Tax Savings

Tax Planning For Independent Contractors: Deductions And Credits You Should Know

May 24, 2023 by kris_admin

As an independent contractor, would you like to save money on taxes? Self-employed individuals can transform their financial situation by understanding their tax deductions and credits. You can save thousands of dollars each year by taking advantage of these opportunities.

Independent contractors must be aware of several tax deductions, from home office deductions to retirement contributions. Furthermore, the Earned Income Tax Credit and Child and Dependent Care Credit allow you to save even more money.

You can make tax planning manageable with the right tools and knowledge as an independent contractor in New Jersey. Let’s look at common tax planning information for independent contractors and the deductions and credits they should know to save money.

working from home, independent contractor tax tips

Possible Deductions and Expenses – Independent Contractors

Home Office Deduction: You may be eligible for a home office deduction if you work from home as an independent contractor. Rent, mortgage interest, utilities, and repairs associated with the portion of your home used exclusively for work are all deductible expenses. It is required that you have a dedicated workspace that is exclusively used for your business activities to qualify for this deduction.

Vehicle Expenses: Some expenses related to your vehicle may be deductible if you use it for business purposes. This includes the cost of mileage, gas, oil changes, and repairs. A standard mileage rate set by the IRS can be used, or actual expenses can be calculated.

Equipment And Supplies: Independent contractors may have to purchase supplies and equipment to run their businesses. These expenses may be deductible as business expenses on your tax return. You can find here computers, software, office supplies, and other essentials for your business.

Health Insurance Premiums: You may qualify for tax deductions if you pay your health insurance premiums as an independent contractor. Deductions are not itemized and are not required to be itemized.

Retirement Contributions: Your retirement savings are your responsibility as an independent contractor. Contributions to traditional IRAs, SEP-IRAs, or solo 401(k)s may be deducted. Saving for retirement and lowering your tax bill can be achieved through these deductions.

Self-Employment Tax Deduction: Self-employed contractors pay self-employment tax, which includes employer and employee contributions to Social Security and Medicare. The self-employment tax you pay can be deducted in half from your tax bill.

Education And Training Expenses: Taking courses or attending conferences to improve your skills as an independent contractor may allow you to deduct these expenses. There is also a cost for books, supplies, and travel.

Possible Tax Credits for Independent Contractors

There may also be tax credits available to independent contractors, reducing their tax liability further. Among the tax credits you should know about are:

Earned Income Tax Credit: Families and individuals with low and moderate incomes can receive refundable tax credits called Earned Income Tax Credits (EITCs). A certain income and filing requirement must be met to qualify for this credit as an independent contractor.

Child And Dependent Care Credit: The Child and Dependent Care Credit may be available to you if you are caring for your children or dependents while you work. The credit can offset expenses associated with the care of children and other dependents.

Retirement Savings Contributions Credit: Contributions to a retirement account, such as a traditional IRA, may qualify you for the Retirement Savings Contributions Credit. This credit offsets the cost of retirement savings for low- and moderate-income taxpayers.

Refundable Tax Credits: Refundable tax credits reduce your tax liability below zero, meaning you can claim a refund for the excess credit amount. Tax credits that are non-refundable can only be used for reducing your taxes.

Non-Refundable Tax Credits: There are three types of non-refundable tax credits: the Child Tax Credit, the Child and Dependent Care Credit, and the Lifetime Learning Credit. Tax credits that are not refundable may not result in a refund, but you may still be able to reduce your tax liability.

IMPORTANT! You should carefully review the rules and guidelines for each credit before claiming it on your tax return since each credit has different eligibility requirements and limitations. Some credits may be offered at the federal level, while others may be offered by state or local governments. You can maximize your tax savings by consulting with a tax professional like Steven Lissner & Company to navigate the tax credit landscape.

Are You An Independent Contractor in NJ?

Many tax deductions and credits are available to NJ independent contractors, which can reduce their taxes and save them money. You can lower your tax bill and improve your financial situation by deducting home office expenses and making retirement contributions. Many tax credits can also save you money, including the Earned Income Tax Credit and the Child and Dependent Care Credit.

Always consult a CPA about your specific situation.

Call Steven Lissner & Company CPAs Today!

Why Individuals Should Hire a CPA to Prepare Their Taxes

February 2, 2023 by kris_admin

It’s tempting to rely on TurboTax or another tax software package when it comes time to file your taxes for the year. Doing it yourself seems more convenient and less expensive, but most filers will miss out on legitimate deductions unless they have a deep knowledge of tax law and its yearly changes. When deciding between hiring a professional CPA or using automated online software, your financial situation should be taken into consideration along with your level of knowledge of IRS guidelines.

If you are single, have a single employer and few or no investments, you may be a good candidate for using a low cost tax software. However, if you hold retirement accounts, are married, have a family, own a business, work freelance, receive an inheritance, bought or sold a home, or receive rental property income, you may want to hire an accountant for your peace of mind and to help you save money on taxes. Although TurboTax and other programs are user friendly, each has its own limitations. If your financial situation becomes complex, spending the additional money to hire a professional can save you a lot of money in the long run.

What is A CPA’s Duty?

CPAs assist in numerous accounting areas, including taxes, financial accounting and reporting, tax and accounting audits, and financial planning. Here are some of the most typical ways in which a CPA can assist you with your tax and financial needs:

They give guidance and help with tax forms and filings. When dealing with tax issues that are particularly difficult or time consuming, it is generally beneficial to hire an expert.
They notify you of your tax obligations and available tax deductions. Certified public accountants are experts at determining your taxable income, calculating deductions and credits, and reporting all of your income streams.
They can communicate with the IRS on your behalf, including managing audits. CPAs are familiar with the questions the IRS may pose and can supply the needed information.
They separate your personal taxes from your corporate taxes. Whether you want to organize a partnership, an LLC, or an S-corporation that will be taxed as a C-Corporation, a certified public accountant can help you structure it.

Benefits of Hiring a CPA for Tax Planning & Tax Preparation

Evaluating the Options For Your Retirement Account

When deciding how to save for retirement in a tax-efficient manner, it may be beneficial to consult with a CPA. This is particularly true when you consider the variety of investment options available for growing your retirement savings. You will want to utilize your retirement options to the fullest extent possible if you are self-employed and likely have even more choices than employees.

Adapting to a Tax Adjustment Caused by a Life Event

Life events like marriage and having children can have a major impact on your tax liability. You may need to modify your tax strategy when a major life event occurs. A CPA can also provide guidance during major personal transactions, such as the sale of your home or the purchase of a new home.

Helping Freelancers & Small Business Owners Make the Most of Tax Deductions

When you choose a CPA firm to prepare your taxes, they can work with you to optimize your tax deductions. If you freelance or are a small business owner, you are likely missing out on many tax deduction opportunities. A seasoned CPA possesses extensive tax knowledge. They will work with you to identify and optimize as many business deductions as allowed under the law. When you hire a professional accountant, they will actively look for ways to reduce your tax liability, allowing you to save money in the long run.

CPAs can also assist you in prioritizing your business objectives by performing administrative tasks such as budgeting, bookkeeping, financial accounting and reporting, tax planning, and tax preparation.

Dealing with Complicated Tax Matters More Efficiently

If you are a business owner, you may find yourself entangled in complex business and investment matters requiring a deep understanding of tax laws. A CPA is proficient in tax law and tax codes and will be able to advise you on even the most complex tax situations for your business. A CPA can quickly and easily complete tasks that would require an individual taxpayer hour of fruitless research in an attempt to find the correct information.

Should You Rely on Tax Software or a Tax Professional?

Online tax filing software like TurboTax can seem like a good option, but unless you have an extremely simple tax situation, the one-size-fits-all approach usually fails to maximize an individual’s potential return.

Need Professional Tax Preparation & Filing? Contact Us Today!

If you need an expert to help prepare and file your taxes, contact us at Steven Lissner & Company today. Our experienced tax professionals will handle your tax preparation and tax filing and assist with other tax-related matters. We’re proud to serve clients right here in our community of Mountain Lakes, as well as all across New Jersey, New York, and Pennsylvania. Call us today to learn more about our tax preparation and tax planning services.

Changes in Tax Laws For 2022

December 9, 2022 by kris_admin

tax preparation and planning 2022 cpa NJ

Tax time is just around the corner! There are a few end of year things you can do to maximize your 2022 tax return. It’s also important to understand some of the changes in tax law between 2021 & 2022 so you don’t get caught unaware.

In most cases, the more tax planning you engage in, the more money you may be able to save. And, if you discover something now that will minimize your 2022 tax liability, you still have time to act before the end of this year. Wise taxpayers need to be informed of the many changes to the tax law for the 2022 tax year to make proper planning decisions.

Tips to maximize your 2022 tax return

Maximize Retirement Savings

There are many significant changes to retirement plan and IRA contributions for 2022. For instance the maximum 401(k), 403(b), and 457 contributions have increased from $19,500 in 2021 to $20,500 in 2022. IRA contribution limits increased from $6,000 in 2021 to $6,500 for 2022. Those born before 1973 will once again be eligible to make a “catch-up” contribution of $1,000 for 2022 as in 2021. IRA contributions are limited by taxable compensation limits.

Stock Portfolio Review

No one likes to lose money, but the stock market can be unpredictable at times causing some stocks to lose value and not bounce back. You can make the most of this situation by selling those stocks at a loss to offset other income liabilities.

Give to Charity

Did you get an extra large bonus this year? Do you expect to realize significant gains from a long term investment? It’s a good idea to look at your overall income estimate for 2022. More income means a bigger tax bill. The good news is that there is still time to offset taxable income with charitable giving. Determining the right amount of charity can be complicated, and everyone’s situation is unique, so it’s important to hire a professional CPA like Stephen Lissner & Company to assist you with your tax planning.

Important tax law changes between 2021 & 2022

2021 Tax Cuts Will Expire

For tax year 2021, significant tax cuts were passed. However, the majority of such tax cuts expired at the end of 2021. These changes affect the earned income credit, child and dependent care credit, and other well-known tax credits for the 2022 tax year when compared to the 2021 tax year. Take a look at the most significant changes listed below, but be sure to hire a tax professional when preparing and filing your taxes so you can rest assured you have filed your taxes correctly and aren’t missing out on any eligible deductions.

The Inflation Reduction Act

Your 2022 tax return may be affected by the Inflation Reduction Act. New laws or yearly inflation adjustments will cause other 2022 revisions.

Child Tax Credit

For 2021, the child tax credit underwent significant adjustments, however, they were only in place for one year. For the 2022 tax year, the child tax credit reverts to its pre-2021 form. In 2021 the credit amount was $3,000 for children aged 6 to 17 and $3,600 for those under 5. The child tax credit for 2022 is now $2,000 per child.

This year, children who are 17 years old do not qualify for the credit, as the previous age limit of 16 years old returns. The 2022 credit is only partially refundable for some lower-income taxpayers (up to $1,500 per eligible child), and they must have earned income of at least $2,500 to benefit from the credit’s limited refundability.

You may have noticed during 2022, monthly credit advance payments stopped.

Child and Dependent Care Tax Credit

The child and dependent care credit had also undergone significant improvements for 2021. However, those modifications were only in effect for 2021. Comparatively, the 2021 credit was worth up to $8,000 in eligible expenses for one qualifying child/dependent, or $16,000 for two or more, or 20% to 50% of those amounts. As income increased by over $125,000, the percentage fell. Also entirely refundable in 2021 was the credit. The child and dependent care credit are not transferable until 2022.

Additionally, the highest credit proportion decreases from 50% to 35%. The credit is also available for fewer care costs. For 2022, the credit is only available for expenses totaling $3,000 for one child or dependent and $6,000 for multiples. If the 35% maximum credit percentage is used, the maximum credit for the 2022 tax year is $1,050 (35% of $3,000) for families with just one child or dependent and $2,100 (35% of $6,000) for families with more than one child or dependent.

Earned Income Tax Credit

The number of workers who could claim the earned income tax credit (EITC) on their 2021 tax return increased, including both younger and older individuals without qualifying children. Also, higher were the “childless EITC” amounts. But once again, those changes were only for 2021. For 2022, the minimum age for a worker without children to collect the EITC increases to 25 for tax returns in 2022. (it was 19 in 2021). There are special cases written into the tax law, so you should always confirm your current eligibility with a licensed CPA.

The maximum age restriction, typically set at 65 years old, was removed for the 2021 tax year, but has been reinstated for the 2022 tax year. Additionally, the maximum credit for workers without children is reduced from $1,502 in 2021, to $560 for the 2022 tax year.

Tax Brackets

While there was no change to the tax rates, the income tax brackets were expanded for 2022. The change is attributable to inflation throughout the 12-month period beginning September 2020 to August 2021, which is utilized to calculate the adjustments.

Tax Rates in 2022 for Single, Married Filing Jointly, and Head of Household

Tax Rate	Taxable Income (Single)	Taxable Income (Married Filing Jointly)	Taxable Income (Head of Household)
10%	Up to $10,275	Up to $20,550	Up to $14,650
12%	$10,276 to $41,775	$20,551 to $83,550	$14,651 to $55,900
22%	$41,776 to $89,075	$83,551 to $178,150	$55,901 to $89,050
24%	$89,076 to $170,050	$178,151 to $340,100	$89,051 to $170,050
32%	$170,051 to $215,950	$340,101 to $431,900	$170,051 to $215,950
35%	$215,951 to $539,900	$431,901 to $647,850	$215,951 to $539,900
37%	More than $539,900	More than $647,850	More than $539,900

(chart from: https://taxfoundation.org/2022-tax-brackets/)

Stimulus Program and Recovery Rebate Credit

Both the stimulus program and recovery rebate credit ceased in 2021.

Working and Living Abroad

In 2022, there will be a higher foreign-earned income exclusion for taxpayers who work abroad. It increased from $108,700 for 2021 to $112,000 for 2022. The exclusion is claimed by tax paying parties on Form 2555. For 2022, the $15,218 standard ceiling on the foreign home exclusion will rise to $15,680.

Contact A CPA ‘Near Me’ Today!

Contact us at Steven Lissner & Company to learn more about our services. We are committed to offering quality tax planning and preparation services to individuals and businesses in Mountain Lakes, and across New Jersey.

Why Use a CPA to File Your Taxes?

October 23, 2022 by kris_admin

Automation has become a popular buzzword in many industries, including tax filing services. However, the complex nature of tax laws and the unique circumstances of individual taxpayers and businesses result in a lot of missed opportunities when it comes to automated tax filing.

Is Automated Tax Filing a Good Choice For You?

Plug-and-play tax preparation software like TurboTax has become increasingly popular since the IRS introduced e-filing in the 1990s. These programs are marketed to consumers based on the ease and convenience of quickly inputting a few numbers and calling it a day. The trade-off is that a one-size-fits-all approach to tax preparation usually fails to capture the uniqueness of most tax situations and often fails to maximize your potential return.

If you are a new graduate with relatively few assets, an online service like H&R Block may be a good choice for you. However, if you are in any of the following situations, enlisting the guidance of a trusted tax expert is likely to give you the best opportunity to maximize your tax return:

You’re self-employed, whether as the owner of a small business or as a subcontractor.
You’ve experienced a significant life event like marriage, divorce, birth, death, business mergers, residential move, buying or selling a home, retirement, etc.
You receive income from rental properties, foreign investments, cryptocurrency, stock trading, etc., or a bevy of less common income sources.

The reality of using an automated tax preparation program is that it delivers precisely what it sells: tax preparation. But what most taxpayers need to maximize their returns is tax planning. The best place to seek tax planning is with an experienced and trustworthy CPA firm like Steven Lissner & Company.

A CPA helps you identify tax savings and investment opportunities that will compound your capital across the span of many years. When you use automated software to file your taxes, you may miss out on opportunities to lower your tax liability. Over time, these missed opportunities can translate into thousands of dollars in lifetime savings. That’s why it’s important to enlist the guidance of a CPA to prepare your taxes — so you can explore every opportunity to maximize your tax return.

Tax Planning Is a Year-Round Effort.

Effective tax planning happens all year, not just during tax season. That’s why you don’t want to wait until tax season to contact a CPA. Steven Lissner & Company can help you right now, so you approach the coming tax season with reduced tax liability and get the maximum benefit.

A skilled CPA is well-versed on the many strategies businesses and individuals can use to create a winning tax strategy. With HSAs, FSAs, IRAs and other types of accounts available, a CPA can offer suggestions on the best way to utilize the various options out there.

It’s important to understand that small financial decisions can carry big consequences as the years pass. Sound financial decisions can increase and compound your long-term savings, whereas a lack of strategy can stagnate your savings.

The reality is that automated tax preparation programs can help you evaluate your current tax year. But they do not provide recommendations for your future or identify missed opportunities with enough time to take advantage of those opportunities. Simply put, unless you’re already a tax expert, automated tax filing programs are a losing tax strategy.

Get the Best of Both Worlds

We’ve explained the pitfalls of automated tax filing, but it is important to note that not all automation is bad. In fact, most CPAs use an automated tax program to assist in calculating returns. But there are some significant differences.

Accountants’ tax preparation software is highly sophisticated. TurboTax, H&R Block, and other online programs boil down their interface to the basics so that it’s easy for the everyday user to figure out. However, that simplification can result in users missing out on important tax liability reduction opportunities.
CPAs are highly trained in using their specialized tax software.
A CPA knows how to work an automated system to your advantage by incorporating a holistic approach to tax planning.

Consider this example:

In 2021 you experienced more health issues than in previous years and you suspect your medical bills exceed 9% of your annual income. TurboTax alerts you to the option of itemizing medical expenses on your return — which become deductible once costs exceed 7.5% of your annual income. TurboTax will provide you with a list of obvious medical deductions like doctors bills and surgery costs.
You input that information but come up a little short. Without an experienced CPA’s guidance, you overlook several qualifying expenses like transportation costs to and from your medical appointments. As a result, you pay taxes on money that is actually tax deductible, significantly reducing your tax refund and compounding your financial burden.

It’s everyday situations like these that will cost you money by using a bargain online automated tax filing program instead of seeking the expertise of a trustworthy CPA firm like Steven Lissner & Company.

What Does it Take to Become a CPA in NJ?

There is a lot of education and training required to become a CPA in NJ. First, you must obtain a bachelor’s degree plus 30 additional semester hours from an accredited institution. A significant amount of credit hours is devoted specifically to accounting and business education. After graduation individuals must pass a 16-hour exam and then complete 1,750 hours of supervised work under a licensed CPA.

These rigorous requirements ensure that you will receive quality tax planning guidance from a CPA.

There is another advantage that goes beyond technical skill or financial aptitude — a good CPA also provides a human touch. When you hire Steven Lissner & Company, you’ll meet with a real person to discuss your financial situation. Our accountants take the time to thoroughly explain anything you find confusing. You won’t find any friendly conversations or detailed explanations in a bargain online tax filing program.

When your circumstances change, you need prompt answers to important questions. CPAs are available year-round to answer questions and guide your financial decisions. Whether you’re setting up a college fund or moving across state lines, CPAs deliver superior customer service.

Tax Preparation & Tax Planning with Steven Lissner & Company

At Steven Lissner & Company, our accountants deliver customized tax planning and preparation solutions for individuals, couples, and small businesses. With over 30 years of industry-leading experience, our CPAs know how to harness the power of tax automation without losing their human touch.

We excel where big-name automated services fall short because we believe a solid financial blueprint involves careful planning. Whereas programs like TurboTax provide only a snapshot of the last tax year, we help you craft a winning financial strategy that will ensure your fiscal success for years to come.

To experience the Steven Lissner & Company difference, contact our team of tax preparation advocates today! Your biggest tax refund yet awaits you!

Transform Your Profitability By Hiring a Small Business Accountant

August 17, 2021 by slissner_admin

Survey any group of entrepreneurs and ask, “What are the most challenging aspects of operating your own business?” And one in two will give an answer related to managing their finances.

Whether it’s sourcing the funds to launch or expand your business, guaranteeing profitability during uncertain times, or simply carving out enough time for careful bookkeeping, small business accounting can make or break your business.

To give your company its best chance, look beyond simple bookkeeping and enlist the insights of a CPA who specializes in small business accounting. From tax planning and regulatory compliance to comprehensive financial consultation, our experts explain why successful, intelligent businesses rely on professional accounting services.

CPAs Shine at Navigating the Complete Business Growth Cycle

Why is it never “too late” or “too soon” to outsource your company’s day-to-day financial management to an accountant? Because a certified public accountant is a master of financial planning, artfully equipped to steward your business through each milestone in its growth cycle. For example, consider how an experienced CPA can nimbly guide you through the following watershed moments in any successful business:

The Launch Stage: Turn to a CPA for expert advice when selecting your business structure (e.g., LLC, sole proprietorship, corporation, etc.), introducing accounting
software or bookkeeping best practices, acquiring a new business, or complying with state or federal guidelines for financial operations.
The Growth Stage: Devise a tax plan that pays long-term dividends by maximizing your deductions, avoiding audits, and minimizing your payouts to Uncle Sam, apply for a small business loan to expand your business’s reach, and automate repetitive bookkeeping tasks (like invoicing, profit & loss reporting, and digitizing receipts)—all with an accountant’s guidance.
The Maturity Stage: Even a mature business can benefit from a CPA’s seasoned touch. Established companies trust CPAs to monitor and comply with changes in tax law, navigate external audits and prevent internal fraud, and manage interactions with the IRS.
The Transformation Stage: Franchising your business, merging with a competitor, or divesting yourself of a struggling company? Complex financial decisions require
sophisticated decision-makers. And, financially savvy executives faced with challenging choices know when to call in the big guns. When combining or dissolving intricate assets, entrust a CPA with reconfiguring your company’s financial infrastructure, maintaining tax-efficient operations, and consolidating any accounts or debts.

Now that we’ve surveyed the big picture, let’s zoom in on a few essential services CPAs deliver to small businesses.

Accounting Services to Launch Your Small Business

“I can’t wait to fill out these mounds of government paperwork!” said no business owner ever.

When launching your financial enterprise, you’re going to be bombarded with fiscal decisions that carry long-term consequences. One of your earliest decisions will involve a pesky (but exceedingly consequential) legal requirement: appointing your business structure.

The structure you choose affects not only how you pay your taxes but also your liability, filing obligations, and a cascading slew of state and federal regulations you must follow. To make matters worse, it’s not an easy decision to undo.

Consider this analogy: Only 27% of college graduates work in a field related to the major they declared as 19- and 20-year-old sophomores.

Needless to say, making important decisions at the outset of any endeavor is incredibly challenging. However, unlike your overwhelmed academic advisors, CPAs have the time to meticulously explore your fiscal goals, identifying the financial opportunities that best suit your business’s needs. This assistance not only includes guiding you to make wise decisions about your business structure but also assisting you to apply for state licenses, establishing your EIN, and completing a variety of exciting tasks.

(OK, so we may have exaggerated… just a smidge. Those “exciting” tasks aren’t actually exciting. But, fortunately, performing them will no longer be your sole responsibility. Instead, you’ll be carving out time to focus on the projects you genuinely enjoy—like developing your brand voice, forging lasting connections in your community, and watching your business vision come to life.)

Systemizing a Well-Oiled Recordkeeping Machine

Are you looking for a one-stop-shop to streamline your recordkeeping? Your accounting guru has undoubtedly mastered QuickBooks, the industry standard for delivering customized accounting solutions to simplify your day-to-day financial ops.

Leverage your accountant’s software expertise to monitor invoices, track payroll and other business expenses, digitize receipts, build custom reports, and more. Set up sophisticated interactions with third-party apps like Salesforce, Microsoft Excel, Shopify, and PayPal. Or take things a step further and request that your accountant provide actionable insights based on monthly, quarterly, or annual data. The possibilities are seemingly endless.

Moreover, we’ll let you in on a well-kept industry secret: Successful integration with QuickBooks can mark the end of the launch phase grind and signal the beginning of your company’s growth stage. And, here’s why:

With a QuickBooks pro in your corner, you’ll be able to automate repetitive processes that would otherwise zap your productivity. In the long run, your most valuable asset is time. With the tedious processes running seamlessly in the background, you’ll have the energy and resources to divert your attention to more sophisticated endeavors. Although it may seem a little intimidating at first, you’ll soon be grateful that the days of painstakingly updating spreadsheets are over. We know we are!

Smart Business Owners Know: Tax Season Operates Year-Round

Tax filing deadlines come and go. But savvy business owners know—when it comes to tax season—it’s always game on. That’s because the tiny financial decisions you make throughout the year have BIG consequences when tax time rolls around.

Not to mention, tax codes are complicated and constantly shifting. With the rules of the game forever fluctuating, consider an account your lifeline to the rulebook.

Who doesn’t desire to use their money wisely? A CPA can help you maximize your business deductions, minimize your payouts to the IRS, avoid costly filing errors, and squelch audits. At the bare minimum, a CPA can prepare your annual business taxes to ensure regulatory compliance with the federal government.

But that’s just the bare minimum.

While careful tax preparation is undoubtedly essential—as well as time-saving—year-round tax planning provides the biggest bang for your buck.

Consider the following example:

2020 proved to be a particularly challenging year for your business. As a result, you’re looking to save every eligible penny during the upcoming tax year. So you reach out to a certified public accountant who audits your business for missed opportunities to minimize your tax burden. After pouring over your records, your account makes the following recommendations:

With a few simple tweaks to your home office setup, you’ll now be able to claim the home office deduction. Accordingly, you’ll no longer pay taxes on business expenses related to home office repairs and essential services like high-speed internet to operate your business. And, you’ll also be able to deduct a percentage of your home’s mortgage interest payments and utilities based on the square footage of your office.
By opening an HSA account for your employees and making regular contributions, you can lower your payroll tax liability and push your business into a lower tax bracket. Not to mention, overall employee satisfaction and productivity rise as a result.
Because your business runs on accrual accounting, you’ve been overlooking the opportunity to write off “bad” debts from delinquent customer accounts. In addition to identifying these deductions, your CPA generates an automated report that fires any time a future account meets this criterion.

With the suggested tweaks in place, you easily save thousands of hard-earned tax dollars when filing your 2021 tax returns. Could anything be more rewarding?

Introducing Our Masters of Small Business Accounting

At Steven Lissner & Company, our team of accounting experts has 30+ years of experience in navigating small companies through the complete business growth cycle. Whether you’re launching a new business enterprise, devising a tax plan that maximizes your deductions, or designing streamlined processes that simply day-to-day accounting tasks, our CPAs understand how to meet your company’s unique needs while keeping an eye on the prize: profitability.

With your collaboration, we’ll create a sustainable and scalable business plan that helps your enterprise thrive. By introducing easy-to-use accounting solutions that meet your business at each milestone in its evolution, we ensure that your establishment achieves its full growth potential.

When it comes to planning your taxes, our accountants work year-round to secure your largest refund to date. Using sophisticated tools and keeping our finger on the pulse of tax law ensures that you never miss a profit-saving deduction.

Where day-to-day operations are concerned, our team specializes in detecting realizable opportunities for explosive growth. With your business’s needs at the forefront, we generate bookkeeping solutions that revolutionize your workflow, enhance your cash flow, and increase your most valuable resource: time.

Our small business accounting solutions free up your busy schedule to enjoy performing the tasks you love. Where you once spent hours pouring over payroll or googling how-to instructions for excel, your repetitive processes will operate like a well-oiled machine where they belong: in the background.

Learn how you can jumpstart your productivity today while saving thousands on your end-of- year taxes. Contact one of our devoted tax specialists to schedule a consultation!

8 Money-Saving Hacks for Tax-Savvy Small Business Owners

July 17, 2021 by slissner_admin

After years of internal debate, you’ve finally decided to take the plunge and transform your passion project into a sustainable source of income. Taking this leap of faith means that you now have the freedom to launch your business vision as you see fit, hand-select your team of rockstar employees, and set your own work hours. (Unlimited PTO? Check.)

However, doing so also means assuming a high level of financial risk. During the leaner months, you’re the person who’s on the hook for payroll. Accordingly, meeting all of your legal obligations to your employees can translate into your business going without profit for a few months.

Playing your odds conservatively isn’t the hallmark of a failing operation—even booming businesses prepare for leaner times. Instead, leveraging your money wisely is a indicator of business acumen and a surefire blueprint for success.

Trust us when we say: Tax-savvy small business owners know how to implement the following money-saving hacks. So, roll up your sleeves, and let’s dive in.

1. Write off home office expenses IF you qualify.

If you’re operating your business venture out of your home, then you may qualify to deduct a bevy of associated expenses from your end-of-year taxes. But, certain conditions must apply:

You must regularly and exclusively use the space to conduct business. This requirement means that your office can’t double as a spare room, entertainment space, library, doggy boarding area, or at-home gym. Remember: If the IRS ever audits your business, they’ll want to conduct an in-depth inspection of this space. So, when in doubt, it pays not to take any risks. Best to shove those winter skis in the attic instead.
Your home office must serve as your principal place of business. If your home office doesn’t function as home base for your day-to-day business ops, then forget it. You’ll need to be able to prove that you conduct business here on the regular, whether that means coding websites or meeting in person with prospective clients. Did you meet the criteria to claim the home office deduction? If so, then you can deduct a percentage of expenses related to your mortgage interest payments, utilities, office repairs, and essential services like high-speed internet. To ensure that you adhere to the letter of the law, entrust the guidance of a certified public accountant who can help you calculate your eligible expenses.

2. Invest in your retirement pronto.

Retirement plans don’t just benefit your employees. They allow you to defer paying taxes on any earnings that you invest into traditional retirement plans. The funds therein are only taxed when an employee withdraws them in retirement. However, because you made that initial investment into an eligible account—such as a 401(k) or IRA—that grows as the years tick by, you’re actually earning money. So, invest away and watch your money grow!

For example, individuals under age 50 can invest up to $5,500 per year into their traditional or Roth IRAs. For individuals over age 50, that annual investment value increases to $6,500. However, thanks to the beauty of compounding interest, those investments mature over time, generating a robust source of retirement income.

3. Accurately calculate and deduct business vehicle expenses.

This deduction isn’t for the faint of heart. It requires meticulous attention to detail in your recordkeeping and receipts. Boatloads of them.

If you use a car in an official capacity to complete business activities, you can deduct certain expenses related to its operation. However, for mysterious reasons, vehicles that double as equipment (e.g., forklifts) or private transit (e.g., taxi cabs) don’t qualify. For less mysterious reasons, neither do luxury automobiles. So, save the Maserati for personal use.

Once your vehicle meets these qualifications, you must determine the percentage of the time that you devote its use to business activities. Here’s an important tip: The answer is never 100% of the time. For example, if you use the company car to make a Starbucks run—while essential in our opinion—it doesn’t count.

Also—and this is particularly important for small business owners to know—commuting miles from your home to your business aren’t deductible either. Unfortunately, Congress assumes this to be a baseline cost for any worker vs. a deductible business expense.

From there, decide if you’ll be deducting the standard mileage rate or itemizing the costs to reflect hidden fees (such as monthly parking passes, tolls, etc.). For 2021, the IRS has set the standard mileage rate at 56 cents per US dollar.

4. Receipts, receipts, receipts.

On that note, let’s discuss the importance of saving your receipts and divulge a little-known hack.

According to the IRS, you’re supposed to save any business receipts for up to five years. We hear you. That’s crazy talk. But, annoyingly, creating a paper trail is essential in the event of an IRS audit. The agent assigned to your case will expect you to furnish evidence of home office expenses, mileage, you name it. So why not say goodbye to those little crumpled-up bits of paper and let an app organize the data for you? There are numerous apps on the market with built-in scanning functionality to digitize those receipts.

Conveniently, this discussion provides the perfect segue into our next topic: Quickbooks.

5. Quickbooks to the rescue.

Quickbooks is one such app that enables you to upload and store your receipts with minimum hassle. But, it’s also an ideal tool for running many of the day-to-day financial operations of a small to mid-sized business.

Quickbooks integrates seamlessly with a range of programs from PayPal and Shopify to Amazon Business and Microsoft Excel. Like Salesforce, Quickbooks’ customizability is one of its crucial features, whether it’s displaying data via reporting or generating invoices and processing payroll. But, unlike Salesforce, Quickbooks is easy and intuitive to use.

Likewise, when tax time rolls around, you’ll be grateful that you have it. Simply give your accountant access to your Quickbooks, and watch the magic happen.

If you’re not a technology guru and setting up Quickbooks seems daunting, you need not stress. At Steven Lissner & Company, our accountants provide Quickbooks setup, tutorials, and customized solutions for your business. Enlist a best-in-class accounting whiz to solve your bookkeeping issues and free up more time for the things you love—like interacting with customers.

6. Deduct fees for new (and used) business equipment.

We all know that you can deduct the business expenses incurred for purchasing new equipment, whether it be an updated computer, an industrial-grade freezer, or a company van.

But, did you know that you can also deduct the costs associated with used equipment that you purchased during the tax year? If you weren’t in the know, don’t beat yourself up too badly over it. The IRS amended Section 179 to expand the equipment eligibility requirements within the last five years.

Exactly how much in expenses can you deduct? You can write off the eye-popping full amount of $1,0505,000 in equipment costs. If your enterprise falls into the small business category, this deduction can feel like a much-needed windfall.

7. Don’t be afraid to claim your losses.

By losses, we don’t mean the money you lose during a particularly poor-performing quarter. Instead, we’re talking about certain debts that you’re unlikely ever to collect. Let’s face it: Sometimes customers don’t pay up.

When that occurs, you don’t have to chalk it up simply as a financial loss. Instead, the government allows you to deduct those debts from your yearly earnings. This provision can take some of the sting out of a business deal gone bad.

8. Advertise away!

Marketing costs to enhance your business’s profitability margins are fully deductible—so advertise away! Hire a UX designer to give your website a user-friendly interface. Employ an SEO expert to fine-tune your content strategy, enriching your site with the keyword-rich language that search engines love. Divert some funds to social media marketing, video production, and expanding your online presence.

In capable hands, advertising costs are a win-win. They bring you business revenue and they save you money on end-of-year taxes.

The Secret Sauce of Tax Savings

Just as advertising is better off left in the hands of professionals, so too is filing your taxes. Almost any cook can make brisket, but only a handful of cooks know the secret sauce recipe that makes customers queue up for miles around.

A skilled certified public accountant is like a Michelin star chef. They possess all the ingredients needed to whip up a winning financial strategy. Whether you’re a small business owner or a late-career CFO, hiring a tax accountant to maximize your returns is always a good idea.

With an industry-leading tax expert in your corner, you’ll be able to identify unique solutions for your business and devise a blueprint for your financial future. You’ll receive human support for all of your tax questions, instead of relying on automated algorithms and faq sections. And, you’ll be prepared when chaos descends in the form of an IRS audit. Scratch that. What would otherwise seem like chaos will now proceed like orderly, predictable clockwork.

At Steven Lissner & Company, our certified public accountants possess the skills you need to help your small business thrive. Contact our tax advocates today to plan for your future tomorrow.