This month we will talk about different business structures.  The business structure you choose influences everything from day-to-day operations, to taxes, to how much of your personal assets are at risk. You should choose a business structure that gives you the right balance of legal protections and benefits.
Your business structure affects how much you pay in taxes, your ability to raise money, the paperwork you need to file, and your personal liability.

This week, we talk about Sole Proprietorships:

Sole proprietorship
A sole proprietorship is easy to form and gives you complete control of your business. You're automatically considered to be a sole proprietorship if you do business activities but don't register as any other kind of business.
Sole proprietorships do not produce a separate business entity. This means your business assets and liabilities are not separate from your personal assets and liabilities. You can be held personally liable for the debts and obligations of the business. Sole proprietors are still able to get a trade name. It can also be hard to raise money because you can't sell stock, and banks are hesitant to lend to sole proprietorships.
Sole proprietorships can be a good choice for low-risk businesses and owners who want to test their business idea before forming a more formal business.

Next week we discuss Partnerships, including LLCs: 

Each tax season comes with unique challenges and 2022 is no exception. The IRS wants taxpayers to get the information they need as quickly as possible. Taxpayers should keep these tips in mind when they get ready to file. Following them will help get this year's taxes done accurately and refunds issued timely.

• Choose a reputable preparer. Taxpayers can self-prepare or use a tax preparer. IRS.gov has resources to help people choose a tax pro. The IRS Directory of Federal Tax Return Preparers provides information on who has a professional credential or participates in the IRS Annual Filing Season Program. We could stop here, since if you choose GLM, we will help with the rest, but...

• Avoid errors. Taxpayers should review their tax return so they can file a complete and accurate return and avoid refund delays. Filing electronically is the most accurate way to file. Taxpayers should check all names and double check all Social Security numbers, bank account and routing numbers.

• Gather records. Good recordkeeping makes preparing a tax return easier. It can also ensure taxpayers do not overlook deductions and credits.
 
• Start with IRS.gov. IRS.gov is available around-the-clock and it's the fastest way to get assistance. Millions of people use IRS.gov for filing and paying taxes, getting information about their accounts or answers to tax questions. The IRS Services Guide outlines the many ways taxpayers can get help from the IRS.
 
• Use online tools. IRS.gov has many useful online tools. The Interactive Tax Assistant provides answers to many tax questions specific to an individual's circumstances. It gives the same answers that an IRS representative would give over the phone.
 
• Report all income. Taxpayers must report their taxable income from all sources, including the gig economy, Forms W-2, Wage and Tax Statements, and Forms 1099. Other income may be taxable, even if the taxpayer does not receive a statement.

• Report unemployment benefits. Taxpayers who received unemployment benefits in 2021, must report the amount as taxable income on their tax return.

• Access online account or review IRS letters. This year, people must have the total amounts of their advance child tax credit payments and their Economic Impact Payments on hand when filing. They can check online account or review Letter 6419, 2021 Total Advance Child Tax Credit Payments, and Letter 6475, Your 2021 Economic Impact Payment, for their total payment amounts to help them file an accurate return.

• File electronically. IRS Free File online can help taxpayers claim their earned income tax credit, child and dependent care credit, child tax credit and recovery rebate credit. Some Free File options are available in Spanish. MilTax online software is available for members of the military and certain veterans, regardless of income, and is offered through the Department of Defense. Eligible taxpayers may prepare and file their federal returns and up to three state returns for free.

• Choose direct deposit. Filing electronically and choosing direct deposit is the safest and easiest way to file an accurate tax return and the fastest way to get a refund.

LEGAL
What are you buying? If it is a stock purchase is it a C Corp? S Corp? LLC?

• Is the business in good standing with the state and feds?
• Any pending lawsuits? Governmental proceedings?
• Survey on land
• Any independent contractors that should have been classified as "employees"
• what is the property zoned?
• Can any of it be sub-divided at a later date and sold off?
• Does the owner really own it? Do they have the legal authority to sell?
• Any workman comp claims? Unemployment claims? -any patents or copyrights of logos?
• Any business license and are the transferrable?
• Any tax registration certificates? Are they transferrable?
• Is the business in compliance with zoning laws?
• Any toxic waste or environmental problems
• Do they own photos, testimonials that may be used in print collaterals or the website?
• Any employee contracts with non-competes?

MARKET PERCEPTION
What is it? With Customers and Vendors?

• What is its brand position? Is it healthy?
• Do they have a good reputation?
• Do they have a customer database?
• Do they have a prospect database?
• Do they know how large their market is?
• Do they have a CRM?
• How are they perceived in the marketplace?
• Who are their key partners and alliances?
• Are their prices high? Low? Middle?
• Are their competitors who are larger, cheaper, quicker, faster that have the customer's attention?
• What are the barriers to entry to this business?
• Does the business have significant vendors or customers?
  • Any vendors that we use that we purchase 10% or more of our product from?
  • Any customers that make up 5% or more of revenues/sales?

  
MOTIVATION TO SELL

• Is it a motivated seller and why?
• How much debt does he need to pay off? (mortgages loans?)
• How much cash does the seller immediately need?
• Does he need that cash all at once?
• Is he looking for a way to avoid capital gains? Or reduce or spread out his tax liability?
• Are there other family members involved in the decision making process?
• Has the reputation of the company been damaged at all?
• How dependent has the business been on the current owner? Relationships with employees? Customers? Vendors?

 
STRATEGIES TO CONSIDER WHEN BUYING A BUSINESS

• Consider buying on installment
• Don't ever be shy in asking for information- your strategy is to "discover" as much as you can
• Consider holding back some of the purchase price until after closing- say six months or a year in case you suffer a loss due to the owner failing to "disclose" information
• Consider buying land in one deal and the company in another- if the two are indeed owned separately
• Consider and 'earn-out' provision where seller only gets paid if certain financial milestones are met

ASSETS

• What assets are you buying?
• Any intellectual property? (trademarks, trade secrets)
• Any inventory or goods obsolete? What is their value?

CORPORATE CULTURE -WHAT IS IT LIKE?

• What's the turnover of employees?
• How many employees? Their skill sets?
• Any training programs (sexual harassment, leadership, team building?) -Any written policy books, employee manuals?
• Will the owner let you interview any of the employees?

CUSTOMERS AND MARKET SEGMENTS

• Any salespeople that have key customer relationships?
• Who do they sell? What primary markets and what secondary markets?
• How do they currently keep their customers?
• How do they reach their prospects and customers with their message? (Channels?)
• What is their competitive advantage?

FINANCIAL QUESTIONS

• cash flow statements
• balance sheets
• accounts payables and receivables
• benefit contracts
• insurance/pension/401 K
• outstanding debts
• debt review
• UCC-a forms - to find out who extended credit to the company -what secured assets were tied up in previous loans
• Do they have healthy margins?
• How do their customers pay for their products?
• Are their expenses in line with their revenues?
• Where will your down payment come from?
• What sources of financing do you have? (friends, family,)
• What sources of funding do you have (self-directed funds from retirement accounts, stocks, home equity)?
• Is the seller open to seller financing?
• Is the seller open to "run to own”?
• Can you furnish a statement of personal net worth and resume?
• What are the terms of renting the building/land if you are not buying?

 

As a business owner, I get it– that first year or two of getting a business off the ground is like an emotional roller coaster. There are so many shifts needed in our mindset when we make the decision to play full-out and launch a business!  
 
I remember when I had to do my accounting myself. I had a working knowledge of QuickBooks at the time but did not use it to its full potential. What else was I missing? What did I need to know that I didn't know?
 
That’s why I was thrilled when my friend Laura Hitt told me that she was hosting an interview series around this very topic! Laura wanted to do her own research project to learn how other entrepreneurs and mindset experts have shifted the ways they look at entrepreneurship, themselves, and the world. 
 
It’s called New Business, New Mindset– Entrepreneurial Women: Learn the Tools & Tricks You Need to Develop an Entrepreneurial Mindset, Breakthrough Barriers and Realize Your Vision! 
 
I have a complimentary ticket for you to participate. You can register using this link: https://bit.ly/3rigQhD
 
Just so you know, you can watch from your home or on the go, and you’ll receive access to two recorded interviews per day, for 7 days! 
 
This series is for women who want to develop their own entrepreneurial mindset and set themselves up for success in their new business, in spite of the many challenges of entrepreneurship. 
 
The top-level entrepreneurs who are interviewed in this series are experts in developing a mindset that will help you breakthrough your barriers and stay true to your vision, in spite of the emotional roller coaster of entrepreneurship. These speakers are sharing their best tips and tricks for altering the way you think, so that you don’t have to spend decades alternating between the highs of launching a business, and the lows of being stuck, overwhelmed and immobilized. 
 
They’ve lived it, and they've become experts in it. 
 
So let me ask you this: What would it be worth it to you to be able to sit down with 14 top-level entrepreneurs and mindset experts and pick their brain about the best ways to think as a new entrepreneur? 
 
For me, it’s worth A LOT and I wish I’d had this when I started! That’s why I’ll not only be a speaker, but I’ll be watching the other entrepreneurs too. 
 
Register here with this complimentary ticket: https://bit.ly/3rigQhD
 
In case you are wondering who is speaking, beside myself, here is just a handful of other amazing speakers who are interviewed: 

• Sam Silverstein, keynote speaker, consultant, best-selling author of 12 books including No More Excuses, The Theory of Accountability and The Success Model
• Erica Strong, speaker, trainer, business and life coach, author (Finishing Strong), podcast host
• Shanie Salmon-Godfrey, 11X best-selling author, business & financial coach, podcaster, author of The Entrepreneurial Mindset
• Jonny Cooper, Entrepreneur, over 8 figure business owner, founder of Jonny Hates Marketing
• Jose Alfaro, serial entrepreneur and COO of Co.starters which supports small businesses and entrepreneurs all across the US… And more! 

 
Click here to register and learn more: https://bit.ly/3rigQhD 

If you watch the daily news, you may have heard that the IRS is understaffed and they plan to be way behind during this year's tax season. Calling the IRS office with questions can take up most of your day. 

So, direct from the IRS, this is a guide to help you find answers to most tax return questions. You can also contact GLM and one of our accountants can also answer you. 
As people get ready to file their 2021 tax return, the IRS reminds taxpayers they can find answers to their tax questions from the comfort of home using IRS online tools and resources. These IRS.gov tools are easy to use and available anytime.
• Choosing a preparer. The IRS has several options for finding a tax preparer. One resource is Choosing a Tax Professional, which offers a wealth of information for selecting a tax professional. The Directory of Federal Tax Return Preparers with Credentials and Select Qualifications can help taxpayers find preparers in their area who currently hold professional credentials recognized by the IRS or who have an Annual Filing Season Program Record of Completion.
 
• Interactive tax assistant. This tool has answers a variety of tax questions. It can also help a taxpayer determine if a type of income is taxable. Many people experienced changes to income and other life events in 2021. This tool can help them find tax credits and deductions.
Taxpayers may qualify for the child tax credit and child and dependent care credit. Those who are not eligible for the child tax credit might be able to claim the credit for other dependents. Individuals paying higher education costs for themselves, a spouse or a dependent, may be eligible to save some money with education tax credits or deductions. Additionally, low-to moderate-income taxpayers may qualify for the earned income tax credit.
• Getting banked and setting up direct deposit. Direct deposit gives taxpayers access to their refund faster than a paper check. Those without a bank account can learn how to open an account at an FDIC-insured bank or through the National Credit Union Locator tool. Veterans should see the Veterans Benefits Banking Program for access to financial services at participating banks.
• Setting up or reviewing IRS Online Account The IRS encourages taxpayers who have not set up an Online Account yet should do so soon. People who have already set up an Online Account should make sure they can still log in successfully. Taxpayers can use Online Account to securely access the latest available information about their federal tax account.
• Paying a tax bill. The IRS offers several ways for taxpayers to pay their taxes including online, by phone or through the IRS2Go app. Direct Pay is free and a safe way to pay taxes or estimated tax directly from a checking or savings account. Direct Pay has five simple steps to pay in a single online session and is also available with the IRS2Go mobile app.
More information:
Publication 5348, Get Ready to File
Publication 5349, Year-Round Tax Planning is for Everyone

​There are steps people, including those who received stimulus payments or advance child tax credit payments, can take now to make sure their tax filing experience goes smoothly in 2022. They can start by visiting the Get Ready page on IRS.gov. Here are some other things they should do to prepare to file their tax return.

Gather and organize tax records
Organized tax records make preparing a complete and accurate tax return easier. They help avoid errors that lead to processing delays that slow refunds. Having all needed documents on hand before taxpayers prepare their return helps them file it completely and accurately. This includes:

• Forms W-2 from employers
• Forms 1099 from banks, issuing agencies and other payers including unemployment compensation, dividends, distributions from a pension, annuity or retirement plan
• Form 1099-K, 1099-MISC, W-2 or other income statement for workers in the gig economy
• Form 1099-INT for interest received
• Other income documents and records of virtual currency transactions

Taxpayers should also gather any documents from these types of earnings. People should keep copies of tax returns and all supporting documents for at least three years.
Income documents can help taxpayers determine if they're eligible for deductions or credits. People who need to reconcile their advance payments of the child tax credit and premium tax credit will need their related 2021 information. Those who did not receive their full third Economic Impact Payments will need their third payment amounts to figure and claim the 2021 recovery rebate credit.

Taxpayers should also keep end of year documents including:

• Letter 6419, 2021 Total Advance Child Tax Credit Payments, to reconcile advance child tax credit payments
• Letter 6475, Your 2021 Economic Impact Payment, to determine eligibility to claim the recovery rebate credit
• Form 1095-A, Health Insurance Marketplace Statement, to reconcile advance premium tax credits for Marketplace coverage

Confirm mailing and email addresses and report name changes
To make sure forms make it to the them on time, taxpayers should confirm now that each employer, bank and other payer has their current mailing address or email address. People can report address changes by completing Form 8822, Change of Address and sending it to the IRS. Taxpayers should also notify the postal service to forward their mail by going online at USPS.com or their local post office. They should also notify the Social Security Administration of a legal name change.

View account information online
Individuals who have not set up an Online Account yet should do so soon. People who have already set up an Online Account should make sure they can still log in successfully. Taxpayers can use Online Account to securely access the latest available information about their federal tax account.

Review proper tax withholding and make adjustments if needed
Taxpayers may want to consider adjusting their withholding if they owed taxes or received a large refund in 2021. Changing withholding can help avoid a tax bill or let individuals keep more money each payday. Life changes – getting married or divorced, welcoming a child or taking on a second job – may also be reasons to change withholding. Taxpayers might think about completing a new Form W-4, Employee's Withholding Certificate, each year and when personal or financial situations change.
​
People also need to consider estimated tax payments. Individuals who receive a substantial amount of non-wage income like self-employment income, investment income, taxable Social Security benefits and in some instances, pension and annuity income should make quarterly estimated tax payments. The last payment for 2021 is due on Jan. 18, 2022.