ALL THINGS ACCOUNTING, TAXES, AND RELATED TOPICS

Absolutely! A well-prepared and clean set of financial statements is a game-changer when it comes to tax season for any business. Here's why: Smoother Process:   Reduced errors:  Clean financials minimize the risk of mistakes and inconsistencies, which can lead to delays, penalties, or even audits. This gives you peace of mind knowing your return is accurate and compliant.   Better communication:  Clear financials facilitate better communication between you and your tax preparer. They can easily understand your financial situation and identify potential tax benefits or deductions, leading to a more strategic approach to your tax filing. Stress-free Experience: Reduced anxiety:  Knowing your financials are in order eliminates the stress of scrambling for documents and worrying about missing something crucial. You can approach tax season with confidence and focus on running your business. Fewer surprises:  Clean financial records allow you to anticipate potential tax liabil

Properly classifying workers as employees or independent contractors is crucial for both businesses and individuals, with significant implications for taxes, rights, and responsibilities. Let's delve into the key aspects: For businesses: Employees:  Businesses must withhold income taxes, pay Social Security and Medicare taxes (FICA), and likely unemployment taxes for employees. They are also responsible for paying their own share of FICA taxes. Failure to do so can lead to significant penalties and interest. Independent contractors:  Businesses generally do not withhold taxes or pay FICA for independent contractors. However, they are required to issue Form 1099-NEC to report payments exceeding $600.   For workers: Employees:  Employers withhold income taxes from employees' paychecks, making tax filing easier. Employees also benefit from FICA contributions, which contribute to Social Security and Medicare benefits. Independent contractors:  They are responsible for pay

As an S corporation owner, you wear many hats. You're the CEO, the marketing team, the janitor – and, most importantly, your own chief financial officer. That means when it comes to retirement planning, you've got some decisions to make. Two popular options are the solo 401(k) and the SEP-IRA, each offering unique advantages and tax implications. Let's dive into the details: Contribution Limits: Solo 401(k):  You can contribute as an employee (up to $22,500 in 2023, plus $7,500 catch-up if over 50 for a total of $30,000 for employee contributions) and as an employer up to 25% of employee compensation (W2 compensation) capped at a combined grand total employee plus employer contributions of $66,000 ($73,500 if age 50 or older). Note, S corporation income is not self-employment income so Solo 401(k) applicable to self-employment income is not discussed for this purpose. SEP-IRA:  A Simplified Employee Pension (SEP) plan provides business owners with a simplified method to

Navigating the financial intricacies of real estate investments, particularly rental properties, can be a complex endeavor. Among the key considerations for landlords are operating expenses and capital expenses, which play a significant role in determining the overall profitability of a rental property. Operating Expenses: The Ongoing Costs of Property Ownership Operating expenses represent the ongoing costs associated with owning and maintaining a rental property. These expenses are incurred on a regular basis and are directly related to the property's operations, such as: Property taxes: Assessed by local governments, property taxes are based on the assessed value of the property. Salaries and wages: Compensation paid to employees for their services. Insurance premiums: Landlords typically purchase insurance to protect against potential risks such as property damage, liability, and lost rent. Maintenance and repairs: Maintaining the property in good condition is crucial

Cost of Goods Sold (COGS) and Cost of Goods Manufactured (COGM) are two important accounting concepts for businesses that produce or sell physical goods. While they are related, there is a key difference between the two. As mentioned in our previous blog Cost of Goods Sold: Only for Inventory-Based Businesses , COGS (Income Statement line item) comes from Inventory-on-hand (Balance Sheet line item) and typically it simply is the wholesale cost of the merchandise or inventory that was sold to customers. It includes the cost of direct materials, direct labor, and overhead costs. COGS is deducted from revenue to calculate gross profit, which is a key measure of profitability. COGM is the total cost of producing all finished goods during a given period. COGM then becomes part of the Inventory-on-hand (Balance Sheet Item) dollar amount. A COGM report is an internal management report. It is not part of the external financial statements presented to the public, investors, banks, and other

Cost of Goods Sold (COGS) is an important accounting concept for businesses that sell physical goods. It represents the direct costs associated with producing or acquiring the goods that were sold during a given period. COGS is deducted from revenue to calculate gross profit, which is a key measure of profitability. What is COGS? COGS (Income Statement line item) comes from Inventory-on-hand (Balance Sheet line item) and typically it simply is the wholesale cost of the merchandise or inventory that was sold to customers. Taking a deeper look, you can also say that COGS includes the following costs: Direct materials: The cost of raw materials that are directly used in the production of goods. Direct labor: The cost of labor that is directly associated with the production of goods. Overhead costs: Certain indirect costs associated with the production of goods, such as factory rent and utilities. Why COGS is important for inventory-based businesses COGS is important for inve