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Entrepreneur Tips and Strategies for Business

Research & Development credit — what are the potential tax savings and what businesses are eligible

Posted by Mark Martukovich Posted on May 11 2018

The Tax Cuts and Jobs Act (TCJA) may create opportunities for research and development (R&D) credits to be used for tax savings not previously considered. The topics listed below should be evaluated for prospects to use R&D credits:

  • Alternative Minimum Tax (AMT)
  • Tax Rates – Corporate & Pass-Through
  • Net Operating Loss (NOL) Limitations
  • Amortization of R&D Expenditures
  • Retention of Qualified Small Business Payroll Credits
  • Retention of Eligible Small Business Credits

What’s Changed Under The New Laws?

  • Corporate tax rate is now at a flat 21 percent, down from previous top rate of 35 percent
  • Pass-through tax rate deduction of 20 percent of domestic qualified business income; subject to limitation; expires after December 31, 2025
  • NOL deduction is limited to 80 percent of taxable income for losses arising in tax periods beginning after December 31, 2017; no carryback and indefinite carryforward for losses arising in tax periods ending after December 31, 2017
  • AMT higher exemption for individual taxpayers; expires after December 31, 2025
  • AMT is repealed for corporations; AMT credits are refundable from 2018 through 2021.
  • Amortization of certain R&D expenditures (including software development costs) would be required for tax periods beginning after December 31, 2021. These R&D costs would be required to be capitalized and amortized over a five-year period.
    Note:  Current efforts are underway to postpone or eliminate enactment of the Internal Revenue Code (IRC) Section 174 provision.

Why Cash Flow Planning is Critical in 2018

Posted by Mark Martukovich Posted on Mar 26 2018

Why cashflow planning is critical in 2018

Cashflow is simply the amount of money coming in versus going out.  Sounds simple right?

Sometimes it is not a matter of simply having more coming in than going out, but how the ebb and flow is structured and if there is a plan in place to assure that positive cashflow is consistent.

 

Cash is King

Without cash in, your business is basically a hobby. Your business needs cash to run. Expenses like rent, people who work for you, raw materials, supplies, and material you resell are required daily to keep the doors open. Positive cashflow means that everything is going well, and more money is coming in than going out. The higher the positive cashflow, the easier it is to grow your business with new equipment, more people or even added places you do business.

 

Cashflow Planning

However, to manage your cashflow you need a plan. Cashflow in most businesses is somewhat of a moving target. Some months, cash flow in can fluctuate while your cashflow out can remain static (rent, employees, etc.). Management of cashflow is critical so that you can predict fluctuations and maintain your ability to provide cashflow out.

Your company history can provide insight into seasonal fluctuations as can an intelligent review of expenses that are recurring and might be coming on the horizon.

These reviews can often uncover issues that can affect a business negatively. Annual licenses, rental agreements, inventory predictions, and capital equipment like computers and machinery often impact a business with “surprises”. However, these surprises could have been predicted with a thorough review.

 

Improving Cash Flow with Planning

A review of how billing is structured is often a place quick gains can be made. Are you losing money in collections or slow billing? Could you structure payment differently to ensure cashflow (especially for longer projects or long-term goals)?

Regarding cashflow out, if you have cash on hand, you may be able to benefit from discounts for full payments, or be able to use payment terms to their fullest. You want to pay all your bills on time and in full, but there are specific strategies to setting up and even negotiating terms based on your business goals, from setting yourself up for a large capital purchase to even selling a business.

 

Cashflow Planning is Critical

Today’s business can weather changing business environments, tax changes and seasonal sale cycles with a good plan. It is not just if your business has money coming in, it is specifically how you spend that money. A smart cashflow plan can help you develop protocol for your business that will help you understand what is going on in your business, your employees understand procedures on how they handle payments and operations and help the people you pay set expectations of how they work with you and creating a level of trust for your company.

Speaking to a qualified business advisor can help your business increase profits from a good cash flow plan.  Call us at (727) 530-0036 to schedule a time for a free strategy session to review your current plan.

Tips For Finding the Right Accountant

Posted by Mark Martukovich Posted on Mar 22 2018

Finding the right Accountant for your business is a critical step in ensuring financial success. It’s important to find someone that will help you reach your goals. Many business owners fail because they do not have a trusted financial advisor that is invested in the long-term success of their business operations. The items below are points to consider when finding the right Accountant.

 

Experience: It is extremely important to find an Accountant that understands your business. Find out about their background, what they specialize in, and what types of clients they serve.

 

Services Match Your Needs: Make sure that the Accountant you choose offers the services necessary to effectively run your business. Gain an understanding of what is included in your services and what is not included in your services.

 

Personality and Communication: Financial matters are often challenging. You want to choose an Accountant that has a good personality and is easy to talk to. You want an Accountant that can communicate well and help you understand financial matters that affect your business.   

 

Valuable to Your Business Strategy: Gain an understanding from the Accountant as to how he/she will bring value to you and your overall business strategy.

 

Utilizing Cutting Edge Technology: You want an Accountant that is utilizing cutting edge technology to ensure your work is being done properly. Also, you want an Accountant that can effectively communicate and deliver relevant information and content in electronic format.

 

Research Customer Reviews: Consider performing an internet search to gather information about the Accountant’s reputation. You can often find customer reviews online.

 

Fee Structure: Make sure you gain a clear understanding of how the fees are structured and calculated so you don’t have any surprises once service begins.

 

Accountant’s Continuing Education and Memberships: Find out where and how the Accountant keeps up to date with industry knowledge and important changes to legislation that may affect your business. It’s also a good idea to know which memberships and networking groups the Accountant is associated with.

 

Contact us for a free strategy session regarding your accounting needs and find out how we might be able to help you. Click Here To Learn More.

The 5 Ways the New Tax Laws Will Force You to Change The Way You Do Business

Posted by Mark Martukovich, CPA Posted on Mar 08 2018

 

The new tax plan for businesses is solidly in place, but there are still a lot of questions being asked regarding if some of the activities that many businesses deduct “really” have changed. The short answer is yes!

There are a number of deductions that have been taken away, however, many of them appear to be balanced out by loosening of restrictions in other areas. Some of the changes may affect you more dramatically based on the ways you do business and cause you to change the way you do things involving your business, or quite possibly making it a good idea to hire a knowledgeable tax advisor to help you plan for these changes.

 

Here Are Some of The Ways Your Business Can Adapt to The New Tax Reform

 

You will have to control your income and profits. If your business is a pass-through business, like more than 90% of small businesses, you may benefit from a lowering of your taxable income from that business by 20%. This is meant to spur you to reinvest in your business or maybe even take on additional employees. However, many service type businesses, like doctors or lawyers, may not be able to take advantage of this in some instances so it’s important for you to understand how your business is regarded. Again, this is an area where your tax advisor can help to make sure you are using the most tax efficient strategies for your situation.  It is also important to consider paying yourself “reasonable compensation so that you are maximizing your benefit.

 

You can grow your company. A large drop in the tax rate for C corps and the introduction of the Qualified Business Income Deduction for pass-through entities might not only make a real difference to your company, but in the way you do business with others. This friendlier tax base percentage might be able to keep companies from going overseas to operate and make it easier for your business to keep more of your income. Theoretically, this also might be the year you are able to start looking at expanding your business as you run projections for your profits and the associated savings in taxes. This year, many businesses should employ tax-savvy business advisors who can guide them on the path to growth in this still-complicated tax environment.

 

You Can Reinvest in Your Business. Now is a great time to put some money into your business as elements of depreciation under Section 179 have changed in favor for many businesses that want to purchase certain types of vehicles and even used equipment.  There are exclusions of course and getting advice on not only what can be deducted but how to structure the purchases can make sure you maximize your deductions.

 

You May Change How You Give To Charities.  The new tax laws have eliminated the business deduction for charity golf and other special charity sporting events. You can no longer deduct either participating in, or even attending a charity sporting event. You must now claim the deductions as basic charitable deductions, giving you a much smaller deduction than before. If you are involved in specific charities, there may be ways in which you can continue to help yet maximize your deductions.

 

You Can Start Talking. Presentation expenses are now completely deductible. While having an intimate dinner might be a great way to show one client how smart you are, presentations allow you to show lots of people also how smart you are. This can lead to better prospects being taken to those previously mentioned non-deductible meals. The big word in this deduction is “the public”. If you prospect and give a presentation to a small group of business owners, that is “the public”, and 100% of your expenses are deductible.

 

As you can see, there are many changes in the tax law that affect your business and can cause you to think about the ways you actually run your business. This should be the year you start to look for a tax advisor that can not only navigate the new tax laws, but the ways you actually structure your business moving forward to maximize your profits and reach your goals.

 

 

Posted by Admin Posted on Aug 31 2017

Entrepreneur Tips and Strategies

Posted by Admin Posted on Aug 30 2017

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Entrepreneur Tips and Strategies for Business Owners

Do you want to start your own business and be an entrepreneur? Though the idea is attractive you should know the pitfalls that lie ahead and what you need to do to make a success of it. And while it can be stressful, the flipside is that it can also be professionally, personally and financially enriching.

Ten Important Entrepreneur Factors

To guide you, here is a checklist of Ten important factors to keep in mind so that you are successful. Use these as guidelines to see that you are the right path and you have a viable business plan, accurate information and clarity on various aspects of the business.>

Is your product or service what people want? Entrepreneurs always have to identify a need or want and then go for it rather than assuming that people will go for what they want to sell.

Cash is essential. Ensure that you have enough money to start and run the business and keep in mind that you need to start generating profits quickly so that you can keep your business afloat, rather than having to keep on pumping money to do so, which can make you cash poor fast.

Reduce costs. When you reduce your costs you are increasing your profits (or potential profits). You need a positive cash flow so that more money comes in than goes out.

Err on the side of caution by overestimating expenses and underestimating income. Most people do the reverse and then get shocked when they find they are losing money. When you start a business you are bound to have some fixed and recurring expenses and some variable ones, so budget for those.

Marketing and sales are the lifeblood of the business. You need marketing so people know what you are selling, but you also need sales to generate cash. A satisfied customer should turn into a repeat customer. Entrepreneurs need to start selling the product as soon as possible.

Improve your profitability. A social media presence and a website will help in marketing, generating leads and converting these into sales. As you increase the sales price point average and boost the number of repeat customers you will enhance your profit margins.

Evaluate, appraise and calculate everything. You need facts and figures in place so that they can be quantified and checked and it is only then you will know your business’s strengths and weaknesses and which areas need more work.

Never be complacent and stop learning. As you keep learning you will keep earning – and that is the bottom-line that you want when you start a business, particularly if you have never started a business before.

A successful business depends on many factors including providing a quality product, sales, marketing, operations and knowing your customer. You never stop learning when you are running your own business.

If there are particular aspects that you feel you don’t know enough about or don’t have the time or expertise to handle, hire an expert and/or delegate the work. All entrepreneurs have to go through the learning curve. 

Once you are committed to growing your business and follow the right path, your business can grow exponentially and reach stratospheric height, leading to greater satisfaction and more money.

As far as your product is concerned, avoid discount, but add value. When you offer a discount, you are reducing your profitability directly. Offering additional value (apart from the actual value of the product) is a further enticement to the customer to buy.

Take help. A coach, a mentor or a professional can help you find the answers you need and look at your business and figures dispassionately and objectively, identify areas that need more work, improve profitability and keep your business afloat.

 

FMA, C.P.A. Can Help Your Business

At FMA, C.P.A., we take pride in being a proactive trusted advisor that helps our clients meet their goals, stay in compliance and help them grow their business.  Our business advisory team can help you with four key areas including compliance, tax efficiency, organization and strategic financial services.  Call us today to get more information about our business advisors and how they can help you get the most out of our services.  

 

Articles on this blog are for information only. Always consult with your tax advisor before following any course of action regarding your business, taxes, or finances.