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Wednesday, July 23, 2014

Ways to Use Business Taxes to Build a Stronger Company

We're more than half way through 2014: Exactly where does your business stand in relations to taxes?



Last week, a client of mine had an awful revelation when I finalized his tax form and brought to light he owed a lot of money to the IRS. His initial response was to be mad at the ambassador. Even so, upon careful reflection, he declared, "Well, I should have come to see you last year when my new product took off the way it did. I knew I was making a lot more money.".

He's correct. Every time there is a sizable shift to your business's bottom line (in either red or black), it's time for a visit to your tax pro. In fact, everyone who operates a small business should take advantage of the mid-year off period to sit down with a tax expert to examine their financial statements as well as potential tax liabilities.

It's much easier to plan and put a strategy in place today than to run around at year end upending pails of water on all the small fires that have been brewing all year.

Here are some suggestions to explore with your tax pro to strengthen your tax situation and preferably keep working capital in your bank account rather than in Uncle Sam's pocket:.

Open a retirement plan.

If you're at long last a few dollars ahead and don't have a retirement fund, now's the time to open one. Here's the bonus: it's deductible!

Speak with a bona fide financial advisor or a representative from your bank to discover what kind of plan best suits your demands.

There are a wide range of vehicles from Individual 401(k) plans to SEP IRAs to PRACTICAL plans that may or may not need you to include employees in the plan.

If a plan necessitates employee participation, do not automatically dismiss it.

Establisheding a retirement plan for your employees could be a meaningful way to give raises that don't require the extra cost of employer paid payroll taxes. Read IRS Publication 560 for more information.

Examine your legal structure.

Take the time to examine whether your business is functioning optimally in its existing entity structure. You may have started out as a sole proprietorship and have grown out of it. It is especially important to examine entity structure if your business is currently netting more than $100,000 per year.

Keep in mind that if you incorporate, you will now be required to take finances out of the business via payroll rather than simple draws.

There is a lot more paperwork involved under this status, but the tax perks and protection that a corporation offers may prove more beneficial. Always review these alternatives with your legal representative and tax expert before making a decision.

Offer employee benefits.

Staff members are our most significant business asset and should be treated keeping that in mind. There are many employee benefits that are not taxable to either the employee or the company. Look into IRS Publication 15-B, Guide to Fringe Benefits to learn more on this topic. You will save your money in payroll taxes while you develop a better working environment for your workers.

Purchase furniture and equipment.

The IRS has always rewarded outlays for capital assets by offering the Section 179 Deduction. This unique deduction allows the immediate expensing of capital assets rather than depreciating them over their useful lives. Be advised however. This year, the limit for purchases decreased from $500,000 to $25,000. However, Congress will be looking into extending that threshold probably sometime during fourth quarter. You can start putting money aside for the purchases now.

Perform projections.

Take a good look at your financial reports. Run a profit and loss and contrast it to the previous year profit and loss through June 30. Are there substantial changes? Are you expecting an increase or decrease in sales and/or expenses through the end of the year? It's a simple matter to export your data from QuickBooks into Excel where you can tinker the numbers to figure out what your yearend bottom line will be. Impart that information with your tax pro to find out if you must change your planned tax payments accordingly.

Tuesday, July 15, 2014

Winklevoss Twins Announce Trading Code for Bitcoin ETF

Earlier this month, Silicon Valley moguls The Winklevoss twins revealed the trading symbol for their cutting-edge bitcoin ETF (exchange traded fund). The bitcoin mutual fund will go public under the mark 'COIN'.

The digital currency caught the twins' eyes more than a year ago as the cost of bitcoin took off. The twins publicized strategies to buy the prominent web-based currency July 1, 2013. Since then, extra details have come to light concerning what the investment tactic was becoming. In May, the twins, publicized they were taking the Winklevoss Bitcoin trust (their Bitcoin ETF) to the stock market. They feel the value of Bitcoin can increase by a factor of ten with a valid exposure on the exchange. On July 15, 1 Bitcoin cost $621.45, a substantial investment opportunity if what the twins say is correct. This figure has been gradually growing since the statement of the fund.

'COIN' is still held up in government control and there is zero crystal clear or formal publicized date for the IPO, although many professionals are speculating that (based on government approval) the fund may be trading right before the end of the year.

It is an exciting period for the digital marketplace, but maybe what is most fascinating about bitcoin specifically is the way in which it is expanding into the real world. Read more about this story at the New York Times and at coindesk.

Monday, July 14, 2014

U.S. Tax Policy Has Corporations Headed Overseas

Originally Posted on TaxTrendsWeekly.com

In the past 10 years, 47 companies have transferred overseas for lower tax rates, compared to only 29 in the previous twenty years.

Now more than ever, American companies are deserting the U.S. for nations with more attractive tax law.

Fresh researched has identified 47 companies over the past decade who have actually transferred their headquarters overseas to take advantage of lower rates. Corporate behavior like this has recently come to be referred to as “inversion”

To qualify for the lower taxes, a company needs to do more than just move a business overseas and don a new address: companies have to initially assimilate with a company in the lower-tax country and then either do at least a quarter of their work overseas or offer the owners of the overseas company at least one-fifth ownership of the newly-merged business.

Just 29 firms used inversion to transition to a lower-tax nation the previous 2 decades, according to the Congressional Research Support service analysis.

Regulators and other legislation have tried to develop stricter requirements for inversion over the years – especially after prominent corporations like Fruit of the Loom, Seagate and Tyco shifted some or all their production/operations to locations like Bermuda and the Caymans.

Tuesday, July 8, 2014

Joe Garza of Dallas Talks About Preparing Taxes

It's never ever prematurely to start tax preparing.

For numerous, tax day is with any luck a distant memory. But also for businessmen, it's never prematurely to start preparing for next year. And while the majority of companies try to make use of every allowable deduction, many don't know that a great portion of their advertising and marketing expenses are tax deductible.

Actually, according to a current study of company owner at Inside99Designs. com, greater than a quarter (27 percent) aren't also aware that the IRS allows them to take off (" underrate ") specific marketing costs on their tax returns. And out of the 73 percent that do learn about the deductions, just 57 percent suggested that they'll be making use of them in the close to future.

And the questionnaire says ...

The survey, carried out among 211 U.S.-based small company proprietors, suggested that 64 percent of entreprenuers state they are creating off roughly the same amount this year as on their previous return, while simply 22 percent are taking off much more.

And when asked what solitary advertising and marketing channel they 'd apply money towards if they were to receive a tax refund, the questionnaire said:

33 percent would certainly spend it on their website.
17 percent on internet advertising and marketing.
17 percent on a mobile application.
10 percent on a print ad campaign.
8 percent on social networking sites marketing.

 Last but not least, when asked if they considered the cash they spent in 2013 on marketing activities were a great investment or not, 70 percent said yes, 23 percent stated they weren't sure, and 7 percent claimed no.

Simply to make clear, I'm by no suggests a tax specialist. Nonetheless, based on the findings from this survey, I could create a general conclusion that lots of small business owners should be consulting with their tax specialists and evaluating feasible tax deductible marketing expenses. But as a small company owner, I locate I'm in excellent business with those which are spending dollars back into their advertising methods in an effort to grow and maintain a healthy client base.

Monday, July 7, 2014

Passwords after You've Passed-On: Estate Planning and Your Digital Footprint

Digital Footprint Here's an interesting article recently picked up by MarketWired detailing the trouble that your social media footprint can have on your Estate Plan. Many older individuals aren't really aware of how essential passwords are to allowing your survived loved ones to take a comprehensive look at your estate. Numerous elderly Americans don't understand the full extent of the impact of their activity online - particularly on social media

Having already compiled all of your online passwords/credentials isn't only important to thorough estate management, but it is absolutely vital for your family and also your estate after you're gone or disabled.

Know that each social network's website has a different collection of guidelines regulating ways to shut your account as well as remove the profile of a deceased individual. Some are rather easy while others might call for evidence of an obituary notification or even a certificate of death. The full article goes into greater detail about how to thoroughly collect any information about your digital profiles that your estate preparer or loved ones might need.

Wednesday, July 2, 2014

Joe Garza Discusses the Difference Between Tax Planning and Tax Shelters

While the terminology "tax planning" is commonly applied to describe the process, it's not necessarily thoroughly understood. Here's what tax planning really indicates. Remember, these methodologies aren’t just tax shelters, they’re legitimate planning and preparation methods to secure wealth.

Tax planning is the craft of managing your responsibilities in ways that defer or eliminate taxes. By employing useful tax planning practices, you can have more resources to save and invest or more money to spend. Or both.Your choice.

Put alternatively, tax planning means postponing and flat out avoiding taxes by utilizing positive tax-law provisions, improving and stimulating tax deductions and tax credits, and generally making optimal use of all relevant breaks available under our beloved Internal Revenue Code.

While the federal income tax policies are now more confusing than ever, the benefits of quality tax planning are arguably more beneficial than ever before.

Certainly, you should not change your fiscal habits just to eliminate taxes. Truly effective tax planning approaches are those that allow you to undertake what you want while lowering tax bills along the way.

How are tax and financial planning linked?

Financial planning is the art of applying strategies that help you achieve your monetary goals, be they short-term or long-term. That sounds pretty quick. Still, if the actual accomplishment was simple, there would be a lot more rich folks.

Tax planning and financial planning are closely connected, since taxes are such a huge expense item as you experience life. If you become really prosperous, taxes will very likely be your single most significant expense over the long haul. So preparing to decrease taxes is a vitally essential piece of the total budgetary preparation process.

Conclusion

There are a lot of other ways to commit substantial tax gaffes. Such as offering appreciated securities too soon when hanging on for just a bit longer would have led to lower-taxed long-term capital gains instead of high-taxed short-term gains; accessing retirement account withdrawals prior to age 59 1/2 and getting stuck with the outrageous 10 percent premature withdrawal tax; or failing to arrange for payments to an ex-spouse in order to qualify as deductible alimony; the list goes on and on.

The treatment is to prepare for transactions with taxes in mind as well as refrain from making unconsidered moves. Seeking professional tax help before pulling the trigger on important transactions is in most cases a strong investment. As we near the end of the year, many columns will involve tax planning solutions that many individuals can take advantage of.

Friday, April 18, 2014

Forbes Names Texas Among Nations 'Low-Tax Pack'

Texas' lack of self income tax has definitely long been a large draw for residents. Being one of only 7 states without any a personal income tax, it truly outshines states like Vermont, which holds a staggering income tax burden. Plus, with 52 Fortune 500 companies in the state, and 12.9 million people making up its labor force, Texas is sustaining-- and growing-- its own reputation for being one of the most critical business hubs in the nation.

Forbes Recognizes Texas Among Low-Tax States

There really are dozens of things that benefit Texas' flourishing economic state. The two of the most notable ones according to Forbes online? The state's tax framework and the various tax benefits that Texas offers to businesses. As a matter of fact, the Lone Star State has among the most affordable tax burdens in the U.S. Here's a more detailed look at the regulations that make Texas such a business-friendly place.

As a result of the Texas Tax Reform Commission, Texas changed its franchise business tax obligation in 2008 with a design that more precisely reflected the structure of small companies and helps the state continue to be a tough player in the U.S. economy.

The amended margins tax took over an outdated franchise tax that was really developed at a period when the state's overall economy was directed by products rather than services. With the latest law, the primary franchise business tax rate went down from 4.5 % to around .5 and 1 %. In addition, an exemption is granted to small companies with a profit below $1 million-- a resolution that benefits 40,000 small companies in Texas.

The largest effort of this type in the U.S., The Texas Enterprise Fund was designed to draw in out-of-state companies by incentivizing job creation and capital investment. Comprising over $410 million, the fund provides awards ranging anywhere from $194,000 to $50 million to qualified companies. The Texas Enterprise Fund has brought in such businesses as Bank of America, Fidelity Global Brokerage, Lockheed Martin and Frito-Lay. It has also triggered a tremendous tech influx in Austin where corporations like Apple, Facebook, Sematech, and Samsung have recently set up shop.

Texas and Business Owners: A Perfect Partnership

"Texas offers a range of tax incentives to its own businesses" Joe Garza - Attorney at Garza & Harris - remarks. "They are offered for everything from manufacturing to pollution control to renewable energy - these incentives make Texas a rock-solid partner for business owners operating in-state". For example, privilege from state sales and use tax on natural gas and electricity are offered to manufacturers. Additionally, firms that employ renewable energy programs, such as solar and wind power, are qualified for a wide array of tax exemptions. Permissions such as these can genuinely add up for business owners attempting to sustain and become a company in Texas.

http://invest-smart.org/best-investment-2014/

Thursday, March 13, 2014

Savings 101: A New Graduate's Most Important Finance Lesson

Perhaps you just recently finished school; maybe you even gotten your first real job, you may think it’s a little early to start worrying about saving and investing what little money you have. Unfortunately, that couldn’t be further from the actual truth. No matter how you look at it, the earlier that begin putting money away, the more of a financial cushion you'll have later in life. Furthermore, learning how to distribute the money you have now will make make things far easier later in life if you, say, want to buy place to raise a family or planning to retire. Beginning great financial habits will always bring lasting rewards later in life. These beginner financial suggestions will hopefully help you find a bit of financial footing and start to invest in your future.

Have backup.

As you begin thinking of long-term professional goals, make sure you have already made a strategy set that is right for your immediate situation. In particular that includes taking care of any private or government, but one key to a financially secure future is to address debt before life gets even more frustrating. You don’t want your past debt looming over your head when you’re planning a family or putting a down payment on your first home.

Beyond paying off your student loan debt, it’s necessary to start putting aside an emergency savings fund. At some point in the future, you could have unexpected expenses. Things like medical bills and major home repairs happen; when they do happen, be pleased that you set something aside to cover it.

What are your future goals?

Most millenials don't already have their entire lives figured out, it's not unlikely that you've got a feel for your biggest interests and priorities. If you plan to travel the world before you have any serious adult responsibilities, your saving tendencies will look a lot different than those of a person whose goal is to retire early. Visualizing your professional goals will help a person identify how much he/she needs to put away every week. Some Experts have even advised young people to save up to 1/3 of their paychecks, while others say that putting aside at minimum 10 percent is a good way to get into the habit of saving. Whatever amount you decide fits into your budget, be sure to put away money for whatever your ultimate financial goals are (from retiring early, to buying a car, to paying off debt) on a monthly basis so that none of your goals are overlooked.

The benefit of early saving habits is that you won’t start getting used to a type of living that becomes too expensive. It’s always far easier to start modest and work toward a more extravagant life than it is to stop using what you used to love.

>> Dallas Lawyer Gives Insight into IRS Scandal

Tuesday, January 21, 2014

IRS Eyes New Tax Filing Approach for 2014

Courtesy Invest-Smart.org

By Joe Garza

Just like other laws, tax laws change, get more complicated, and change to benefit (and disappoint) different taxpayers. In the coming year, you will most likely to see a few adjustments to income tax, including adjustments for inflation, new regulations for same-sex partners, and some punishments for {not paying for health insurance either through a private provider, or the federal government. One defining characteristic of the '14 legislationtax season may be its several-week delay, courtesy of the U.S. government's shutdown back in 2013. But, this year will also mark the beginning of a completely different type of national tax change — not only the amount we pay, but in the way we file.

2014's New Federal IRS Tax Guide

Not long ago, the Internal Revenue Service announced the release of a “newly revised comprehensive tax guide,” or, as some people call it, Publication 17: a resource that aims to assist people file their taxes this year. This guide touts greater interactivity and tips for “tax-saving opportunities.” Among the inclusions made to the new IRS guide is educational material on the American Opportunity Tax Credit which affects college students and their guardians, and also Earned Income Tax Credit and Child Tax Credit.

Distributed by the IRS since the 1940’s, the new release of the tax guide will still contain info on how to report income, capital gains and losses, IRA’s (Individual Retirement Accounts) and fundamental educational material. However, at nearly 300 pages, it's highly unlikely that many taxpayers will have the time to use the publication in its entirety. Considering the growing complexity of Federal income tax, it comes as no surprise that the IRS posts almost daily updates to forms and instructions on their website.

Less Face-to-Face Interactivity

The new IRS policy demonstrates a huge transition away from face-to-face interaction, with many more online resources to help people get through their taxes.

Tighter IRS budgets — courtesy of sequestration 2013 — mean there are far fewer resources available for in-person tax submission help. In lieu of a human being, those filing taxes will be directed to a multitude of online resources, including over 13,000 official partnering (volunteer) sites, and resources on IRS.gov - like the IRS 'Free File' program. Even very inquiries are now handled online or through one of the IRS' various hotlines. With such online assimilation becoming so ubiquitous, it makes sense that a branch of the government would begin to offer more of its material in the form of online material.

A Shift Toward Web Accessibility

While the lack of walk-in help will probably be frustrating for some people, some will be relieved to know they can take care of more tax-related problems online than ever. Now, taxpayers can view and authenticate their tax forms online. The IRS will also continue to give Employee Identification Numbers via its website. To avoid handling taxpayer inquiries concerning the status of income tax refunds over the phone, the IRS will now handle all related questions online as well.

Thursday, January 2, 2014

Attorney Joe Garza Looks at Supreme Court Case Invilving Halliburton Co.

Leading Oilfield Services conglomerate Halliburton just requested that the US Supreme Court reconsider the 1988 case, Erica P. John Fund v. Halliburton - To clarify, the Erica P. John Fund (the “Fund”) is among the oil giant's shareholders. The EPJ years-old litigation with Halliburton is based on the accusation that Halliburton "fudged" some very important information involving Halliburton's shareholder activities, like overstating income and reducing perceived liabilities. Because of this, EPJ has attempted to have its suit against the defense recognized as a class action, a form of lawsuit which is enacted on behalf of a particular group who have suffered from similar injuries. A class action lawsuit allows the Fund to represent all shareholders of Halliburton stock, effectively increasing the dollars on the table in the suit.

NY Times recently included a relevant analysis of the case the Court will have to decide in the case, should it agree to hear the case. The Times publication illustrates how many securities fraud lawsuits revolve around the concept of “reliance”, meaning that the litigation - or in EPJ's case, the shareholders acted in reliance of the organization's (potentially) illegal activities. The Supreme Court has a vast interpretations of "reliance". To show reliance, an involved shareholder doesn't need to read a prospectus and the fraudulent statements it contains. Rather, courts consider any allegedly criminal statements made by a corporation (and accepted by the public) that has any bearing on the financial value of the business and is thrown into the total price of the the corporation's securities. The court justifies this view on the ground that markets will price securities using all available information, an idea that is largely accepted in the field of finance. Still, although most investors do not typically crucially review financial records and prospectuses released by the companies in which they invest; plaintiffs involved with the suite can still show “reliance” as long as they can prove that they have acquired securities of the company. As more and more shareholders are capable of proving reliance, class action suits become easier to take to court.

In defense's request to the Supreme Court to review the case, Halliburton has hinted that it will contest that the court’s traditional interpretation of reliance is far too loose. Halliburton will say that the Supreme Court should interpret reliance as requiring shareholders to do more than simply purchase securities; for example, they could require plaintiffs in the CAL to review a financial statement or fraudulent prospectus. This kind of a contention will likely see some enthusiastic backing from the greater business community.

As the Times article points out, '12 four justices in an unrelated case suggested that they would be willing to overrule the former, nebulous meaning of “reliance.” If the Court agrees to hear Halliburton’s case, the obvious question will be about whether the company can muster a necessary fifth vote from the Court.

More by Attorney Joe Garza