Jeff Haywood, CPA

Posts Tagged ‘Tips’

Lessons From a Start-Up

Mrs. CPA Superhero and myself started a new venture recently and here are some learns we learned.

Pricing:

First, the emotions involving pricing are tremendous. Even though many told my wife we were not charging enough, including me, she still felt that lowering prices would get more of her product to sell. Many that did not buy her product shared the reason they were not buying was they did not have money to be buying anything. Most of the people that bought the product were impulse buyers. So it was not the price but still my wife thought that lowering the price was related to moving more product. But the facts bore out that was not the case.

Our Market:

Second, we learned what the market was interested in. Many items we thought would sell quickly did not sell at all. Others we were not as excited about moved quickly. So you see, it is not what we think but what the market wants. So we need to accommodate the market.

Third, we learned that what marketing ideas worked and what did not. Specifically our shows in homes did well while shows at businesses did not. We may want to try some shows at fairs next year and see how that goes. Additionally we were surprised that we did so well selling to a retailer when we thought we were retail. It may well turn out that we will be wholesalers (apparently we had wholesale prices).  Even now that we are back in Mexico, others are marketing my wife’s jewelry, marking it up from our price.

Lessons Learned:

From the points above you can see that (1) we got started, and (2) actually sold more then we expected, but then (3) we also gathered information that will help us be more successful in the future. There is nothing like getting starting and learning while making money.

Finally, we learned what to do and what not to do so as to make as much money as possible while giving up the least amount of our time. Our shows at businesses not only were not very profitable but they took up too much of our very valuable time. The home shows and selling to a retailer took less time and the time we spent was not prime time for us, time that we could have used in more important pursuits. So we are so excited about the experience and are looking forward to our next trip back to the USA to sell our product purchased here in Mexico. Stay tuned for more lessons learned from a start-up.

Jeff Haywood, CPA
CPA Tax Superhero
972-439-1955
jeff.jhtaxes@gmail.com

This article was written by Jeff Haywood, CPA.
Jeff is a licensed CPA in Texas
He has prepared income tax returns for the public for over 10 years.
He also has an MBA in Finance from Loyola University in Chicago and he has 24 years experience in Corporate Finance and Business Analysis.

Tweet

I prepare the following types of tax returns:

Personal
Business
Estate/Gift
Trusts
Federal and State Returns

I especially value discussions about you, your business, your dreams and goals.

Click Here to Follow Jeff Haywood, CPA on Twitter
Also, Click Here to Follow My Twitter Account: Taxesforxpats

In addition here are links to a few of my articles about income taxes for expatriates:

Income Tax Returns for Expatriates
US Income Tax Help for Expatriates
Foreign Earned Income Exclusion
Are You Required to Report Foreign Bank and Financial Accounts?

Click Here to Follow My Twitter Account: Taxesforxpats

For a full list of prior posts see the CPA Tax Blog.

Standard Disclaimer:

As always keep in mind that the content provided on this site is general in nature and may or may not apply to your particular case. It is best to check with a tax professional about your circumstances and what is best for you personally. Also, IRS regulations and tax laws are constantly changing and the information on this site is not constantly updated. Again please check with me about your particular circumstances and what will be best in your situation at the given time and law.

Comments:

If you have a comment to share about this post or for me, please email me at jeff.jhtaxes@gmail.com.

Do You Need a Written Business Plan?

Is a business plan required for your new business? The short answer is no, probably not. One may be required by a bank or a potential investor but other than that you probably do not want a written business plan.

How can you say that Mr. CPA Superhero?

It is easy to say. When was the last time you spoke to a successful business person who had a written business plan? Most likely never, because the idea of the written business plan is a product of University Business Schools taught by men wearing sandals. I have never met a successful business person who had a written business plan.

Recently I played golf with a friend who specifically mentioned to me that he has never and will never do business with a person who has or requires of him to have a written business plan.  His reasoning is that people who have them or require them, in his experience, have no idea what they are doing.  He has had conversations with so called “business plan people” in the past and found them to be too rigid to have any success.  He perceived that they were incapable of adapting to change or obstacles and, of course, things change all the time. He noticed that the people who require business plans are business school graduates that have never had any success in business. Meanwhile, my friend has developed a few businesses that have generated over a million dollars in profits for him.

So listen to people who have achieved success in business and save yourself some time and forget the written business plan.

When Things Do Not Go As Planned

So, no you do not need and probably do not want a written business plan. You should, however, have a good concept of what your business is going to be and a strategy to reach your goals.  You do not need to waste time putting an elaborate plan in writing. You see, most successful businessmen are men of action not of writing plans. So when you have an idea move forward with it. Now here is the really valuable advice…when things do not turn out as planned or things change then adapt. And things never turn out just as planned and if they do, in time, they change. So one key to success is being able to evaluate your business and adapt to be successful.

If a bank or investor wants a written business plan you may want to look for others ways to get your financing. Again, be creative and make it happen. I’m just saying…that is what I have noticed over many years of doing business with successful and unsuccessful businessmen and women.

The other take away here, is listen to people who have succeeded and never ever listen to those who have not had success and wear sandals while teaching a class.

Jeff Haywood, CPA
CPA Tax Superhero
972-439-1955
jeff.jhtaxes@gmail.com

This article was written by Jeff Haywood, CPA.
Jeff is a licensed CPA in Texas
He has prepared income tax returns for the public for over 10 years.
He also has an MBA in Finance from Loyola University in Chicago and he has 24 years experience in Corporate Finance and Business Analysis.

Tweet

I prepare the following types of tax returns:

Personal
Business
Estate/Gift
Trusts
Federal and State Returns

I especially value discussions about you, your business, your dreams and goals.

Click Here to Follow Jeff Haywood, CPA on Twitter
Also, Click Here to Follow My Twitter Account: Taxesforxpats

In addition here are links to a few of my articles about income taxes for expatriates:

Income Tax Returns for Expatriates
US Income Tax Help for Expatriates
Foreign Earned Income Exclusion
Are You Required to Report Foreign Bank and Financial Accounts?

Click Here to Follow My Twitter Account: Taxesforxpats

For a full list of prior posts see the CPA Tax Blog.

Standard Disclaimer:

As always keep in mind that the content provided on this site is general in nature and may or may not apply to your particular case. It is best to check with a tax professional about your circumstances and what is best for you personally. Also, IRS regulations and tax laws are constantly changing and the information on this site is not constantly updated. Again please check with me about your particular circumstances and what will be best in your situation at the given time and law.

Comments:

If you have a comment to share about this post or for me, please email me at jeff.jhtaxes@gmail.com.

There Is More Than One Way to Get To the Market

Have you heard the expression there is more than one way to get to the market? When you start your business it is essential that you understand that you do not have to do it the same way as someone else and most of the time it is not a good idea to imitate someone else. It is so important that your business works for YOU.

Baseball Examples

There is usually more than one way to operate/market a business. Take baseball teams for example. The Yankees spend big bucks on proven players and they generate a lot of attention and are the most valuable team in baseball. Are they the most successful? That depends on your definition of success.

The other end of the spectrum is the Oakland A’s, of “Moneyball” notoriety. The Oakland A’s follow a different approach out of necessity. They look for undervalued players that have certain characteristics that are key to winning games. The Oakland A’s are successful in their own way. Mainly they make a profit and generally they have a winning team, even if they have not won the World Series in many years.

Then there are the St. Louis Cardinals, who are my favorite team. The Cardinals have employed what appears to be a hybrid of these two ways to build a team. Actually they have transitioned from a variety of the Yankees approach of signing players from other teams to a team that develops talent from within the organization. They are now shying away from paying enormous salaries to older proven players over many years. The Cardinals have great attendance at their games, they are regularly in contention for the World Series and have won several recently.  They also have a faithful, devoted, fan base and they have shown they can adapt and evolve.

Questions To Ask Yourself

From the examples above you can see there is more than one way to build a business and achieve success. So what about your business? Ask yourself some questions:

• In what way do you want your business to be successful?
• Does your plan allow you to achieve your lifestyle goals?
• Is your plan consistent with your strengths, your market, and your financial resources?

There are many things to consider when starting a business. Please realize that you do not have to and probably should not copy someone else. By all means realize that being the biggest in terms of generating revenue is not the only way. Keep your eye on your objective. Is it to be famous or to have the most money in your pocket at the end of the day or both? The biggest is seldom the most successful in terms of profit and money in your pocket.

So when you start planning your business these are a few things to consider.  Your friendly CPA Superhero has worked with many people that have started businesses and some have succeeded and some have failed.  In addition your CPA Superhero has built and is currently building another business.  Benefit from these observations and plan a way to the market that you will enjoy and that will produce profits and empower you to achieve your desired success for the business and your lifestyle.

Jeff Haywood, CPA
CPA Tax Superhero
972-439-1955
jeff.jhtaxes@gmail.com

This article was written by Jeff Haywood, CPA.
Jeff is a licensed CPA in Texas
He has prepared income tax returns for the public for over 10 years.
He also has an MBA in Finance from Loyola University in Chicago and he has 24 years experience in Corporate Finance and Business Analysis.

Tweet

I prepare the following types of tax returns:

Personal
Business
Estate/Gift
Trusts
Federal and State Returns

I especially value discussions about you, your business, your dreams and goals.

Click Here to Follow Jeff Haywood, CPA on Twitter
Also, Click Here to Follow My Twitter Account: Taxesforxpats

In addition here are links to a few of my articles about income taxes for expatriates:

Income Tax Returns for Expatriates
US Income Tax Help for Expatriates
Foreign Earned Income Exclusion
Are You Required to Report Foreign Bank and Financial Accounts?

Click Here to Follow My Twitter Account: Taxesforxpats

For a full list of prior posts see the CPA Tax Blog.

Standard Disclaimer:

As always keep in mind that the content provided on this site is general in nature and may or may not apply to your particular case. It is best to check with a tax professional about your circumstances and what is best for you personally. Also, IRS regulations and tax laws are constantly changing and the information on this site is not constantly updated. Again please check with me about your particular circumstances and what will be best in your situation at the given time and law.

Comments:

If you have a comment to share about this post or for me, please email me at jeff.jhtaxes@gmail.com.

Follow Up on a One-On-One Meeting

In a previous post I wrote about 2 Steps to Make Networking Work For You.  What is the strategy after a one-on-one meeting with a potential contributor to your network?  Well depending on the first meeting you may follow up with the person to offer your services or product or that of someone else.  So you continue to think about what the person told you and when you have an idea that may help them you contact them to let them know.  It may be too that you thought of someone that may benefit from their or one of their contact’s product or service and you want to connect them.

Connecting With a Contact’s Contacts

Finally, you may be interested in meeting one of your contact’s contacts.  This is where networking gets very interesting and dynamic.  When you find they know someone that is very good at something that interests you or others that you know then you will likely want to get to know that person and start working together.  When you do this kind of follow-up and start branching out then your network really grows and your life becomes much more interesting.  As your network grows you are more enabled to help others find what they need/are interested in.   Another result is a growing network that has knowledge of you and what you have to offer.  As I mentioned in the previous post, this growth has the affect of causing your world to get smaller as you get closer to many valuable and interesting people.

This kind of follow-up takes two forms.  One is having a contact of a contact call you to meet and talk.  The other is when a contact tells you: hey I would like to meet that guy that you know that is “setting the world on fire.”  I have in my calendar an event to setup a meeting between a contact and one of my clients.  My friend and contact wants to meet my client not because he thinks my client may be a fit for his service but because he feels that it is likely my client knows people that will benefit from his service.  Both my friend/contact and my client get what networking is about and in fact have taught me quite a bit about being successful.  That meeting will prove to be very dynamic and interesting and so naturally I want to be there for the meeting.

So if you want to “set the world on fire” or want to continue to do so and would like to tap into my network then please contact me.  I would love to network with you.  By the way, if your CPA is not connecting you with people that “set the world on fire” perhaps you want a new CPA.  See my contact information below and use it.  Also, don’t keep me a secret.  Let others know about me and where to find me.

Jeff Haywood, CPA
CPA Tax Superhero
972-439-1955
jeff.jhtaxes@gmail.com

This article was written by Jeff Haywood, CPA.
Jeff is a licensed CPA in Texas
He has prepared income tax returns for the public for over 10 years.
He also has an MBA in Finance from Loyola University in Chicago and he has 24 years experience in Corporate Finance and Business Analysis.

Tweet

I prepare the following types of tax returns:

Personal
Business
Estate/Gift
Trusts
Federal and State Returns

I especially value discussions about you, your business, your dreams and goals.

Click Here to Follow Jeff Haywood, CPA on Twitter
Also, Click Here to Follow My Twitter Account: Taxesforxpats

In addition here are links to a few of my articles about income taxes for expatriates:

Income Tax Returns for Expatriates
US Income Tax Help for Expatriates
Foreign Earned Income Exclusion
Are You Required to Report Foreign Bank and Financial Accounts?

Click Here to Follow My Twitter Account: Taxesforxpats

For a full list of prior posts see the CPA Tax Blog.

Standard Disclaimer:

As always keep in mind that the content provided on this site is general in nature and may or may not apply to your particular case. It is best to check with a tax professional about your circumstances and what is best for you personally. Also, IRS regulations and tax laws are constantly changing and the information on this site is not constantly updated. Again please check with me about your particular circumstances and what will be best in your situation at the given time and law.

Comments:

If you have a comment to share about this post or for me, please email me at jeff.jhtaxes@gmail.com.

What do successful people do? What is it that people do that creates in you a desire to do business with them or spend time with them? Every year I spend time with many business people who range from getting by to really successful. One thing I notice that the really successful do that is different is inside of how they talk to others.

Mining for treasure

A friend of mine, like a magnet, drew people to him and people found him so interesting, me included.  So I wondered what he did that caused this result.  What did he do differently from other people?  What he did was really outstanding.  He kept asking people questions, and eventually I figured out he was mining for treasure.  He was trying to find out what or who they knew that was of interest to him.  Here is the really interesting quality in my friend, he was sure that everyone he met had something interesting to offer and he was determined to find it.  So by asking questions, much like a talk show host asks questions, aka Johnny Carson, he found some interesting/entertaining information. In addition the people he talked to loved it because he was truly interested in them and valued what they had to offer…often he saw more value in them than the person saw in them-self.

Successful people do not just speak with people they get to know them and mine for the treasures that are inside each person. My most successful clients always quiz me about taxes and business to find out what I know and what I have learned since we last met.  Mining for treasure distinguishes really successful people from those that just get by. Really successful people are successful not just in business but also in developing friendships/relationships. They do this simply by asking questions, taking an interest in others and what they have to offer and in being open to benefiting themselves from the conversation…in fact they insist on benefiting or being entertained by a conversation.  After all what are we after inside of conversation.  Really successful people take upon themselves to find something interesting to talk about.  They are not victims of boring uneventful conversations.

New Goal

Are you excited to talk to others?  Try talking to others with a goal.  Start with a goal of finding out something interesting about the person or what or who they know. It is there inside of each person.  You can be really successful as well and find conversations to be very interesting by mining for treasure.

This ends the lesson. If you have observed other things that successful people do please send me an email using my contact information below. You can also feel free to contact me with questions.

Ready…Set…Go…Find the Treasures

Jeff Haywood, CPA
CPA Tax Superhero
972-439-1955
jeff.jhtaxes@gmail.com

This article was written by Jeff Haywood, CPA.
Jeff is a licensed CPA in Texas
He has prepared income tax returns for the public for over 10 years.
He also has an MBA in Finance from Loyola University in Chicago and he has 24 years experience in Corporate Finance and Business Analysis.

Tweet

I prepare the following types of tax returns:

Personal
Business
Estate/Gift
Trusts
Federal and State Returns

I especially value discussions about you, your business, your dreams and goals.

Click Here to Follow Jeff Haywood, CPA on Twitter
Also, Click Here to Follow My Twitter Account: Taxesforxpats

In addition here are links to a few of my articles about income taxes for expatriates:

Income Tax Returns for Expatriates
US Income Tax Help for Expatriates
Foreign Earned Income Exclusion
Are You Required to Report Foreign Bank and Financial Accounts?

Click Here to Follow My Twitter Account: Taxesforxpats

For a full list of prior posts see the CPA Tax Blog.

Standard Disclaimer:

As always keep in mind that the content provided on this site is general in nature and may or may not apply to your particular case. It is best to check with a tax professional about your circumstances and what is best for you personally. Also, IRS regulations and tax laws are constantly changing and the information on this site is not constantly updated. Again please check with me about your particular circumstances and what will be best in your situation at the given time and law.

Comments:

If you have a comment to share about this post or for me, please email me at jeff.jhtaxes@gmail.com.

The Gifter (Generous Aunt)

If your aunt is gifting you and your brother some land there should be no immediate tax consequences other than the requirement that your aunt file a gift tax return. She should not owe any taxes as a result of making the gift as long as she has not made gifts totaling over $5 million (the current unified credit amount = current value of estate that is not taxable). The way it works is if the property gifted is worth say $350,000 and your aunt gifts it to you and your brother she gets an annual exclusion of $13,000 (this year) for each of you. So she would report the $350,000 less the $26,000 in annual exclusions which would be subtracted from her unified credit of $5 million. The difference would be the remaining amount of her estate that would not be subject to estate tax given the current exclusion amount of $5 million. Anything over the $5 million less the used unified credit used would be subject to the estate tax when she passes away.

The Giftee (You)

Now for you the gift recipients, you and your brother, you would receive the gifted property with a basis equal to your aunt’s basis, either her cost less expenses or the value when she inherited the property. When you sell the property the amount it sells for less your basis and cost of the sale would be subject to capital gains tax. When you inherit a property you get a basis equal to the current market value at the time of death. So if the value of the property was much less when your aunt obtained the property than it is now you would be better off waiting until she dies to inherit the property.

Capital Gains Tax Rates

The other thing to consider are the capital gains tax rates. The capital gains tax rates are due to increase in 2013. If your plans are to sell the property you should take the capital gains rates into consideration/tax planning.

By the way, when your aunt makes the gift, I can prepare the gift tax return for you.

Jeff Haywood, CPA
CPA Tax Superhero
972-439-1955
jeff.jhtaxes@gmail.com

This article was written by Jeff Haywood, CPA.
Jeff is a licensed CPA in Texas
He has prepared income tax returns for the public for over 10 years.
He also has an MBA in Finance from Loyola University in Chicago and he has 24 years experience in Corporate Finance and Business Analysis.

Tweet

I prepare the following types of tax returns:

Personal
Business
Estate/Gift
Trusts
Federal and State Returns

I especially value discussions about you, your business, your dreams and goals.

Click Here to Follow Jeff Haywood, CPA on Twitter
Also, Click Here to Follow My Twitter Account: Taxesforxpats

In addition here are links to a few of my articles about income taxes for expatriates:

Income Tax Returns for Expatriates
US Income Tax Help for Expatriates
Foreign Earned Income Exclusion
Are You Required to Report Foreign Bank and Financial Accounts?

Click Here to Follow My Twitter Account: Taxesforxpats

For a full list of prior posts see the CPA Tax Blog.

Standard Disclaimer:

As always keep in mind that the content provided on this site is general in nature and may or may not apply to your particular case. It is best to check with a tax professional about your circumstances and what is best for you personally. Also, IRS regulations and tax laws are constantly changing and the information on this site is not constantly updated. Again please check with me about your particular circumstances and what will be best in your situation at the given time and law.

Comments:

If you have a comment to share about this post or for me, please email me at jeff.jhtaxes@gmail.com.

I hate to be the bearer of bad news but there is a potential increase in your taxes and reduction in your income coming in 2013.  A reduction in income tax rates is set to expire which would result in higher income tax rates.  Also as things stand now you will see an increase in payroll taxes that you pay.  The payroll taxes will increase by 2% of your gross payroll starting on January 1, 2013.  Why is this going to happen? A couple of years ago the government lowered the employee’s share of Social Security Taxes from 6.2% to 4.2% of wages. That reduction is scheduled to end January 1, 2013.  So while these changes may or may not happen it is best to be prepared for the potential reduction in your paycheck and take a look at your budget with this in mind.

I want to make sure all my clients/potential clients are prepared for this just in case it comes to fruition. Even worse than the tax increase is to be unprepared for it.  If you want to review how this scheduled change will affect you feel free to contact me using my information below.

Jeff Haywood, CPA
CPA Tax Superhero
972-439-1955
jeff.jhtaxes@gmail.com

This article was written by Jeff Haywood, CPA.
Jeff is a licensed CPA in Texas
He has prepared income tax returns for the public for over 10 years.
He also has an MBA in Finance from Loyola University in Chicago and he has 24 years experience in Corporate Finance and Business Analysis.

Tweet

I prepare the following types of tax returns:

Personal
Business
Estate/Gift
Trusts
Federal and State Returns

I especially value discussions about you, your business, your dreams and goals.

Click Here to Follow Jeff Haywood, CPA on Twitter
Also, Click Here to Follow My Twitter Account: Taxesforxpats

In addition here are links to a few of my articles about income taxes for expatriates:

Income Tax Returns for Expatriates
US Income Tax Help for Expatriates
Foreign Earned Income Exclusion
Are You Required to Report Foreign Bank and Financial Accounts?

Click Here to Follow My Twitter Account: Taxesforxpats

For a full list of prior posts see the CPA Tax Blog.

Standard Disclaimer:

As always keep in mind that the content provided on this site is general in nature and may or may not apply to your particular case. It is best to check with a tax professional about your circumstances and what is best for you personally. Also, IRS regulations and tax laws are constantly changing and the information on this site is not constantly updated. Again please check with me about your particular circumstances and what will be best in your situation at the given time and law.

Comments:

If you have a comment to share about this post or for me, please email me at jeff.jhtaxes@gmail.com.

Step One:

The Introduction

How do you turn those networking contacts into clients or valuable resources? Here are a two steps to make that happen. First, after meeting someone at a networking function or elsewhere immediately contact them and let them know how pleased you are to have had the opportunity to meet them.  Also make sure they have your contact information and start on a meaningful relationship by asking them if they would like to meet for a cup of coffee to explore networking opportunities.  You may need to spell out for them that you are interested in finding out more about them, what they do well, who they know and what they do well and you are willing to share the same about yourself.

A side note: It does not have to be over coffee.  I often do these meetings with people in other countries via the phone/Skype.

Step Two:

The Meeting

What is the point of this? What are you networking for? Do you need business, ideas, resources, other? What opportunities can the person you met bring to you and your business and how can you help them? When you meet with them find out what they are good at and what they need and what their friends are good at and what they need. That is the definition of networking. It is turning one contact into potentially an unlimited number of useful contacts.

When you meet should you ask them for their business? Maybe but probably not. Remember this is networking. You are developing a network of people that know, trust and value each other. That really takes time to develop. So invest in yourself and others by really networking. I like to set goals such as number of new contacts made and number of one on one meetings.  I need to add to those goals the number of follow up contacts as well.

The results have been good but not perfect. While a percentage of people will have a one on one meeting some times it does not yield much. A percentage are “live ones” that get what networking is and will work it. They talk about themselves and who they know. From showing interest in them, whether they are a potential client or not, and actually trying to help them yields dividends. They may not become a client but they likely know someone who would be a good match for your business. Real success in networking is when people start contacting you for referrals for something they or a friend need. Typically I will get an email from someone asking if I know a good attorney or plumbing guy. One of my newest clients met someone that I had met and they referred the new client to me to do help them with their business and do their income tax returns. It is a small world right? Not really, but you can make your world smaller and draw people and business to you by really networking.

Become a Connector:

Who are you?  To create a network you have to become “the guy” that makes it happen.

Often you will benefit by sharing with others what it means and how you develop a network.  Many people have the mind-set that just exchanging business cards will magically make it happen.  Others think it means trading, I refer people to you and you refer people to me.  Actually, for you to really be a source that helps people you refer people who you think are a good fit.  I am not a good fit for everyone that needs accounting and tax work.  That is why you need to get to know each other and what you do well.  This even works with your competitors.  What you are after is knowledge of people and what they do well so you can connect people who need help with those who are a good fit for them.  For further help with this concept read “The Go-Giver”. In “The Go-Giver” you will learn that 50-50 is a losing proposition.  Don’t look for a referral in return for one you give.  Be “the guy” that helps people with their needs and help people understand what a real network is and how it works.

What will result from really working a network? You will end up with a group of people who help others and look out for each others interests. Of course for that to happen you have be “that guy” for others.  Just connect and help others and you will benefit by becoming known as “that guy”, the CONNECTOR.  It works.

If you would like to network with me feel free to use my information below to contact me.

Jeff Haywood, CPA
CPA Tax Superhero
972-439-1955
jeff.jhtaxes@gmail.com

This article was written by Jeff Haywood, CPA.
Jeff is a licensed CPA in Texas
He has prepared income tax returns for the public for over 10 years.
He also has an MBA in Finance from Loyola University in Chicago and he has 24 years experience in Corporate Finance and Business Analysis.

Tweet

I prepare the following types of tax returns:

Personal
Business
Estate/Gift
Trusts
Federal and State Returns

I especially value discussions about you, your business, your dreams and goals.

Click Here to Follow Jeff Haywood, CPA on Twitter
Also, Click Here to Follow My Twitter Account: Taxesforxpats

In addition here are links to a few of my articles about income taxes for expatriates:

Income Tax Returns for Expatriates
US Income Tax Help for Expatriates
Foreign Earned Income Exclusion
Are You Required to Report Foreign Bank and Financial Accounts?

Click Here to Follow My Twitter Account: Taxesforxpats

For a full list of prior posts see the CPA Tax Blog.

Standard Disclaimer:

As always keep in mind that the content provided on this site is general in nature and may or may not apply to your particular case. It is best to check with a tax professional about your circumstances and what is best for you personally. Also, IRS regulations and tax laws are constantly changing and the information on this site is not constantly updated. Again please check with me about your particular circumstances and what will be best in your situation at the given time and law.

Comments:

If you have a comment to share about this post or for me, please email me at jeff.jhtaxes@gmail.com.

Plan Year End Moves

A recent meeting with one of my clients uncovered an opportunity to save them at least $12,000 in taxes on their 2012 income tax returns.  The opportunities to save on your taxes are greatest this time of year.  So if you really want to make the most of your CPA a conversation this time of year can save you much money.  In the case of my client it was identifying the time to make an organizational change.  For many however there are opportunities to reduce taxes at year-end by delaying income or by accelerating expenses or both. 

You may have the ability to reduce the taxable income from your business by delaying billing or receiving of payments until next year.  If you are a cash basis taxpayer you can bill customers/clients at the end of the of the year so they pay you next year.  In addition you can make purchases that are expenses to your business before year-end.  Now here is one that is quite nice…you can put an expense on your credit card before year-end and deduct it this year even if you do not pay the bill until next year.  Just remember to pay the bill in a timely manner to avoid any interest charges and penalties.  You may be able to significantly reduce your income for the year by purchasing major assets before year-end.  When making these moves you want to be careful not to spend money just to save pennies on the dollar in taxes.  After all it is about how much money you have in your pocket at the end right?  I repeat DO NOT SPEND DOLLARS ONLY TO SAVE PENNIES ON YOUR TAXES.  While you want to pay as little tax as possible, even more important should be maximizing your wealth which should lead to you paying some taxes.  Paying taxes are a good thing, you just want to keep it to a minimum and this is a great time to make some moves to accomplish that end.

Prepare for 2013 Tax Changes

In addition to tax moves you also need to be actively looking at changing your budget for tax changes for 2013.  Income tax rates are due to increase and payroll taxes are due to increase by 2% starting January 1, 2013.  Take a look at how this will affect your budget for 2013 and be prepared for this potential reduction in income.

There are other moves that you can make now like contributions to retirement or HMA accounts.  What will work for you depends and a conversation with your CPA now can result in a huge savings for you and prepare you for changes starting January 1, 2013.  What is the best in your situation depends on your situation.  So now is the time to give me a call to discuss your situation and to see what opportunities you have now to minimize your taxes for 2012 and prepare for 2013.  Please feel free to contact me using my contact information below.

Jeff Haywood, CPA
CPA Tax Superhero
972-439-1955
jeff.jhtaxes@gmail.com

This article was written by Jeff Haywood, CPA.
Jeff is a licensed CPA in Texas
He has prepared income tax returns for the public for over 10 years.
He also has an MBA in Finance from Loyola University in Chicago and he has 24 years experience in Corporate Finance and Business Analysis.

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I prepare the following types of tax returns:

Personal
Business
Estate/Gift
Trusts
Federal and State Returns

I especially value discussions about you, your business, your dreams and goals.

Click Here to Follow Jeff Haywood, CPA on Twitter
Also, Click Here to Follow My Twitter Account: Taxesforxpats

In addition here are links to a few of my articles about income taxes for expatriates:

Income Tax Returns for Expatriates
US Income Tax Help for Expatriates
Foreign Earned Income Exclusion
Are You Required to Report Foreign Bank and Financial Accounts?

Click Here to Follow My Twitter Account: Taxesforxpats

For a full list of prior posts see the CPA Tax Blog.

Standard Disclaimer:

As always keep in mind that the content provided on this site is general in nature and may or may not apply to your particular case. It is best to check with a tax professional about your circumstances and what is best for you personally. Also, IRS regulations and tax laws are constantly changing and the information on this site is not constantly updated. Again please check with me about your particular circumstances and what will be best in your situation at the given time and law.

Comments:

If you have a comment to share about this post or for me, please email me at jeff.jhtaxes@gmail.com.

An S Corporation is a favorite of CPA’s because of the tax benefits they can bring to their clients but an S Corporation is not for everyone/business.  Now keep in mind I am writing this from a tax and not a legal standpoint since you cannot form an S Corporation solely for tax purposes.  Typically taxpayers who have their own business can save some and sometimes large sums of money in the way of taxes by forming an S Corporation if they have sizable profits.  Also, realize there are responsibilities that come with forming an S Corporation in addition to potential tax savings.

Many form S Corporations to reduce the amount of employment taxes they pay each year and also to a measure of personal protection from the liabilities of their business.  The employment taxes for a sole proprietorship show up on your personal income tax return as Self-Employment Taxes and they are the equivalent of social security and medicare taxes withheld from an employees paycheck plus the employers share since you are both the employee and the employer.  Depending on current tax law you could be looking at approximately 15% in employment taxes on your profits.  Forming the S Corporation enables you to potentially reduce some of these taxes.

How does this work?  The IRS requires S Corporations to pay their active shareholders a reasonable salary for their services performed for the corporation.   Below is part of the IRS wording on this subject.

“S corporations must pay reasonable compensation to a shareholder-employee in return for services that the employee provides to the corporation before non-wage distributions may be made to the shareholder-employee. The amount of reasonable compensation will never exceed the amount received by the shareholder either directly or indirectly.”

So this opens a door, albeit not a well defined door, for a shareholder of an S Corporation to take some of the companies profit in the form of salary for himself and some in the form of a shareholder draw that is basically his share of the business profits which may not be subject to employment taxes.   For more information on this subject including factors to consider to determine a reasonable salary see this IRS post on “S Corporation Compensation and Medical Insurance Issues”.

http://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/S-Corporation-Compensation-and-Medical-Insurance-Issues

Self-Employment Taxes are where an S Corporation can save you some money.  But realize that forming an S Corporation adds a level of complexity to your business and your life.  To form an S Corporation will cost you some money and you also encounter regular reporting and required maintenance for the S Corporation.  Depending on how the S Corporation is setup you may be required to file annual minutes or other maintenance/procedural requirements.  In addition you become an employer and need to pay the shareholders salaries and conform with payroll requirements and reporting.  This often involves reporting who your employees are to the state in which you operate and filing payroll tax and unemployment tax returns on both the federal and state level.  In addition you are required for a Federal Income Tax Return for the S Corporation and likely a state return as well.

As you can see by this brief (not all inclusive) overview forming an S Corporation is not a simple matter and not one that should be undertaken without conversations with your CPA and attorney.  You especially want to be careful of forming an S Corporation for a business that has not generated any profits yet as you may add expenses and complications without seeing any benefit.  So before you start a business call me to discuss your situation.  If you already have a profitable business you may be paying too much in taxes so you should contact me using my contact information below to see if an S Corporation will benefit your business.

Jeff Haywood, CPA
CPA Tax Superhero
972-439-1955
jeff.jhtaxes@gmail.com

This article was written by Jeff Haywood, CPA.
Jeff is a licensed CPA in Texas
He has prepared income tax returns for the public for over 10 years.
He also has an MBA in Finance from Loyola University in Chicago and he has 24 years experience in Corporate Finance and Business Analysis.

Tweet

I prepare the following types of tax returns:

Personal
Business
Estate/Gift
Trusts
Federal and State Returns

I especially value discussions about you, your business, your dreams and goals.

Click Here to Follow Jeff Haywood, CPA on Twitter
Also, Click Here to Follow My Twitter Account: Taxesforxpats

In addition here are links to a few of my articles about income taxes for expatriates:

Income Tax Returns for Expatriates
US Income Tax Help for Expatriates
Foreign Earned Income Exclusion
Are You Required to Report Foreign Bank and Financial Accounts?

Click Here to Follow My Twitter Account: Taxesforxpats

For a full list of prior posts see the CPA Tax Blog.

Standard Disclaimer:

As always keep in mind that the content provided on this site is general in nature and may or may not apply to your particular case. It is best to check with a tax professional about your circumstances and what is best for you personally. Also, IRS regulations and tax laws are constantly changing and the information on this site is not constantly updated. Again please check with me about your particular circumstances and what will be best in your situation at the given time and law.

Comments:

If you have a comment to share about this post or for me, please email me at jeff.jhtaxes@gmail.com.