietor. S Corp profits, or distributions, are not subject to payroll taxes. If you are a business owner taking a salary and contributing substantially to the operations of the business, you may think that you should just take the distributions and forget the salary. After all, think how much you would save in payroll taxes. But this has already been tried and shot down by the IRS in the courts. And this is where the term reasonable compensation comes in. The IRS requires that business owners that perform a substantial contribution to the business be paid a salary according to a number of factors. This is called reasonable compensation. You can’t pay yourself below market and take a large amount in distributions. The IRS has issued a fact sheet that describes the guidelines that can be used to determine reasonable compensation. They include employee training, experience, duties, time spent, history of distributions, bonuses, and many other factors. There are also reasonable compensation ramifications for C Corporations as well. If reasonable compensation is an issue or concern for your business, check out this link to the IRS’ fact sheet: https://www.irs.gov/uac/wage-compensation-for-s-corporation-officers. As always, please feel free to reach out and let us know how we can help. The information presented is of a general nature and should not be acted upon without further details and/or professional guidance. For assistance in identifying and utilizing all the tax deductions to which you are entitled, please contact your CPA or tax preparer.
As business owners, we want to remain optimistic about our business’ future. But life can happen, and we need to be prepared. A good business owner thinks about all the risks to their business and has a plan in place to reduce or eliminate them. In 2017, we have already seen floods in the Midwest and California, a healthy dose of tornadoes, and an ice storm earlier in the year. And those are just the weather disasters. Are you ready? In 2015, Nationwide ran a survey that revealed that three out of four small businesses do not have a disaster plan. The same survey noted that 52 percent of small business owners thought it would take three months to recover from a disaster. The most common solution is to create two plans:
There’s a lot of help online to help you create your plan. A few of the major items that should be covered include:
Creating a disaster recovery plan can be the lowest priority item on your to-do list as a business owner – until it isn’t. If you have a lot to lose, then consider spending some time on a plan to give you peace of mind. This is general information and should not be acted upon without first determining its application to your specific situation. Please contact your business advisor for additional details.
In general, you can expect your federal refund to be issued approximately 21 days after your electronically filed tax return has been accepted. However, identity theft is still a major problem, and the IRS continues to implement new strategies to protect taxpayer data. For example, if you claim the Earned Income Tax Credit or Additional Child Tax Credit on your 2016 individual federal income tax return, your refund will be held until February 15. This is general information and should not be acted upon without first determining its application to your specific situation.
Please contact your CPA or tax advisor for additional details.
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Tax Breaks That Are Now Permanent
Three tax breaks you’ll be able to take on your 2016 return, and on future returns:
Itemized Deductions and Personal Exemption Phase-Outs For 2016, itemized deductions and personal exemptions are limited when you file as single and your adjusted gross income (AGI) is above $259,400. The limitation begins with AGI above $311,300 for married couples filing jointly. Alternative Minimum Tax The exemption amount for 2016 is $53,900 for singles and $83,800 for married filing jointly. Capital Gains and Dividends Long-term gains are generally taxed at 15%. The rate is zero percent if you’re in the 10% and 15% ordinary income brackets, and 20% when you’re in the 39.6% ordinary income bracket. Affordable Care Act Surtaxes You’ll pay a Medicare surtax of 0.9% on wages and self-employment income exceeding $200,000 when you’re single and $250,000 when you’re married filing jointly. For unearned income, you’ll pay the 3.8% net investment income tax when you’re single and your modified AGI exceeds $200,000. If you’re married filing jointly, the net investment income tax is imposed when your modified AGI exceeds $250,000. If you have questions about your 2016 tax return, please call your CPA or tax advisor for assistance with understanding how these rules may affect your situation.
This is general information and should not be acted upon without first determining its application to your specific situation. Please contact your CPA or tax advisor for additional details.
How Basis Works Typically, stock basis in an S Corporation begins with the capital contribution you make to get the company started. Note that when you receive stock as a gift, an inheritance, or in place of compensation, your initial basis is calculated differently. At the end of each taxable year, your stock basis is adjusted to reflect your business’s operating results. Taxable income increases your basis, while losses reduce it. Basis is also increased by capital you put into your company and reduced by amounts you withdraw, such as distributions. After your stock basis reaches zero, you may be able to deduct additional losses, up to the extent of your debt basis. That is the basis you have in loans you make to your company. However, once your stock and debt basis are both reduced to zero, losses incurred are suspended, which means you get no current tax benefit. You can generally take suspended losses in future years, when you again have basis. The Solution You can increase your basis – and your ability to take losses – by adding capital or making loans to your business. Make the time to discuss how basis affects your individual income tax return with your CPA or tax advisor. They can guide you through the rules. This is general information and should not be acted upon without first determining its application to your specific situation. Please contact your CPA or tax advisor for additional details.
Seeing purchases your friends post on social media can leave you envious – and might also foster a desire to buy a similar item. That can be a problem if your goal is long-term financial freedom, because spending money on items you may not need can derail your plans. Three simple habits can help you stay on track. 1. Live below your means. Living below your means requires that you discover what those “means” are. To find out, use a budget app, an online financial site, or old-school pencil and paper to track your income and expenses over a month or more. You'll learn how much disposable income you receive and what your spending habits are, and you might be surprised at how your money habits hurt your finances. By spending less on non-essentials, you'll be able to save for the future and develop long-term wealth. 2. Save for emergencies. By setting aside money in easily accessible accounts, you avoid racking up credit card bills when unexpected expenses occur. Such expenses could include your out-of-pocket costs for trips to the emergency room, repairs to the family car, or patching a hole in the roof. A reserve fund can also help you survive periods of unemployment without incurring additional debt. 3. Use debt wisely. Necessary debt can generally be linked to appreciating assets, such as your home mortgage, or assets used to generate income, such as a basic car for getting to work or school. Unnecessary debt, on the other hand, might include routine credit card charges or installment loans for depreciable items. Ask yourself whether you can pay off new debt from next month's income. Making smart financial decisions isn't glamorous or easy, and requires more than a little self discipline. Your reward for persevering: substantial long-term benefits. This is general information and should not be acted upon without first determining its application to your specific situation. Please contact your CPA or tax advisor for additional details.
When you take a distribution from your IRA or qualified plan with the intention of depositing it, or “rolling it over,” into another IRA or qualified plan, the 60-day rule says you're required to complete the rollover within 60 days of receiving the distribution. In the past, when you missed the deadline, you generally had to request relief from the IRS. That meant paying a fee and going through a process to obtain a written statement waiving the rule. Now, the IRS says that in some cases you can “self-certify” by submitting a written letter to your financial institution or trustee explaining why you missed the 60-day deadline. Your error must be one of eleven allowable reasons, such as death or serious illness in your family, severe damage to your principal residence, or misplacing and never cashing the distribution check. If you are in this position, contact your CPA or financial advisor for more information. This is general information and should not be acted upon without first determining its application to your specific situation. Please contact your CPA or tax advisor for additional details
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