Business Strategies Archives - Page 2 of 17 - Think Outside the Tax Box

Business Strategies

By Dominique Molina, CPA MST CTS

Mitigating Risks: A Roadmap for Withdrawing Employee Retention Credits or Filing Income Tax Returns for Clients Who Have

Just in – the IRS dropped a hot alert about the Employee Retention Credit (ERC), and it's time to pay attention . With the March 22, 2024, deadline creeping up for the ERC Voluntary Disclosure Program, it's crucial for those who mistakenly filed a claim to take action. This program lets businesses repay just 80% of the claimed amount, so it's a chance to make things right. If your clients filed a claim that's still in the pipeline, it's time for a double-check. Review the guidelines ASAP and withdraw the claim if it doesn't pass muster.


S Corporation Shareholder-Employee Reasonable Compensation

The S corporation is a powerful tool for small business owners to manage their business efficiently and reduce payroll taxes on owner’s profits. The primary benefit small business owners get, when organized as an S corporation, is the opportunity to avoid payroll taxes on distributions after paying reasonable compensation. A reasonable wage/salary is a must for shareholder-employee/s. However, the shareholder-employee soon discovers that the lower her wage is, the lower the payroll taxes. Why not pay no wage? Or only a token wage? Of course, the IRS knows those tricks and requires the company to pay “reasonable compensation” to shareholder-employees so they’ll submit proper payroll taxes. The IRS can adjust wages to reflect reasonable compensation. Family members of the shareholder must also receive reasonable compensation for services rendered. In this article we will begin by debunking urban legends surrounding S corporation reasonable compensation followed by calculating a reasonable compensation package before finishing with a strategy.

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Client Alert

Mastering Email Marketing for Accountants: Strategies for Effective Client Communication

I knew little about email marketing when I started my entrepreneurial journey in 2018. I used emails to communicate regularly with team members, vendors, board members, etc. Little did I know that having an email list of prospects and effective campaigns are a way to grow revenues. We are in a time when digital communication, specifically email marketing, has been and continues to be one of the most potent tools for business owners, especially accountants, seeking to enhance client relationships and drive business growth. Many perceive that our accounting industry is traditional; however, we’ve finally included marketing in our world and established new avenues for engagement. Here, I will shed light on the crucial role of email marketing in the accounting sector and provide actionable strategies for effective client communication.

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Staying Afloat in Tax Seas: Understanding the IRS’s Moratorium on ERC

Question: Should I even bother assisting my clients with filing new ERC claims? Answer: In light of the IRS's recent moratorium on processing new Employee Retention Credit (ERC) claims and the introduction of a withdrawal option for certain employers, it's understandable that you might be wondering whether to assist your clients with filing new claims. The answer, like a well-prepared tax return, is nuanced and deserves a detailed examination.

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An Alphabet Soup of Confusion: LLCs, BOI, and UPL

By now I hope that all tax professionals have heard of the FinCEN requirement for certain entities to report beneficial ownership information starting in 2024. The requirement is causing confusion because tax and accounting professionals feel that this could be an opportunity to either add value to an existing engagement, could be a new revenue stream, or could be a huge potential for liability. What follows is a brief review of the law and the requirements, an analysis of the main issues, and some recommendations for practitioners wondering how to help their clients while limiting their professional liability.

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Electronic Commerce Creates Confusing Sales Tax Obligations

Any company engaged in e-commerce, i.e., selling online, knows that the ability to reach buyers and customers remotely can juice the bottom line. State and local tax jurisdictions around the country know that, too, especially the bottom line of their sales tax coffers. Now every state with a statewide sales tax has a threshold past which remote sellers must collect and remit state sales tax. Failure to do so can incur big penalties, or worse, and there’s a lot to know based on where and what you sell online.

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Client Alert

Content Marketing for Accountants: Creating Valuable and Engaging Content

If you read my article Building a Strong Personal Brand as an Accountant: Strategies for Success you’d have learned about how I started my entrepreneurial journey in 2018, knowing absolutely nothing about marketing. I was one of those CFOs who would need to understand why a company has to spend more money on marketing; however, I did understand that having a robust online presence was necessary for a new digital age. Little did I know that marketing is senior to any other activity in a business.

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Some of What You Need to Know to Do 1041 Right Because Nobody Knows Everything

There was a recent IRS memo from an associate chief counsel that should be shocking but actually isn’t. Promoters have for many years been hawking a “copyrighted non-grantor irrevocable complex discretionary spendthrift trust,” which purported to avoid capital gains tax. You could learn about it on TikTok. It “worked” by citing Section 643(a)(3), which excludes capital gains allocable to corpus from distributable net income. You and I both know that DNI is not taxable income, but not everybody who learns the tax law from TikTok has caught onto that subtle point yet. Although I have never encountered anything as egregious as the “copyrighted, etc, etc, trust” I have seen a lot of problems with trusts over the years (and partnerships and SALT – don’t get me started). Much of it has to do with working under a lot of pressure. Often, the things that are wrong end up not mattering all that much, but I get a little frightened, because maybe one of these days the IRS is going to start getting its act back together. If it does, I think things may be a little shocking to practitioners who have grown up in an environment where enforcement has been progressively gutted.

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“AI Inside” – What Does that Even Mean?

Remember back in the day when having your tax and accounting software in the "Cloud" was the newest, coolest thing? Even if it took us 10 years to realize that the "cloud" just meant someone's server somewhere else? Similarly, have you noticed that our tax and accounting products have a sprinkling of AI now? And if they don't, they're talking about how they'll be AI-ing soon? (And if they're not talking about it, do we even want them in our toolbox?) Let's chat about what it means to have "AI Inside", especially with the rise of tools like ChatGPT and Bard. The "AI Inside" label is becoming ubiquitous but can mean many things, so let's discuss. I'd hate for you to get excited about an AI feature only to discover that you can access it via one of the widely available Generative AI (GenAI) tools (ChatGPT, BingChat, Bard, Claude, etc.). While this new technology has fundamentally shifted everything, what does it mean for us as tax professionals? On this journey of exploring what "AI Inside" really means, we're going to discuss what's going on under the hood. We'll also dive into why creating a fully functional "TaxGPT" is challenging right now. (Notice I said "right now"). Finally, we can look at what "AI Inside" tools would be handy, even if you CAN get that functionality out of the regular ol' GenAI applications. In the end, you'll know whether to be impressed or pass. And, even more importantly, you'll know whether to spend the extra money on those tools.

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