On the Summit CPA Virtual CFO Blog, we publish blogs each week, to bring you helpful information that will assist you with your administrative duties. Here are our top five posts last month:
- New Tax Rules for Capital Expenditures- The tax reform bill that was passed in December 2017 has many provisions intended to benefit small businesses. The provisions include rules that will affect the way a small business will explain (account for) the cost of capital expenditures. Beginning this year the number of business property purchases you can expense each year increases to $1 million (previously $500,000). Usually, the spending on business property (office equipment, vehicles, etc.) is capitalized and depreciated in a way that the tax benefit is spread out...
- Taking a Loan from Your Company? Don’t Forget the Tax Rules-. If you are a business owner and want to borrow money from your company, then you probably already know that you should enter the loan as a “shareholder loan” in your books. Although, if your tax return is audited, the IRS will scrutinize your loan to make sure it’s not really dividends or disguised wages that are taxable income. When structuring the arrangement of the loan it is useful to know what the IRS may be looking for if there is an audit.
- Quickbooks Chart of Accounts: 5 Things You Should Know- As a business owner starting out, you probably didn’t think that you would have to become an expert in accounting. Although it’s not a requirement to have knowledge of accounting principles, there are still certain concepts that you need to understand.
- Effective Tax Rate vs. Tax Bracket- Though this can be a little tricky, it is not a trick question. For instance, when you know your tax rate it gives you an accurate reflection of your tax liability relative to your total income. Whereas, knowing your tax bracket is useful for planning purposes. For example, if you decide you want to spread a Roth conversion over several years in order to stay within the income limits of a certain tax bracket.
- The Pros and Cons of a Company Buyout- Sometimes when a company is looking to reduce costs and employees, larger companies may offer a buyout to certain employees before dealing with layoffs. Buyouts can be good for both the company and the employee. Employees that take the buyout to get a nice sum of cash, and companies can reduce high wage senior positions and hire new employees at an entry-level wage.
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