Setting up an LLC for our business can help you avoid personal liability if you get sued BUT ONLY if you follow these rules. You must have a separate bank account for your LLC.  You cannot co-mingle personal money or expenses with your business revenue or business expenses. You can use your own money to start the company, but you must keep track of the money you put in. It is called your basis in the company. You must use only a credit card in the business name or your business checking account debit card. You must follow the rules in your operating agreement. Yes, you need to stipulate what assets, or each partner owns and what the starting ownership of the company is and more.

You must always write or sign business contracts in the name of the LLC. You must keep 3 to 4 months of operating expenses as cash in the business when possible. It is wise to have a liability insurance policy for the business. This way if you do get sued the policy is first in line and your business cash or assets are 2^nd in line.  When your LLC starts to net $80,000 or more you need to think about telling the IRS you wish to start acting like an S Corporation. Call James D Jones @ 410-457-7331 with your tax or business formation questions. He can give you more information and help you get started!

                   Just a reminder about S corps. You need to take a salary of roughly half of your profit until that exceeds $60,000 a month. If half of your profit is exceeding $60,000 then we should talk about your next steps. Remember to reimburse your self for the miles driven @ .67c per mile in 2024 and reimburse your self for your home office and internet and be generous. I’m reimbursing myself about $500 per month just for my home office and internet alone! If you do all of this you will be much happier come tax time next year.  Good Luck James 410-457-7331

Dear Business Owner: To limit the amount that you have to pay in taxes in April. You should be thinking about DEDUCTIONS NOW!

The purpose of this letter is to reveal how you can get the IRS to owe you money.

Of course, the IRS will not likely cut you a check for this money (although in the right circumstances, that will happen), but you’ll realize the cash when you pay less in taxes.

Here are six powerful business tax deduction strategies you can easily understand and implement before the end of 2023.

1. Prepay Expenses Using the IRS Safe Harbor

You just have to thank the IRS for its tax-deduction safe harbors.

IRS regulations contain a safe-harbor rule that allows cash-basis taxpayers to prepay and deduct qualifying expenses up to 12 months in advance without challenge, adjustment, or change by the IRS.

Under this safe harbor, your 2023 prepayments cannot go into 2024. This makes sense, because you can prepay only 12 months of qualifying expenses under the safe-harbor rule.

For a cash-basis taxpayer, qualifying expenses include lease payments on business vehicles, rent payments on offices and machinery, and business and malpractice insurance premiums.

Example. You pay $3,000 a month in rent and would like a $36,000 deduction this year. So on Friday, December 29, 2023, you mail a rent check for $36,000 to cover all of your 2024 rent. Your landlord does not receive the payment in the mail until Tuesday, January 2, 2024. Here are the results:

• You deduct $36,000 this year (2023—the year you paid the money).
• The landlord reports $36,000 as rental income in 2024 (the year he received the money).

You get what you want—the deduction this year.

The landlord gets what he wants—next year’s entire rent in advance, eliminating any collection problems while keeping the rent taxable in the year he expects it to be taxable.

2. Stop Billing Customers, Clients, and Patients

Here is one rock-solid, straightforward strategy to reduce your taxable income for this year: stop billing your customers, clients, and patients until after December 31, 2023. (We assume here that you or your corporation is on a cash basis and operates on the calendar year.)

Customers, clients, and insurance companies generally don’t pay until billed. Not billing customers and clients is a time-tested tax-planning strategy that business owners have used successfully for years.

Example. Jake, a dentist, usually bills his patients and the insurance companies at the end of each week. This year, however, he sends no bills in December. Instead, he gathers up those bills and mails them the first week of January. Presto! He postponed paying taxes on his December 2023 income by moving that income to 2024.

3. Buy Office Equipment

Increased limits on Section 179 expensing now enable 100 percent write-offs on most equipment and machinery, whereas bonus depreciation enables 80 percent write-offs. Either way, when you buy your equipment or machinery and place it in service before December 31, you can get a big write-off this year.

Qualifying Section 179 and bonus depreciation purchases include new and used personal property such as machinery, equipment, computers, desks, chairs, and other furniture (and certain qualifying vehicles).

4. Use Your Credit Cards

If you are a single-member LLC or sole proprietor filing Schedule C for your business, the day you charge a purchase to your business or personal credit card is the day you deduct the expense. Therefore, as a Schedule C taxpayer, you should consider using your credit card for last-minute purchases of office supplies and other business necessities.

If you operate your business as a corporation, and if the corporation has a credit card in the corporate name, the same rule applies: the date of charge is the date of deduction for the corporation.

But suppose you operate your business as a corporation and are the personal owner of the credit card. In that case, the corporation must reimburse you if you want the corporation to realize the tax deduction, which happens on the reimbursement date. Thus, submit your expense report and have your corporation make its reimbursements to you before midnight on December 31.

5. Don’t Assume You Are Taking Too Many Deductions

If your business deductions exceed your business income, you have a tax loss for the year. With a few modifications to the loss, tax law calls this a “net operating loss,” or NOL.

If you are just starting your business, you could very possibly have an NOL. You could have a loss year even with an ongoing, successful business.

You used to be able to carry back your NOL two years and get immediate tax refunds from prior years, but the Tax Cuts and Jobs Act (TCJA) eliminated this provision. Now, you can only carry your NOL forward, and it can only offset up to 80 percent of your taxable income in any one future year.

What does this all mean? Never stop documenting your deductions, and always claim all your rightful deductions. We have spoken with far too many business owners, especially new owners, who don’t claim all their deductions when those deductions would produce a tax loss.

6. Deal with Your Qualified Improvement Property (QIP)

QIP is any improvement made by you to the interior portion of a building you own that is non-residential real property (think office buildings, retail stores, and shopping centers)—if you place the improvement in service after the date the building was placed in service.

The big deal with QIP is that it’s not considered real property that you depreciate over 39 years. QIP is 15-year property, eligible for

• immediate deduction using Section 179 expensing, and
• 80 percent bonus and MACRS depreciation.

To get the QIP deduction in 2023, you need to place the QIP in service on or before December 31, 2023.

I trust that you found the six ideas above worthwhile. If you want to discuss any of them, please call me on my direct line (410-457-7331).

Sincerely, James Darle Jones Sr
www.ATB.TAX

Employee Retention Credit 2020/2021  August 2021

It’s hard to imagine that a small business does not qualify for some or all of the employee retention credit (ERC).

And remember, this is a tax credit—one of the very best things that tax law has to offer. True, it’s not as valuable as some other tax credits, because you have to reduce your payroll income tax deductions for the credits, but the ERC certainly puts you ahead.

And you can be looking at big bucks. The possible ERC is $5,000 per employee for 2020 and $28,000 per employee for 2021. That’s $33,000 per employee.

For 2020, you have two ways to qualify:

1. You had a gross receipts drop during a 2020 calendar quarter of more than 50 percent when compared to the same calendar quarter of 2019. The more than 50 percent test is the trigger for the ERC, and you automatically qualify for that quarter and the following 2020 quarter.
2. You suffered from a federal, state, or local government order that fully or partially suspended your operations (under this rule, you qualify for the ERC on the days you suffered the full or partial suspension, even if you did not lose any money).

For 2021, you have three ways to qualify:

1. You suffered a federal, state, or local government order that fully or partially suspended your operations (under this rule, you qualify for the ERC on the days you suffered the full or partial suspension, even if you did not lose any money).
2. Your gross receipts for a 2021 calendar quarter are less than 80 percent of gross receipts from the same quarter in calendar year 2019.
3. As an alternative to number 2 above, using the preceding quarter to your 2021 calendar quarter, your gross receipts are less than the comparable quarter in 2019.

You can see by the rules that the government wants to help your small business. Take advantage.

One final note. You may not double-dip. Wages you use for the ERC may not be used for the Paycheck Protection Program (PPP), family leave credit, or similar COVID-19 programs.

The gross Tax Gap is the difference between the amount of tax owed by taxpayers for a given year and the amount that is actually paid timely for that same year. It represents, in dollar terms, an estimate of the annual amount of noncompliance with our tax laws. Many commentators have pointed to the Tax Gap as a roadmap for funding additional national priorities, cut taxes, or limit the need for tax increases. They reason that the government should prioritize full payment of taxes already legally owed before it looks to impose additional tax obligations on the general public. It is an important topic.

Reducing the Tax Gap and improving compliance is a central part of the IRS mission, which is to: “Provide America’s taxpayers top quality service by helping them understand and meet their tax responsibilities and enforce the law with integrity and fairness to all.” Our mission statement reflects our values: we put “service” first making it easier for Americans to understand and satisfy their tax obligations as the most important thing the IRS can do to affect the Tax Gap.

The IRS will also, however, enforce the tax laws against those who choose not to voluntarily fulfill their responsibilities. Indeed, our enforcement efforts serve taxpayers generally, the vast majority of whom want to comply with their tax obligations, by legitimizing that choice and giving them comfort that we support them and will aggressively enforce the laws against those who do not pay their fair share. In this regard, our enforcement efforts support compliant taxpayers and a fair and equitable tax system.                                                   We specialize in helping you pay as you go to help you avoid penalties and the prospects of owing long term ta-debt! Call James with your questions @ 410-457-7331

Businesses need an inexpensive way to advertise and market their products and services. We help you market your business, sell your products online or simply collect payments online. If you don’t need to accept online payments, we make it easy for you to earn CASH 💰through our reseller program. Call James at 410-457-7331 and learn how you can add websites with payments and earn revenue for yourself or your company!

To get started building your free website, we need:

• Your company name and contact information
• Description of your store and the products you sell
• Website address ideas (for the domain name)
• 3 photos for the home page
• Initial list of products/services to add to your online store
• Pricing and photos for your products/services
• Keyword and phrases to use with SEO marketing
• Banking information to enable direct deposit payments
• Order fulfillment information (shipping, taxes, returns)

We will support you and train you to manage your store! If you prefer to hire us as your digital store manager, we can do that too!

After the initial configuration, additions to your product catalog can be uploaded in bulk with a CSV file.

Refer someone who needs a website, and and after they accept $500 in payments we will pay you $100!!!

💰

 

Believe it or not I ran into a business the other day that had decided not to accept credit cards for payment. It was a new tattoo shop in Frederick Maryland. How could it be, in this day and age, that a business would actually consider not accepting payments in an electronic form when it makes it so easy for their customers to pay? After doing some digging it seems there are several tattoo shops in Frederick that don’t accept credit cards. These businesses are mostly comprised of a younger generation who thinks they don’t need to conform to run their business and I get it but……I don’t get it. Let me tell you why they’re missing the boat. As a retail or service business, you need to make it as easy as possible for people to buy your product or service and in this case it’s both! Say a new client comes in and looks at some designs and says ok I’ll take it. Instantly you’re creating a barrier to your sale when either have a sign that says cash only or you have to say we only accept cash or worse yet you create the tattoo and when they go to pay with plastic you say “sorry cash only.” First if you have the sign it’s also a red flag that says there is an extra step to buy from me. Second if you say cash only before they buy it makes the customer decide again whether they wish to do business with you. Sure, times are good but no-one with any sense would make a potential customer think twice about their purchase. If you were to spring it on them after the tattoo was completed what are you going to do follow them to the bank? Anyone who says they always get it anyway is lying to themselves and I’m not LOL. What about those tattoos that cost $4-5-$600.00 or more? I’m sorry but not many people have that kind of cash to drop on a tattoo, but they might have that much in credit. Ahhhh…Do you see all of the problems you are solving when you accept credit and debit cards for that matter? By accepting credit cards, you have a built-in financing program with no risk as long as you dip the card into the reader and get a signature for the cards that do require one now. By accepting credit cards you’re also giving your clients a level of security. Think about it, it’s a risk for you just to go to an ATM and withdraw money. Years ago, when I was living in Baltimore I was robbed at an ATM, the guy got $300 and wanted more before I ran off and yes, he had a gun Clint Eastwood would be proud to holster. I had an insurance agent complain once because I paid a large some of cash for my car insurance and she didn’t like making cash deposits at the bank. If your potential customer must get a cash advance from a credit card it’s another fee or should I say obstacle for them to buy from you. Let’s say you wanted to get a cash advance from your credit card, but you don’t know the pin #? You’re not waiting a week or more to get the pin # in the mail. You’re going to a tattoo shop that accepts credit cards. It’s that simple By accepting credit cards, you are making it easy for your customer to pay and in the back of their head they will always know it’s easy to buy from you. You get a built-in financing program and you don’t have to make as many cash deposits at the bank either. Most of your would-be clients might be able to get the cash but it’s a hassle and no-one likes a hassle especially when your customers are buying something like a tattoo that is supposed to make them happy. In the long run not accepting credit and debit card will cost your business customers and it will cost you money. If you’re worried about the fee, then increase your pricing 4% to 5% but whatever you do don’t make them pay a surcharge for many of the same reasons! For more information about the solutions we offer to help your business accept electronic payments in your store, in the field or online Call James @ 301 829 3331 or complete our contact page https://atb.tax/contact/ and we will be in touch. Good luck with your business and keep in mind “The Key to Profitability is making it Easy for Your Customers to pay!” We make it Affordable!

Over the past few weeks, we’ve been working on updates to our atb.tax website. We are expanding our service offerings to include website design and all the bells and whistles that go along with a website: domain name registration, web hosting, security, mobile compatibility, maintenance and upgrades. We started with our own site to give an example of what is possible. Check out our site, and let us know what you think.

If you need money to help keep your business afloat we can help!

We just applied for the Maryland Small Business COVID-19 Emergency Relief Loan Fund It’s not super hard you just need your last two years Profit & Loss Reports and why you need the loan and a little personal info! This fund can provide you and your business up to $10,000 in grants to help you survive the crisis. We also applied for the Maryland Small Business COVID-19 Emergency Relief Grant Fund This fund can offer you a loan of up to $50,000 for operating expenses. I have heard that if you use it to pay employees that you may not have to pay it back. We are helping business owners like you apply for aid for a nominal fee. Call James @ 410-457-7331 for more information!

One of the things we offer is touch-screen Point of Sale Systems for Restaurants. Recently I had a potential client I’ve been working with say to me.

James                                 “So I am leaning towards full self-service kiosk. I Think it would help my Business a lot. I don’t think that I should partner up with anything unless I have what I really need?”

Rehan,                                  Besides the food your biggest asset is the charm of your restaurant. You should always be trying to connect with your customers. Asking your customers to pay at a kiosk is not very charming and it’s definitely not very personable. You should always be bending over backwards to give your clients the best experience possible at your restaurant. When they leave your restaurant they should be saying: Wow we were seated quickly, they took our order quickly, the food arrived in a short time, the food was great, and they made it easy to pay and tip. One of the biggest problems with a kiosk is that 1 out of 5 people will need help. Suddenly it’s doing the opposite of what you wanted which was to save time. It needs to be easy in, easy to order, easy to pay, and easy out! Your restaurant is too small for a kiosk. The food and your charm is what makes your place great. A kiosk can’t smile and ask how the meal was and it’s not very charming! Anytime you get interact with your customers the better! let me know when you’re ready to revolutionize your business. Harbortouch Elite POS can do it! All the best! James