You’ve done it! You navigated the application for a loan under the Payroll Protection Program (PPP), you’ve gotten your loan and are even well along the way to substantiating that all or a portion can be forgiven. All is right with the world, so it seems. Perhaps not ALL.
Exit Planning – It might not be what you think
There’s a sign outside our office that lets the public know that our Firm assists in exit planning. Unfortunately it seems that a lot of people think this is a plan to exit the world of the living. Not so.
A good exit plan asks and answers all the business, personal, financial, legal and tax questions involved in transitioning a privately owned business. It includes contingencies for illness, burnout, divorce and death. Its purpose is to maximize the value of the business at the time of exit, while minimizing taxes and ensuring the owner the ability to accomplish all of his or her personal and financial goals in the process. When you have an exit plan, you are able to control how and when you exit (the business). Please contact Michael Reynolds for more information on exit planning.
As accountants and advisors we are often asked by small business owners as to the best method to raise capital. The chart below seeks to provide some insight into various common methods for raising capital for small businesses.
Please note methods, business types, amounts raised and the criteria indicated below are generalizations for typical situations common in business. However, each method can theoretically be applied to any business type and amounts raised could be any amount depending on the financial situation of the entrepreneur.
By Douglas S. Stanger, Esq. Shareholder of the Firm of Flaster/Greenberg PC and on the Panel of Trustees of the Department of Justice.
While bankruptcies are generally down in most areas of the country, not here in Atlantic County. With many closed casinos and eight thousand foreclosures looming, individuals and businesses have been under pressure. It is expected that over the next few years individuals and businesses will be looking to re-organize or simply rid themselves of debt and obtain the “fresh start” a bankruptcy can provide. Bankruptcy is one strategy among many used to assist those in financial distress. This article will give a brief review of the bankruptcy alternatives. There are generally three statutory bankruptcy schemes known as Chapter 7, Chapter 11 or Chapter 13.
Under current law, most employees making $23,660 or less per year automatically qualify for overtime after 40 hours worked per week. The new rule recently issued by the U.S. Department of Labor (DOL) would raise that threshold to $47,476, effective December 1, 2016.
The impact of this new regulation will vary amongst businesses. It is important for every employer to assess the impact of these regulations now and to implement any changes that may be deemed necessary for compliance purposes in a way that is most cost effective and beneficial to their business.
As always, we are happy to answer any questions you may have regarding this tax matter.
I am opening a new business that will be operating as a partnership. How do I draw a paycheck?
~ Carrie Gill
You don’t. Partners, and members of LLCs taxed as partnerships, are considered to be self-employed, not employees when performing services for the partnership. The payments that a partner receives for services to a partnership are generally referred to as guaranteed payments. While guaranteed payments are taxable to the partner, these payments are not considered to be pay to an employee. As such, there will not be any withholding tax through payroll deductions. To avoid a tax shortfall when your tax return is filed, it is important to plan for these taxes, most commonly by making estimated tax payments. The partner’s allocable share of net income of the business and the guaranteed payments for services are reported to the partner annually on a Form k-1 generated by the business. The partner will be subject to both income tax and self-employment tax (Social Security and Medicare taxes) on his/her share of the “self-employment income” from the business. Partners can also receive distributions of capital (their investment) as a result of their ownership interest in the partnership, which is often a tax-free return of post-tax items including their investment and allocable earnings.
By: Michael Salad
There are numerous reasons why owners should form business entities. One of the most common questions that arise is what type of business entity a business owner should form. Many business owners wish to form a limited liability company (“LLC”). However, a subchapter S corporation (“S Corp”) provides several tax advantages that are unavailable to LLCs.
First, formation of an S Corp allows shareholders to reduce their self-employment tax liability. Self-employment taxes are based upon an individual’s self-employment income for the year. Self-employment tax consists of old-age, survivors, and disability insurance (“OASDI”) and hospital insurance.
When we think of business performance consulting or business financial consulting, we may think of these services as appropriate for struggling or underperforming businesses. In our years of consulting, that is not the typical situation. While we work with some businesses facing temporary challenges, we most often provide services to high performing companies which are striving to reach the next level. The business owner may feel that despite good performance, if some adjustments were made to the business strategy then the business could grow or become more profitable. Maybe after years of solid performance the business has plateaued and the owners would like some fresh ideas. Other owners set new goals to expand, and they aren’t exactly sure how they will achieve them.