Ag FinTax

If you’re a small business owner, planning for retirement can get a little confusing. How do you know which retirement savings plan will work best for you? Specifically, how do you choose between the Simplified Employee Pension (SEP) IRA and a Solo 401(k)?  Each has its own benefits and drawbacks, but after reading this post, you should be able to see which one will work the best for your circumstances.  Here’s a walkthrough of how both types of accounts work and their pros and cons.  What is a SEP IRA?  A SEP IRA is an account that’s similar to a traditional IRA.  Account owners can make tax-deductible contributions throughout the year, and the money in the account can grow tax-free. Once you do retire, you’ll be taxed on the qualified withdrawals you make.  The SEP IRA is designed to allow small business owners, whether sole proprietors, partnerships, or corporations, to make contributions for themselves and their employees (if they have any).  Howev...

There are some for whom family and business go together like music and lyrics. These business owners may have been part of a family business for generations, in which the business is passed down from parent to adult child, and include that adult child’s spouse, siblings, even extended family.  For others, mixing business and family sounds like a terrible idea. Perhaps the family members have tried working together before but found it to cause conflict and strife. Or maybe they’ve simply heard stories of how challenging it can be to work with family or spouses and haven’t wanted to take the risk.  Whichever camp you may fall into, the truth is that it can actually make good financial and business sense to employ your spouse—although you should always talk to a financial or tax advisor to see what makes the most sense for your particular situation. Here are a few reasons why.  Increase your retirement savings One potential reason to hire your spouse and add them to your com...

No matter how well-prepared you are, tax time is nearly always stressful for small business owners.  Finding receipts, keeping track of all your expenses, listing out deductions—it’s a lot to manage, more so if you have employees that you should file additional paperwork for.  And while it’s probably impossible to get rid of all the anxiety associated with tax time, it is definitely possible to reduce it.  Here are our 4 tactics to make filing your small business taxes easier in 2021.  Start early and split your tax-related task list into chunks.  Rather than devoting an entire day to do everything from finding your documents to signing and sending off your tax return, it makes much more sense to list down all the related tasks and accomplish them one after the other. Do a little at a time.  This way, if you end up running into obstacles or issues that require additional time or professional assistance, you’ll still be ahead of the game.  Know wha...

It happens to all of us at one point or another: we lose a loved one to old age, illness, or accident.  Along with the grief attendant on such an experience, there are also, unfortunately, plenty of legal and financial issues to manage when a loved one passes. If you’re not prepared for these, the grieving period can be made even harder by financial and legal stress.  If you’re the executor, or the one managing the deceased’s affairs, here are some of the most important things you need to know.  What does an executor do?  The executor of the deceased’s estate is the person designated to identify the decedent’s assets, pay off any debts, and make sure that what is left gets distributed to the heirs and beneficiaries that the decedent identified.  That also includes filing tax returns and paying any outstanding taxes. You can see the first part of this article series here , which outlines some of those. For more, keep reading.  Federal income tax consideratio...

The second round of PPP loans was approved by Congress in December 2020, as part of the second coronavirus stimulus package.  Because the money is lent on a first-come, first-served basis, you don’t want to wait to apply. While the deadline isn’t until March 31, 2021, it’s a good idea to get started as soon as possible.  Whether you received a PPP loan in April 2020, and want to apply for a second, or you’re applying for the first time, here’s what you need to know.  Eligibility rules Businesses can apply for up to 2.5 times their monthly payroll costs, up to a maximum of $2 million. This is a reduction from the initial $10 million that businesses were able to apply for, aimed at reducing the potential for large businesses to drain the PPP funding.  If you’re a freelancer or sole proprietor, you can still apply, but the amount you’re eligible for is determined differently—it’s 2.5 times the monthly profit you reported on your 2019 Schedule C tax form.  As per th...

The Paycheck Protection Program (PPP) was renewed in December 2020 with a new round of funding—$284 billion, to be exact.  This brings the total funding for the program, which is managed by the Small Business Administration, to $806 billion.  And none of it is going to waste. The SBA has given out more loans since the program started, in fact, than it has in its entire history, almost 70 years, according to The Washington Post .  Now, small businesses, freelancers, independent contractors, and sole proprietors, with or without employees, can once again apply for these forgivable loans to cover costs associated with payroll or certain other operating costs, like mortgage payments or utilities.  One of the best things about these loans, of course, is that they’re forgivable—meaning, you don’t have to pay them back as long as you use them for the designated purposes. In fact, the COVID-related Tax Relief Act of 2020 reiterates that your PPP loan forgiveness amount is no...