Having your children work in the family business is a great way to teach your kids about work ethic and money management, and to kick-start their retirement or college savings plan. Click through for tips on bringing your children into the family business.

Is having your children work in your family-owned business a blessing or a curse? Here are five tips for making it a blessing and preventing it from being curse:

Have them work elsewhere for at least five years. They need time to mature, becoming their own individuals, and to gain confidence learning and doing things as distinct human beings rather than just children of successful parents. Kids need to learn how to work, to be punctual, to earn their own money and to be held accountable. Everyone wins when potential successors have excellent training and gain skills and confidence outside the nuclear family.

Consider this scenario: A family-owned restaurant in a small town occasionally has three generations working together on a Friday night. The children are under the age of 16. Assuming that child labor laws have been taken into account, the family is content that they are passing on a tradition and family trade. The kids work one or two nights during the weekend.

In this example, the family is limiting the number of hours, and their expectations are reasonable. It’s a way for children to learn the family business and helps them gain self-respect. Indeed, one adult who remembers working with his mother in a greenhouse when he was 12 and 13 recalls that the job was hot, dirty and exhausting. However, he recalls he got paid for the work he did, and it gave him a greater appreciation for the work his parents did to support their family.

Understand generational differences. Today’s young people are far more likely to want to work to live rather than adopt their parents’ “live to work” attitude. That’s why your adult children don’t want to work 80-hour workweeks. Younger children and other employees are most probably looking for a different workplace experience.

Give psychometric assessments to make their personalities/capabilities fit their jobs. One child may be temperamentally unsuited for a position demanding detail and strict deadlines; he or she may be more of a big-picture, laissez-faire personality. Assessing such things will go a long way to improving both business function and family harmony.

Hold them accountable, but not to an unreasonable standard. Give your kids crystal-clear roles and responsibilities and regular reviews so they know whether they’re living up to their job descriptions. The biggest morale killer in small businesses is underperforming or dysfunctional family members who are allowed to meander through various roles with virtually no accountability and to inflict themselves on others in your organization. In that case, pruning the family tree almost always results in improved business productivity.

Communicate formally and regularly with a third-party facilitator. Virtually every family employee thinks he or she works harder and contributes more than anyone else and stews over this. Family businesses have a greater need for formal communication to resolve perceived contribution issues, especially if you decide a family member is ill-suited to working at your company. You need to be able to discuss volatile topics constructively and productively. Seek the help of a talented facilitator to get the most from your family business.

It can be a wonderful experience for all involved to have your children work with you. Just remember that it’s a delicate balancing act that needs your attention.

Call us now at 912-634-7722 to learn more or request your free consultation online to get started.

If you made or received a payment in a calendar year as a small business or self-employed individual, you most likely are required to file an information return to the IRS. Click through to learn what this means.

If you engaged in certain financial transactions during the calendar year as a small business or self-employed (individual), you are most likely required to file an information return to the IRS. Below are some of the transactions that you have to report.

• Services performed by independent contractors — those not employed by your business.
• Prizes and awards, as well as certain other payments — termed other income.
• Rent.
• Royalties.
• Backup withholding or federal income tax withheld.
• Payments to physicians, physicians’ corporation or other suppliers of health and medical services.
• Substitute dividends or tax-exempt interest payments, and you are a broker.
• Crop insurance proceeds.
• Gross proceeds of $600 or more paid to an attorney.
• Interest on a business debt to someone (excluding interest on an obligation issued by an individual.
• Dividends and other distributions to a company shareholder.
• Distribution from a retirement or profit plan, or from an IRA or insurance contract.
• Payments to merchants or other entities in settlement of reportable payable transactions — any payment card or third-party network transaction.

Being in receipt of a payment may also require you to file an information return. Some examples include:

• Payment of mortgage interest (including points) or reimbursements of overpaid interest from individuals.
• Sale or exchange of real estate.
• You are a broker and you sold a covered security belonging to your customer.
• You are an issuer of a security taking a specified corporate action that affects the cost basis of the securities held by others.
• You released someone from paying a debt secured by property, or someone abandoned property that was subject to the debt or otherwise forgave their debt to you (1099-C).
• You made direct sales of at least $5,000 of consumer products to a buyer for resale anywhere other than in a permanent retail establishment.

Keep in mind that information is for businesses. You will not have to file an information return if you are not engaged in a trade or business. You also will not have to file an information return if you are engaged in a trade or business and 1) the payment was made to another business that’s incorporated, but wasn’t for medical or legal services or 2) the sum of all payments made to the person or unincorporated business was less than $600 in one tax year.

This is just an introduction to a complicated topic, and the mechanics of filing such a return are filled with essential details. If you’re running a business, even a small one, be sure to discuss the details with a qualified professional.

Call us now at 912-634-7722 to learn more or request your free consultation online to get started.

Giving your taxes your full attention just once a year isn’t the best business strategy. Experts suggest that a year-round approach is better for your finances. Click through to learn the best ways to evaluate the impact of taxes throughout the year.

Numerous tax experts agree that addressing your tax liability effectively requires planning throughout the year. Those business owners who reap the most benefits consider their taxes year-round, rather than waiting to focus on tax payments just a few weeks before the filing date.

A typical small business qualifies for roughly a dozen tax deductions. For example, you may be able to claim deductions on the following:

• Cars operated for business purposes
• Business-related travel and entertainment expenses
• Purchases of office supplies, furniture, equipment, and software programs
• Telephone expenses
• Contributions toward insurance policies, retirement plans, and pension funds

It’s surprising how many small businesses never take advantage of these deductions, mainly because they suffer from the “tax-planning-happens-but-once-a-year” syndrome. To fully benefit from these deductions, it’s important to maintain your expense records throughout the year.

Your goal should be to reduce your tax liabilities by retaining records of your purchases and determining the proportion of business costs in combined expenses. By monitoring your expenses closely all year, you can analyze each expense for its tax impact as it’s made. Additionally, smart business owners should contemplate three key steps to tax planning:

1. Invest in the most effective tax record tools for your business. Whether it’s spending roughly $30 on journals and tax books with a set of refill sheets costing less than $10 to do manual bookkeeping or investing up to $2,000 on the latest online software tax-filing applications, you will benefit from more rigorous and accurate recordkeeping. Sure, the initial investment could be significant, but regular monitoring should facilitate tracking expenses and making advance payments, which will save you money in the long run.

2. Determine when you need professional tax tips and planning advice. At times you will be able to justify paying for professional tax services, particularly if you need advice on unclear requirements in tax laws that could be in your favor. To prevent unnecessary complications and aggravations, you must avoid violating tax laws that may be applicable to your small business. If you are unsure of these laws, using the tools at your disposal, such as current software and online recordkeeping, and complementing those capabilities with professional advice when needed, can help you keep your taxes under control.

3. Establish year-round tax planning goals. A good tax-planning strategy will help you accomplish some of these goals:

• Reduce the amount of taxable income
• Claim any available tax credits
• Lower your tax rate
• Control the time when taxes must be paid
• Avoid the most common tax-planning mistakes

Plus, a year-end review at the end of your fiscal year or “busy season” can be most effective if you’ve maintained clear records and an understanding of your financial position throughout the year.

Of course, this is just a general list. Not all deductions are available in all situations, and rules change frequently. Give us a call to discuss which deductions apply to your company.

When two companies join together, whether it’s a merger between equals or the purchase of a smaller entity, it’s not just about the money. Click through for some insights into the softer side of M&A.

All mergers are different, and at times the end goal of setting up a new company that results from the merger is front and center in one’s mind. Joy and pure excitement come at closing the deal, but if this is a family business, a mixed bag of emotions follows fast.

You may have grown up in the family business, and it was probably understood that the next generation would eventually take over. But there are many factors that can get in the way of this happening: Internal family dynamics or external economic factors that result in a family business entering into a merger.

That’s when a host of emotions rises to the surface. The thought of someone else running your business, the company you worked so hard to build, seems wrong. “No one can run it like me,” “They will ruin my name,” “What will I do once I don’t have this business?” “Do I define my business or does my business define me?”

These are among the thoughts that begin to run through an owner’s mind, and if it’s a multigenerational company, the older folks may feel nostalgic while the younger generation is apprehensive. When the company is sold to an outsider, feelings of failure can creep up. The nagging questions from one’s subconscious: “What could I have done differently?” “Am I failing my children (my parents)?” “What will my role be in the new company?” “Will the new owners need me at all?”

This is when harsh reality hits like a cold shower. Two companies are joined together, cost savings are sought. People are going to be laid off. This hurts because some of them will have worked with you for years, making such decisions tough and painful.

One story of a father/son firm was recounted: The company was sold more than two years ago. The son remembers that when he had to tell the employees, it was the hardest and saddest day of his life. “Some of them had been with my dad for almost 40 years and I had known them since I was a young child. They were hardworking men and women who had become more like family. We knew that what we were doing was the right thing for the company and for us, but that didn’t make it any easier. Facing those people and letting them know that the home they had for the past few decades was closing was heartbreaking. It was a day that many tears were shed.”

From denial to anger to sadness and finally acceptance — the range of emotions that one experiences is sometimes like a period of mourning. Here is some advice:

• Accept the emotions. Give yourself permission to feel them and accept the fact that they are normal. This is one of the hardest things to do.
• Find your new path, whether that’s going to college or getting a job for a couple of years outside your business. It’s scary, but exciting at the same time.
• Get married and have kids, take a breather, and then face the future.

Sadness is inevitable. You’ve lost something that has been dear to you. Embrace this opportunity to discover new dreams, new paths, new adventures.

So you’re past the period of low morale and decreased productivity among the rank and file, which, of course, is a byproduct of many mergers that attempt to slam together two diverse corporate cultures. The employees who lose their jobs and those left behind — so-called survivors — now have to deal with the loss of institutional knowledge, increased workloads and a sense of uncertainty about their futures.

For some this can be devastating psychologically and can lead to stress-based illnesses. Yes, mergers can be messy. That is why paying attention to the human factor is a wise move.

Call us now at 912-634-7722 to learn more or request your free consultation online to get started.

Launching a new business takes hard work — and money. Costs for market surveys, travel to line up potential distributors and suppliers, advertising, hiring employees, training, and other expenses incurred before a business is officially launched can add up to a substantial amount.

The tax law places certain limitations on tax deductions for start-up expenses.

• No deduction is available until the business becomes active.
• Up to $5,000 of accumulated start-up expenses may be deducted in the tax year in which the active business begins. This $5,000 limit is reduced (but not below zero) by the excess of total start-up costs over $50,000.
• Any remaining start-up expenses may be deducted ratably over the 180-month period beginning with the month in which the active business begins.

Example: Gina spent $20,000 on start-up costs before her new business began on July 1, 2019. In 2019, she may deduct $5,000 and the portion of the remaining $15,000 allocable to July through December of 2019 ($15,000/180 × 6 = $500), a total of $5,500. The remaining $14,500 may be deducted ratably over the remaining 174 months.

Instead of deducting start-up costs, a business may elect to capitalize them (treat them as an asset on the balance sheet). Deductions for “organization expenses” — such as legal and accounting fees for services related to forming a corporation or partnership — are subject to similar rules.

Our experienced Saint Simons Island, GA CPA can save you real money on your taxes through sophisticated tax planning. To learn more about personal or business tax planning, call 912-634-7722 now or request your free consultation online.

Using a Vehicle for Business: Q&A

IRS rules and exceptions abound, but there are some questions we can answer simply.

Next to your home, your car is probably the most expensive investment you make. And the costs of paying for and maintaining it can be considerable. Can you recoup some of your investment by claiming vehicle expenses on your tax return?

Sometimes. The IRS has many restrictions on the business use of a vehicle, and those restrictions have many exceptions. Better to know these upfront than to have to correct a tax return after you’ve filed it. Here are some questions and answers that may help you decide whether you’re eligible.

How does the IRS identify a “vehicle”?

A car, van, pickup, or panel truck.

What are transportation expenses?

These are “ordinary and necessary expenses” incurred when you, for example:

• Visit customers,
• Attend a business meeting held at a location other than your regular workplace, or
• Go from home to a temporary workplace that is not your company’s principal location.

The daily commute to and from your regular office is not deductible. The IRS considers this personal commuting expenses.

What if I’m on an overnight business trip away from home?

The IRS considers these travel expenses, and they’re reported differently. Your car expense deduction, though, is calculated the same way in both situations.

What if I use my car for both business and personal purposes?

You’ll calculate the expenses incurred for each by determining how many miles you drive for business and how many you drive for personal reasons.

I work in a home office. Can I deduct any driving expenses?

Yes, you can deduct the cost of driving to “another work location in the same trade or business.”

How do I calculate my deductible expenses?

There are two options. Use the standard mileage rate. You are required to use this method for the first year you use the vehicle for business purposes. After that initial year, you can choose between the standard mileage rate and actual car expenses. These include depreciation, oil and gas, insurance, and repairs.

Depreciation? Isn’t that difficult to calculate?

Yes, especially for cars. If you plan to take this kind of deduction, please let us handle your tax preparation for you. Depreciation is very, very complex, and sometimes requires more than one calculation method.

Can I take a Section 179 deduction for my vehicle?

Possibly, if you use the car for business more than 50 percent of the time — and only for the first year.

What kind of vehicle expense records do I need to maintain?

You know the drill here. If the IRS ever wants to examine your return, it will expect evidence like receipts, canceled checks, and credit card statements. You’ll need to document the date and location where you incurred the expense. You’ll need accurate mileage records (miles driven, the purpose of the trip, etc.).

These requirements scream for some kind of organized computer log or written diary, along with a safe place for any paper receipts, bills, etc. There are numerous mobile apps that can help you with this task. We can steer you in the right direction.

If you’re planning to deduct car expenses, it’s important that you keep careful paper or electronic records.

Where will I be reporting transportation expenses?

If you are self-employed, you will report business-related vehicle expenses on Schedule C or Schedule C-EZ (Form 1040). Farmers should use Schedule F (Form 1040). You’ll also want to complete a Form 4562, which is used to report depreciation and the Section 179 deduction.

Maintaining accurate records for car and truck expenses is time-consuming and detail intensive. And that’s once you understand all of the IRS’s rules and exceptions surrounding this deduction. To avoid having to fix completed tax documents that the IRS has questioned, talk to us before you put a vehicle into business use. We’ll be happy to evaluate your transportation situation and guide you through the process.