Pros and Cons of a Paperless Business

Has your bank, broker, credit card company, or maybe even your phone or utility company sent you information about getting your statements online instead of through the mail? Going paperless has its advantages — not the least of which may be seeing your countertop for the first time in months. But it also has its drawbacks. Before you completely eliminate paper statements, look at both the pros and cons.

The Benefits

When customers manage their accounts online, companies can save substantial amounts of money in printing and mailing costs. That’s why many companies offer incentives, such as reducing interest rates or fees or making donations to environmental groups, to encourage customers to go paperless. And fewer mailings mean there’s less risk that someone could steal personal documents from your mailbox and use the information fraudulently.

The Drawbacks

While companies claim financial information sent electronically is more secure, not everyone agrees. When they happen, security breaches can put your personal information at risk. And it may be easier to miss the e-mail or forget about reviewing statements or paying bills when you don’t have them right in front of you.

Another potential drawback: Retrieving statements that are more than a few months old may be difficult, although many companies say they’re working on archiving several years’ worth of documents.

Going paperless may be to your advantage, but weigh everything carefully before you sign up.

Take charge of your financial future. Give us a call, today, to find out how we can assist you and your business.

…from the Team of Professional at RE-MMAP We are just a click or call away. www.re-mmap.com and phone # (561-623-0241).

3 Ways to Make the Most of Your Fundraising

Fundraising is very challenging: It’s a critical function that essentially never ends. Coming up with some innovative ideas can help add a fresh spark to the task.

Auction Action

If you have an individual patron or corporate donor who is willing to donate a big-ticket item — such as a car, a vacation, or even a home or other piece of real estate — you may be able to raise a substantial amount by having an auction. Consider selling a limited number of tickets at a relatively high price. Most supporters will be willing to pay a higher price in return for a better chance of winning the prize.

If auctioning off a single big-ticket item isn’t feasible, you may be able to find a lot of donors who will donate smaller items to an auction. Invite the whole community to attend and have plenty of publicity to generate excitement. You can charge admission and/or combine the auction with other fundraising opportunities to maximize the amount you raise.

Star Power

Investigate the possibility that someone involved with your organization knows or is related to someone with star power. A respected television or movie personality? A well-known author, artist, or athlete? If you discover that there is a connection to a public figure and find that he or she is willing to work with you, start making plans. There are many creative ways to use your relationship with a famous person to generate donations.

Advance Planning

When thinking up new fundraising ideas, use your imagination. Just be sure to set financial goals and run some realistic projections before you get too carried away with any one idea. No matter how exciting your plans look on paper, you should be reasonably certain ahead of time that you can raise enough money to make your efforts worthwhile. If it looks promising, allow yourself plenty of time to organize your event.

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Be Proactive when it Comes to Business Issues

Photo credit: Todd Zeng

Your manager breaks her leg playing softball and will be out for a month. Or your receptionist’s husband lands his dream job, but it’s out of state so they’ll be moving. When you own a small business, learning to expect the unexpected comes with the territory. Yet, you don’t have to stand idly by and wait for something to disrupt your finances and send you down a path of trouble, promax shares how to improve asset utilization using a shared storage area network. Consider being proactive with these troubleshooting tips.

Watch Your Numbers

You can monitor your company’s financial health, spot developing problems, and improve performance by reviewing key ratios derived from the numbers on your financial statements. Taken together, these ratios help paint a picture of your company’s financial well-being, learn more about paid survey panels in this Lifepoints Review.

At times, you might dwell on problems in one particular aspect of your business. But don’t ignore the rest. If you’re not seeing the big picture, you might not spot trouble in other areas. For example, if your profit margin is falling, you could become so focused with your Headphonage and trying to find a solution that you fail to notice that several of your biggest customers haven’t sent a payment lately and a cash flow problem is brewing.

Watch Your Assets

Always try to make the most of your assets. If you carry inventory, keep your eye on turnover rates. Slow inventory turnover can strain your cash flow. Figure out how many days’ worth of product you’d ideally like to have on hand, and adapt your purchasing to meet that goal. Also, check your fixed assets. If you have equipment that’s not being fully utilized, you may be able to re-purpose it. If not, it may be time to sell or donate it, we recommend use the topVPN is the best technology for your business.

Watch Your Debt

It’s practically impossible to operate a business without taking on at least some debt as per the accountants in Finchley. Debt itself isn’t a problem, as long as you keep it under control. A high level of debt can eat up your cash, cut into your profits, and reduce the return you’re getting on your investment in the company — and that’s definitely trouble.

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Are You a Non-Profit? Then Politics are Out of Bounds

Nonprofit organizations exempt from tax under Section 501(c)(3) of the federal tax code — schools, religious groups, hospitals, social service providers, and other public charities — should be careful not to violate the law’s prohibition on political campaign activities.

What’s Prohibited?

Participation or intervention in a political campaign on behalf of, or in opposition to, a candidate for public office is absolutely prohibited, whether it’s done directly or indirectly. This restriction applies across the board to campaigns of candidates running for national, state, or local public office.

Examples of prohibited political campaign activities include:

> Endorsing a candidate

> Donating to a candidate’s campaign

> Allowing a candidate to make a campaign speech at an organization-sponsored event

> Allowing a candidate to use an organization’s assets or facilities if other candidates are not given an equivalent opportunity

> Distributing materials that favor or oppose a candidate (whether the statements are prepared by others or by the organization)

> Posting comments about a candidate on the organization’s website or maintaining a link to only one candidate’s profile on the site

Permissible Activities

An organization may educate voters as long as it’s done in a nonpartisan, unbiased way. For example, organizations may prepare and distribute voter education guides or hold public forums that we have learned across the mba duel degree studies. But all candidates seeking the same office should have an equal opportunity to be represented or participate. Neutrality — in content, wording, questioning, issues for discussion, etc. — is key.

Board members and other leaders of an organization may, of course, hold their own political views. But when they express those views, they should make it abundantly clear they are speaking for themselves, not on behalf of the organization. Leaders should avoid making political statements at organization meetings. Similarly, the organization’s resources or publications should not be used to express political views.

A charity may conduct educational activities regarding public policy issues of importance to its mission, including issues that divide candidates in an election for public office. However, messages that could be construed as political campaign intervention should be avoided.

Failure To Comply

Violating the prohibition on political campaign activities can result in revocation of an organization’s tax-exempt status and the imposition of certain excise taxes.

To learn more about non-profit compliance issues, give us a call today. We look forward to helping your non-profit grow.

 

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Seriously? Sweat Equity is Not Deductible?

The labors of love you pour into your business may have a fair market value on the street, but how do you accurately translate your net worth?

Is it $100 an hour or does it range in the thousands? For the CEOs of some publically traded companies that number is often tens of thousands an hour.

But you won’t be able to calculate the value of your efforts until you have been paid.

What About Charity Donation?

Okay, we know, you’re worth every penny, but when you donate time to charity or you’re looking to deduct the cost of your time spent, it can cause confusion at tax time. For entrepreneurs who assume their sweat equity is deductible, this can result in shock and disappointment.

The Startup Phase

Starting a new business is an exciting time for an entrepreneur. Ideas are taking shape and heart-held dreams are becoming tangible realities. But unless they’re backed by a substantial nest egg or loan, most businesses need time to produce enough cash flow to compensate the owner for development time.

Many business owners spend hours establishing their businesses before they even open the front door (virtual or otherwise). Ensuring their company’s viability doesn’t often happen overnight. Market testing and calculating pricing take time.

What’s the legal answer to this question?

Well, perhaps it can be found in a recently decided court case. The issue? Whether or not a taxpayer can deduct the value of sweat equity, i.e. services for which he/she is unpaid.

In short, a sole proprietorship reported a loss in his business providing services at no charge. The amount was substantial: $29,500. The taxpayer used this loss as a deduction against his income of $234,000 earned that year (2014). While he had not spent any actual money out of pocket, he argued that research was needed to succeed in his business; yes, sweat equity.

The court ruled against the taxpayer in this case because, in order to take a deduction, one must pay or otherwise incur an expense to be eligible to deduct it. The labor itself is not within the meaning of Code Section 162.

Donating Time to Charity

What about taxpayers or business owners who donate their time to a charitable cause? We’ve already determined their time has value. Certainly, the court must allow for this type of deduction, right?

Well, no, not this one. Donations of services are not deductible charitable contributions. However, if business owners or taxpayers donate the value of their work in cash so the organization can hire someone else to do the work, it then becomes a tax-deductible donation.

Donated labor is not deductible even to nonprofits because, in the normal earning cycle of a business, the net value of the services donated is zero.

For example, consider service on a nonprofit board. If you charge for the work, you would earn according to your pay scale. However, in donating your services you are not paid.

Now, there’s a way around it.

If the organization pays you for your service and you then donate it, you would be reporting it as income. You would owe and pay taxes on the money earned and then be able to deduct your cash donation. By not receiving the income, you avoid reporting the fees in additional revenue for the year, and you’ll also forego the charitable deduction. Either way, the result is the same.

While your personal valuation of sweat equity you put into your business may result in Fortune 500 positioning, it won’t help you reduce your tax bill.

More questions, feel free to give us a call. As a Certified Tax Coach, we can assist you.

 

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Putting a Value on Donated Property

Donating noncash property valued at more than $5,000 to a charitable organization generally requires a qualified appraisal that meets IRS guidelines.* Fair market value is the price that property would sell for on the open market. Its principles — willing buyer and willing seller, no compulsion to buy or sell, and reasonable knowledge of the relevant facts — remain mainstays of the valuation rules. However, the IRS cites other factors that may be considered in making the determination.

Cost or selling price. The price paid for an item can be an accurate measure of fair market value when the transaction and the donation dates are close and no change has occurred that would affect the item’s value.

Sales of comparable properties. Sales prices of comparable properties may be used to help determine value based on the degree of similarity of the property, the time between the sale and the donation, and the sale conditions.

Replacement cost. The cost of buying property similar to the donated item may be a consideration. An appropriate amount for depreciation must be deducted.

Opinions of experts. The expert should be knowledgeable and competent, and his or her opinion should be thorough and supported by facts.

Choosing a Qualified Appraiser

A qualified appraiser is someone who

  • Has earned an appraisal designation from a recognized organization or has met certain education and experience requirements.
  • Regularly prepares appraisals for a fee.
  • Is not an “excluded individual.” In general, this would include the donor; the donee; a person who sold, exchanged, or gave the property to the donor or acted as a transfer agent; or a person “related to” any of the above. (Other exclusions apply.)

A qualified appraisal must be signed and dated. The appraisal must be made no earlier than 60 days before the valued property is donated.

For more help with individual or business taxes, connect with us today. Our team can help you with all your tax issues, large and small.

 

* IRS Publication 561, Determining the Value of Donated Property

 

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Know what Documentation you Need for Your Charitable Donations

To claim a deduction for a charitable donation, you must have certain documentation. The current tax law requirements are summarized in the table below.

 

Additional Tips

 

Here are some other points to keep in mind.

 

Multiple contributions. If you make multiple contributions of less than $250 to the same charity during the year, you generally should treat each contribution separately in determining the amount of the contribution and the supporting records you should have.

 

Donations of clothing and household items. To be deductible, these donations must be in “good used” condition or better unless you are claiming a deduction of over $500 and include a qualified appraisal of the item with your return. If you can’t get a receipt from the charity because you left items at a charity’s unattended drop site, note the charity’s name, the contribution date, and a description of the items you donated and keep it on file. Also, note the donated items’ fair market values and how you determined the values.

 

Text message donations. If you donate money by sending a text message — to a disaster relief charity, for example — the donation will be routed through the cell phone company you use. The company forwards the amount you donate to the charity, and the charge appears on your bill. Therefore, the telephone bill showing the date and amount of your donation to the organization will serve as the proof you need to substantiate your contribution.

 

Contribution        Amount                 Records

Type                    Contributed          Required

 

Monetary              Less than $250      Bank record or written receipt:

(cash, credit                                        • Name of organization

card, check)                                       • Amount of contribution

  • Date of contribution

 

Monetary              $250 or more         Same as for monetary contribution of less than

(cash, credit                                        $250 plus written acknowledgment stating:

card, check)                                       • Contribution amount

  • Whether charity provided goods/services in exchange
  • Description, an estimated value of goods/services provided

 

Monetary              Any amount           Pay stub, Form W-2, or another document from the employer

(payroll                                              that shows amount withheld for payment to charity

deduction)                                          Pledge card showing charity’s name

Written acknowledgment if $250 or more is deducted

from single paycheck

 

Property               Less than $250      Receipt, letter, other written communication from

charity stating:

  • Name of organization
  • Date and location of contribution
  • Property description

(receipt not required when impractical to obtain)

Record of property’s fair market value on the contribution

date and how the value was determined

 

Property               $250-$500             Same as for property donation of less than $250 plus

written acknowledgment must state whether charity provided

goods or services in exchange and, if so, their value

 

Property               $500-$5,000          Written acknowledgment

Form 8283 (filed with tax return) stating:

  • How and when a property was acquired
  • Cost or another adjusted basis of property (unless publicly

traded securities)

 

Property               Over $5,000          Same records as for property donations of $500-$5,000 plus:

  • Qualified appraisal (exceptions apply)
  • Appraisal summary with Form 8283

 

To learn more about donations and taxes, give us a call today. Our staff of professionals is always happy to help.

 

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IRS Requirements for Documentation for Charitable Donations

Recently, the U.S. Tax Court denied a taxpayer’s claimed deductions for over $27,000 of charitable contributions because the taxpayer had failed to properly document them.

 

Individual taxpayers and business owners claiming deductions must be able to substantiate them according to specific rules established by the IRS. Watch out for these common pitfalls.

 

Donations. Cash contributions of less than $250 require a bank record or written receipt indicating the name of the organization and the date and amount of the contribution. For noncash donations, you need a receipt and a record showing the donee’s name and a description of the gift. If the value of any gift equals $250 or more, you also need a contemporaneous written acknowledgment, a statement of whether the charity provided any goods or services in exchange for the gift, and, if so, a description and a good faith estimate of the value. Additional rules apply to contributions of noncash property of more than $500.

 

Hobbies. Deductions for hobby expenses are strictly limited. If you wish to claim the full extent of any expenses, you must be prepared to show that your activity qualifies as a business. The IRS will presume it’s a business if you can show a profit in three of the past five years. If that isn’t the case, then you should be prepared to produce evidence to satisfy a number of more subjective tests to avoid application of the tax law’s “hobby loss” restrictions.

 

Divorce. Alimony payments are tax deductible, but payments for child support are not. Taxpayers should retain their final divorce decree and any agreements for child support and/or separate maintenance in case the IRS questions claimed deductions. Also, retain any agreements regarding who will claim exemptions for dependent children. For capital gains purposes, save cost records for both jointly owned and settlement property.

 

Business expenses for travel, meals, and entertainment, and transportation. Generally, you must retain documentation to establish the amount, time, place, and business purpose for each expenditure. Specific expense categories may have additional requirements.

 

Business use of an automobile. Maintain records for the cost of the car and any improvements; the date you started using it for business; the mileage, destination, and business purpose for each trip; and the total mileage for the year. When you use the actual expense method rather than the IRS standard mileage rate, you also need records of your operating costs, such as gas, oil, repairs, maintenance, and insurance.

 

Home office. Be prepared to produce records that substantiate your claimed expenses and show regular and exclusive business use of that part of the home.

 

To learn more about tax rules and regulations, give us a call today. Our knowledgeable and trained staff is here to help.

 

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How to Determine the Value of Your Property Before You Donate

The tax deduction available for making a charitable donation of property may be no more than the fair market value of the property on the date of the gift. Fair market value is the price that a willing buyer and seller would agree to when neither is required to act and both have a reasonable knowledge of the relevant facts.

The IRS lists several factors that may be considered in determining fair market value.*

Cost or selling price can be an accurate measure of fair market value when the transaction and the donation dates are close and there has been no change that would affect the item’s value.

Sales of comparable properties may be useful for determining value where the properties sold and the property donated are similar and the sales occurred reasonably close in time to the date of the donation.

Replacement cost may be a good indicator of value in some situations, provided that depreciation is subtracted from the cost to reflect the property’s physical condition and obsolescence.

Expert opinion is relevant to the extent the expert has the appropriate education and experience and has thoroughly analyzed the transaction.

* IRS Publication 561, Determining the Value of Donated Property

Who Qualifies as an Appraiser?

Generally, where a charitable deduction of more than $5,000 is claimed for donated property, the IRS requires a qualified appraisal by a qualified appraiser. A qualified appraiser is someone who:

Has earned an appraisal designation from a recognized professional organization or has met certain education and experience requirements

Regularly prepares appraisals for a fee

Is not an “excluded individual,” such as the donor, the donee, or a party to the transaction in which the donor acquired the property being appraised (Other exclusions apply.)

The qualified appraisal must be signed and dated and can be made no earlier than 60 days before the valued property is donated.

To learn more about tax rules and regulations for donations, give us a call today. Our knowledgeable and trained staff is here to help.

 

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How to Determine the Tax Value of Artwork

Making a donation of artwork to a museum, educational institution, or other qualifying charitable organization can give you an opportunity to share your collection with others and provide you with a charitable income-tax deduction. If such a contribution is among your charitable goals, your first step generally should be to obtain a written appraisal from a qualified source to support your claim.

 

What Constitutes a Qualified Appraisal?

 

A qualified appraisal is one that’s made by a qualified appraiser and dated no earlier than 60 days before the date you donate the artwork. Very generally, a qualified appraiser is one who has the education and experience to value the type of property being appraised and who regularly prepares appraisals for a fee.

 

Typically, the appraisal should include the following:*

 

  • A sufficiently detailed description of the artwork (e.g., size, subject matter, medium, name of artist)

 

  • The authenticity and condition of the artwork

 

  • Any donor restrictions (or the terms of any other agreement) on the disposition or use of the artwork by the charitable organization

 

  • The appraised fair market value of the artwork

 

  • The specific basis for the valuation

 

  • The date (or expected date) of the contribution

 

Claiming the Deduction

 

The IRS has certain requirements that must be met in order to claim the deduction for donated artwork. For donations of artwork valued at $20,000 or more, you must attach a complete copy of the signed appraisal to your tax return and be prepared to provide a conforming photograph of the artwork if requested by the IRS. If the artwork has been appraised at $50,000 or more, you can request a Statement of Value for the item from the IRS before filing your return. A copy of the qualified appraisal and a check or money order for $5,700 (for up to three items) must be submitted with your request.

 

Call us today for more tips on how to ensure you’re getting the most tax benefit out of your donations.

 

 

* This is not an exhaustive list.

 

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