Wednesday, November 14, 2018

New Rules Benefit Contractors and Retailers


By Ben Kinsey, CPA

Calling all small contractors!  

Image courtesy of flickr
I have good news for contractors concerning long term construction contracts.  The 2017 Tax Act can save you money and reduce your accounting hassles. As long as your business does less than $25 million in gross receipts and the contract duration is over a year in length, you will be able to use cash accounting as opposed to the percentage of completion method you are currently forced to embrace.  In the past, long term construction contracts had to be reported using the percentage of completion method.  This method was very cumbersome to employ, since it required the contractor to even out the reporting of income over the life of the contract, regardless of the income collected. To use this method, all contractors were required to keep detailed accounting records of each period during the contract.

Tuesday, November 6, 2018

Sales Tax Shuffle


By Ben Kinsey, CPA

Image courtesy of flickr
Ben Franklin said it best when he coined the phrase, "In this world nothing can said to be certain, except death and taxes."  But as all business owners know, while death calls but once, there are many different kinds of taxes they are expected to pay at different times of the year. While income taxes are paid but once a year, business owners are required to frequently pay sales tax on many of the things they sell, as well as a number of things they buy.  The second kind of sales tax is referred to as Use Tax.

Thursday, November 1, 2018

Can Professionals Capitalize on the Same 20% Deduction as Other Businesses?


By Ben Kinsey, CPA

Image courtesy of Pixabay
In my previous blog, Do the Right Thing & Save 20%, I covered the new tax laws in effect that allow many businesses to capitalize on deductions that apply to overflow income (business income minus your salary). The only rub is this deduction specifically excludes professionals. That’s the bad news. The good news is in today’s blog I will reveal how realtors, accountants, doctors, dentists, CPAs, engineers and any other business owners that provide a service may still have an opportunity to capitalize on this 20% deduction. 

Sunday, April 1, 2018

Do the Right Thing & Save 20%

Do the Right Thing & Save 20%
By Ben Kinsey

Image courtesy of wikimedia
For all active business entities in the US that are not rental properties or hobbies, there is a new 20% business deduction that applies to your overflow income. (This is your income minus your salary) Salary, in this case, is important since the only way you can take the 20% deduction is if you take a salary, or in the case of a partnership, a guaranteed payment.  The term the IRS uses to describe this is Qualified Business Income. 

Monday, March 19, 2018

Come Hell or High Water – New Disaster Tax Relief Provisions

Courtesy of Wikimedia Commons
By now, most Americans have heard of the devastating wildfires that have destroyed property and claimed lives in California.  What many are not aware of is the fact that President Trump recently signed into law the Bipartisan Budget Act of 2018, which among other things was designed to help Californians hardest hit by fire damage.  Normally a personal casualty loss incurred by wildfire is an itemized deduction.  Under the new Act, qualified losses are now deductible as well.

Thursday, February 1, 2018

How Reasonable is Your Compensation?

By Paul S. Hamann & Jack Salewski, CPA, CGMA
Courtesy of Creative Commons Images

The IRS requires “Reasonable Compensation” be paid to S-Corporation Shareholders and General Partners in a Partnership in order to avoid a notice or audit.  The question, therefore, is, “What is reasonable?”  Below are three methods to determine a reasonable salary with a focus on the Cost Approach preferred for closely held entities which represent the majority of clients in my practice.

The Three Methods of Determining Reasonable Compensation 
It is important to match each method with the business’ size and business owner’s job duties.

Tuesday, October 17, 2017

Employee or Independent Contractor? Is it Worth the Risk!

By Ben Kinsey, CPA
Courtesy of Army.mil

Are you willing to gamble with the IRS on Contractors versus Employees, it can be a business killer if you Lose?  When should you hire an Employee versus a Contractor?  “Do You Know the Rules that determine and Independent Contractor?

Are they an Employee or Independent Contractor? Know the Rules the IRS encourages all businesses and business owners to know the rules when it comes to classifying a worker as an employee or an independent contractor. An employer must withhold income taxes and pay Social Security, Medicare taxes and unemployment tax on wages paid to an employee. Employers normally do not have to withhold or pay any taxes on payments to independent contractors. Here are two key points for small business owners to keep in mind when it comes to classifying workers: