• What Should Your Margins Be?

    What Should Your Margins Be? Benchmarking Your Business with Financial Ratios By Dennis Fredrickson, CPA   A client recently called me with a question: “What should my margins be?” That’s a great question. Frequently, many small business owners don’t know how their business compares to their industry or competitors. There are resources available to help with this. They can provide a wealth of information regarding financial ratios. You can go to resource desk at a larger library and look for the following periodicals (there are others available, this is just a sample): RMA Annual Statement Studies (Risk Management Association) Industry

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  • Defending Fair Market Value

    Defending Fair Market Value

    Determining the value of items on your tax return is always open to interpretation. You do not want that to happen to you during an audit as it can lead to additional tax and penalties. Here are some tips to help defend your Fair Market Value (FMV) determinations. “Fair market value (FMV) is the price that property would sell for on the open market. It is the price that would be agreed on between a willing buyer and a willing seller, with neither being required to act, and both having reasonable knowledge of the relevant facts.” Source: IRS Publication 561

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  • Change in Tip Reporting is Coming – Mandatory gratuities (tips) to become

    Change in Tip Reporting is Coming – Mandatory gratuities (tips) to become

    Automatically adding a tip to your restaurant bill could become a thing of the past in 2014. Here is what you need to know as a patron, a server or a restaurant owner. The long-standing practice of automatically charging you a 15 – 20% gratuity at your favorite restaurant is changing as we speak. The practice of charging customers for tips is normally applied to large parties (tables of 8 or more) or at high profile restaurants. The practice came about to ensure servers handling large groups receive adequate tips. Here is what is changing: Restaurant Owners Beginning in 2014

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  • Reduce Your Income: Hire Your Kids

    Reduce Your Income: Hire Your Kids

    If you run a small business that is not incorporated, consider hiring your kids to reduce your tax bill. Here’s why. If you own your own business, by hiring your children you can save in the following ways: Salaries paid to children under 18 are not subject to Social Security or unemployment taxes (in most states). No Federal withholding taxes are required if the child is under age 21 and earns under $5,950 per year. Even if the child must pay taxes, the child’s rate of tax is normally lower than your own rate. You should not have to pay

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  • The New Premium Tax Credit – Claim it now or take it later?

    The New Premium Tax Credit – Claim it now or take it later?

    Beginning on October 1, 2013 a new Health Insurance Marketplace is being opened by each state. This Marketplace will allow open enrollment for uninsured to obtain health insurance. If eligible you may also receive a reduction in your insurance premium by use of a Premium Tax Credit. Should you apply the credit now or wait and receive the credit on your tax return? Here is what you need to know. Effective October 1st, there is a new tax credit available; The Premium Tax Credit. If you are eligible for this credit you can decide to take it now based on

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  • Seven Payroll Tips for Small Business Owners

    Seven Payroll Tips for Small Business Owners

    Having a staff on payroll can seem very commonplace as well as essential to running a small business, but many owners get in trouble with Uncle Sam because they don’t understand the complexity of payroll tax law. On the flipside, by not fully understanding the rules, it’s also common for business owners to overlook ways to manipulate employee pay to save money.   With that said, here are a few tips for business owners to keep their payroll on track and in compliance with the IRS:   1. Make sure that you properly classify your workers. Just because a worker

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