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Michael J. Kessler, CPA https://longisland-accountant.com Thu, 19 Dec 2019 23:15:37 +0000 en-US hourly 1 https://wordpress.org/?v=5.3.2 What Success Looks Like In Reality For Long Island and Stamford Businesses https://longisland-accountant.com/what-success-looks-like-in-reality-for-long-island-and-stamford-businesses/ Wed, 05 Dec 2018 13:36:37 +0000 https://longisland-accountant.com/what-success-looks-like-in-reality-for-long-island-and-stamford-businesses/ Lots of email responses and activity were prompted by last week’s note on the new 20% deduction for pass-through entities (if you didn’t get it or missed it, shoot me a note by clicking the email button at the top of the page and I’ll forward it along), and we’re knee-deep in the year-end moves […]

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Lots of email responses and activity were prompted by last week’s note on the new 20% deduction for pass-through entities (if you didn’t get it or missed it, shoot me a note by clicking the email button at the top of the page and I’ll forward it along), and we’re knee-deep in the year-end moves that this final month of the year always brings.

I’ll have some generalized thoughts for you on the kind of year-end moves that might make sense for any smart business next week, but in the meantime, here’s a thought:

If your revenues, expenses, structures or results changed in a significant way this year, shoot me an email through that email button at the top of the page. Or give us a call: (516) 449-2852 … we might have some specific tricks up our sleeves that can make a real difference in the next few weeks to add more to your bottom-bottom line.

But I want to change the pace here a little bit this week.

I’ve been coming at you hard with expense-, insurance-, and tax-related thoughts over the past month, so I wanted to take a moment and use this tiny little platform to lift your vision a little, especially this month.

Because I bet your eyes would be opened if you sat with me in my office sometime, and watched the procession of “successful” and “struggling” business owners from Long Island and Stamford meeting with me and my staff over their tax and accounting situations — and watch how their hearts are activated. Sometimes my “most successful” clients can be the most impoverished … and those without many zeroes in their accounts can be flat-out rich.

“Success” is a state-of-mind — and it’s tied to gratitude. It affects how you see sales, savings, retirement, the local marketplace, and investment. And, of course, gratitude is the enemy of fear. It’s like an opposite magnet for it — walk in gratitude, and fear just melts away.

So, here’s my advice for this week: Whatever financial situation you happen to find your business to be in, find a way to be thankful. There are hidden blessings in any trial … and hidden fears lying within any windfall. Find them, savor the blessings, and watch your business (and your mind) thrive.

Don’t believe me? Then I offer you this apocryphal story of doubtful origins [:)] — but which carries deep truth…

What Success Looks Like In Reality For Long Island and Stamford Businesses

“Be thankful for what you have; you’ll end up having more. If you concentrate on what you don’t have, you will never, ever have enough.” – Oprah Winfrey

A rich farmer liked to ride around his vast estate so he could enjoy his great wealth. One day, while riding his favorite horse, he saw Hans, an old tenant farmer, sitting under a tree.

Annoyed because Hans wasn’t hard at work, he halted his horse and asked, “What are you doing there?”

Hans replied, “I was just thanking God for my meal.” And the farmer saw Hans eating a modest lunch of rice and beans.

“If that was my lunch, I wouldn’t be giving thanks for it,” the farmer said.

“It’s all I have,” said Hans, “but it’s all I need, so I give thanks.”

The farmer was about to ride on when Hans called out to him. “I thought I should tell you that I had a dream this morning. A voice said to me, ‘The richest man in the valley will die tonight.’ I just thought you should know.”

The farmer rode away, but Hans’ words worried him. He was the richest man in the valley, wasn’t he? So he called his doctor when he got back to his mansion. The doctor came out and looked him over, but found nothing wrong with him. The farmer went to bed, still worried, and slept fitfully.

When he woke the next morning he thought, “Well, there was nothing to that dream after all. Here I am, alive and well.”

Then a servant knocked at his door. “What is it?” the farmer asked.

“It’s about that old tenant farmer, Hans, sir,” the servant said.

“What about it?”

“He died in his sleep last night, sir.”

Feel very free to forward this article to a business associate or client you know who could benefit from our assistance — or simply send them our way. While these particular articles usually relate to business strategy, as you know, we also specialize in tax preparation and planning for families and business owners.

Warmly,

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2019 Tax Planning Strategies Questionnaire For Long Island and Stamford Taxpayers https://longisland-accountant.com/2019-tax-planning-strategies-questionnaire-for-long-island-and-stamford-taxpayers/ Tue, 04 Dec 2018 16:30:36 +0000 https://longisland-accountant.com/2018-tax-planning-strategies-questionnaire-for-long-island-and-stamford-taxpayers/ Wait, you thought I meant the holidays? Ha. As much as I love Andy Williams, what I REALLY mean is tax planning season. That is to say, year-end moves. 🙂 And next week, I’ll give you some generalized moves you can make that can affect your tax bill (in positive ways only). But the real […]

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Wait, you thought I meant the holidays?

Ha. As much as I love Andy Williams, what I REALLY mean is tax planning season. That is to say, year-end moves. 🙂

And next week, I’ll give you some generalized moves you can make that can affect your tax bill (in positive ways only).

But the real reason I get excited about this month is that the inevitability of the calendar turning is upon us — we’re in the final month — and little alarm bells should be going off for you that there ain’t much time left to get ahead of the game.

(And yes, I said “ain’t”. I’m a tax pro, not an English major.)

You see, because as much as we enjoy unlocking the puzzle of forms, statements and spreadsheets that form the tax preparation process, what actually revs our engines is the feeling we get when the advice we’re able to offer, and the plans we craft, make a big bottom-line difference in the lives of our Long Island and Stamford clients.

Which might mean the difference between taking a vacation this year … or not. Or more, better gifts for the children over the holidays. Or maybe just that much more saved for college, retirement and weddings (my favorite).

This is the time to make and execute tax planning strategies for the end of 2018. So, take a moment to answer the questions below and email us your answers by using the email button at the top of the page. We’ll get back to you if there’s something you can do this month that would make a difference, or have you set a time to chat directly with us.

So, again, this isn’t our “official” tax preparation questionnaire, it’s simply designed to help us figure out if we can do something before year-end to make a real difference … before we can’t anymore. Please email us your answers to the below questions by clicking the email button at the top of the page.

*****

1) Have you had a significant change in your wage (or non-wage) income this year?

<Put YOUR answer here in your email reply>

2) Have you taken capital gains or losses this year? Are you planning to?

<Put YOUR answer here in your email reply>

3) Did you start or sell a business this year?

BONUS QUESTION: Do you know anyone who did, that would like input on their tax situation?

<Put YOUR answer here in your email reply>

4) Did you purchase real estate?

<Put YOUR answer here in your email reply>

5) Did you make your full contributions to retirement accounts?

<Put YOUR answer here in your email reply>

6) Have you considered a Roth IRA?

<Put YOUR answer here in your email reply>

7) Did you withdraw from retirement accounts, and for what purpose?

<Put YOUR answer here in your email reply>

**8) Have you sent your family and friends our way — and, if not, is there a way we can make this easier?

<Put YOUR answer here in your email reply>

9) Are there any other tax or financial (or other) issues you think we should know about?

<Put YOUR answer here in your email reply>

*****

Now — your answers to these questions form the “tip of the iceberg”, and they will help us to know which direction to take as we work with you over the next month to prepare for year-end. With your permission, we’ll contact you back, as appropriate, and set up a time to discuss them further with you, whether by phone or other method.

Hope to see you in here soon…

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Can I Take the Section 199A Deduction For My Long Island and Stamford Business? https://longisland-accountant.com/can-i-take-the-section-199a-deduction-for-my-long-island-and-stamford-business/ Wed, 28 Nov 2018 13:40:52 +0000 https://longisland-accountant.com/can-i-take-the-section-199a-deduction-for-my-long-island-and-stamford-business/ Lots of business owners have been contacting us of late, as we’ve developed a bit of a reputation around the Long Island and Stamford area for helping business owners save a bundle on their taxes. And many of the business owners in Long Island and Stamford that we’ve talked to have a similar question: Can […]

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Lots of business owners have been contacting us of late, as we’ve developed a bit of a reputation around the Long Island and Stamford area for helping business owners save a bundle on their taxes.

And many of the business owners in Long Island and Stamford that we’ve talked to have a similar question:

Can I take the new 20% deduction for qualified business income?

Also known as the “Section 199A deduction”, it’s been the subject of many a conversation around here.

Well, let’s dive in, shall we?

WARNING: Geeky stuff ahead.

Can I Take the Section 199A Deduction For My Long Island and Stamford Business?

“Geeks are people who love something so much that all the details matter.” – Marissa Mayer

The new Section 199A <nerd alert> is a subset of Section 199 of the tax code that covers “Domestic Activities Production”, and the much-talked-about deduction applies to AGI (adjusted gross income) or “below the line”, rather than to gross income (“above the line”) after which we would arrive at the AGI.

So this makes it even more powerful.

It applies to “pass through” entities and structures, which are as follows:

  • Real estate investors (without entity)
  • Sole proprietorships (without entity)
  • LLCs (both “disregarded entities” — single member — and multi-member LLCs)
  • Any entity taxed as an S corp
  • Trusts and estates, REITs and qualified cooperatives

The big exception: Specified Service Trade or Businesses (SSTBs). If you happen to operate a business under certain areas, you are NOT able to take these deductions — unless the income of your business falls under a certain threshold. These are as follows:

  • Healthcare Providers
  • Legal Pros (not just attorneys, but also mediators and paralegals)
  • Accountants (blech)
  • Actuarialists
  • Performance Artists
  • Consultants (basically, if you get paid specifically for “advice and counsel”)
  • Athletes (including coaches, managers, etc.)
  • Financial Service Providers (again, when “advice and counsel” is required — so bank tellers, etc. are not part of this)
  • Brokerage Services (not including real estate and insurance brokers)
  • Investment Advisors and Managers (not including property managers)
  • Securities Dealers

And the big one:

  • Trade- or Skill-Dependent Businesses. Specifically, the regulations include “any trade or business where the principal asset of such trade or business is the reputation or skill of one or more of its employees or owners.”

That final one still hasn’t been fully clarified, so we’ll be watching the courts and further regulations on that.

I mentioned that income threshold. If your business falls under one of the above categories, BUT your taxable income is less than $157,500 for a single return / $315,000 for joint, then the 20% deduction is fully available. If your taxable income is greater than $157,500/$315,000 but less than $207,500/$415,000 then a partial deduction is available. But if your taxable income is greater than $207,500/$415,000 then you do NOT qualify for this deduction.

If your business happens to NOT fall under these categories, then there are still some phaseouts. If your taxable income is less than $157,500 for a single return / $315,000 for joint, then the 20% deduction is fully available. If your taxable income is greater than $157,500/$315,000 but less than $207,500/$415,000 then a partial deduction is available with some asset and W-2 calculation. And if your taxable income is greater than $207,500/$415,000 then the good news for “non-SSTB” businesses is that there are still partial deductions possibly available, depending on depreciable assets and W-2 limits.

Now, the calculation of what this income actually is happens to be where we can really get geeky. I will spare you all of the (many) scenarios, and give you the broad strokes:

The following kinds of income are excluded from these QBI calculations…

  • Reasonable compensation received from an S corporation by a shareholder — i.e. whatever W-2 salary you might take from your S-corp (which is an important part of an ethical S-corp) cannot be added back into the “QBI” number
  • “Guaranteed payments”
  • Short- and long-term capital gains (they’re already taxed on the K-1)
  • Depreciable asset gains and losses from assets held for over a year and then sold (Section 1231)
  • Dividends and interest (unless you are charging actual customers interest on AR that is overdue)

As with everything tax-related, the devil really is in the details.

Which is why I hope you see how important it is to have somebody as geeky as we are by your side. We’re here to help you maximize every possible legal, ethical deduction for your Long Island and Stamford business. We won’t cross any lines, but suffice to say — we’re in your corner.

And we look forward to helping your business keep as much of its hard-earned revenue where it belongs: in your pockets.

Let us help you … and we’d love to be a resource for your business owner friends as well.

Feel very free to forward this article to a business associate or client you know who could benefit from our assistance — or simply send them our way.

Warmly,

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Michael Kessler’s Nine Can’t Miss Questions For Year-End Tax Planning https://longisland-accountant.com/michael-kesslers-nine-cant-miss-questions-for-year-end-tax-planning/ Tue, 27 Nov 2018 13:33:43 +0000 https://longisland-accountant.com/michael-kesslers-nine-cant-miss-questions-for-year-end-tax-planning/ With the Thanksgiving leftovers mostly consumed by this point, we are turning our eyes to year-end matters. And this year, there are LOTS of things to consider as we approach 12-31-19. Because yes — the standard deduction has been significantly increased, and it might make sense for you to take that. Or, it might not. […]

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With the Thanksgiving leftovers mostly consumed by this point, we are turning our eyes to year-end matters.

And this year, there are LOTS of things to consider as we approach 12-31-19.

Because yes — the standard deduction has been significantly increased, and it might make sense for you to take that.

Or, it might not.

There are so many factors to consider in this “new” tax code, that it can be a little overwhelming. In fact, I know that there are plenty of tax pros and taxpayers in Long Island and Stamford who will opt for the “simplest” solution and just take that standard deduction. In some cases, that’s smart, and offers true savings.

But it’s not always wisest to go the simplest route.

Which is why it might make sense for us to have a chat. In fact, there may be a few moves we can make that can make a big difference — even in this next month — before we’re forced into “reaction mode”, which is the only mode in which after-the-fact tax work can be done.

So, if at all possible, I’d like to figure out if there are things we can do NOW to prepare 
by having you answer a few short questions for me…

This isn’t our “official” tax preparation questionnaire, it’s simply designed to help us figure out if we can do something before year-end to make a real difference … before we can’t anymore. To send me your answers please click the email button at the top of the page.

*****

1) Have you had a significant change in your wage income this year?

<Put YOUR answer here in your email reply>

2) Have you taken capital gains or losses this year? Are you planning to?

<Put YOUR answer here in your email reply>

3) Did you start or sell a business this year?

BONUS QUESTION: Do you know anyone who did, that would like input on their tax situation?

<Put YOUR answer here in your email reply>

4) Did you purchase real estate?

<Put YOUR answer here in your email reply>

5) Did you make your full contributions to retirement accounts?

<Put YOUR answer here in your email reply>

6) Have you considered a Roth IRA?

<Put YOUR answer here in your email reply>

7) Did you withdraw from retirement accounts, and for what purpose?

<Put YOUR answer here in your email reply>

**8) Have you sent your family and friends our way — and, if not, is there a way we can help to make this easier?

<Put YOUR answer here in your email reply>

9) Are there any other tax or financial (or other) issues you think we should know about?

<Put YOUR answer here in your email reply>

*****

Now — your answers to these questions form the “tip of the iceberg”, and they will help us to know which direction to take as we work with you over the next two months to prepare for year-end tax planning. With your permission, we’ll contact you back, once you email us your answers, as appropriate, and set up a time to discuss them further with you, whether by phone or other method.

Hope to see you in here soon…

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Michael Kessler Special Guest “Shark” for SBA Emerging Leaders https://longisland-accountant.com/9976-2/ Wed, 21 Nov 2018 23:42:57 +0000 https://longisland-accountant.com/?p=9976 Yonkers, NY – Tuesday October 16, 2018: Michael Kessler, Business Profit Producer. Best-Selling Author and CPA, volunteers to hear six great entrepreneurs articulate their growth plan in SBA Emerging Leaders’ version of “Shark Tank” – Mike shared his suggestions for increasing the value of each business with insights in the areas of sales & marketing, […]

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Yonkers, NY – Tuesday October 16, 2018: Michael Kessler, Business Profit Producer. Best-Selling Author and CPA, volunteers to hear six great entrepreneurs articulate their growth plan in SBA Emerging Leaders’ version of “Shark Tank” – Mike shared his suggestions for increasing the value of each business with insights in the areas of sales & marketing, costing, pricing, technology and developing key performance indicators to measure real time business performance.

About Mike

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Michael Kessler’s Thanksgiving Thank You To Long Island and Stamford Business Owners https://longisland-accountant.com/michael-kesslers-thanksgiving-thank-you-to-long-island-and-stamford-business-owners/ Wed, 21 Nov 2018 16:01:05 +0000 https://longisland-accountant.com/michael-kesslers-thanksgiving-thank-you-to-long-island-and-stamford-business-owners/ It’s Thanksgiving week, which definitely seems to have come too fast this year. Because of the holiday, things are a bit slower — but not by much. With so many changes for the business owner in this year’s tax code, we’re having lots of conversations with clients in Long Island and Stamford who are taking […]

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It’s Thanksgiving week, which definitely seems to have come too fast this year.

Because of the holiday, things are a bit slower — but not by much. With so many changes for the business owner in this year’s tax code, we’re having lots of conversations with clients in Long Island and Stamford who are taking proactive steps to get ahead of the year-end tax planning rush.

So, speaking of Thanksgiving, I think this is the perfect time for us business owners to take a little stock of where things are.

And around here, we try to practice what we preach … so I’m thinking back a little about the beginning of *my* particular business.

I still remember what it was like to take this dream I had for my Long Island and Stamford firm and put it into reality. I was a little bit scared, and a little bit hopeful. I remember the friends and other business-owners who helped me along the way … and how risky it all seemed.

It helps me to NOT take for granted that you have chosen us to walk with you and your business as we give you advice and help take care of your financial picture, especially around tax time. It’s hard to reveal the kind of sensitive information that you provide to us, and we don’t take it lightly.

And I look around the nation, the chaos that we seem to always be seeing, and I also look back… I remember and think about how it was in the middle of the Civil War that Lincoln established Thanksgiving as a national holiday.

When I remember this, I realize that if 1860s America can find the seeds of gratitude, so can we.

And, as a business owner, I think there is a very good lesson there.

Declining (or rising) revenue, staff issues (or the lack thereof), market share issues … all of these things can conspire against our internal momentum.

But if we could take a moment for gratitude, to recognize the gift of what we have been given, we might even be able to shift that momentum. And this week is a great time to start.

So look — I’ll start: For my part, I’m simply grateful for YOU.

I’m grateful for your trust, for your attention to my blog ramblings (which are taking on a bit of a different flavor this week), for your allowing us to serve you, for your referrals … for so many things.

I don’t forget that it’s people like you who enable me to do what I do — to breathe life and hope into businesses, their owners, and their financial situations. And to help them enjoy the fruit of their labors, while carrying the peace-of-mind that the ever-grasping hand of taxation reaching into their pockets is minimized.

So here’s my Thanksgiving thank you. For everything.

Feel very free to forward this article to a Long Island and Stamford business associate or client you know who could benefit from our assistance — or simply send them our way? While these particular articles usually relate to business strategy, as you know, we specialize in tax preparation and planning for families and business owners.

Warmly,

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Michael Kessler’s Reflections On Lincoln’s Thanksgiving Proclamation While Our Country Is In Chaos https://longisland-accountant.com/michael-kesslers-reflections-on-lincolns-thanksgiving-proclamation-while-our-country-is-in-chaos/ Wed, 21 Nov 2018 13:33:47 +0000 https://longisland-accountant.com/michael-kesslers-reflections-on-lincolns-thanksgiving-proclamation-while-our-country-is-in-chaos/ Is it just me, or does it feel like Thanksgiving week arrived suddenly this year? And how did it get here so fast? With so many momentous events over the past few weeks (elections, shootings, wildfires, and more), it feels a bit surreal — and incongruous, even — to think about pausing for the sake […]

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Is it just me, or does it feel like Thanksgiving week arrived suddenly this year? And how did it get here so fast?

With so many momentous events over the past few weeks (elections, shootings, wildfires, and more), it feels a bit surreal — and incongruous, even — to think about pausing for the sake of giving thanks.

But, as it is here, I have some thoughts, which are perhaps a bit more meditative than normal, because of how this holiday works for tax professionals.

You see, the December holidays are wonderful, of course — but they are a calm before a big storm (tax season). We’re usually furiously prepping for the season, and seeking to understand the last-minute tax code changes that Congress often foists upon us, even this year on top of (still) receiving guidance from the IRS about everything Congress passed LAST year.

But such is our life.

And, I imagine, it might feel difficult for YOU to pause and give thanks. If you are tapped into our present cultural and political moment, it’s easy to find reasons for frustration and cynicism.

But, may I remind you of something?

It was right in the thick of horrendous civil war that President Lincoln proclaimed the fourth Thursday of November as a national day of Thanksgiving which should take place every year.

His entire Thanksgiving proclamation (written by his Secretary of State, William Seward) is worth taking in, or even reading aloud, but the opening is particularly powerful:

“The year that is drawing toward its close has been filled with the blessings of fruitful fields and healthful skies. To these bounties, which are so constantly enjoyed that we are prone to forget the source from which they come, others have been added …”

I believe Lincoln understood a fundamental truth in the human soul: how we choose to see our circumstances often dictates the state of our hearts — and, thereby, our future circumstances. After all, if a war-torn nation can turn its eyes upward — so can we.

For my part, I’m simply grateful for YOU.

I’m grateful for your trust, for your attention to my blog ramblings (which are taking on a bit of a different flavor this week), for your allowing us to serve you, for your referrals … for so many things.

I don’t forget that it’s people like you in Long Island and Stamford who enable me to do what I do — to breathe life and hope into families, and their financial situations. And to help them enjoy the fruit of their labors, while carrying the peace-of-mind that the ever-grasping hand of taxation reaching into their pockets is minimized.

So thank you. For everything.

And finally, on a “tax note”, allow me to remind you that although we are busy as we head into the end of the year, we will always make time to help you save on taxes. Give us a call at (516) 449-2852, and let’s get your 2018 tax return set up to save you the most that is legally and ethically possible.

There are lots of options, and we’re right here for you…

Until next week then,

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Six Underlying Needs For Effective Small Business Planning In Long Island and Stamford https://longisland-accountant.com/six-underlying-needs-for-effective-small-business-planning-in-long-island-and-stamford/ Thu, 15 Nov 2018 13:32:18 +0000 https://longisland-accountant.com/six-underlying-needs-for-effective-small-business-planning-in-long-island-and-stamford/ So last week, I began the conversation around those foundational items of necessity for a “real” business that many business owners in Long Island and Stamford don’t quite take into consideration when they first get started. These are the sort of things that can be the difference between a long-term, sustainable business versus one that […]

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So last week, I began the conversation around those foundational items of necessity for a “real” business that many business owners in Long Island and Stamford don’t quite take into consideration when they first get started.

These are the sort of things that can be the difference between a long-term, sustainable business versus one that gets sunk.

And yes, these issues are aside from the problems of marketing/sales, cost controls, capitalization, management, and other critical components to building a business.

Part of our job for you is to make sure you’re on top of these necessities so that you can go out there and do what you do best. Because nobody “got into a business” to major on these issues, so they’re the perfect things to have somebody else handle on your behalf.

And while we can’t directly handle all of these things for you, we can certainly give you pointers.

So, without further ado, here’s more of what I started last week…

Six Underlying Needs For Effective Small Business Planning In Long Island and Stamford

“A little thought and a little kindness are often worth more than a great deal of money.” – John Ruskin

Last week, we identified six areas in which many business owners remain under-planned.

These are:

  1. Disability and Workers’ Comp
  2. Property and Liability Coverage
  3. Unemployment Coverage
  4. Healthcare Plans
  5. Retirement Plans (401(k)s, etc)
  6. Retirement Income Plan (Social Security and beyond)

Last week, we covered Disability and Property/Liability. Let’s today dive into the rest.

Unemployment — Where’s Your Safety Net?

When it comes to retirement and healthcare, there are lots of ways that a Long Island and Stamford small business owner or freelancer can “mimic” the coverage often provided by large companies to employees. But there is one significant problem with the “business owner” life (which can also be a great source of motivation): no safety net.

For the employee who gets laid off, you can apply for unemployment. Your employer has paid an unemployment tax (presumably!) on your work the entire time you have been employed with them, which is a simple payroll cost for them. All those taxes go into a pool of government funds from which those who are laid off can get a small amount of money each week to tide them over while they find work.

The business owner or freelancer, on the other hand, must pay their own “unemployment tax” — by which I mean have a short-term savings plan. This is in case disaster somehow strikes and you go out of business. As an employer, you aren’t able to dip into that same kind of pool. Having this in place is an essential way to shore against disaster, and you need to build a “retained earnings” plan into your business just as soon as you are able. Nobody else will do that for you.

Healthcare For The Employer Or Freelancer

Employees on their company plans get to (mostly) pay for their healthcare insurance in “pre-tax” dollars — which makes it “cheaper” (though not for the employer). If you don’t have that option as a business owner or freelancer, you can still technically deduct the premiums, but under the existing tax code, it has to be more than 10% of your income to qualify for the medical expense deduction.

And of course with the larger standard deduction coming into play this year, itemizing these deductions might not be the best tax play for you.

However, there are lots of great options for employers, at least from a tax standpoint. It doesn’t change the fact that healthcare is EXPENSIVE, but if you do the thing correctly, you can actually set up a system by which you can pay for ALL of your healthcare costs (not just premiums) with “pre-tax” dollars using a Small Business HRA. And there are other options as well if you don’t want to go through that process.

Week-long seminars could be devoted to this topic of employer healthcare (and they are!), so I won’t go on and on. But know that you have options, and we are here to help you set up the most tax-advantageous ones.

Retirement Planning For The Small Business Owner

Again, this is a topic around which entire books can be written, so I will keep my comments on this short and sweet.

The main thing here is to have a plan.

But here is a decent rule of thumb. There might be certain cases in which you might want to do something differently, but this is a good place to start, when you consider how to save for retirement:

If you want to save less than $5,000 per year, your best bet is to use an IRA or a ROTH IRA.

If you want to save more than that (up to around $40,000 per year) and you do NOT have an S-Corp, the best choice is most often the SEP IRA.

If you want to save more than $5,000 per year and you do happen to have an S-Corp, then a 401(k) is the best choice. We can help you get that set up.

And then if you want to get really aggressive (over $40K per year), then we’re talking about pension plans — and these are definitely not something you want to set up on your own. If that’s you, let’s definitely talk (if we haven’t already).

As for your Retirement Income Plan…

This will depend upon your choices above, of course.

But on top of your savings, you need to make sure you’re paying into Social Security through payroll taxes — which, of course, means putting yourself really and truly “on the payroll”.

And yes, if you take the pessimistic view (for which there is plenty of evidence), the system might be completely broken by the time you are able to take from it.

But assuming that’s not going to happen, remember that those payroll taxes you are paying can still be seen as an investment into your future. Sometimes that takes a little sting out of having to pay both sides of it.

All of these things (including Disability and Liability) are items that any business owner in Long Island and Stamford should have a plan for.

If they intimidate you, let us help you. That’s what we’re here for.

Feel very free to forward this article to a Long Island and Stamford business associate or client you know who could benefit from our assistance — or simply send them our way? While these particular articles usually relate to business strategy, as you know, we specialize in tax preparation and planning for families and business owners.

Warmly,

The post Six Underlying Needs For Effective Small Business Planning In Long Island and Stamford appeared first on Michael J. Kessler, CPA.

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One Significant Habit Of The Wealthy In Long Island and Stamford — Generous Charitable Contributions https://longisland-accountant.com/one-significant-habit-of-the-wealthy-in-long-island-and-stamford-generous-charitable-contributions/ Wed, 14 Nov 2018 13:30:33 +0000 https://longisland-accountant.com/one-significant-habit-of-the-wealthy-in-long-island-and-stamford-generous-charitable-contributions/ Now that we have a divided Congress again, we can all sit back and enjoy the gridlock that is headed our way. Or something. I don’t blame you if you tune out from politics — and I also don’t blame you if you find yourself jumping more intentionally into the fray. There’s lots to be […]

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Now that we have a divided Congress again, we can all sit back and enjoy the gridlock that is headed our way.

Or something.

I don’t blame you if you tune out from politics — and I also don’t blame you if you find yourself jumping more intentionally into the fray. There’s lots to be frustrated by, and plenty to fight for.

But, as I always like to say, the MOST important thing you can be doing is tending to the state of your own mind, so that you are able to be focused on those things that most concern your family and financial world.

And yes, I know that’s “easy to say” as somebody who has built a business in Long Island and Stamford, and is making certain progress … but it’s also because I have chosen to focus on these things that we are even having this conversation right now.

So, if you want to add focus to those more private matters and you need somebody to pay attention to how upcoming Congressional actions will be affecting your finances … well, that’s exactly what we’re here for. We pay attention to these things so you don’t have to. It’s just what we do.

With all of that said (and speaking of habits that will help you), I’m returning to one of my favorite topics today. Would love your thoughts…

One Significant Habit Of The Wealthy In Long Island and Stamford — Generous Charitable Contributions

“My best friend is the one who brings out the best in me.” – Henry Ford

We’re into the final quarter of 2018, and since this is the biggest quarter of the year for giving, I’d like to take the opportunity as one of your financial advisers to make a few points about giving to charity.

Because with more taxpayers taking the standard deduction than has been done in years past (at least in terms of what people are projecting for this upcoming year), there are some who might be wondering if they should be as aggressive about charity as they have been in the past.

In which case, allow me to posit a question:

Why do you give to charity? Is it for the tax deductions … or for a different reason?

Now, as someone who prepares tax returns (and who figures out all the many new ways we can keep more of your money in your pocket), much of what we do revolves around tax avoidance strategies. I have ZERO problem whatsoever in helping my Long Island and Stamford clients use all available strategies to their utmost, ethical advantage. But I love it when I see my clients and friends make giving decisions which seem to run counter to immediate, short-term self-interest.

And, I believe it’s actually enlightened self-interest in the long run. And not just in our sense of feeling good.

I also see the balance sheets of people from every walk of life and every kind of income class, and over the years I’ve noticed an interesting phenomenon: individuals and families who make giving a priority, even when they aren’t “wealthy” by others’ standards, seem to eventually do better in the long run. And I do mean financially — not just in their state of mind.

(Though, there are great “state of mind” reasons for giving. Have you seen, as I have, that those who freely give seem to be much more pleasant company?)

In my line of work, I have made it a point to observe how money works. And, for some reason, money gets attracted to those who aren’t in hot, desperate pursuit of it. It’s almost like in romance — potential lovers are usually turned off by the overly-aggressive seeker.

So, because of (and not despite) the shifting nature of how charitable contributions might be counted on your taxes, may I suggest that you consider increasing your giving? You might be surprised by what happens in your heart. And, dare I say, in your balance sheets.

Lastly, let me also say that just because you give — you don’t have to be a dunce! We can help you determine the most tax-advantaged way under the “new” tax code for you to do your giving, if you want that advice.

We’re only an email or phone call away.

Until next week,

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Michael Kessler’s Essentials On Small Business Insurance Coverage https://longisland-accountant.com/michael-kesslers-essentials-on-small-business-insurance-coverage/ Wed, 07 Nov 2018 13:37:14 +0000 https://longisland-accountant.com/michael-kesslers-essentials-on-small-business-insurance-coverage/ “Go start a business!” they said. “It’ll be fun and you’ll make a lot of money!” they said. “FLEXIBILITY!” “BE YOUR OWN BOSS.” But then … well, you are your own boss now. And there are so. many. things. to think about beyond what you got into your business to actually do. It’s time to […]

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“Go start a business!” they said.

“It’ll be fun and you’ll make a lot of money!” they said. “FLEXIBILITY!” “BE YOUR OWN BOSS.”

But then … well, you are your own boss now. And there are so. many. things. to think about beyond what you got into your business to actually do.

It’s time to put on your grown-up pants, because whether you’re newly freelancing or have a “bigger” small business in Long Island and Stamford (i.e. you have employees, overhead, and more), there are a few essential components for which to make sure you have a plan.

Because if you don’t, you might find your business in jeopardy should things shake out in a particular way.

These are “the big six” for any small business owner, new freelancer, or participant in the growing “gig economy” to make sure they have covered…

Michael Kessler’s Essentials On Small Business Insurance Coverage

“F-E-A-R has two meanings: ‘Forget Everything And Run’ or ‘Face Everything And Rise.’ The choice is yours.” – Zig Ziglar

Most freelancers, and a surprising number of small business owners, have NOT made a plan for six essential coverage needs for their business.

We can help you with some of these, but not all (for which we are glad to give a recommendation) … but they are all things that require planning.

These are:

  1. Disability and Workers’ Comp
  2. Property and Liability Coverage
  3. Unemployment Coverage
  4. Healthcare Plans
  5. Retirement Plans (401(k)s, etc)
  6. Retirement Income Plan (Social Security and beyond)

I’ll take some time this week (and perhaps in a future installment or two) to cover what you need in a few of the small business coverage areas, and hopefully by the end of this series, you’ll have a plan for each (if you don’t already).

Disability — For When You Are Out of Action

Many of these issues are items that “employees” (especially of a large corporation) are covered for … but as a freelancer or small business owner, this item is regularly missed. An employee who is injured will often have Workers’ Comp to cover medical bills. And many states have a Disability Insurance structure — which will replace a portion of your wages for a short time if you are unable to work — again, if you are an employee.

But if you are working as a contractor to other businesses, or you are a business owner yourself, there is no safety net in the same way. If you’re suddenly injured, you have to have your own plan to get the work done. The good news is that you can purchase short-term disability plans (AFLAC is a common, famous example — which I’m not endorsing per se, but mentioning just because that’s what they’re known for). Many insurance companies offer these kinds of plans.

And remember there are both short-term and long-term disability plans. You should think through what it would look like if you were “out of action” in some form or fashion, and what that would mean for your business … and plan accordingly. Ideally, you should have an insurance plan for both.

Property and Liability Coverage

Again, this is something that many business owners don’t handle … often because they haven’t really been told to, or they’ve never had a problem. Many business owners are former employees, and they are used to the environment in which if they break a piece of equipment by accident, they might feel a little foolish, but no one expects them to buy a new multi-thousand dollar machine.

But if you are freelancer or small business owner and something happens to your Macbook (from which you derive all of your income), well, you are making no money until you buy another computer. And if you don’t have a spare $2K in your account, I guess that means the credit card debt, eh?

But then there are the liability issues to consider. Say you are a web designer, and you are working on a client website, and YOUR computer is logged into their back-end system, which includes customer information. You leave your laptop unattended while you go to the bathroom at a coffee shop and someone swipes it. Not only are you out a $2K computer, but you could be on the hook for any liability that comes from the identity breach you just caused.

The good news is that there is a pretty simple solution. Call your insurance provider (not the healthcare person) but a P&C — “Property and Casualty” provider — often the person who helps with your car or renters/homeowners insurance, and tell them you need a “BOP” (Business Office Policy) or a rider on your home insurance that will cover at least your equipment. And consider getting a crime or cyber security policy. A $1MM umbrella liability plan can be inexpensive (less than $100 per year), and worth having.

Again, all of these things are items that any business owner should have a plan for.

In a future installment, I’ll dive into healthcare, retirement and unemployment.

In the meantime, let us help you. That’s what we’re here for.

Feel very free to forward this article to a Long Island and Stamford business associate or client you know who could benefit from our assistance — or simply send them our way? While these particular articles usually relate to business strategy, as you know, we also specialize in tax preparation and planning for families and business owners.

Warmly,

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