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The Main Street Lending Program & The Year Of Opportunity

The world is in chaos and the US government is doing everything it can to keep our economy stable.  Hundreds of Billions of dollars have been spent in the last couple of months with what seems to be little to no oversight.

With many small businesses still struggling to survive during this pandemic, there are still a lot of opportunities to be had.

As part of the CARES Act, the Federal Treasury has started a lending program that has been in the works for months now.  Very few people have heard about the Main Street Lending Program as it has been overshadowed by the Paycheck Protection Program and the Economic Injury Disaster Assistance Loan. (Click HERE to join a free Webinar we will be hosting to provide a more detailed overview of the Main Street Lending Program)

The Federal Treasury has finally opened up this program in late June and eligible businesses will soon be able to apply for these loans until it closes on September 30th or the funds dry up.

Some businesses will use this to bridge themselves until we get back to what we hope is “normal”.  Others will use this loan as a means to push forward and upward.  There is still a lot of opportunity to make money in what seems to be chaos and this program will be the fire to fuel it.

Here are the highlights of the Main Street Lending Program:

  • There are 3 different types of loans, each with their own unique purpose,
  • Minimum Loan within the program is $250,000,
  • Maximum loan is 4 to 6 times the business’ 2019 EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) less current debt on the books, OR $35 million ($300M for the MSELP),
  • 5-year loan, no principal payments for first 2 years, interest-only starting in year 2, 15% of principal due at the end of years 3 and 4, 70% remaining balance due at the end of year 5,
  • Interest rate is 3% plus LIBOR (currently around 0.3%; last year around 2.4%).

Businesses who can take the most opportunity from these loans are those that require bridge loans, mezzanine financing, or secondary market financing.  In addition, you may be able to refinance high-interest debt using this program.

This is a great cash-flow tool since no payments are due for the first 12 months and even after that, only interest payments are due for the second 12 months.  The issue will be the large principal payments due after years 3, 4, and 5.

Some industries that could easily use this as a tool to reduce financing fees and grow their business are house flippers, who oftentimes use hard money loans at 18% interest rates and 3% closing costs or used car dealers who use secondary market financing with high fees and interest rates.  Also, being able to have the cash on hand to make quick business decisions provides a competitive advantage.

Those businesses with high-interest rate loans can even refinance those loans under the Main Street Lending Program to stabilize themselves and not be hostage to these predatory lending practices.

Our firm will be hosting a free webinar to discuss how the Main Street Lending Program works, how to maximize your business’ loan, and to cover the obstacles ahead.  Click the button below to register.

 

The Below Table From The Federal Treasury Outlines Each Of The 3 Lending Programs

Main-Street-Lending-Program-Details-Overview-CPA-Charlotte-NC

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CARES Act For Small Businesses – Stimulus Program

As you have heard, the new CARES Act was passed last Friday and there is a lot of new legislation out there on how small businesses impacted by COVID-19 can benefit from it.  Below is a summary of the programs small businesses can take advantage of to stay afloat during these uncertain times.

Paycheck Protection Program (PPP)
This is the program that people are calling, the “free money loan”.  It’s not quite free, but there are mechanisms in place to allow for a portion of the loan to be forgivable under the right conditions.

  • This loan must be obtained from a bank   If the business has an existing relationship with a bank, this would be the best point of contact to apply for funding.  Most small businesses will qualify for this loan, as they have less than 500 employees.  The business must have been in operations prior to February 15, 2020.
  • Maximum Funding – Small businesses are eligible for up to 4 months of qualified expenses (payroll expenses, mortgage payments, rent payments, utilities and payments on any other debt obligations).  The maximum funding is 250% of the average monthly payroll, prior to COVID-19.  No loan may exceed $10 million.
  • Loan Forgiveness – Only 8 weeks of payroll, loan interest, rent payments, and utilities qualify for the loan forgiveness.  The entire loan is not necessarily forgivable.  We are suggesting that our clients apply for 4 months of funding, but it is important that they understand that only 8 weeks of qualified expenses are forgivable.  The rest will be structured into a loan at a 4% interest rate.  The loan forgiveness is also based on a calculation of employment stabilization.  If you did not bring your company back to its pre-COVID-19 employment structure, then the amount of loan forgiveness decreases.

Economic Injury Disaster Loan (EIDL)

  • This is the SBA’s Disaster Assistance Loan that has been around for decades.  The new stimulus bill added a few boosters to the program to help small businesses survive through this pandemic.
  • Banks cannot help with this loan.  This loan must be applied for either independently, or through a professional, such as a CPA or law firm.
  • Loan of up to $2 Million at a 3.75% interest rate – This loan is designed to cover working capital and other ordinary costs of a business.  It is not forgivable, but the loan is designed to cover more types of expenses than the PPP Loan discussed above.  The payment terms are up to 30 years, but the SBA will determine the period the business should be able to pay it back over.
  • Up To $10,000 Grant – There is a provision in the stimulus package that allows for up to a $10,000 advance on the EIDL that is not required to be paid back.  The $10,000 is to be provided within 3 days of an SBA agent initiating the application process.  The intention of this grant is to allow small businesses to cover payroll costs, debt obligations, and increased cost of supplies.

Loan Payment Deferrals

  • Any small business impacted by COVID-19 with a loan backed by the Federal Government (any FDIC insured banks) should be allow a 90-day deferral period on small business loans.  If a small business has an SBA Loan, the deferral period is 6-12 months.  All a business needs to do is call their bank and ask for a deferral to start the process.

Payroll Tax Credits and Payroll Tax Deferrals

  • Lastly, the new stimulus package does call for the ability to obtain tax credits on the employer’s portion of payroll taxes and even to be able to defer paying the payroll taxes, however, this is not available for businesses who obtain loans from the programs above.  The payroll credits are not that lucrative in comparison, but were worth mentioning.
  • The message we are sending to our clients is that they should apply for both the Paycheck Protection Program and the Economic Injury Disaster Loan.  While the EIDL covers more business expenses, the PPP allows the opportunity for free money.

Call LB&J today if you have any questions or would like to see how you can qualify for any of the above programs and potentially get free money!

Get Cares Act Consultation Today!

Thank you for your time and let’s all stay optimistic!

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SBA Opens Disaster Financial Assistance For Small Businesses

As a follow-up from our article regarding the SBA announcement to preparing to provide disaster financial assistance to small businesses, we recently received word that the SBA will be training their staff on Thursday on how to process the Disaster Loan Assistance applications that will be pouring in over the next several weeks.  Prior to the coronavirus, the SBA would typically take 2-3 weeks to process a Disaster Assistance Loan.  With all of the businesses impacted by the coronavirus, hundreds of thousands of applicants will be flooding the SBA’s website to apply for disaster assistance.  We would not be surprised if the SBA’s server crashes due to the extreme volume of applicants; the same thing happened when Obamacare was first released.

The SBA is training their staff to handle the anticipated influx of applications, however, it is not always first come first serve.  Loan processing is a game of momentum, loans that can be issued more easily will most likely be processed sooner.  Like any loan, the loan process will require a lot of documentation to prove the need and to substantiate the requested loan amount.  If you are prepared and organized, your loan will most likely go through more easily than the person who is disorganized and unprepared.  Also, the longer it takes you to respond to the SBA’s request for additional information, the less momentum you have as the SBA loan processor will have more momentum with other businesses applicants.

The SBA also announced that based on certain criteria, these loans have the ability to be completely forgiven, making this essentially free money as long as you meet specific qualifications. One of these qualifications is that your business keep employees on payroll until June, 30th 2020. To learn more about the other qualifications, a certified public accountant or someone able to assist your business in these matters will need to review the specific instances based on your business needs.

With our help, we can assist in making the process a lot cleaner to make sure you receive the financial assistance your business needs to stay afloat. If you are a small business that is concerned with being able to maintain the financial ability to stay afloat throughout this pandemic, contact LB&J today so we can walk you through ways we might be able to help.

In North Carolina, the Disaster Financial Assistance program is now open (see image below) as with many other states, so we’d recommend acting soon for the reasons addressed above.

SBA-Opens-Disaster-Loan-Assistance

 

To learn more and apply, visit our Disaster Assistance page

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AICPA Update – No Tax Extension But Some Tax Payment Delays Offered

AICPA Update – March 18, 2020 — Volume 27 No. 15

In a press conference on Tuesday, Treasury Secretary Steven Mnuchin announced that individuals and corporations can delay their tax payments for 90 days due to the coronavirus pandemic. Individuals can defer up to $1 million in payments for 90 days from the April 15 deadline. Corporations can defer up to $10 million in payments for 90 days. During that time, the IRS will not charge interest or penalties.

As of this writing, the IRS had not yet issued formal guidance on the policy. Mnuchin’s announcement did not delay the April 15 filing deadline.

The delay, as announced, affects 2019 federal income taxes only; Mnuchin did not address 2020 estimated tax payments, payroll taxes, or estate and gift taxes. For state tax developments related to the coronavirus outbreak, see the AICPA list here.

The relief came four days after President Donald Trump had declared the coronavirus pandemic a national emergency. Under Sec. 7508A, the declaration of an emergency under the Robert T. Stafford Disaster Relief and Emergency Assistance Act, P.L. 100-707, allows the IRS to delay certain tax filing and payment deadlines.

As early as last Tuesday, members of Congress had begun calling for a delay in the April 15 deadline, and last Wednesday the AICPA called for Treasury and the IRS to provide relief to all taxpayers.

AICPA Update – March 16, 2020 — Volume 27 No. 14

As a follow-up from our SBA announcement yesterday, regarding the SBA potentially extending financial aid to small businesses nationwide, The AICPA sent us an update regarding the likelihood of extending the tax deadline by up to 90 days. Below is the exact messaging from the AICPA. At LB&J we are committed to helping small businesses stay on top of these changes, so please stay tuned to updates regarding any confirmed tax extension along with the financial assistance the SBA is considering and other ways to mitigate the impact to your small business during this challenging time.

AICPA Update – March 15, 2020 — Volume 27 No. 13

Yesterday, we told you about our efforts and conversations with the Treasury Department and the IRS to secure filing and payment relief for taxpayers and tax preparers in light of the uncertainty and challenges caused by the spread of the Coronavirus (COVID-19) pandemic.

Based upon our conversations, we anticipate that Treasury and the IRS will announce this week an extension of the April 15th deadline by as much as 90 days, and a waiver of penalties and interest for most taxpayers.

Additionally, Treasury and the IRS are aware of the major deadline for businesses tomorrow, March 16th, and the challenges facing taxpayers and tax preparers in meeting that deadline.  They have indicated that they would be generous in determining reasonable cause abatement of any penalties for taxpayers and tax preparers unable to file in a timely manner.

We will continue to keep you updated as we receive more information.

You can also visit our AICPA Coronavirus Resource Center for frequent updates and resources to help you manage clients’ needs and your business at this time.

 

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LB&J Business Update – Corona Virus (COVID-19)

LB&J Business Update – Updated March 31st, 2020

CARES Act is now official and the application process is available! Learn more about the differences between the different loans and potential free money opportunities available to small businesses by clicking here

LB&J Business Update – Updated March 23th, 2020

Apply now for the SBA Disaster Assistance Loan program for your small business.  The SBA is now taking applications for up to $2 million loans at 3.75% interest or completely forgiving the loan if you keep on a certain number of employees until 6/30 and meet a number of other criteria. Click here to learn more.

LB&J Certified Public Accountants is ready to help!  Our focus is on small businesses and strategy.  We assist small businesses in getting the funds needed to keep their business afloat through the SBA Disaster Assistance Program. Our CPAs have over 50 years of experience and are ready to help you and your business. Apply now.

LB&J Business Update – Updated March 17th, 2020

For more information regarding the SBA business loans for businesses impacted by the Coronavirus, click here. Also note the below AICPA update below, indicating that the tax deadline is likely to be extended by 90 days due to the impact of the coronavirus, (for more details click here). We will keep you updated once we know more about both the SBA business loans or confirmation regarding the tax deadline extension.

AICPA Update – March 15, 2020 — Volume 27 No. 13

Yesterday, we told you about our efforts and conversations with the Treasury Department and the IRS to secure filing and payment relief for taxpayers and tax preparers in light of the uncertainty and challenges caused by the spread of the Coronavirus (COVID-19) pandemic.

Based upon our conversations, we anticipate that Treasury and the IRS will announce this week an extension of the April 15th deadline by as much as 90 days, and a waiver of penalties and interest for most taxpayers.

Additionally, Treasury and the IRS are aware of the major deadline for businesses tomorrow, March 16th, and the challenges facing taxpayers and tax preparers in meeting that deadline.  They have indicated that they would be generous in determining reasonable cause abatement of any penalties for taxpayers and tax preparers unable to file in a timely manner.

We will continue to keep you updated as we receive more information.

You can also visit our AICPA Coronavirus Resource Center for frequent updates and resources to help you manage clients’ needs and your business at this time.

LB&J Business Update – Updated March 16th, 2020

Dear Clients, Visitors, Family & Friends

Though we are taking extreme precautions to mitigate any risks of the pandemic caused by COVID-19 for our clients and staff, we have still received many questions and wished to proactively address how we are responding.  As of this writing:

  • We are still open for business at our physical office location.
  • We have implemented the CDC guidelines of ‘social distancing’ and zero-touch in-person meetings.
  • Business personnel have been busy with extra cleanings of the office and other high-touch areas.
  • We will immediately implement any new CDC guidelines as this pandemic unfolds.

There are simple things the CDC recommends you do to help keep yourself and others healthy while visiting our location:

  • Wash your hands often with soap and water for at least 20 seconds, especially after blowing your nose, coughing, or sneezing; going to the bathroom; and before eating or preparing food.
  • Avoid touching your eyes, nose, and mouth with unwashed hands.
  • Stay home when you are sick.
  • Cover your cough or sneeze with a tissue, then throw the tissue in the trash.

We will continue to monitor the evolving COVID-19 situation and make every attempt to keep you informed. Emergency notifications to staff and clients will be conducted through our emergency communication channels including text notifications, telephone calls, and communicated directly to customers.

For updated information on this rapidly changing situation, please visit the CDC website here: http://bit.ly/39TQIyg

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Top Things To Know About The SBA’s Disaster Assistance Program for Businesses Impacted By The Coronavirus

Update 3.19.20 – SBA Officially Opens Disaster Assistance Program For Small Businesses with the potential of getting the loan completely forgiven depending upon specific circumstances with your business. Learn more by clicking here

At LB&J CPA, we strive to help provide the most relevant business preparation, strategic accounting, proactive tax minimization and financial planning for small businesses. With the Coronavirus likely to have a rather big impact on many small businesses, we wanted to make sure people were aware of the ways the Government plans to help aid small businesses negatively affected by the virus and how to take action on any of this assistance.

For those small businesses impacted by the Coronavirus, the SBA (U.S. Small Business Association) will be accepting applications for low-interest rate loans to help with working capital.  When the program is released, the website to apply for SBA Disaster Assistance is https://www.sba.gov/funding-programs/disaster-assistance.

We can all see that the country is starting to shut schools down for a few weeks as the Coronavirus is spreading.  Doctors have indicated that the Coronavirus may fizzle out in the Summer, which indicates that businesses may be impacted for several months, not weeks.

Small businesses will be significantly impacted by this as people will be spending less.  The SBA will be accepting applications under their Disaster Assistance Program to help businesses with short-term working capital needs.  The SBA will be lending up to $2 Million Dollars for those businesses impacted by the Coronavirus at an interest rate of 3.75%.  The payback period may be as long as 30-years.

It is important to understand that the funds are for working capital only and will be “need-based”.  As such, it is important that any business looking to apply for the SBA’s Disaster Assistance get their affairs in order to prove that the business has a need.  What does this mean?  Businesses will have to prove that their business is suffering by providing documents such as Sales Reports, Year-to-Date financial statements, and past income tax returns.  So if you are behind on your accounting or filing your tax returns, get them completed and up to date immediately.

Because of the flood of applications that will be going into the SBA for financial assistance, it is important that businesses be proactive and get their affairs in order so not only are they the first ones in line to request funds, but also they have easy access to all of the necessary documents to make this process seamless.

How much a business needs in financial assistance is not always easy to calculate, however, if the economy does not get back on track until the Summer, a business may need to request 4 to 6 months of operating expenses plus enough funds for the owner(s) to pay their personal bills.  A business is better off asking for more money than needed, rather than less.

In the meantime, businesses and business owners should assess how the Coronavirus has impacted them thus far and make appropriate steps to reduce their financial risks by decreasing their monthly expenses.  Businesses should not automatically expect the SBA to give them financial assistance.  They should hope for the best, but be prepared for the worst.  Some of the things they can do are:

  • Reduce Payroll – Having employees work a few hours less a day if possible will save over the long-run.
  • Reduce unnecessary spending – Of course all business expenses tend to be necessary, but there are always those expenses that you can turn off for a few months and turn back on later.  Advertising expenses may be an example.  If no one is going to spend money because they are staying at home, businesses may consider reducing their advertising budgets for a few months.  Some businesses spend up to 25% of their revenues on advertising.
  • Zero % Interest on Credit Card – Having debt on a business is never a good thing, but if a business can convert expenses to a zero percent credit card to hedge themselves for the next 6 months, it may be worth considering.
  • Hold less inventory – If a business sells a product, holding less inventory may be a good way to reduce expenses for the short-term. At the same time, with shipments from Europe and China at a halt, getting access to products may be difficult.
  • Close on your slowest days – If a business has days that are typically slower than other days, closing the business for those days may be an option. The business would need to make sure they inform customers that they are closed for the day and not out of business.

Each business is unique to another so there is no instruction book on what to do in case of a crisis.  Business owners impacted by the Coronavirus are certainly stressed.  We can only hope that the SBA’s Disaster Assistance Program will act quickly to provide the necessary aid to America’s small businesses.

 

 

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Flipping the Script on Expenses for Real Estate Investors

By Eric Little, CPA – 

If you’re trying to make money by buying, improving, and reselling homes—known colloquially as house flipping—it pays to pay attention to taxes. A lot of things go into whether you can make a profit flipping, and not all of them are predictable, but taxation often is. If you know how real estate business taxes work, you can make plans that minimize your tax burden and maximize your profit.

Your Properties Are Considered ‘Inventory’ For Tax Purposes

The IRS considers most flippers real estate dealers, because, as Nolo explains, buying and improving homes for sale is their usual business. As small businesses, real estate dealers must worry about business taxation on their inventory—the real estate they plan to sell. The IRS considers homes inventory for this kind of business, just like a seller of orange juice or t-shirts would count those items as inventory when doing their taxes.

This rule used to cause problems for real estate dealers, who, under IRS rules, couldn’t deduct their high-cost home purchases as an expense until they were sold. If they made a big purchase right before tax time, too bad; no deduction until the sale. That situation can make budgets very tight for a smaller business.

New Rules for High-Cost Inventory Change The Game For Small Businesses

However, in late 2017, the Tax Cuts and Jobs Act changed the rules on that, raising the threshold for using the accrual method from $1 million (for an inventory-based business) to an average of $25 million over the prior few years.

That new rule instantly changes things for small house flippers, who are unlikely to go over $25 million in gross receipts. Now, flippers who are below the threshold can deduct inventory using (in relevant part) “the taxpayer’s method of accounting.”

Small business accounting firm Catching Clouds says this seems to mean treating your inventory/properties consistently with the rest of your accounting. Thus, at least in theory, you can use any method of accounting you want, including one that allows you to deduct the price of the real estate after you pay it, as long as you follow it consistently.

Many CPAs would advise caution here. The IRS reserves the right to challenge any taxpayer’s accounting methods, and if you get it wrong, you may be charged back taxes and penalties. Before taking full advantage of this opportunity, you may wish to talk to an experienced small business CPA with experience in real estate investing.

Talk to our Charlotte CPAs today

New tax laws like the increased threshold for accrual-based accounting means that your financial strategy may need to shift significantly. If you are a real estate investor or have passive real-estate investments, this new change could potentially impact your business.

Our tax & financial planning professionals at LBJ CPAs have the experience, knowledge and creativity needed to stay ahead of all tax code changes and to help keep the regulatory burden off our client’s shoulders. Call our office today and schedule your free consultation with LBJ CPAs today to learn more about how your real estate portfolio could be affected by the new IRS inventory reporting methods.

 

 

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The Underappreciated Magic of Qualified Small Business Stock

By Eric Little, CPA – 

Money is a common stumbling block for startup businesses. Business leaders need it to hire employees, rent an office and eventually sell their products. But startups, almost by definition, don’t have a lot of extra cash around. That slows their growth—and therefore, their profitability.

Attracting “angel investors” can be tough, which is why startups trying to raise capital should consider offering a little-known but attractive benefit: Qualified small business stock. Under the right circumstances, investors in a small business can cash out their QSBS completely tax-free, even if they had big capital gains. This makes QSBS a fantastic reward for ground-floor investors who stick with a company throughout its climb to success.

How Qualified Small Business Stock Works

Qualified small business stock is stock class issued by a C corporation (not an S corporation or any other business form) from the United States.

As the Internal Revenue Code says, the stock must be original-issue, not resold, which is why this is a great mechanism for early-stage investors. The corporation must not have more than $50 million in assets at the time the stock is issued—also not likely to be a problem for many startups.

During most or all of the time the investor holds the stock, the business must remain a C corporation, and at least 80% of the corporation’s assets must be used in the active conduct of a qualified business*, as defined by the IRS:

  • Every trade or business of such entity is the active conduct of a qualified business within an empowerment zone
  • At least 50 percent of the total gross income of such entity is derived from the active conduct of such business
  • A substantial portion of the use of the tangible property of such entity (whether owned or leased) is within an empowerment zone
  • A substantial portion of the intangible property of such entity is used in the active conduct of any such business
  • A substantial portion of the services performed for such entity by its employees are performed in an empowerment zone
  • At least 35 percent of its employees are residents of an empowerment zone
  • Less than 5 percent of the average of the aggregate unadjusted bases of the property of such entity is attributable to collectibles (as defined in section 408(m)(2)) other than collectibles that are held primarily for sale to customers in the ordinary course of such business
  • Less than 5 percent of the average of the aggregate unadjusted bases of the property of such entity is attributable to nonqualified financial property.

*IRS Qualified Business list courtesy of law.cornell.edu

Deciding what’s a qualified business can get complicated, and we welcome inquiries from business leaders about it, but a technology startup is likely to be a qualifying business. Once all these classifications are met, the real advantage of the QSBS goes to the medium-term holder of the stock.

If the investor holds the stock for at least five years and it goes up in value, the tax code exempts that increase from the capital gains tax!

This is assuming that the investment was made after September 28, 2010, which is likely for current startups.

States may still charge capital gains taxes, so QSBS doesn’t make a windfall from a stock sale completely tax-free. But it does reduce the seller’s tax burden very substantially—and that’s a great enticement for people with money to invest. For startups, incorporating as a C-corporation can be a great way to finance the rapid growth they need to get to market and—eventually—realize a great profit on their ideas.

Talk to our Charlotte CPAs today

Rule updates like the QSBS mean that your financial strategy may shift significantly, to keep up with the best opportunity for your money. Our tax and financial planning professionals at LBJ CPAs have the experience and creativity needed to stay ahead of all tax code changes and to help keep the regulatory burden off our client’s shoulders. Call our office today and schedule your free consultation with LBJ CPAs today to learn more about QSBS and other forms of early startup financing.

 

 

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Year-End Planning Tips

Here are a few things you can do before the end of the year to keep your income taxes as low as possible.

  1. Due to the new tax legislation, many people are taking the new standard deduction.  If you are still itemizing, you can still do the following to help reduce your tax bill:
    1. Pay your property taxes.
      Real estate taxes and vehicle taxes are tax deductible. If your property tax bill is due early next year, you might want to pay it now and take the deduction.  Please remember that the new cap on state and local tax deductions are $10,000 per year.
    2. Donate to charity. It pays to be charitable, especially at the end of the year. Donating cash is always a good idea (fully deductible up to 60% of your adjusted gross income). You can also donate household goods, clothing, and other items. Under the Pension Protection Act, you will need a written receipt for all charitable donations, and donated items must be in good or better condition. You can also deduct the cost of driving for charity at 14 cents per mile. You cannot take a charity deduction, however, for the value of your time or services when volunteering.
    3. Pay doctor bills, insurance premiums, buy eyeglasses, or stock up on prescription medications during the year. You can take a deduction for medical expenses exceeding 7.5% of your adjusted gross income.
  2. Tax Harvesting. To offset capital gains, investors can lower their capital gains taxes by selling securities that have lost money. Losses offset gains dollar for dollar, and losses in excess of your gains can be deducted, up to $3,000 per year.
  3. Max out your retirement savings. Contributions to a retirement plan reduce your taxable income.
  4. Max out your Health Savings Account (HSA). If you have a Health Savings Account, make sure you are maxing it out for 2019. HSAs work similar to IRAs, you can make contributions towards them up through April 15th, 2020 and have contributions retroactively applied to your 2019 tax return.
  5. Boost business expenses. Business owners and independent contractors can buy office supplies, invest in new equipment, or pay bonuses to their employees. They should also review their retirement plans or decide about setting up a retirement plan. Many retirement plans need to be established by the end of the year if owners want to make tax-deductible contributions for the year. You will want to review what constitutes a legitimate business expense just to make sure it will be tax-deductible.
  6. 20% qualified business income deduction. Sec 199A provides for a 20% deduction with respect to “qualified business income” and certain other types of income. The deduction may be taken by individuals, estates, and trusts. The deduction for qualified business income is set to expire for tax year beginning after Dec 31, 2025.
  7. Sole-Proprietors should evaluate becoming an S-Corporation.  Those who are self-employed, taxed as sole-proprietors should consider whether it makes sense for their business to be taxed as an S-Corporation.  S-Corporations can provide considerable tax relief under the right conditions.
  8. Organize your financial records. Good record-keeping can really pay off at tax time. Not only will it make your tax preparation easier and faster, but you might uncover enough tax deductions to be able to itemize. More importantly, the IRS will require receipts and other records in the event of an audit. Business owners should be using accounting software such as Peachtree, QuickBooks, or Microsoft Office Accounting to ensure that all their income and expenses are recorded properly. Individual taxpayers may want to use Microsoft Money or Intuit’s Quicken to keep track of their personal spending. As an added bonus, these programs provide reports that summarize your tax deductions for faster tax preparation.

If there is anything we can help you with, please feel free to let us know.

Very truly yours,


LB&J Certified Public Accountants

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Saved Client $35,000 In Taxes

We had a business client who would do his bookkeeping internally with little oversight.  He had hired a new office manager to do the books and did not review this person’s work.  The office manager incorrectly reported $90,000 of bank transfers as income and after we found the error, we amend the client’s tax returns for a $35,000 refund.

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