Since 2003 the IRS has been working to revamp how businesses should account for money spent on buying, making, improving and repairing tangible property. The final regulations were announced in 2014 with an important update made in 2015. Why would such a seemingly arcane tax accounting topic take a decade to finalize? The changes affect over $17 trillion in tangible assets owned by U.S. businesses and may require accounting changes for virtually every company in the country. The new … [Read more...]
How a 1031 exchange works
1031 exchanges offer business owners and real estate investors a solution to a “good” problem. When you buy an asset like a warehouse, office building, rental apartment or piece of land, it will likely increase in value over time. When you sell it for a profit, there is usually a hefty tax bill that must also be paid. Those taxes eat into the money you earned on the transaction which in turn leaves you with less cash available to reinvest in a new property. To solve this problem, Congress passed … [Read more...]
How hackers hack small businesses
Sony Pictures Entertainment (SPE) is finally starting to move beyond the hack attack which began on November 24th, 2014 and led to tremendous embarrassment for executives and multi-million dollar losses for the company. Hackers stole over 100 terabytes of confidential information, the equivalent of ten times the entire printed collection of the U.S. Library of Congress. In this attack the victim is a small division of Sony which has over $120 billion in assets and $65 billion in annual revenues. … [Read more...]
Getting paid what you’re owed without breaking the law
Collecting from customers that can’t or won’t pay you is one of the trickiest parts of running a small business. If you are too lenient you could go bankrupt; if you are too strict you could turn away good customers that just need a little flexibility; if you are too aggressive you could find yourself being sued by a Federal Agency or a State Attorney General. This last mistake – being too aggressive – could have dire consequences for your business. Both Federal and State government agencies … [Read more...]
2015 income “taxmageddon” breakdown
As IRS commissioner John Koskinen has publicly admitted, the 2014 tax year will be one of the most complicated and stressful to process in the history of the IRS. Last-minute changes to tax credits and deductions, new tax rules relating to the Patient Protection and Affordable Care Act (“Obamacare”) and a reduced IRS budget will create a perfect storm of hot tax mess starting in January. Processing delays – even disappearing returns according to National Taxpayer Advocate Nina Olson – can be … [Read more...]
Margin Makeover for 2015
How profitable is your business? How do your profits compare to other companies in your industry? These are two questions that small business owners need to consider very carefully before jumping into 2015. Profitability can be measured in different ways but the basic measure is “net profit” which is calculated by subtracting all of your expenses including interest, taxes, depreciation and amortization from your revenues. Sageworks, a leading provider of risk management solutions to … [Read more...]
Choose a payroll strategy for 2015
Choosing how often to pay your employees can be just as important for your business as choosing how much to pay them. While at first it seems like a simple decision, there are a number of factors that can impact employee morale, payroll processing costs and compliance with state and federal regulations. As you prepare for 2015 let’s take a closer look at your different options for paying your people. Standard payroll periods There are four standard options for choosing pay periods: weekly, … [Read more...]
Should you lend money to your employees?
Nearly 38 million families make just enough money to cover their day-to-day expenses. When something unexpected happens that requires additional cash, they don’t have it and need to borrow it. Many of them turn to their employers for help especially if the money is needed immediately. What should you do? Do you make the loan or turn them down? Why lending money to your workers is a risky proposition While many small business owners are sympathetic to workers with a financial problem, an … [Read more...]
How to get the most yield on your business cash
One of the most painful experiences a business owner can go through right now is examining the interest they are earning on their cash. For the past six years interest rates have been at historic lows. A successful business owner with $1 million in a savings account would earn around $100 to $150 per month at current interest rates. The interest on $10 million wouldn’t even cover rent for a studio apartment in most cities! It’s extremely frustrating. Despite recent indications and measures … [Read more...]
How much equity should you give your employees?
Life is very expensive these days. A few decades ago earning a $100,000 salary provided for a very comfortable lifestyle with plenty left over for savings. Today, a $200,000 income in San Francisco, New York, Chicago or Miami provides at best a middle class lifestyle. The average sale price for an apartment in Manhattan is now nearly $1.7 million. The average monthly rent for a two bedroom apartment in San Francisco is nearly $3,900. The average car insurance premium in Miami is $264 per … [Read more...]
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