When you sell inventory, the result is reported currently as ordinary income. You can’t exclude the income and you can’t defer it. When you sell business property at a profit, it usually results in a capital gain. In a handful of situations, you can exclude the gain; it’s not taxable. But generally, gain is recognized and taxed in the year of the sale. Still, there are some good ways to postpone tax on the gain. Consider these options before you finalize any sale so you can be positioned to take advantage of a particular deferral option. Benefits of deferral Tax […]

Your business is located in the U.S, all your employees are in the U.S, and all your sales are made within the U.S. So how can you be called a “foreign business”? You don’t have to be doing business overseas to be a foreign business. A foreign business is any company legally formed in one state that is conducting business in another state. For example, you formed a corporation in New Jersey but maintain an office in New York or warehouse your goods there. To the state of New York, due to your physical presence there, you’re a foreign business. […]

For more than 25 years, I’m proud to say my tax book for small businesses has been the go-to guide for owners and their tax advisers. The 2023 edition for preparing 2022 returns as well as tax planning for 2022 has been updated to incorporate changes from the Inflation Reduction Act as well as other new laws, court decisions, and IRS pronouncements. As has been my practice, I’ve written my own book review to explain the purpose of the book, what’s new, and what’s ahead. (The following is an update to previous blogs about my book.) Why small business owners […]

“Cultivate the habit of being grateful for every good thing that comes to you, and to give thanks continuously. And because all things have contributed to your advancement, you should include all things in your gratitude.” ~ Ralph Waldo Emerson The annual national holiday of Thanksgiving for many businesses is the official start of the holiday shopping season. For some businesses, this period represents their peak sales for the year. But there are many reasons why I’m grateful to be a small business owner in the U.S. (The following is adapted from an earlier blog.) Reasons Thanksgiving holds special significance […]

As recession creeps up, it’s likely that money owed to you may become harder to collect. Perhaps it’s outstanding receivables. Maybe you’ve loaned money to an employee, a vendor you’ve known for years, or a business associate. What can you do? Collections policies Today, with electronic payment options and Square attached to a phone for swiping and tapping, it’s easy to get paid for your goods and services on the spot. But for some businesses and in some industries, invoicing and waiting to get paid remains the norm. What can you do to ensure your outstanding invoices don’t stand out too […]

Understanding and monitoring your business’ financial information is critical to success. When starting a business, financial terminology may be confusing and the importance of mastering it and staying on top of your numbers may be challenging. Here are some key numbers to know and watch. The discussion is very general; you may need to drill down further for a better picture of your business’ financial situation. Key numbers to know and watch: 1. Cash flow statement Making sales is one thing; having cash on hand to pay your bills is quite another. Cash flow is more important than profits, says […]

November 8th was Election Day. Who knows what impact a new Congress will have on your business; it’s too early to tell. But voters across the country approved a number of provisions on the state and local levels that could affect your workplace. Here are some areas to explore in your location. Minimum wage The majority of states have minimum wage rates higher than the $7.25 federal rate. On Election day, Nebraska voters approved a minimum wage increase, incrementally to $15.00 per hour by 2026. Nevada voters okayed a minimum wage increase to $12.00 per hour by July 1, 2024. The […]

November 11 is Veterans Day and October 31 through November 4, 2022, was National Veterans Small Business Week. According to the SBA, veterans own 5.6% of businesses in the U.S. There were 1,421,000 nonemployee firms and 1,758,934 employee firms. These figures are roughly in line with the 5.6% of the U.S. population that identify as veterans. Big companies founded by veterans The numbers above demonstrate that many veterans start small business. And some of the best-known major corporations were also started by veterans, including: Walmart—Sam Walton served in the Army intelligence during World War II Amway—Jay Van Andel served in […]

How does your company measure up when it comes to environmental, social, and governance (ESG) performance? For publicly-traded corporations, ESG is a big deal and is clearly disclosed on their SEC filings (quarterly 10-Gs and their annual 10-Ks). (Harvard Law School Forum on Corporate Governance describes recent trends in SEC filings) How important is ESG to small businesses? A national survey from Fordham University found some very interesting results. The following is a summary of some aspects of the report that may be helpful in evaluating your current practices and deciding on your company policies going forward. What consumers know about […]

Intelligent automation is already a powerful force in our everyday lives. Computers remember our passwords, phones are starting to use facial recognition, and social media apps adjust their algorithms based on our activity. With many people working from home or quitting in the Great Resignation, robotic process automations (RPAs) are more relevant in the workplace than ever. RPAs won’t solve the labor crisis, but they can pick up the slack of the lost workers and help the employees who remain. Here are five major ways intelligent automation will benefit your employees. 1.  Increases Employee Productivity A lot of time, energy, and […]

Tax credits are a dollar-for-dollar reduction of taxes owed. Some credits offset income taxes; others offset employment taxes. Some credits are part of the general business credit and subject to an annual limitation; others are fully refundable (they can be recouped in excess of what taxes are owed). For pass-through entities, the business must qualify for the credit, but owners claim their share on their personal returns. In some cases, limitations apply at both the entity and owner levels. If all of this sounds complicated, that’s because it is…and you need to work with a tax professional. The following will […]

Bank of America’s 2022 Workplace Benefits Report found employers play an important role in their employees’ financial wellness. Employees are stressed (62%) by current economic conditions and employers (97%) today feel very responsible for employee financial wellness (only 41% of employers felt this way in 2013). Offering financial wellness support can lead to more employee satisfaction, more company loyalty, more engagement, greater productivity, and stronger job performance. Now is the time to make your employee benefits plans—an important part of employees’ financial wellness—for the coming year if you haven’t already done so. What you offer depends on what your company […]

There’s a lot to be concerned about today—inflation, high interest rates, labor challenges (the inability to find and keep good employees, plus quiet quitting), crime, regulatory problems, and on and on. But small business owners by nature are optimists; they have to be to believe they can start a company and be profitable. I think it’s worth thinking about positivity, especially now. As Anne Shirley in the book Anne of Green Gables by L.M Montgomery said: “I’m so glad I live in a world where there are Octobers.” Here are some ideas to help you stay positive: Recognize the importance […]

It seems that just about everything is political. With the mid-term elections fast approaching, there are strong feelings that are being expressed on conventional and social media as well as in homes and workplaces. What are small businesses supposed to do about such expressions in the workplace? (The following is adapted from a blog posted a couple of years ago.) When it comes to politics in the workplace, small businesses will want to consider: Legal requirements Employers must be mindful of the law. Individuals have a constitutional right to free speech. This right bars the government from restricting speech; it […]

Do you have business-owned vehicles that employees use company business? Do you require employees to use their own vehicles for business driving? Whichever option applies to your company, be sure to have a policy on driving. This can enhance employee safety and avoid costly accidents. Basic rules for your driving policy Because the company may be financially liable for accidents, whether the vehicle is owned or leased by the company or belongs to the employee driving on company business, be sure to have a solid vehicle and drivers policy. Your policy should reiterate to employees what is common sense: Obey […]

In the old days, employers had to withhold money from employees’ paychecks primarily for two purposes: income tax withholding and FICA. Income tax withholding applies for federal and state income taxes. FICA withholding is the employees’ share of Social Security and Medicare taxes. Over the years, employers have become the financial centerpiece of many employees’ lives, and this is reflected in withholding for a vast array of reasons. So that you can adapt your business practices, take note of some of the withholdings you may have to make in addition to income tax and FICA withholding. Types of withholdings to […]

You’ve built a successful business in your home state, and now you’re ready to take it to the next level by expanding to another state. But before you open up shop in a new location, there are a few things you need to know first. Here’s what to consider before expanding your business to another state: The cost of doing business The market potential in the new state The competition you’ll face The regulations and red tape you’ll need to navigate The availability of talent and resources Your company’s culture Your considerations The cost of doing business This includes the […]