CPA Blog

How can your business make the most of the cloud?

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Published: Monday, 24 October 2016 09:30

Written by Phillip Strickler, CPA.CITP

Like many companies, yours probably stores at least some of its business files, documents and information in “the cloud.” This is the widely used term referring to the seemingly infinite data storage capacity of the Internet.

Using the cloud generally means lower IT costs, because you don’t have to deploy a lot of expensive hardware and software on-site and it’s scalable — in other words, you can easily expand or diminish your data storage capabilities as necessary. Most cloud services also feature automatic backups and updates.

But these inherently great features don’t guarantee you’ll get a good return on investment. To make the most of the cloud, you’ll need to identify and follow some best practices. Here are two to consider.

A carefully vetted provider

Moving from on-premises, server-based data storage to cloud-based data storage requires a different mindset. You’ll be unable to physically look at and touch a server box and say, “That’s where my data is stored.”

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What the self-employed need to know about employment taxes

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Published: Monday, 24 October 2016 08:58

Written by Phillip Strickler, CPA.CITP

In addition to income tax, you must pay Social Security and Medicare taxes on earned income, such as salary and self-employment income. The 12.4% Social Security tax applies only up to the Social Security wage base of $118,500 for 2016. All earned income is subject to the 2.9% Medicare tax.

The taxes are split equally between the employee and the employer. But if you’re self-employed, you pay both the employee and employer portions of these taxes on your self-employment income.

Additional 0.9% Medicare tax

Another employment tax that higher-income taxpayers must be aware of is the additional 0.9% Medicare tax. It applies to FICA wages and net self-employment income exceeding $200,000 per year ($250,000 for married filing jointly and $125,000 for married filing separately).

If your wages or self-employment income varies significantly from year to year or you’re close to the threshold for triggering the additional Medicare tax, income timing strategies may help you avoid or minimize it. For example, as a self-employed taxpayer, you may have flexibility on when you purchase new equipment or invoice customers. If your self-employment income is from a part-time activity and you’re also an employee elsewhere, perhaps you can time with your employer when you receive a bonus.

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Are you timing business income and expenses to your tax advantage?

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Published: Wednesday, 19 October 2016 09:12

Written by Phillip Strickler, CPA.CITP

Typically, it’s better to defer tax. One way is through controlling when your business recognizes income and incurs deductible expenses. Here are two timing strategies that can help businesses do this:

1. Defer income to next year. If your business uses the cash method of accounting, you can defer billing for your products or services. Or, if you use the accrual method, you can delay shipping products or delivering services.
2. Accelerate deductible expenses into the current year. If you’re a cash-basis taxpayer, you may make a state estimated tax payment before Dec. 31, so you can deduct it this year rather than next. Both cash- and accrual-basis taxpayers can charge expenses on a credit card and deduct them in the year charged, regardless of when the credit card bill is paid.

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Business owners, help your estate by gifting company stock

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Published: Monday, 10 October 2016 09:49

Written by Phillip Strickler, CPA.CITP

Everyone needs a solid estate plan to distribute assets according to their wishes and benefit their heirs. But this necessity is especially keen for business owners, many of whom have spent years working hard to build up the values of their companies.

If you can relate to this statement, one effective way to reduce estate taxes is to limit the amount of appreciation in your estate — and your company may provide just the ticket for doing so.

Why appreciation?

You’ll save the most in estate taxes by giving away assets with the highest probability of future appreciation. Why? Because gifting these assets today will keep future appreciation on those assets out of your taxable estate. Thus, there may be no better gift than your company stock, which could be the most rapidly appreciating asset you own.

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