Small Businesses Start Preparing NOW For Tax Season

The current U.S. tax law for individuals and small business owners is very complex.  Start preparing NOW.  One of the most followed personal financial tips is to consult a good accountant this season.

Here are a couple of major changes that may affect your 2018 tax returns:

Different Taxation Rules
Depending on your business entity, there are a variety of a correct ways you should be filing your business taxes. And getting it right can be hard for busy entrepreneurs. Sole proprietors have different taxation rules for LLC’s, S Corporations and C Corporations. Speaking to an accountant or tax professional can help you figure out what your obligations based on your business entity federal, state, and local.

IRS Releases Regulations on Passthrough Business Deductions
In August, the Internal Revenue Service issues proposed regulations for a new provision affecting passthrough businesses. The regulations would allow many owners of sole proprietorships, partnerships, trusts and S corporations to deduct 20 percent of their qualified business income. This new deduction is referred to as the Section 199A deduction or the deduction for qualified business income was created by the Tax Cuts and Jobs Act.  Eligible taxpayers can claim it for the first time on their 2018 federal income tax return.

Stay on top of these important dates:

April 15 – Tax Deadline
File electronically, no later than 11:59 p.m.  If you are mailing your return, your envelope must be postmarked by the deadline date.

October 15 – Extension Deadline
This is the last day to file your tax return if you received an extension from IRS.

Need more help making sense of it all this tax season?   Consider using a tax professional.  If you don’t have one yet, call T. Williams & Associates!

Special tax breaks for members of the military and their families.

There are some special tax breaks for members of the military and their families. Learn how you can save money on your taxes.

If you’re active duty military or a military spouse, there are a few ways to keep money in your pocket this tax season.

1. Moving expenses. Service members who are on active duty and move because of a permanent change of station (PCS) can deduct the reasonable unreimbursed expenses of moving.

2. Combat pay. Enlisted personnel and warrant officers who serve in a combat zone for any part of a month can exclude all military pay for that month from their income. Commissioned officers also can exclude a limited amount of pay.

3. Joint returns. Spouses who are not available to sign a joint income-tax return due to military duty may use a power of attorney or IRS Form 2848 to file the return.

4. End of Service. During the transition to civilian life, you may be able to deduct certain job search and/or moving expenses. You should also remember to meet with your financial professional to make sure you have adequate insurance coverage.

You can depend on the experienced accountants at T. Williams & Associates for fresh ideas to reduce your taxes through proactive planning and skillful income tax preparation. With us in your corner, you’ll take advantage of every avenue available to minimize your tax burden and maximize your income. For more help with individual or business taxes, connect with us today. Our team can help you with all your tax issues, large or small.

3 Money Management Tips to Meet Your Small Business Financial Goals at Year-End

Resources to help you with money management do not need to be an EXTRA scary task.  The perfect way to satisfy this year’s financial goals in your small business is to take one step at a time.

1) Set a budget and stick to it. If the idea of budgeting seems intimidating, start with something simple by writing down your monthly income (paychecks, child support, etc.) and how much money you spend each month (rent, food, child care, car loan, etc.). Use this budget worksheet to help you plan.

2) Give your business and personal finances a wellness check. Your personal finances and well-being are closely tied to how well your business is doing.  Whether or not your business is as healthy as you’d like to be, it is recommended to run a wellness check to ensure that you meet your business’ financial goals.

3) Hire a tax professional to help you with your year-end tax planning.  The US code can be complex and difficult to understand.  Tax planning allows you to take advantage of strategies that may help reduce your tax obligation. To make things even easier, we recommend researching your tax credit opportunities to reduce your liability.

T. Williams & Associates are willing to educate our clients as to what their financial statements say as well as make suggestions as to what courses of action are advisable.  With the new year fast approaching, it’s important to understand the recent changes to our tax laws. Together, we can identify new ways to save you money and increase profits wherever possible. Through our experience and expertise, we have developed proven processes to help automate your bookkeeping, increase your cash flow, and ultimately save money on your taxes.

If you enroll in our accounting services by December 31st, we are offering a two month FREE trial of our payroll and Online Quickbooks software!*

Please follow this link to schedule a meeting or conference call, so we can discuss your business’ needs and determine how much money we can save you monthly.

Tax Credit Opportunities

Tax deductions aren’t the only things to consider when looking for ways to reduce your 2018 tax bill. There are a number of tax credits that you may be able to claim. A tax credit reduces your tax liability dollar for dollar (and, in some instances, may be fully or partially “refundable” to the extent of any excess credit).



Child-Related Credits

Parents of children under age 17 may claim a child tax credit of up to $2,000 per qualified child. The child tax credit is phased out for higher income taxpayers. A different credit of up to $13,810 is available for the payment of qualified adoption expenses, such as adoption fees, attorney fees, and court costs. The credit is phased out at certain income levels, and there are certain restrictions as to the tax year in which the credit is available. Look into claiming the child and dependent care credit if you pay for the care of a child under age 13 while you work. It’s available for 20% (or more) of up to $3,000 of qualifying expenses ($6,000 for two or more dependents). This credit isn’t confined to child care expenses — it may also be applicable for the care of a disabled spouse or another adult dependent.



Higher Education Credits

The American Opportunity credit can be as much as $2,500 annually (per student) for the payment of tuition and related expenses for the first four years of college. A different credit — known as the Lifetime Learning credit — is available for undergraduate or graduate tuition and for job training courses (maximum credit of $2,000 per tax return). You’re not allowed to claim both credits for the same student’s expenses, and both credits are subject to income-based phaseouts and other requirements.



Sometimes Overlooked

One credit that taxpayers sometimes miss is the credit for excess Social Security tax withheld. If you work for two or more employers and your combined wages total more than the Social Security taxable wage base ($128,400 in 2018), too much Social Security tax will be withheld from your pay. You can claim the excess as a credit against your income tax. The alternative minimum tax (AMT) credit is another credit that’s easy to overlook. If you paid the AMT last year, you may be able to take a credit for at least some of the AMT you paid. The credit is available only for AMT paid with respect to certain “deferral preference” items, such as the adjustment required when incentive stock options are exercised.

Your tax advisor can provide more details regarding these and other tax credits that may be available to you.



Why Small Businesses Should Outsource their Bookkeeping

We all get 24 hours in one day. But between answering texts, emails, filling staffing holes, attending meetings, networking, attaining funding and trying to have a personal life, how do business owners also run a successful company with 24 hours in a day?

Working with outsourced accounting and bookkeeping firms, you can surround yourself with experts, provides sound counsel, allows for business owners to focus and, and ultimately, increases profits. They are a trusted source of deep knowledge in an aspect of business and can quickly identify risks facing the operation and understand common pain points.  In addition to  bringing  solutions, best practices and efficiencies to quickly get to the desired solution.

Working with outsourced  accounting and bookkeeping firms also encourages owners to get answers to pertinent and sometimes not yet considered questions to prevent a sticky situation down the road. These questions also encourage decisions  to help get to a good consideration.

Most small business owners start a business to give themselves an outlet for their passion, not to meddle with bookkeeping, payroll and tax compliance. With outsourcing your accounting and bookkeeping it saves time and resources to keep your business needs rolling so you can invest in your passion.

A good accounting and bookkeeping firm will work to increase a company’s profitability.  While it’s true partnering with an accounting and bookkeeping firm requires an initial investment.  Accounting and bookkeeping firms offer turnkey services.  These add efficiencies lowering operation expenses, giving a leg up on the competition, an ultimately maximizing profits.

Ultimately, outsourcing your bookkeeping to experts is worth it.  Accounting and bookkeeping firms invest in making your business better and, in the end, provide efficiencies that add to the bottom line.  In addition, you’ll be able to grow your business, focus on what you do best, and lower your stress.

T. Williams & Associates believes when our client wins, our firm wins.  We will invest as much of ourselves to see your business succeed.  In the past 10 years, T. Williams & Associates have helped many small businesses get a handle on their accounting and bookkeeping needs by automating their back office finances, so they can increase cash flow, grow faster, and save more money on their returns.  You can use this link to reserve some time to chat: https://twilliamsassociates.youcanbook.me    Or just call us directly at 816-251-4527.

In the meantime, you can learn about our firm here: https://www.twa-accountingservice.com/

Tax Reform Raises the Use of The Cash Accounting Method.

The Tax Cuts and Jobs Act accounting method provisions are allowing businesses greater use of the cash method of accounting and exemption from complex tax rules. An accounting method is the set of rules that apply to determine when an item or deduction is taken into account for tax purpose. The two most common methods are cash and accrual. Once an accounting method is established, it generally must be used consistently from year to year.



The cash methods available to only small business are generally simpler than the accounting methods required to be used by larger businesses. Under the cash method of accounting, income is generally recognized in the year cash is received and deductions are generally taken into account the year an expense is paid. Under the accrual method of accounting, income and expenses is generally recognized when earned or incurred, even if payment is received in a later year. Prior to December 31, 2017, limitations applied to corporations and partnerships with corporate partners. These taxpayers were prohibited from using the cash method of accounting for tax purposes unless their gross receipts were $5 million or less.  Beginning December 31, 2017, the threshold has increased to $25 million.



The IRS guidance ,released August 3, 2018, is allowing small businesses with annual grow earning of $25 million or less in the prior three-year period to use the cash method of accounting.  Business taxpayers are permitted under the Tax Cuts and Jobs Act may obtain an automatic consent to change accounting methods starting after December 31, 2017.

Under the new law, allows more taxpayers to use the cash method of accounting.  Taxpayers switching from the accrual method to the cash method is required to complete Form 3115 to make this change. Businesses must apply the gross receipts test each year to determine whether it continues to be eligible to use the cash method.

Tax reform has dramatically changed US federal income tax rules. Consult your accountant or tax advisor to develop a tax strategy to determine whether a change in accounting method is consistent with that strategy.