Business Decisions: Taking The Necessary Time To Evaluate
Mar 02, 2016
We apologize for our lack of posting. Bill and I have been busy working on an engagement to determine if a given business location should be shut down. As it stands, the location is not profitable. It would be easy to say, if it is not profitable eliminate the location and stop adding to loss. However, it is not quite that simple. I’m sure any business owner can think of a time when you considered scraping an idea, but then it ended up being profitable.
This is not to say if you have a product line, a customer, or even a process which is not producing a profit that you should continue on. Instead, do not be so quick to react regardless of the decision you make. It is imperative to take the appropriate time to perform the necessary analysis to determine if there is a different method or approach to be taken. Sometimes it is not the idea that is poor, it is the execution.
These are not always easy decisions to be made. Any business decision always has impact, whether it be positive or negative. Taking the time to analyze and reflect gives you an opportunity to evaluate various scenarios and determine what is best for your business. I for one think it’s quite exciting to peel back the layers and have all the relevant information in front of you.
You may discover there is a different method to run a location, or way to cut costs, or even increase sales. Without doing a proper analysis, how do you know? Also consider what could be lost if you stop doing what you’re doing. Are there credits you are currently able to receive which may be eliminate? Are there losses to take advantage of that would be lost?
Do not just give up without a comprehensive review and analysis of all possible scenarios.
Categories: Cost Accounting
Tax Tips: Review Your Return Before Filing
Mar 01, 2016
Everyone makes mistakes, but making a mistake on your income-tax return can cost you. It could delay your refund, boost your tax bill, require an amended return or even trigger an audit. Before you submit your return electronically or put it in the mail, double-check to make sure you haven’t made any errors.
Simple slip ups
Many tax-return mistakes are simple ones. Ensure that you’ve entered the correct name, address and Social Security number for every person listed on your return. Another frequent error is to enter the right information on the wrong line. So it pays to go through your return line by line.
Clear up confusion
It’s important that you use the right filing status. If you’re not sure which filing status is right for you, use the interactive tool “What is My Filing Status?” on www.irs.gov. You can also check the IRS website to figure out who you can claim as a dependent. Once you determine who qualifies as your dependent(s), verify that you have checked the appropriate exemption boxes for your personal, spousal and dependency exemptions.
Correctly calculate credits and deductions
If you’re claiming any credits, such as the dependent care credit, you need to follow the instructions carefully. And check that you have completed the necessary forms or schedules. If you’re taking the standard deduction, verify that you are claiming the correct one. You can use the chart in the Form 1040 Instructions or use the interactive tool “How Much is My Standard Deduction?” on www.irs.gov.
Check your math
It’s very easy and common to make simple math errors while preparing your tax return. It’s a good idea to double-check that you’ve added and subtracted all numbers correctly and that you haven’t transposed any numbers. Ensure that you used the right column on the tax table when figuring out your tax.
Final details matter
Don’t be in such a rush to finish your return that you forget a few final, simple steps. If you’re filing a paper return, verify that you (and your spouse if it’s a joint return) have signed and dated the return. Attach Copy B of each Form W-2 that you received from your employers. Attach each Form 1099-R that shows federal tax withholding. And attach all other necessary schedules and forms in sequence number order. Make a copy of the return and all attachments for your own records. Use the correct mailing address from your tax form instructions, and include a check or money order if you owe tax. And, finally, check that you put sufficient postage on your envelope.
Categories: Other Resources
Talent Attraction: Hiring The Best Candidates
Feb 25, 2016
How can your company attract and retain top employees? It’s not always easy, especially for small businesses. Having a streamlined hiring process and ensuring that your salaries and benefits package are comparable to other, similar companies in your area can help make your company an attractive destination for high performers. Here are some pointers to jump-start your thinking.
Simplify the process
Make sure job responsibilities are clearly described when posting your openings. Candidates should be able to easily ascertain if they have the appropriate qualifications for a position. Also describe any documentation candidates may need to submit with their applications.
Be open and professional
Let candidates know early in the process, preferably in the job posting or during interviews, how much the position pays. Top candidates appreciate candor about such matters. Treat candidates professionally during every stage of the process — it sends a strong signal about your company’s culture.
Evaluate your benefits package
Compensation and benefits are important factors when it comes to attracting and retaining top talent. Salaries should be in line with what other companies in your region pay for specific occupations. Attitudes toward health and retirement benefits can influence employment choices and how committed and engaged employees are after they are hired. Your company will have a leg up on attracting and retaining the employees it needs to succeed and gain a competitive advantage if it can offer the benefit options top performers want.
If you are unsure whether your current benefits package is competitive, please contact your financial professional. An analysis of your current retirement and insurance benefits will help you identify areas that may need to be improved if you are to attract and retain the best employees.
Categories: Other Resources
Student Loan Tax Deductions
Feb 23, 2016
If you are paying interest on one or more student loans, you may be able to deduct up to $2,500 of the interest annually. The deduction is “above the line,” so you don’t need to itemize to claim it.
General Rules
To qualify, the debt must have been incurred by you, your spouse, or your dependent (as of the time the debt was incurred) for the sole purpose of paying tuition, room and board, and related expenses for post-high-school education. Certain post-graduate and vocational programs also qualify. The student must be a degree candidate carrying at least half the normal full-time course load.
The person claiming the deduction must be legally obligated to make the interest payments and not be another taxpayer’s dependent. Married couples must file jointly to claim the deduction. For 2016, the deduction is phased out if a couple’s adjusted gross income is between $130,000 and $160,000 ($65,000 and $80,000 for single filers).
Home Equity Loans
Taxpayers who choose to use a home equity loan for higher education expenses also may be able to deduct the interest on their loans. Generally, interest on a home equity loan may qualify for an itemized deduction if the underlying debt doesn’t exceed $100,000 ($50,000 for a married taxpayer filing separately) and all mortgages on the home do not exceed the home’s fair market value.
Categories: Other Resources
The Flip Side of Low Gas Prices
Feb 18, 2016
The good news: gas prices, following a drop in the price of oil, have steadily declined over the last several months. In many places, gas is now well below $2.00 per gallon. No doubt, we all enjoy some relief every time we fill up, but it is worth considering the flip side to low gas prices.
The not-quite-as-good news: reduced standard mileage rates from the Internal Revenue Service. Gas prices are one of many components of the formula the IRS uses to determine the standard mileage rates for a given year. So, if gas prices fall, the mileage rates for business use of vehicles will also decrease. The IRS offers a standard mileage rate as a simplified alternative to tracking actual vehicle expenses.
The IRS recently issued Notice 2016-1 which outlines the rates for 2016:
- For the business use of a car, pickup truck, panel truck, or van, the rate for 2016 will be 54 cents per mile, down 3.5 cents from the 2015 rate of 57.5 cents per mile
- Mileage incurred for medical or moving purposes may be deducted at 19 cents per mile, four cents lower than for 2015
- Miles driven for service to a charitable organization are still deductible at 14 cents per mile, unchanged from 2015
- The depreciation component of the standard mileage rate also remains unchanged for 2016 at 24 cents per mile.
If you use the standard mileage rate, you are not allowed to claim additional deductions for actual costs of owning the vehicle, including depreciation, lease payments, repairs, maintenance, insurance, gas, oil, tires, and registration fees.
Also, you are not permitted to use the standard mileage rate if:
- You use 5 or more cars at the same time in your business
- You claimed a depreciation deduction for the care using any method other than straight-line depreciation
- You claimed a Section 179 deduction on the car
- You claimed the special depreciation allowance on the car
As always, be sure to keep track of your mileage, and check with your tax advisor to figure out the best ways to deduct your vehicle expenses.
By: Jake Freppel, CPA
Categories: Other Resources