by Solange Lopes | Jan 16, 2018 | Start Your Business
If you ask many, if not most business owners, what the hardest part of running their business is, one of the most common answers you’ll get is around productivity. It’s not surprising, considering that running a business, or even a side hustle, requires keeping so many balls up in the air. Unlike a regular 9-to-5, we must set our own schedules, answer to ourselves, and in the beginning juggle the different aspects of running all the facets of the business, from accounting to marketing.
One of the biggest struggles I’ve had in my side hustle first, and business later, was to be and keep being productive. I would be appalled at how fast time would fly, and at how little I would accomplish in a day, as compared to the monumental task list I’d have going. It seemed I would never be done, yet the tasks would keep piling up on my list. “How could I ever get it all done?“, was the question I would constantly ask myself.
In order to be more productive, it’s crucial to find ways to make better use of the little time we have. Here are 12 tips for small business owners to improve their productivity:
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Prioritize
Running a business or even simply being involved with a business also means having a long list of to-do’s. From getting clients to answering emails, there are a gazillion things to attend to in a business. However, you cannot possibly attend to them all. Which also means that you must prioritize your tasks and rank them by order of impact.
To Do: Identify the activities that are most impactful to your business. These may include income-producing activities, as well as content and client outreach activities, for instance. Prioritize these and ensure that you do spend an adequate amount of time on them.
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Identify the income-producing activities
As passionate as you may be about your business, it’s still important for you to make money in it. A business that doesn’t make any money, or doesn’t have any money-making potential, is a hobby. While your business may not automatically make enough money right from the start, you must pinpoint those activities that have the potential to bring income to it.
To Do: List all the business activities that are income-producing, and devise ways to fit these in your schedule on a daily basis. Focus on these and devote time to them.
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Identify the least desirable activities, and tackle them first or delegate them
There will be many activities in your business that you will not be particularly attracted to. Those are the tasks that make you want to get a root canal instead of devoting yourself to them. Pay particular attention to these, and make a conscious decision to either tackle them first or delegate them to someone competent enough to handle them.
To Do: Go through your list of to-do’s and pinpoint the tasks that you are reluctant to tackle. Decide whether to work on them first thing in the morning, or to delegate them.
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Focus on one task
As business women especially, we may be inclined to multitask. However, studies have proven that multi-tasking reduces our productivity and efficiency. Learning to focus on one task makes us more effective, especially within our businesses.
To Do: Pick one single activity to focus on at a time, and do not switch your focus until you’re done. Establish a system of rewards for completing each task so you can motivate yourself even more.
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Time yourself
There are so many things to address in a business that it can be easy to lose track of time. Make it a habit of timing yourself from activity to activity. Use tools like the Tomato Timer, based on the Pomodoro time management technique, for instance. Assessing how much time it takes you to finish given tasks will give you a better idea of how efficient you really are. It’s also a great basis to improve your productivity.
To Do: Use a timer method of your choice to keep track of how you spend your time in your business. Start keeping weekly timesheets and assessing your time management. Track your progress and reward yourself as you go.
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Communicate with your team
If you work with a team, or even just collaborators, make sure that your communication is effective. It can be challenging to keep the lines of communication clear and open when running or growing a business. Use collaboration tools like Asana, Slack, or Google Docs, to streamline and clarify your communication.
To Do: Make it a habit to communicate frequently with your team. If you haven’t already, pick a collaboration tool to use within your team.
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Lessen meetings
One of the biggest time-wasters in businesses is unproductive meetings. Learn to reduce the necessity of meetings by communicating more effectively and clarifying directions. Instead of constant meetings, opt for mini-huddles to keep in touch. Use technology to stay connected with your team without spending unnecessary time in meetings.
To Do: Reduce the amount of meetings you’re involved in. If it can be said in an email, it does not require a meeting.
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Take breaks and exercise
Businesses require a lot out of us. Which also means that we can deplete ourselves in the process of creating, running and growing our businesses. This is why it’s crucial to replenish our reserves, whether mental, physical or spiritual. Make it a habit to exercise regularly and take breaks throughout your day. Having a spiritual practice also goes a long way in keeping you focused and productive.
To Do: Schedule time for exercise and breaks as you would business commitments. Learn to honor this time to care for yourself and come back re-energized.
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Automate it
Thanks to technology, there are many tasks on your business to-do list that you can automate. From bank transfers to scheduling your social media posts, learn to streamline your activities by automating them whenever possible and effective.
To Do: Identify those tasks on your to-do list that can be efficiently and productively automated. Use the appropriate tools in order to run your business as smoothly and as effectively as possible.
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Say NO
No is a complete sentence. It’s also one of the most potent success tools in business. Learn to recognize those requests and demands on your time that are not aligned with your business purpose, and say no to them. Saying no is a muscle you must learn to develop if you want to be successful as a business owner.
To Do: Get in the habit of saying no to at least one request per day, that is not aligned with your business purpose.
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Break up with social media
Social media has too many business owners and entrepreneurs flaunting false artifices on social media, instead of actually building and growing their enterprise. While social media is a powerful business and marketing tool, it can also constitute a huge distraction. Learn to schedule your social media activities around your business needs and stick to this schedule.
To Do: Use tools such as Buffer to schedule your social media posts. You may also schedule some specific time intervals to maintain your social media involvement, instead of being on it all day.
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Schedule email time
Email is a close contender to social media when it comes to being a huge business distraction. Schedule your email time as you would any other commitment, and stick to it. Make sure to maintain a clean inbox, and declutter your email subscriptions regularly.
To Do: Set some time on your daily schedule devoted exclusively to email. Keep away from email outside of this time. Get rid of any email subscriptions that are not aligned with your personal or business purpose as well. Anything you haven’t opened or read in the past six months is obviously not needed, so get rid of it.
How do you keep productive in your business?
To Your Success,
The Corporate Sister
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by Solange Lopes | Jan 11, 2018 | Start Your Business
While there’s a lot of noise around starting a business and entrepreneurship in general, no much gets said about the emotional side of starting a business. However, the very act of launching a business is first and foremost an emotional process. It requires faith and a level of mental stability that many of us may not necessarily have.
Very few entrepreneurs admit to the emotional roller-coaster that starting and running a business really is. In the age of “following your dreams” and the hyper-mediatized temptation of social media hustling, it can be easy to imagine that entrepreneurship is easy. After all, it’s just a matter of “following your passion and the money will come”, right? Wrong…
While entrepreneurship requires being adequately prepared with the appropriate tools and strategies, the emotional part of being an entrepreneur is often under-estimated. From sheer excitement, motivation to loneliness, sadness and even depression in many cases, many are the emotions that entrepreneurs face.
Here are a few ways to deal with the emotional side of entrepreneurship:
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Have realistic expectations
Many entrepreneurs are also perfectionists. Which also means that many of us set very high and quite unrealistic expectations for ourselves and entrepreneurial journey. While these can provide a temporary high, they can also bring a certain level of disappointment in people.
Many entrepreneurs fail to care for themselves. As a result, the accumulated stress and fatigue end up affecting their emotional state. In our hustling, super-by society, self-care is very often underrated. Instead of stopping to reflect and observe a pause in order to replenish our mental, emotional, and spiritual. We tend to push, over-exhaust ourselves and in turn be even less effective at what you do.
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Get a coach or accountability partner
Entrepreneurship can be a lonely and challenging process. It’s also a very emotional process, as it awakens parts of ourselves that we may have buried for a long time. From dealing with fear to facing emotions ranging from guilt to extreme excitement, there are many emotional pitfalls to the entrepreneurial journey. It’s exactly the reason why it’s so important to find a coach or accountability partner.
These are people who will challenge, motivate and inspire you, especially during those moments when you feel low. They are also those who will help you dig yourself out of the pit of emotional highs and lows that come with any entrepreneurial journeys.
I’ve mentioned earlier that entrepreneurship can be a pretty lonely experience. It’s also one that many around you may not necessarily understand. After all, not everyone has an entrepreneur’s mindset, or understands the demands of creating a business.
This is why it’s crucial to surround yourself with people who can and are willing to support you. It also means that we owe it to ourselves to place some distance between us and those who may not be good for you during this part of your journey.
How do you deal with the emotional side of entrepreneurship?
To Your Success,
The Corporate Sister.
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by Solange Lopes | Jan 9, 2018 | Make More Money
Unless you’re doing your taxes on your own, choosing the right tax preparer is key. There are many benefits to hiring a tax preparer and outsourcing your taxes. However, choosing someone who has the right credentials, expertise and understanding of your particular situation requires certain specific steps.
Not only will the right tax preparer help you file an accurate tax return, but he/she will also help you maximize your deductions and reduce your tax liability.
Here are 10 tips to remember if and when you are ready to pick a tax preparer:
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Check your tax preparer’s qualifications and history
It’s important to verify that your tax preparer has the adequate qualifications. You can consult the IRS Directory of Federal Tax Return Preparers as a reference. In addition, you may also inquire about the tax return preparer’s history with the Better Business Bureau, the appropriate State Boards of Accountancy (if you’re dealing with a CPA), or the State Bar Association (if you’re dealing with a tax attorney).
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Ensure they have a PTIN number
Note that all paid tax preparers are required to have a Preparer Tax Identification Number (PTIN), which you can request. Additionally, you may inquire if they also attend continuing classes or belong to a professional organization.
It’s wise to inquire about a tax preparer’s fees even before submitting any documentation. Avoid any tax preparer who bases their fees on a refund amount or percentage. You may also want to confirm these fees in writing with your chosen tax preparer.
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Check on e-filing services
Inquire of any tax preparer you may be considering if they offer e-filing services. If so, make sure to ask them about the e-filing process, deadlines and other requirements, as well as the best filing options.
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Confirm their availability
You may also want to ensure that your tax preparer will be available for your needs, even after your file your tax return. Confirm the due dates and deadlines of your tax return preparation service.
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Ask if they provide support in case of audits
IRS tax audits are scary, but they are a possibility. Ask your potential preparer if they will/can support you in case of a tax audit. You may also want to obtain information about any additional fees in this instance.
There are some common red flags you should be aware of as you pick the right tax preparer for you. Avoid any tax preparer that tells you you should sign a blank tax return. Similarly, do not engage with a tax preparer who won’t sign your tax return or will not include their Preparer Tax Identification Number (PTIN). Last but not least, any sign of an abusive tax preparer should have you running in the opposite direction.
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Provide records and receipts
Any good tax preparer should ask you for records and receipts, and ask you pertinent questions about your income, expenses, deductions, and other items. Watch out for any preparer who only asks you for your last pay stub instead of your W-2 in order to e-file your return, as it is against IRS rules.
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Be aware of your complaint options
Know that you are able and encouraged to report any abusive or incompetent tax preparers. You may use Form 14157, Complaint: Tax Return Preparer. In case said tax preparer filed or modified your return without your consent, you may also file Form 14157-A, Return Preparer Fraud or Misconduct Affidavit. You can get these forms at IRS.gov or by calling 800-TAX-FORM (800-829-3676).
Last but not least, listen to your gut. While you may not necessarily be familiar with tax matters, trust your instinct when it comes to working with certain individuals. Do your due diligence and ask as many questions as you need to feel more comfortable.
Got any tax-related questions? Click HERE to contact our sister consulting website SW Consulting.
To Your Success,
The Corporate Sister.
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by Solange Lopes | Jan 4, 2018 | Make More Money
The start of the New Year is always a great time to plan your finances. Making a solid financial plan should be at the top of your to-do list, as it can significantly impact your financial future as well as that of your children.
While financial planning is important for everyone, women tend to face unique economic and lifestyle challenges that require special attention. Women tend to live longer and earn less than men on average. Many, if not most women, are also responsible for the household budget. Additionally, they are examples for their children and tend to should the burden of aging parents and relatives as well.
As a working mom, the beginning of the new year is my favorite time to put my finances on the table and “get real” about our money situation as a family. This is especially important after the increased spending of the holidays. While some of us may want to avoid looking at your bank accounts right after the holidays, it’s better to tackle it and start on a fresh financial footing.
Here are 10 steps to making and implementing your financial plan this year:
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Confirm your financial priorities
We all have financial priorities. What are yours? As a working woman, it’s important to identify your life priorities and goals, so you can devise the right financial strategy for you. Your financial priorities may be related to sending your kids to college, being comfortable in retirement and/or being able to care for your elderly parents. Decide what’s most important to you in terms of life and financial priorities first.
To Do: Make a list of your life and financial priorities. If possible, share this with your spouse or your accountability partner(s).
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Learn to invest confidently
Even as a Certified Public Accountant, it took me a while to get comfortable with the idea of investing. For some reason, I felt that the investing industry was reserved to men, and that it failed to understand the needs of women. Thankfully, the investing landscape is changing for women. There are now a number of online investment options targeted to women specifically, and more women than ever are taking the lead in their finances.
As women, we have a lot of basic and natural skills that make us excellent investors, from managing our households to leading complex projects. However, we must commit to getting familiar with investments through classes, organizations or on our own, and invest more confidently.
To Do: Set some money aside every month as part of your budget to invest. When in doubt, consult with a financial advisor about possible investment opportunities that target your own financial priorities (see Step 1). You can also consult these online financial planning firms for women.
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Plan for taxes
Very few of us think to plan for our taxes. You know what they say: “There are only two things that are certain, death and taxes!”. Planning for tax savings options allows you to save money, and headaches, in the long run.
From saving your raises to make tax payments, to deducting your student loan interest, there are many ways you can plan ahead for your taxes. Make sure to consult with a tax professional on these.
To Do: Get clear on your upcoming tax payments, if any. If possible, set aside some money in your budget for your taxes. Consult a tax professional for the best options to save on your taxes.
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Save for retirement
Retirement is very real, and can be planned well ahead of time. In order for you to enjoy it and have peace of mind as you get there, consider starting your financial planning efforts now. It starts with determining how much you will need in order to retire comfortably. You can use the help of a financial advisor for this, as well as to make a plan to save accordingly.
To Do: Do some research and get familiar with the following questions/concepts when it comes to retirement planning:
- What is your life expectancy?
- How much will you need to healthcare costs in retirement?
- When is it best to claim your Social Security benefits?
- How much of your nest egg can you withdraw next year?
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Mind your spouse’s finances
Your spouse’s financial decisions can affect your own financial welfare. It’s important to discuss with them the financial plans they may have or decisions they may be taking. Not discussing finances with your significant other may lead to underfunded savings, financial mistakes and inaccurate budgets.
To Do: Have a money date with your spouse to plan your finances periodically. Pick a quiet time and place to discuss your budget, savings and retirement. Frequently ask questions, and create a common budget that takes into account your combined financial situation.
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Get adequate insurance
Insurance is basically your backup in case an unplanned occurrence requires you to spend a large amount of money. The right insurance plan will protect your assets and safeguard your peace of mind too.
When you think insurance coverage, don’t just limit yourself to your car or home insurance. You may also want to think about:
- Health insurance
- Disability insurance
- Life insurance
- Business insurance
- Etc
To Do: Do your homework and research the best insurance options for your particular circumstances and budget. If needed, consult with an insurance agent or advisor as to your best options.
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Create multiple streams of income
Relying on one single income can not only be a source of stress, but also an obstacle if you happen to lose it. If you’re employed, consider pursuing a side hustle or starting investment funds that create additional income for you. If you’re a business owner, start thinking about ways to diversifying your income streams by offering varied products or services.
To Do: Brainstorm on additional ways you can create additional income. Try to implement at least one of these this year.
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Prepare for long-term care
Having health insurance is one thing, planning for long-term care is another one. Start thinking about ways to prepare for long-term care, especially as a woman. Women tend to live longer than men and tend to have a higher rate of chronic illnesses, which also means that they also need more long-term care.
To Do: Start planning for your long-term care needs by doing the following:
- Discuss your options with an advisor
- Consider shared-care policies with your spouse if you’re married
- Consider a hybrid long-term care insurance policy that pay you and your family in either long-term care benefits or life insurance proceeds
- Consider opening a Health Savings Account (HSA): You can use your tax-exempt dollars to pay for long-term care premiums, under certain condition.
- If you’re single, research the best options for single women or consult with your advisor
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Create your estate plan
There is another area that few think about as part of their financial planning efforts. However, it’s crucial as it allows you to plan for your assets after you are gone. This usually involves drawing out a will, and listing out all your assets ahead of time, with the help of an estate planner or advisor.
To Do: Start researching estate planning options and/or consult with an estate planner or advisor.
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Plan early and review your plan frequently!
Last but not least, do not wait to implement the various components of your financial plan. The earlier you start planning your financial future, the greater the rewards! In addition, make sure to review your plan as frequently as possible, at least on a quarterly basis. Don’t forget to adjust it in cases of life changes, such as marriage, divorce, children, etc.
To Do: Set a timeline for implementing your financial plan, and delineate action steps as to how you can realistically tackle it.
Have you set your financial plan yet?
To Your Success,
The Corporate Sister.
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by Solange Lopes | Dec 28, 2017 | Make More Money
The final version of the Tax Cuts and Jobs Act was passed on December 20, 2017. There are many aspects to this new tax plan, which mostly benefit corporations and wealthy people. However, one aspect that may be overlooked is the impact it can have on working women and their families.
The new Tax Bill will raise taxes for over 83 million middle-class families in the U.S, and it also will have important implications for employees and careers. Here are various implications for you and your family if you’re a working woman:
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Your tax rates will be lowered (although the income tax brackets will remain the same)
| New Tax Bill Rates and Income Brackets |
|
|
|
|
|
|
| New Tax Plan Rates |
Current tax plan rates |
Married Filing Jointly- Income Levels |
Single- Income Levels |
| 10% |
10% |
$0-$19,050 |
$0-$9,525 |
| 12% |
15% |
$19,050-$77,400 |
$9,525-$38,700 |
| 22% |
25% |
$77,400-$165,000 |
$38,700-$82,500 |
| 24% |
28% |
$165,000-$315,000 |
$82,500-$157,500 |
| 32% |
33% |
$315,000-$400,000 |
$157,500-$200,000 |
| 35% |
33%-35% |
$400,000-$600,000 |
$200,000-$500,000 |
| 37% |
39.60% |
$600,000+ |
$500,000+ |
Please note that these rates revert to the current rates in 2026.
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The standard deduction has been doubled
When filling out your tax return this year, you’re able to choose between the standard deduction or your itemized deductions to deduct from your Adjusted Gross Income in order to get your taxable income. If you don’t qualify to itemize your deductions, then you may have to choose the standard deduction.
If you’re a single filer, your standard deduction just went from $6,350 to $12,000. If your status is Married Filing Joint, your standard deduction is now $24,000 from $12,700 under the old tax plan. Note that this change will revert back in 2026.
Since the standard deduction has now increased to such levels, it’s more likely that most taxpayers will pick it over their itemized deductions.
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Most of your itemized deductions are now eliminated
Itemized deductions are made of various types of expenses you incur throughout the year. If the total of your itemized deductions exceeds the standard deduction, your best bet is to deduct those itemized expenses instead. These generally include your home mortgage interest, property, state and local income taxes, investment interest expense, medical expenses, charitable contributions, miscellaneous expenses.
Some itemized deductions that are now eliminated include your moving expenses, with the exception of members of the military. If you are paying interest on your home equity line of credit, you can no longer deduct this.
However, the following deductions have not been eliminated:
- Charitable contributions
- Property taxes
- Mortgage interest
- Property taxes
- Retirement savings
- Student loan interest
Note that the deduction on mortgage interest is now limited to the first $75,000 of the related loan. As for state and local income taxes, taxpayers can deduct up to $10,000 whereas there was no cap before.
Good news! Your medical expenses deduction is now expanded for 2017 and 2018, as you can now deduct medical expenses that are 7.5% or more of your income. This is in contrast to being able to deduct medical expenses that are 10% or more of your income in the old plan.
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No more personal exemptions!
A personal exemption is the amount you can deduct from your income for each taxpayer and dependent you’re claiming on your tax return. You can claim a child, friend, relative, fiancé (etc) as a dependent on your tax return.
Under the old plan, you were able to deduct $4,050 per person claimed on your tax return. These exemptions are now eliminated, which puts families with many children or dependents at a disadvantage.
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Child and Elder Care Deductions Are Increased
You may be able to claim the child and dependent care credit if you incurred expenses for the care of a qualifying person to allow you (and your spouse if filing a joint return) to work or look for employment. Under the new Tax plan, the Child Tax Credit has been increased from $1,000 to $2,000, but only $1,400 at most will be refundable against payroll taxes.
If you have a 529 plan or are planning to have one, you can now use it for tuition at private and religious K-12 schools. You can also use these funds for any homeschooling expenses you incur.
If you’re caring for a non-child dependent, you can claim a $500 credit. This is especially helpful if you’re caring for elderly parents.
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Your job expenses and miscellaneous deductions are gone!
Under the old tax plan, you could deduct miscellaneous deductions exceeding 2% of your Adjusted Gross Income (AGI). However, these deductions are eliminated from 2018 through 2025. These include unreimbursed employee expenses such as tools and supplies, as well as tax preparation expenses. Note that this doesn’t affect business-related deductions.
Overall, this new tax plan helps higher-income individuals and families the most. However, the changes to Obamacare may mean that less women may have access to healthcare. Career-related expenses which could have benefited women to further their careers are also gone. There are many changes involved, so make sure to consult with a professional if in doubt.
To Your Success,
The Corporate Sister.
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by Solange Lopes | Dec 26, 2017 | Start Your Business
The new GOP tax plan, also known as the Tax Cuts and Jobs Act, is final as of December 2017. This sweeping reform of the U.S. Tax Code will affect your business, in more ways than you may realize. This major tax act is one of the most significant reforms for businesses and corporations, with the elimination of the Alternative Minimum Tax (AMT) among other changes.
While this new legislation may result in a reduction of taxes for families and individuals, the changes may affect businesses in different ways. Here are a few of the ways that your business may be impacted:
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If you’re a US corporation, you will benefit from a large tax cut
If your business is registered as a U.S. corporation, you’re in luck! The new tax reform actually grants a generous tax cut to corporations registered in the US. Instead of a maximum corporate tax rate of 35%, C corporations that are personal service corporations, such as legal and accounting firms for instance, will now have a 25% rate.
Note that personal service corporations are corporations performing services in the fields of health, engineering, accounting, architecture, actuarial science, consulting, performing arts, and law. This lower tax rate is particularly attractive for corporations because it will ultimately make them more profitable. It also is a great incentive for foreign businesses to move to the U.S.
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The corporate AMT no longer exists!
Prior to this tax reform, the corporate Alternative Minimum Tax (AMT) consisted of a 20% tax rate that applied in case a company’s tax credits resulted in the business’ effective tax rate dipping below that level. Under this new reform, the Alternative Minimum Tax (AMT) no longer exists.
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Your corporation’s ability to deduct its interest expense is now limited
This new tax bill actually limits any corporation’s ability to deduct their interest expense up to 30% of their income. This also means that your firm may face more challenges when it comes to borrowing funds. It may also result in businesses issuing less bonds and buying back their stock.
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There are new limits on deducting Net Operating Losses (NOL)
If your business’ expenses exceed its income, your business may incur a Net Operating Loss (NOL). Under the previous tax law, this Net Operating Loss would be carried back two years. This would result in a refund of the taxes paid in the past two years, in partiality or in their entirety.
The new tax regulation eliminates carrybacks of any Net Operating Loss. The only exception applies to small businesses in case of disaster and casualty losses. In addition, taxpayers would be able to deduct any Net Operating Loss (NOL) only up to 90% of the business’ taxable income.
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Increase in Section 179 Personal Property Expensing
Prior to this new tax regulation, business owners may have been able to deduct up to $510,000 of personal property cost purchased and used for business in a single year. Now, this amount is increased to $5 million for property acquired and placed in service between 2018 and 2022.
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If your business has depreciable assets, you can now deduct their cost in one year!
Instead of amortizing any depreciable assets your business may have over the course of several years, you can now take one deduction in one year! However, the depreciable equipment must be purchased after September 27, 2017 and before January 1, 2023.
In addition, this 100% bonus depreciation applies to both new and used property, whereas previously it was only available to new property only. The bonus depreciation for automobiles would reflect an increase from $8,000 to $16,000. However, you should note that depreciation may not be used for real property.
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If you’re a pass-through service business making less than $315,000 per year, you may get a 20% deduction!
Pass-through businesses, including sole proprietorships, partnerships, and S corporations, now get a 20% deduction. This is a great benefit to small businesses, since such a deduction would lower your business’ taxable income. In turn, it will allow these businesses to reinvest any money saved back into the company’s operations.
However, this deduction only applies to service businesses making less than $315,000 per year. This is to avoid potential tax loophole, by limiting certain service-based businesses from taking advantage of lower taxable income.
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No more taxes on your overseas profits
Prior to this new legislation, corporations engaged in business abroad were taxed on the profits they incurred in foreign territories. However, the new regulation includes a shift in what is known as the “territorial” tax structure. As a corporation, you may now have to retrieve profits previously held in foreign territories with a one-time tax of up to 15.5%.
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Offering health insurance to your employees may cost you more!
This new tax regulation also results in the elimination of one of the major tenets of the Affordable Care Act. This requirement consisted in mandating all individuals to purchase health insurance. This also means that insurance premiums will more likely be raised by insurance companies. In return, your health insurance costs as related to your employees could skyrocket as well!
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You may be able to choose between the accrual and cash method of accounting
Under this new tax reform, more businesses are now allowed to use the cash method of accounting instead of the accrual method of accounting. The cash accounting mandates that a business record income when it is received, and expenses when they’re paid. However, under the accrual method of accounting, both expenses and income are booked when owed, as opposed to when they’re received or paid.
As of now, businesses with average revenues of $25 million or less are exempted from using the accrual method of accounting, which is a $5 million increase from the prior tax law.
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Your employees’ withholdings will change!
Considering the standard tax deduction has actually doubled and personal exemptions have been eliminated, what you withhold from your employees’ paychecks will need to be modified. Additionally, any bonus, commission or supplemental wages are now subject to automatic withholdings of up to 28%. This is a 3% increase from the original 25% rate. However, these changes will not be in effect until 2018.
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Watch those employee perks!
Prior to this tax regulation, businesses were able to deduct the cost of food and beverage provided to employees. However, only 50% of these costs are now allowed to be deducted. Additionally, please also note that this provision is only effective until 2025. After this date, you may no longer be able to deduct any of these expenses.
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Other deductions and credits for your business will no longer exist
The new tax law also eliminates the following deductions and credits:
- Deduction for domestic production activities
- Local lobbying expenses deduction
- Childcare tax credit provided by employers
- Historic structures Rehabilitation Tax Credit
- Work Opportunity Tax Credit
- Credit for access to disabled individuals
While these changes will only take effect at the start of 2018, it will most likely take a few months for corporations and businesses to implement the related changes. Considering that many businesses have already set their budgets and outlined their growth plans for the new year, this may also result in significant delays.
What’s your opinion on these changes?
To Your Success,
The Corporate Sister.
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by Solange Lopes | Dec 21, 2017 | Make More Money
Ask a CPA_ 3 Can’t Miss Tax Savings for New Parents
Congratulations on becoming a new parent! Not only is this a major life-changing event, it also has some seriously positive tax implications. There are several tax benefits available to new parents, as well as considerations to take into account as you plan your new child’s future.
First off, keep in mind that in order to claim your child as a dependent, s/he would need a Social Security card first. Make sure to take care of this as soon as your child is born, in order to claim them as a dependent as soon as possible. Remember that even if your child is born on December 31, you can still claim him/her for the entire year. Additionally, you may want to submit a new W-4 at work in order to adjust your tax withholding status.
Here are some tax savings to keep in mind as your family starts growing:
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Check if your employer offers a dependent care Flexible Spending Arrangement (FSA).
Take advantage of any dependent care Flexible Spending Arrangement offered by your employer as a tax benefit. FSAs allow you to contribute on a pre-tax basis $5,000 towards childcare. This is $2,000 over the normal contribution limit of $3,000, and you should definitely take advantage of it.
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Invest in a 529 Plan.
Even if you can’t fund it right away, consider opening a 529 plan for your new addition. Even minimal monthly contributions can add up over time. Additionally, consulting a financial planner on a yearly basis to discuss your current financial standing as well as your college savings goals can prove rewarding as you plan your child’s future. Also keep in mind that grandparents are allowed to fund a 529 plan, so encourage them to help as well.
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Use a tax pro!
Don’t let the variety of tax deductions and credits available to you as a new parent overwhelm you. Instead, consider hiring the services of a tax professional to avoid mistakes as you do your taxes yourself.
Becoming a new parent is one of the most exciting milestones you’ll ever reach. Congratulations on this new part of your journey, and don’t hesitate to consult a tax professional to answer any questions you may have!
To Your Success,
The Corporate Sis.
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