Let’s pretend that it is tax season – depending on when you’re reading this, it might be. As April 15th approaches, you’re desperately searching through your finances, looking for deductions that can reduce your tax liability. Now, you probably think that you looked everywhere and explored every option. However, there’s one you might’ve missed: cost segregation.
A Cost Segregation study involves classifying property components that can be identified as personal property in order to lower your tax bill. Sound simple enough? Well, there’s a little bit more to it. What we’re going to do today is walk you through the cost segregation process while listing off the factors that would make you eligible.
Shorter Depreciation = Lower Taxes
As you may know, any property that you or your business owns is slowly depreciating in value over time. With this depreciation comes another expense – something that can be written off as a tax deduction. However, because depreciation of the property occurs over the course of 30 to 40 years, the expense is fairly low. This is where cost segregation comes in.
What cost segregation does is speed up the depreciation process by identifying assets that would typically belong to the property as personal assets themselves, with much shorter lengths of depreciation. For example, assets like carpeting and wall covering have a depreciation length of five to ten years compared to 30. This allows you to write off larger depreciation expenses to lower your tax liability.
How Is This Done?
Now that you know what cost segregation is, how do you go about it? Well, it’s a study like I said. That means a cost segregation specialist will come in to analyze various aspects of your property including plumbing, electrical, flooring, and walls just to name a few.
They will also assess improvements to the land surrounding your property like sidewalks and landscaping as well. Based on this assessment, the cost segregation specialist will determine which personal property assets can be reclassified for accelerated depreciation. This will increase the depreciation expense, allowing for a larger deduction come tax time.
What Are The Benefits?
As previously stated, cost segregation benefits the property owner in the form of a lower tax liability. In addition to this, cost segregation is also great for estate planning. This can create tax benefit opportunities well after you’re no longer around, which makes payments easier for whoever you decide to leave your estate to.
Being audited by the IRS? Fortunately, cost segregation documentation leaves a clean paper trail for the IRS, potentially simplifying matters in the future. Last and definitely not least is an increased cash flow. The lower the tax liability, the more money you save, meaning that you can apply it to other aspects of your home or business.
For additional information on cost segregation, check our cost segregation services page. For everything else, feel free to visit the Nazaire Blog or contact us today!
There’s a million and one ways to approach your accounting – that includes outsourcing. However, like with everything in life, there are pros and cons to outsourcing your accounting. Depending on your situation, outsourcing may or may not be the best option for you. Various factors can come into play that will affect you financially, so it’s important that you are aware of the advantages and disadvantages. Fortunately, that’s why I’m there. Whether you’re a small business or major corporation, here’s why you should or shouldn’t outsource your accounting.
Pro: Outsourcing Saves Time
As a business owner, I know you’ve heard the phrase, “Time is Money”. That holds true when it comes to your accounting. Crunching the numbers can take a considerable amount time – time that could be better allocated elsewhere. By outsourcing your accounting, your resources can be focused on other aspects of your business while someone else does the heavy lifting. Depending on your company’s size, it may cost more but the flexible schedule will open up better opportunities for growth.
Con: Lack of Access & Control
Unfortunately, when you outsource your accounting, there is a certain amount of control that you will be expected to relinquish. Because your accounting department isn’t right down the hall, chances are you won’t have as easy access to your financial information than if it was. That means making calls, sending emails, or scheduling meeting to find out how you’re doing financially. Outsourcing may save you time but control is something that might have to be sacrificed.
Pro: Cuts Overhead Costs
Payroll taxes, benefits, office space, a weekly paycheck – these are all things that you’re going to have to cough up if you hire an in-house accountant. On the other hand, you bypass these overhead expenses by outsourcing. While bigger companies may be more economically inclined to establish their own accounting departments, most small businesses cannot afford to. Finding space in the budget for an accounting service is much more efficient than building a department from scratch, at least it is for some. It all depends on your unique situation.
Con: Increased Level of Risk
As previously stated, outsourcing comes with lack of control. That being said, your financial information is at a slightly higher risk of being compromised in someone else’s hands compared to your own. While it can be assumed that your accounting firm can be trusted, you’re not there to keep an eye on things. That adds a sense of uncertainty, especially when it comes to your financial data. With your accounting being performed in-house, you can keep a closer eye on your company’s finances and out of malicious hands.
Pro: Guaranteed Professionals
Sometimes, professionalism is priceless. When outsourcing your accounting, you know exactly what you’re paying for. Accounting firms employ of some of the best financial professionals in the industry. These individuals make it their priority to provide the highest quality of service at a fair and cost-effect rate. The margin of error in regards to accounting is so small that only a true expert should be handling your finances. That’s exactly what you’ll get by outsourcing your accounting. These guys and girls don’t believe in cutting corners and neither should you.
Con: Potential Changes in Structure
Remember that an accounting firm is a business, just like you. They have their own financial and structural matters to contend with in addition to handling your accounting. That can potentially mean changes within their business, which can affect the quality of your services. Corporate restructuring audits by the IRS, your accountant leaving the company; these are all things that can occur within an accounting firm that will have a direct effect on you. This alters how fast you receive information or if anyone is keeping an eye on your finances at all. It’s uncertainty at its best but unfortunately, it comes with the territory.
In the end, your decision to outsource your accounting should be determined by whether or not the pros outweigh the cons and vice versa. Outsourcing isn’t for everyone but it does have its perks. I hope I was able to swing you one way or another today and if not, there’s always tomorrow. Keep in mind that accounting is a pivotal part of managing any business so if you’re going to do, you might as well do it right. Best of Luck!
Employment taxes refer the money that is deducted from an employee’s compensation each pay period based on their income and number of dependents. Those taxes must then by reported to IRS at the beginning of the following year so that said employee can either pay whatever amount is still owed or receive a refund on the difference. Under certain circumstances, an individual can file as tax-exempt but other than that, every citizen must report their withholdings.
What are the Various Types of Employment Taxes?
Federal Income Taxes: These are withholding of an employee’s compensation that is made payable to the federal government. As with all employment taxes, the amount deducted is determined by income, as well as the number of dependents.
State Income Taxes: These are withholding of an employee’s compensation that is made payable to their state of residence. As with all employment taxes, the amount deducted is determined by income, as well as the number of dependents.
Social Security Taxes: This type of tax is deducted and placed into a federal account for retired citizens when they reach a certain age. Its purpose to ensure that elderly citizens who are no longer working full-time are provided with some financial assistance outside of their own retirement plans. It should also be noted that deducted social security taxes are also matched by the employer.
Medicare Taxes: Similar to social security, Medicare taxes are in place to provide financial assistance to those who are unable to or no longer work. These taxes help cover the cost of medical care including hospital stays, doctor visits, surgeries, and medication for elderly citizens that are longer employed.
Do Employers Pay Employment Taxes?
Yes, they do. In addition to matching the amount of social security taxes deducted from their employees, employers also have to pay a federal unemployment tax, which provides financial assistance to individuals that lost their jobs due to specific circumstances (lay-offs, business dissolution, etc.). Also, individuals who are self-employed must pay what is called a self-employment tax, which covers social security and Medicare.
How do Individuals Report Their Employment Taxes?
At the beginning of the New Year, working individuals will receive a W-2 statement from their employer. This document recounts how much money they made the previous year, as well as the amount of taxes deducted. From there, individuals can use this W-2 to file a tax return with the IRS. This allows them to discover if they owe money or if they will be receiving a refund.
What is Accounting Software?
An accounting software is an application tool that records every transaction happened such as payment, deposit, payroll, and trial balance. It can be developed by your company, or you can purchase a professional accounting software from websites. You can use it online anywhere, anytime.
Regular Responsibilities of an Accounting Software Specialist Include
- Solve problems from clients through accounting software.
- Upgrade the software in a timely manner.
- Manage the software by logging in all correspondence about customers’ issues.
- Participate in customer’s implementation teams.
Here Are the Benefits of Hiring an Accounting Software Specialist:
As we talked above, an accounting software specialist can help you to accomplish lots of things regarding an accountant job. Having an accounting software specialist is to save your time to focus on your business. Imagine that you pay this person for $80 per hour, and he or she will do a great job. While you may spend more if you cannot complete the whole works by yourself during a certain time. For instance, the tax season is the struggling one.
It’s not easy to keep track of business’s expenses. Your accounting software specialist may monitor the back and forth transactions. Keep an eye on your personal and business expenses separately. You may be in trouble if you mix those two expenses and IRS (Internal Revenue Service) will look for you. It may trigger an audit to show the questionnaire expenses related to your business.
- Provide Professional Knowledge
An accounting software specialist with professional knowledge can assist your company’s operation. Specialists can understand your dynamics workflow and give you suggestions about using accounting software to level up your business operation. As the area of a company operation is changing all the time, it’s important to leave it to an accounting software specialist to provide you with beneficial advice, even if it’s about your company’s risk management.
It is obvious that you spend money on a specialist and turns out he or she can quickly solve your company’s accounting problems. Also, you can develop the relationship with an accounting software specialist so that this person knows your family’s financial situation and future goals. A professional accounting software specialist is able to make valuable tax savings suggestions that he or she may anticipate from the software.
Not all businesses benefit from accounting software. But using it will be more attractive to make the process to be simple because there are so many documents in the office. Now, if you decide to have an accounting software specialist, the next step is to choose the right accounting software. For different companies, there are a various software for them to use. It can be modified depending on which functions you need.
In a word, an accounting software specialist is necessary for company to hire. It will bring back a great profit and avoid some trouble that you didn’t realize.
It’s Tax Season, Are You Ready to Get Your Tax Return?
Individual tax preparation might be a task when you have to answer soo many questions. Let’s see what kind of steps you will need to take in order to meet good standards with your individual tax preparation?
There Are Some Forms You Need to Fill out as Following:
Federal tax return preparation
State, City & Local tax return preparation
Resident Returns: 1040EZ, 1040A, 1040
Non-resident Returns: 1040NR, 1040NR-EZ
Amendment Returns: 1040X
Partnership Return: 1065
Business Return: 1120, 1120-S & 1120-C
When You Are Preparing Your Tax Return, Please Keep in Mind a Few Points
- Have an organized checklist.
Using a tax preparation checklist is a great approach because you can make sure that you have all the correct documents and you won’t miss any important detail. A tax preparation checklist may be the best way to know what things you have done well, and what need to be done in the future before the deadline as well.
- Find a tax expert if you need.
Of course, if you cannot complete the whole thing by yourself, try to find a tax expert or rely on professional tax return software. A lot of people use tax preparation software based on the organized format and electronic files.
- Triple-check your files.
Do not send your tax return until you review it at least three times. To make sure the accuracy and all your personal information are correct. Social Security number and any other private information are important to report to the IRS.
- Have enough time by the deadline.
If you aware of the deadlines so that you must be well-prepared.
- Tax preparation is starting through the whole year.