Business Taxes

Getting summer help? Classify properly

Posted on Jun 25, 2018

Don’t subject your business to tax penalties by misclassifying employees and independent contractors. You can avoid misclassification by understanding how the law defines employment (we can help you with this), and by creating and following work-habit guidelines. Thoroughly review your work arrangement not only at the beginning of professional relationships, but regularly to ensure both you and your employee are on the same page. Gilliland & Associates, PC is a full-service CPA firm specializing in tax planning for individuals and businesses in the Northern Virginia area. We are based in Falls Church, VA and also service clients in McLean and Tysons Corner, VA. Gilliland & Associates is known for our superior knowledge and aggressive interpretation and application of tax laws. We help you keep more of your earnings by finding you the lowest possible tax on your business or personal tax return. You can connect with us on Google+, LinkedIn, Facebook, and...

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A new credit for small business owners

Posted on Jun 6, 2018

Starting this year, employers can take advantage of a new credit for paid family and medical leave created by the Tax Cuts and Jobs Act. Employers may claim the credit based on wages paid to employees while they are on leave for the birth of a child, a serious health condition, and other family and medical events. The credit is a percentage (ranging between 12.5 percent to 25 percent) of the amount of wages paid to an employee while on family and medical leave for up to 12 weeks. The credit is set to expire after the 2019 tax year, however, so keep this in mind for long-term planning. Gilliland & Associates, PC is a full-service CPA firm specializing in tax planning for individuals and businesses in the Northern Virginia area. We are based in Falls Church, VA and also service clients in McLean and Tysons Corner, VA. Gilliland & Associates is known for our superior knowledge and aggressive interpretation and application of tax laws. We help you keep more of your earnings by finding you the lowest possible tax on your business or personal tax return. You can connect with us on Google+, LinkedIn, Facebook, and...

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6 ways to avoid a credit card catastrophe

Posted on Jun 4, 2018

Credit cards should be a convenient short-term way to pay, not a source of regular spending. Unfortunately, some people have a hard time staying true to this concept. Instead of paying off the entire balance due on the card each month, they let it grow and pay only the minimum amounts. If this sounds all too familiar, it’s time to stop what you’re doing and start following these rules: 1.  Pay the entire balance due each month. 2.  If a balance remains unpaid at month’s end, do not use the card again. 3.  Do not use more than one credit card. 4.  Do not accept credit cards from specific retail stores. 5.  Do not pay off one credit card with another. 6.  Do not purchase gifts for people with your credit card. It’s often too easy to let your generosity exceed your ability to pay. Spending habit monitoring tip: Take your credit card charges and your canceled checks for the past year and sort each charge and canceled check into two piles. One pile is for the “must” payments such as utilities, taxes, medication, rent or mortgage payments. The other pile is for the optional spending, such as meals at restaurants, gifts for people, recreational events or equipment. Gilliland & Associates, PC is a full-service CPA firm specializing in tax planning for individuals and businesses in the Northern Virginia area. We are based in Falls Church, VA and also service clients in McLean and Tysons Corner, VA. Gilliland & Associates is known for our superior knowledge and aggressive interpretation and application of tax laws. We help you keep more of your earnings by finding you the lowest possible tax on your business or personal tax return. You can connect with us on Google+, LinkedIn, Facebook, and...

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Why a business appraisal may be your best friend

Posted on May 28, 2018

For many business owners, business appraisals can provide vital planning information and help mitigate risk. Consider what it may be able to do for you: Establish a verifiable value for your business. This can show whether assets have appreciated at a reasonable rate. If not, you may need to adjust your firm’s strategy. Create documentation to support new financing. Lenders need strong evidence that their loans are properly secured. A business appraisal can supply that evidence. An independent evaluation of business assets may also encourage lenders to offer favorable interest rates. Set a reasonable selling price. Without a detailed and defensible appraisal, owners selling their businesses sometimes entertain unreasonably low offers. On the other hand, an appraisal can keep owners from overpricing the firm and thus discouraging potential buyers. Avoid litigation after a death. What happens if one owner dies or otherwise leaves his or her share of the business to others? In some cases, litigation follows. To ensure that the remaining owners’ interests are protected, the business needs to be appraised beforehand. Support proper estate planning. If your estate is audited, the IRS is more likely to accept valuations that in Figure out capital gains. For example, if you inherit a business from your father and decide to sell it, the business can be valued as of the date of your father’s death. A good appraisal can help establish a supportable value for the business and may result in lower capital gains taxes. Contact our office if you have questions about selling your business. Gilliland & Associates, PC is a full-service CPA firm specializing in tax planning for individuals and businesses in the Northern Virginia area. We are based in Falls Church, VA and also service clients in McLean and Tysons Corner, VA. Gilliland & Associates is known for our superior knowledge and aggressive interpretation and application of tax laws. We help you keep more of your earnings by finding you the lowest possible tax on your business or personal tax return. You can connect with us on Google+, LinkedIn, Facebook, and Twitter....

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Get your small business off the rocks

Posted on May 16, 2018

Every small business eventually hits a rough patch. It’s easy to get discouraged when it happens. But look at the upside: you have infrastructure in place, you have existing customers and most importantly, you have the hard-won experience of knowing what works and what doesn’t. With that in mind, here are some ideas to get things back on track: Focus on triage. Just like a hospital ranks patients for attention according to the severity and urgency of their injuries, you need to rank your biggest issues. First list what needs to be done urgently, such as paying bills, making payroll and delivering orders. Then rank what is most important long-term, like reviewing expenses, improving marketing and advertising, and gathering sales leads. This process means setting aside the idealistic business plan you had before you ran into problems and focusing on the nitty-gritty business realities of revenue, expenses and cash flow. You can pick up the business plan after you plug the holes in the boat, and revise it based on what you learned from your difficult period. Cut costs. If you are running into troubles you may be spending money on things that aren’t working. Try this exercise before trouble is seen on the horizon: ask yourself what you would eliminate first if your business situation took a turn to the worse. Second? Third? You’ve just made your cost-cutting priority list. Get market information. When your business isn’t working well, you need to take a closer look at your market. Look at what your most successful competitors are doing. Pick the brains of your customers, your vendors and your employees for their opinions about the products, services and companies in your industry. Improve your offering. Based on what you’ve learned from your market research, make improvements to your product or service. Use your research and business experience to help you narrow down your list to a few ideas, which you can then test through trial-and-error. One of the most disciplined ways to do this is through A/B testing: create two versions of your offering with one variable changed. Keep whichever one does better and scrap the other, then offer a new A/B test using the improved version. Your products or services will get better over time based on market feedback. Improve your operations. Your product or service may be great, but for some reason it’s not getting the attention of customers. Meanwhile, a competitor may be outselling you with something inferior. If that’s the case, you’ll need to revamp your operations: your marketing, advertising, sales and online presence. You can use the same A/B process you used to improve what you’re selling to improve how you sell: change one variable at a time and learn from trial-and-error what works and what doesn’t. Remember, great businesses are those that address problems and use them to grow. When seen in this light your business will often become stronger as a result of periodic challenges. Gilliland & Associates, PC is a full-service CPA firm specializing in tax planning for individuals and businesses in the Northern Virginia area. We are based in Falls Church, VA and also service clients in McLean and Tysons Corner, VA. Gilliland & Associates is known for our superior knowledge and aggressive interpretation and application of tax laws. We help you keep more of your earnings by finding you the lowest possible tax on your business or personal tax return. You can connect with us on Google+, LinkedIn, Facebook, and...

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Update on the Tax Cuts and Jobs Act (TCJA)

Posted on May 2, 2018

The Tax Cuts and Jobs Act (TCJA) was passed by Congress in a hurry late last year, and the IRS and tax preparers have been working to digest some of the more thorny issues created by the tax overhaul. Here are the latest answers to some of the most common questions: Is home equity interest still deductible? The short answer is: Not unless you’ve used the money to buy, build or substantially improve your home. Before the TCJA, homeowners were able to take out a home equity loan and spend it on things other than their residence, such as to pay off credit card debt or to finance large consumer purchases. Under the old tax code, they could deduct interest on up to $100,000 of such home equity debt. The TCJA effectively writes the concept of home equity indebtedness out of the tax code. Now you can only deduct interest on “acquisition indebtedness,” meaning a loan secured by a qualified residence that is used to buy, build or substantially improve it. If you have taken out a home equity loan before 2018 and used it for any other purpose, interest on it is no longer deductible. I’m a small business owner. How do I use the new 20 percent qualified business expense deduction? Short answer: It’s complicated and you should get help. Certain small businesses structured as sole proprietors, S corporations and partnerships can deduct up to 20 percent of their qualified business income. But that percentage can be reduced after your taxable income reaches $157,500 (or $315,000 as a married couple filing jointly). The amount of the reduction depends partly on the amount of wages paid and property acquired by your business during the year. Another complicating factor is that certain service industries including health, law, consulting, athletics, financial services and accounting are treated slightly differently. The IRS is expected to issue more clarification on how these rules are applied, such as when your business is a mix of one of those service industries and some other kind of business. What are the new rules about dependents and caregiving? There are a few things that have changed regarding dependents and caregiving: Deductions. Standard deductions are nearly doubled to $12,000 for single filers and $24,000 for married joint filers. The code still says dependents can claim a standard deduction limited to the greater of $1,050 or $350 plus unearned income. Kiddie Tax. Unearned income of children under age 19 (or 24 for full-time students) above a threshold of $2,100 is now taxed at a special rate for estates and trusts, rather than the parents’ top tax rate. Family credit. If you have dependents who aren’t children under age 17 (and thus eligible for the Child Tax Credit), you can now claim $500 for each qualified dependent member of your household for whom you provide more than half of their financial support. Medical expenses. You can now deduct medical expenses higher than 7.5 percent of your adjusted gross income. You can claim this for medical expenses you pay for a relative even if they aren’t a dependent (i.e., they live outside your household) as long as you provide more than half of their financial support. Gilliland & Associates, PC is a full-service CPA firm specializing in tax planning for individuals and businesses in the Northern Virginia area. We are based in Falls Church, VA and also service clients in McLean and Tysons Corner, VA. Gilliland & Associates is known for our superior knowledge and aggressive interpretation and application of tax laws. We help you keep more of your earnings by finding you the lowest possible tax on your business or personal tax return. You can connect with us on Google+, LinkedIn, Facebook, and...

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