Client Alert
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.
Read MoreElectronic 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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How to Deal with Huge Tax Debt
The only thing scarier than owing Uncle Sam a lot in taxes is being unable to pay the bill. Luckily, the Internal Revenue Service has ways for you to whittle what you owe. Just make sure which method works for you, depending on such factors as the size of your tax debt and what you can afford to pay and when. Don’t panic. Here’s how individual taxpayers can proceed – and what to watch out for.
Client Retention Strategies for Accountants: Building Long-Term Relationships
Client acquisition is crucial for business growth in the fast-paced accounting world. However, retaining existing clients is equally important, if not more so. Servicing long-term client relationships is a testament to your firm’s reliability and is critical to sustained success. My first client is still with me, now more than seven years. Our relationship has grown and changed over time but has also strengthened.
Loyalty and commitment are two of my core values. I’m always looking to provide value to my prospects and clients to attract and retain them long-term. However, some clients do not fit those values, and I have decided to forgo working with them.
I believe that attracting and retaining the right clients starts with your mission, vision, and core values. However, it is also essential to have effective client retention strategies to ensure clients remain loyal and satisfied for the long haul.
Health Savings Accounts vs Flexible Spending Accounts
With the rising cost of healthcare, our clients are looking to save money where they can, especially if they can save money on their healthcare costs and taxes at the same time. As their trusted advisor, you can offer them a basic understanding of what savings tools are available to your clients. Some of the tools available will come in handy if there is a minor unexpected tax bill this spring.
That is why today we’re going to look at the triple tax advantaged health savings account (HSA) and the health flexible spending account (FSA). We’ll look at what they are, who is eligible to open one, and how they can save your clients money each year.