April 15, 2015
Make Time for Your Annual Business Checkup
Set your tax and financial course for 2015
What repair regulation option is right for your business?
Wednesday, April 15 is the deadline for filing individual tax returns. Here are some additional April 15 filing requirements:
• Filing 2014 income tax returns for individuals. If you cannot file your return by this deadline, be sure to file an extension request by April 15. The automatic extension (you don't need to explain to the IRS why you need more time) gives you until October 15, 2015, to file your return. An extension does not, generally, give you more time to pay taxes you still owe. To avoid penalty and interest charges, taxes must be paid by April 15.
• Filing 2014 partnership returns for calendar-year partnerships.
• Filing 2014 income tax returns for calendar-year trusts and estates.
• Filing 2014 annual gift tax returns.
• Making 2014 IRA contributions.
• Paying the first quarterly installment of 2015 individual estimated tax.
• Amending 2011 individual tax returns (unless the 2011 return had a filing extension).
• Original filing of 2011 individual income tax return to claim a refund of taxes. Some taxpayers have tax refunds due them for prior years, and unless a return is filed to claim the refund by the three-year statute of limitations, the refund is lost forever.ayers must file information returns, such as Form 1099s, with the IRS. This deadline is extended to March 31 for electronic filing.
You get an annual checkup from your physician to monitor and manage your personal health. Shouldn't you do the same for your business? To keep your operation in top shape, consider an annual business review. The benefits of such a review are evaluating current performance and better planning of future operations.
• Revisit your business strengths, weaknesses, and opportunities. Is your competitive position improving, or are you losing ground?
• How did you perform relative to your business plan? Did you meet or exceed your objectives? Are sales, profit margins, and cash flow improving?
• Get a pulse on your customers. An annual customer satisfaction survey is a great way to assess performance, obtain insight on potential new products or services, and to let your customers know how much you value their business.
• Evaluate your team. Are you developing a superior team, employing their unique talents, and training them to improve performance? Do you reward on merit or simply on seniority?
• How effective is your marketing? Are your current methods and channels working well, or are you simply doing what you've always done?
• Meet with your insurance agent. Is your coverage adequate and appropriate for changes in your business activities and acquisitions?
• Review your business tax strategy. Identify opportunities for tax savings. Are you using the right form of business entity? Are you aware of recent changes in the tax code that might benefit your business?
• How is your scorekeeping? Do your measurements track your progress or do they measure things that don't matter? What are the key performance measures that drive your business?
If you are serious about improving your business, consider a yearly assessment of your operation. For any assistance you need, contact us.
Were you less than satisfied with your financial situation at the end of 2014? If so, making tax-smart decisions in 2015 could provide a helpful course correction. Here are some suggestions to get you started on the right path.
• Get structured. That out-of-control feeling from last year might be due to a lack of organization. Set up a simple filing system to arrange your tax papers and records. Once you're organized, review your monthly expenses and establish a budget you can live with. Online tools can help make that job much easier, or you can give us a call. We'll be happy to help.
Next, take your planning a step further and create an emergency fund. Consider setting aside six months of living expenses in an account you can tap easily.
• Be strategic. Examine your investment portfolio for potential tax savings, such as selling stocks that are worth less than you paid to offset your capital gains. You might also donate appreciated stock that you have held for more than one year to charity and avoid capital gains altogether. With the new tax on unearned income to watch out for, consider buying investments that pay tax-free income, such as municipal bonds.
• Look again. Some everyday tax moves deserve a second look. Review your employer's list of benefits to make sure you are making the most of them, including the lesser-known perks, if available, such as flexible spending accounts, commuting reimbursements, and employer-paid college expenses. If you have a qualified high-deductible health insurance plan, consider the benefits of a health savings account.
This is also a good time to analyze your tax withholdings and estimates for 2015. Changes to your job, marital status or dependents, a new home, or a serious health issue - all of these life events can affect your tax situation. Adjustments now can put extra money in your pocket when you need it most.
• Go long. In addition to strategies that yield immediate benefits, think about your long-term finances. Take full advantage of your employer's retirement matching program. Consider contributing the maximum allowed by law, especially if you are nearing retirement age. In 2015, you can contribute up to $18,000 to your 401(k) plan, plus a $6,000 catch-up contribution if you're age 50 or over.
Are you ready to think really long term? Review your will and estate plan. Even though the current high-dollar exclusions may shield you from the estate tax, there are still good reasons for you to have a solid plan in place.
If looking back at 2014 leaves you thinking you should have managed things better, take steps now to get your tax and financial plan back on track.
Have you thought about your accounting method lately? The IRS has - and the result is the "repair" regulations. As you may have heard, these regulations became effective in January 2014. They control the way you record costs incurred to acquire, produce, or improve tangible property.
What do the repair regulations have to do with your accounting method? Your taxable income is generally computed using the same "method of accounting" that you apply to your books, such as cash or accrual basis. Your method of accounting also encompasses the way you treat special items, including depreciation. Since the repair regulations are essentially rules detailing whether your tangible property related expenses may be deducted or must be capitalized and therefore depreciated, the regulations affect your method of accounting.
Adoption of the new rules is mandatory. However, you have a choice as to how you comply when your total assets or your average annual gross receipts are less than $10 million. For example, you can use a simplified method. In that case, you apply the repair regulations to acquisitions and disposals of property for 2014 and future years. Alternatively, you can elect to review your treatment of past tangible property expenditures and apply the repair regulations to prior as well as future years.
Among other factors, your decision will depend on the accounting method you used for certain items. For instance, say you capitalized expenses in the past that might now be considered "replacements" under the new rules. You may realize current year tax savings by applying the repair regulations to prior years and taking a deduction now.
The new rules contain other changes, including annual elections that you must make beginning with your 2014 tax return. Please schedule an appointment so we can help you determine the right choices for your business.
