​New tax law allows small businesses to expense more, expands bonus depreciation
The Internal Revenue Service reminds small business taxpayers that changes to the tax law mean they can immediately expense more of the cost of certain business property. Many are now able to write off most depreciable assets in the year they are placed into service.
The Tax Cuts and Jobs Act (TCJA), passed in December 2017, made tax law changes that will affect virtually every business and individual in 2018, 2019 and the years ahead. Among those for business owners are tax rate changes for pass-through entities, changes to the cash accounting method for some, limits on certain deductions and more.

Section 179 expensing changes
A taxpayer may elect to expense all or part of the cost of any Section 179 property and deduct it in the year the property is placed in service. The new law increased the maximum deduction from $500,000 to $1 million. It also increased the phase-out threshold from $2 million to $2.5 million. These changes apply to property placed in service in taxable years beginning after Dec. 31, 2017. For most businesses, this means the 2018 return they file next year.
Section 179 property includes business equipment and machinery, office equipment, livestock and, if elected, qualified real property. The TCJA also modifies the definition of qualified real property to allow the taxpayer to elect to include certain improvements made to nonresidential real property. See New rules and limitations for depreciation and expensing under the Tax Cuts and Jobs Act for more information.

New 100 percent, first-year ‘bonus’ depreciation
The 100 percent depreciation deduction generally applies to depreciable business assets with a recovery period of 20 years or less and certain other property. Machinery, equipment, computers, appliances and furniture generally qualify. The law also allows expensing for certain film, television, and live theatrical productions, and used qualified property with certain restrictions.
The deduction applies to business property acquired after Sept. 27, 2017, and placed in service after Sept. 27, 2017, and before Jan. 1, 2023. In general, the bonus depreciation percentage is reduced for property placed in service after 2022. See the proposed regulations for more details.
Taxpayers may elect out of the additional first-year depreciation for the taxable year the property is placed in service. If the election is made, it applies to all qualified property that is in the same class of property and placed in service by the taxpayer in the same taxable year. The instructions for Form 4562, Depreciation and Amortization, provide details.

Business owners can refer to the Tax Reform Provisions that Affect Businesses page for updates.

More resources:

• Publication 535, Business Expenses
• Publication 946, How to Depreciate Property
• Additional First Year Depreciation Deduction (Bonus) FAQs
• Tax Cuts and Jobs Act: A Comparison for Businesses

Direct from the Small Business Administration Website, 10 Steps to starting your business. Even if you have started you business, this is a great review to make sure your ducks are in a row.

1. Conduct market research
Market research will tell you if there’s an opportunity to turn your idea into a successful business. It’s a way to gather information about potential customers and businesses already operating in your area. Use that information to find a competitive advantage for your business.
Learn more

2. Write your business plan
Your business plan is the foundation of your business. It’s a roadmap for how to structure, run, and grow your new business. You’ll use it to convince people that working with you — or investing in your company — is a smart choice.
Learn more

3. Fund your business
Your business plan will help you figure out how much money you’ll need to start your business. If you don’t have that amount on hand, you’ll need to either raise or borrow the capital. Fortunately, there are more ways than ever to find the capital you need.
Learn more

4. Pick your business location
Your business location is one of the most important decisions you’ll make. Whether you’re setting up a brick-and-mortar business or launching an online store, the choices you make could affect your taxes, legal requirements, and revenue.
Learn more

5. Choose a business structure
The legal structure you choose for your business will impact your business registration requirements, how much you pay in taxes, and your personal liability.
Learn more

6. Choose your business name
It’s not easy to pick the perfect name. You’ll want one that reflects your brand and captures your spirit. You’ll also want to make sure your business name isn’t already being used by someone else.
Learn more

7. Register your business
Once you’ve picked the perfect business name, it’s time to make it legal and protect your brand. If you’re doing business under a name different than your own, you’ll need to register with the federal government, and maybe your state government, too.
Learn more

8. Get federal and state tax IDs
You’ll use your employer identification number (EIN) for important steps to start and grow your business, like opening a bank account and paying taxes. It’s like a social security number for your business. Some — but not all — states require you to get a tax ID as well.
Learn more

9. Apply for licenses and permits
Keep your business running smoothly by staying legally compliant. The licenses and permits you need for your business will vary by industry, state, location, and other factors.
Learn more

10. Open a business bank account
A small business checking account can help you handle legal, tax, and day-to-day issues. The good news is it’s easy to set one up if you have the right registrations and paperwork ready.
Learn More
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​Please remember that GLM can help you through each steps of the process. Your accountant can and should guide you through this and help you set yourself up in each step that benefits you the most.

Typical Situation: Our client is growing and are unsure if they are legally complaint with employees. They feel they have been "winging it" in the area of HR, for too long and want to formalize processes. Or simply, they have many questions about employee issues and need answers we cannot provide (Legally and we just don’t know)
 
When you hear a business owner say:
 

• “I need to fire this person, but I don’t want to get sued”
• “There are so many laws changing, and I don’t know if our policies and practices are compliant.”
• “We’re having a hard time finding and retaining qualified candidates.”
• “We don’t need a full-time HR professional, but we need occasional help with employee relations issues.”

 
HR Source Provides

• HR Hotline: With unlimited access to the HR Hotline, members can talk to HR experts and employment law attorneys any time they have a question or concern.
• Benchmarking Surveys: Keep your organization competitive with the market’s most robust and timely data on wages, salaries, polices, benefits and executive compensation.
• Newsletter Updates: HR Source’s weekly newsletter keeps employers current on HR compliance issues and best practices.
• Training and Education: HR Source offers training programs focused on HR best practices, employment law compliance, leadership development and more.

 
How they Work
HR Source is a not-for-profit employers' association serving more than 1,200 companies and organizations. They provide human resources and legal support, publish compensation and benefits surveys, conduct HR and supervisory training, and more.
 
Matching Ideas with Resources:

Business owners may be able to benefit from the home office deduction
Taxpayers who use their home for business may be eligible to claim a home office deduction. It allows qualifying taxpayers to deduct certain home expenses on their tax return. This can reduce the amount of the taxpayer’s taxable income.
Here are some things to help taxpayers understand the home office deduction and whether they can claim it:

• The home office deduction is available to both homeowners and renters.
• There are certain expenses taxpayers can deduct. They include mortgage interest, insurance, utilities, repairs, maintenance, depreciation and rent.
• Taxpayers must meet specific requirements to claim home expenses as a deduction. Even then, the deductible amount of these types of expenses may be limited.
• The term "home" for purposes of this deduction:
  • Includes a house, apartment, condominium, mobile home, boat or similar property.
  • Also includes structures on the property. These are places like an unattached garage, studio, barn or greenhouse.
  • Doesn’t include any part of the taxpayer’s property used exclusively as a hotel, motel, inn or similar business.
• There are two basic requirements for the taxpayer’s home to qualify as a deduction:
  • There must be exclusive use of a portion of the home for conducting business on a regularly basis. For example, a taxpayer who uses an extra room to run their business can take a home office deduction only for that extra room so long as it is used both regularly and exclusively in the business.
  • The home must be the taxpayer’s principal place of business. A taxpayer can also meet this requirement if administrative or management activities are conducted at the home and there is no other location to perform these duties. Therefore, someone who conducts business outside of their home, but also uses their home to conduct business may still qualify for a home office deduction.
• Expenses that relate to a separate structure not attached to the home will qualify for a home office deduction. It will qualify only if the structure is used exclusively and regularly for business.
• Taxpayers who qualify may choose one of two methods to calculate their home office expense deduction: 
  • The simplified option has a rate of $5 a square foot for business use of the home. The maximum size for this option is 300 square feet. The maximum deduction under this method is $1,500.
  • When using the regular method, deductions for a home office are based on the percentage of the home devoted to business use. Taxpayers who use a whole room or part of a room for conducting their business need to figure out the percentage of the home used for business activities to deduct indirect expenses.  Direct expenses are deducted in full.

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IRS launches new Tax Withholding Estimator; Redesigned online tool makes it easier to do a paycheck checkup

WASHINGTON — The Internal Revenue Service today launched the new Tax Withholding Estimator, an expanded, mobile-friendly online tool designed to make it easier for everyone to have the right amount of tax withheld during the year.

The Tax Withholding Estimator replaces the Withholding Calculator, which offered workers a convenient online method for checking their withholding. The new Tax Withholding Estimator offers workers, as well as retirees, self-employed individuals and other taxpayers, a more user-friendly step-by-step tool for effectively tailoring the amount of income tax they have withheld from wages and pension payments.
“The new estimator takes a new approach and makes it easier for taxpayers to review their withholding,” said IRS Commissioner Chuck Rettig. “This is part of an ongoing effort by the IRS to improve quality services as we continue to pursue modernization and enhancements of our taxpayer relationships.”
The IRS took the feedback and concerns of taxpayers and tax professionals to develop the Tax Withholding Estimator, which offers a variety of new user-friendly features including:

• Plain language throughout the tool to improve comprehension.
• The ability to more effectively target at the time of filing either a tax due amount close to zero or a refund amount.
• A new progress tracker to help users see how much more information they need to input.
• The ability to move back and forth through the steps, correct previous entries and skip questions that don’t apply.
• Enhanced tips and links to help the user quickly determine if they qualify for various tax credits and deductions.
• Self-employment tax for a user who has self-employment income in addition to wages or pensions.
• Automatic calculation of the taxable portion of any Social Security benefits.
• A mobile-friendly design.

In addition, the new Tax Withholding Estimator makes it easier to enter wages and withholding for each job held by the taxpayer and their spouse, as well as separately entering pensions and other sources of income. At the end of the process, the tool makes specific withholding recommendations for each job and each spouse and clearly explains what the taxpayer should do next.

The new Tax Withholding Estimator will help anyone doing tax planning for the last few months of 2019. Like last year, the IRS urges everyone to do a Paycheck Checkup and review their withholding for 2019. This is especially important for anyone who faced an unexpected tax bill or a penalty when they filed this year. It’s also an important step for those who made withholding adjustments in 2018 or had a major life change.

Those most at risk of having too little tax withheld include those who itemized in the past but now take the increased standard deduction, as well as two-wage-earner households, employees with nonwage sources of income and those with complex tax situations.

To get started, check out the Tax Withholding Estimator on IRS.gov.
​

Typical Situation: Our client’s Card processing fees have increase over the years. The may have outstanding invoices that would be paid quicker if they took credit cards.
 
When you hear a business owner say:
·         “I don’t understand the charges from my current credit card processing company.”
·         “It is taking too long for me to receive payment on my invoices.”
·         “I have been receiving chargebacks because I am not EMV compliant and my equipment does not take chip cards.”
·         “I want to upgrade my credit card processing equipment but I’m not sure what is the best fit.”
·         “I am opening a new business and I need to accept credit card payments.”
 
Merchant Services assist businesses with taking secure electronic payments (credit cards, checks, online payments). They find ways to streamline operations, reduce cost, improve cash flow, and provide excellent reporting. There are a variety of solutions including online payments, payment terminals, invoicing software, and POS systems.
 
How they Work They will ask questions about how a business operates currently and struggles they may be having with expenses, cash flow, reporting, marketing, customer loyalty, etc. They then take these findings to customize a tailored recommendation for the business. All new accounts are checked for accuracy, assisted with installation and training, and receive 24/7 support.

Matching Ideas with Resources:​

Step 1) Begin- Give us your accounting documents.

• Bank Statements, Receivables, Payables, Inventory, etc.

Step 2) Accounting–  We process your information, reconcile and file.

Step 3) Statements– We prepare the Financial Statements.

• Balance Sheets, Income Statements, Ledgers

Step 4) investigation– Accountant Review of Financials.

• Tax Planning- Proactive planning can potentially minimize your tax burden.

Step 5) Consulting-  Business Strategist Review.

• Analysis of Goals, Operations, Marketing, Trends,

Step 1) Begin Again- Meet With You and Discuss Findings.

• Regular Accountability through Timely, Accurate Financial Reporting

 

Congratulations, Now that you sold your business, there are reports you need to fill out for the IRS. 

Form 8594 is used to report the sale and purchase of a group of assets that constitute a business. Both the purchaser and seller must file Form 8594 with their own individual income tax return.
On Form 8594, the total selling price of the business is allocated to asset classes using the residual method.
Form 8594 provides the IRS with the following information:

• The purchaser's depreciable basis in the assets transferred, and
• How the seller determined gain or loss.

Assets Classes on Form 8594
Form 8594 lists seven classes of assets. For asset acquisitions occurring after March 15, 2001, make the allocation among the following assets in proportion to (but not more than) their fair market value on the purchase date in the following order:

Class I assets:

• Cash and general deposit accounts (including savings and checking accounts).
• Does not include certificates of deposits held in banks, savings and loan associations, or other depository institutions.

Class II assets:

• Certificates of deposit
• U.S. government securities
• Foreign currency
• Publicly traded personal property, including stocks and securities.

Class III assets:

• Accounts receivable
• Other debt instruments
• Assets that you mark to market at least annually for federal income tax purposes.

Class IV assets:

• Property of a kind that would properly be included in inventory if on hand at the end of the tax year or
• Property held by the taxpayer primarily for sale to customers in the ordinary course of business.

 
Class V assets:

• All other assets other than Class I, II, III, IV, VI, and VII assets.
• Example of assets included in this class:
• Furniture and fixtures, equipment, buildings, land, and vehicles.

Class VI assets:

• Section 197 intangibles (other than goodwill and going concern value).
• Examples include, workforce in place, customer lists, clients lists, patient lists, trademarks, trade names.
• See the list of section 197 intangibles.

Class VII:
Goodwill:

• Goodwill generally represents the excess of the price paid for a business over its net asset value (also called book value). It may have the following characteristics:
• It may be associated with a company's good reputation in terms of the products it sells, the services it performs, and it's standing in the community. Other characteristics of goodwill include:
• It may be tied to the ability of a business to continue doing business with its existing customers and to attract future customers.
• It is an intangible asset that may only be acquired as part of the acquisition of a business.
• It is a section 197 intangible whose value is amortized over 15 years by the purchaser of a business.
  

Going concern value:

• Going-concern value is the value attributed to a business entity as an on-going enterprise.
• Going-concern value focuses mainly on the ability of the company's assets to generate a return on investment not simply goodwill.

If an asset described in (I) through (VI) is included in more than one category, include it in the lower number category. For example, if an asset is described in both (4) and (6), include it in (4).