Business Tax Planning
Businesses face many tax issues. Business tax planning engagements may include:
Choice of Business Entity Selection: Corporation, S-corporation, Partnership, Limited Liability Company (LLC), Sole Proprietorship. Each form of ownership has its pros and cons. We provide tailored planning depending on your business strategy and type of owners.
Multi-State Tax Planning: We provide nexus (i.e. a tax term that simply means tax connection to a state) studies to determine your income tax and sales tax nexus. Did you know that after the Wayfair Supreme Court decision in June 2018, many businesses may be required to collect taxes and file up to 45 state sales tax returns even if they have no physical presence in that state!
Tax Incentive Planning: Is your business utilizing the myriad of tax credits that are available? As a reminder a tax credit reduces your tax dollar for dollar. A deduction reduces your tax based on your tax rate. A corporation with a $100 tax credit will save $100. A corporation with a $100 deduction only saves $21 ($100 * 21% using 2018 flat tax rate).
Cost Segregation: A cost segregation may be beneficial when buying a commercial property or making substantial leasehold improvements to your business location. A cost segregation allows a business to depreciate a portion of its property over 5-7 years rather than over 39 years; thereby, increasing your depreciation deductions. A cost segregation can be made several years after you bought the property or constructed your leasehold improvements. Depending on the size of your property, a cost segregation can lead to significant additional deductions. In many cases, I have seen cost segregation studies lead to deductions over $250,000 resulting in tax refunds over $100,000.
Worker Classification: Make sure your staff is correctly reported as an employee or independent contractor as independent contractor reporting is a hot issue during both income and payroll tax audits. Payroll tax penalties are steep if you incorrectly classified an employee as independent contractor. In addition, if there is a willful misclassification of individuals as independent contractors, the California Department of Industrial Relations can impose civil penalties of between $5,000 and $25,000 per violation.
Mergers & Acquisitions (M&A) Due Diligence: We provide consulting on the structure of acquisitions as well as provide due diligence on potential tax liabilities you may inherit when acquiring a business. Besides income tax liabilities, look out for potential sales tax, use tax, payroll tax or withholding tax responsibilities.
Withholding Tax: Besides payroll and sales tax withholding, there are a myriad of Federal and state withholding taxes. Did you know withholding may be required on payments to U.S. and foreign vendors? Did you know pass-through entities such as partnerships, LLCs and S-corporations may have to withhold on distributions to owners? Did you know California withholding rules differs on whether the owner is domestic (i.e. outside of California) or foreign (i.e. outside the United States)?
Tax Planning for Emerging Industries such as Marijuana Dispensaries and Crypto and Virtual Currencies.
Individual Tax Planning
Individuals face many tax issues. Individual tax planning engagements may include:
Employer Stock Option Planning: Does your employer provide stock options [Employee Stock Purchase Plan (ESPP), Nonqualified Options (NQ), Incentive Stock Options (ISO)] or make grants of restricted stock, restricted stock units (RSU)or contribute stock to your 401(k) plan? There may be consequences upon, grant, vest or distribution.
Investment Tax Planning: The type of investment, investment holding period and type of ownership (personal versus retirement plan) all impacts your taxes. Planning is essential to minimize your taxes.
Sales of Start-up stock: In one success story, I helped a company’s founder eliminate $10 million in capital gain income.
Global Mobility: Did you know working overseas as an expatriate may allow over $110,000 of your salary (or self-employment income) to be excluded from federal tax? Planning is essential to minimize your taxes if you work overseas.
Consultation on expatriate employee benefits packages for those working overseas is also available. Are you being offered top of the line benefits? Are you working in dangerous environments requiring kidnap & ransom insurance?
Real Estate Tax Planning: Many real estate investors are unaware of how their rental properties will be taxed. For example, many landlords are unaware of a rule that limits losses generated by rental properties (i.e. passive loss rules). In addition, investment and rental properties may be eligible for tax-deferral if sold and the proceeds are reinvested in other real estate.
As a father I pay close attention to tax law changes that impact families. I advise on issues such as education funding (such as 529 plans) or the”kiddie tax.” In fact, I was quoted in the Wall Street Journal on changes to the “kiddie tax” rules.
FOR A FREE 2 PAGE REPORT ON HOW TO MAXIMIZE YOUR INDIVIDUAL CHARITABLE CONTRIBUTION TAX DEDUCTION AFTER TAX REFORM, PLEASE CONTACT ME.
Nonprofit Tax Planning
Nonprofits (aka tax-exempt organizations) also face many tax issues. Most tax advisers are unaware of the special rules that apply to nonprofit organizations. We can assist with:
Public Support Test calculations to make sure your charity retains its public charity status. Failure may cause your charity to be treated as a private foundation.
Unrelated Business Income Tax (UBIT): Did you know Tax Reform has brought a hidden UBIT tax on organizations that offer commuter transit benefits? Did you know your investments may trigger the UBIT tax?
Worker Classification: Make sure your staff is correctly reported as an employee or independent contractor as payroll tax penalties are steep. Did you know California also requires independent contractor reporting?
Donor Charitable Giving Strategies: Some donors are motivated by tax rather than philanthropic reasons. We can assist on explaining the tax-efficient means for donors to donate to your organization.
Functional Expense Reporting: Starting in 2018, all nonprofits who receive audited financial statements must report their functional expenses. This means the organization must categorize its expenses as (1) program, (2) management & general or (3) fundraising.
CONFUSED ON WHAT TAX FILINGS YOUR NONPROFIT MUST FILE? CONTACT ME FOR A FREE 2 PAGE REPORT.
FOR A FREE 2-PAGE REPORT ON HOW YOUR INDIVIDUAL DONORS CAN MAXIMIZE THEIR CHARITABLE CONTRIBUTION TAX DEDUCTION AFTER TAX REFORM, PLEASE CONTACT ME.