New Business Startup Part I: BEST PRACTICES

We often get requests for a list of best practices from people who are starting a new business venture. Here is a practical, but by no means exhaustive list of best practices. Realize that selecting the type of business entity best suited for your situation is complex, and it is best done with some support from a CPA or your lawyer. You will want to protect your personal assets from a liability suit directed at your company. You can do this by creating one of several forms of Limited Liability Business organizations, such as an LLC, Corporation, S Corporation, Partnership etc.

If you are purchasing an existing company or a franchise, you should engage the services of a lawyer or CPA as quickly as possible. There are significant tax and accounting issues associated with these kind of ventures.

 

INITIAL COMPANY SETUP:

  • Set up your Limited Liability business organization. We assume you are in Florida, so you will set up your business on the Florida SUNBIZ Web Site.
  • Obtain a Federal EIN number. This number is used in lieu of your social security number, in all your business reporting requirements. It limits exposing your social security number in your business affairs.

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IDENTITY THEFT: PART 2

I recently saw some very disturbing news regarding Identity Theft in the Bonita/Estero/Naples News Press. Here are the facts:

  • FLORIDA has the highest rate of Identity Theft in the nation.
  • The top 5 cities in the country for Identity Theft are in FLORIDA.
  • Naples is second on the list and Ft Myers/Cape Coral is fourth
  • Miami has the highest rate of Identity Theft and Tampa/St Pete is third.
  • There are 361 Identity Theft complaints per 100,000 residents in Florida, almost twice the second highest state, Georgia.
  • The fastest growing segment of Identity Theft is Income Tax fraud.
  • US Attorney Wilfredo Ferrer reports his office has prosecuted 270 cases since 2012, involving 449 Million dollars in fraudulent Tax Returns.
  • The IRS intercepted 260,000 fraudulent tax returns in 2011, involving 1.4 Billion dollars.

I will publish a list of precautions regarding Tax Identity Theft in my next blog.

The most important things to remember are to file as early as possible and file electronically.

If you are the least bit concerned about Tax Identity theft or Identity Theft in general, do not hesitate to call CPA Accounting and Tax Solutions at 239-596-6050 or email me at joe.daniele@cpaacctax.com.

Also, I posted a number of links on our Web Site, in our BLOG section. These web sites are excellent sources of Identity Theft information. Our Web Site is WWW.CPAACCTAX.COM.

Knowledge and awareness are your best protection. Be proactive in learning about this Identity Theft crime and how to protect yourself.

Identity Theft Websites

CPA Accounting & Tax Solutions, a full service accounting and tax services company, is providing the following list of excellent websites, offering education and tips on identity theft.

We believe the best defense against identity theft is awareness, education, and aggressive management of your Identity information. Identity theft is now a major problem with fraudulent tax returns, where your identity data is used to file a tax return and collect a refund. Your legitimate return is then returned by the IRS. Several sites below provide excellent information on this subject.

If you have any concerns about Identity Theft in general or as it relates to your personal or business tax returns, contact us immediately at 239-596-6050. Learn more on our web site: www.CpaAccTax.com. You can also email me at joe.daniele@cpaacctax.com.

There are credit monitoring services available today that will monitor your credit status, detecting and informing you of new credit account setup. The following link identifies many of these services. We think it is useful as a list of available services, but offer no opinion on the quality or cost effectiveness of the services. If you are interested, research each and decide. Again knowledge and awareness are your best defenses.

IDENTITY THEFT: It Is Everywhere

Non Participative

  • ATM
  • Every retail establishment
  • Everywhere your social security number is used, for example: Medical offices, Hospitals, Banks, Tax offices, and Latest example: Target.

Participative Approach

  • E-mail inquiry, asking for personal identity info
  • Phone inquiry, asking for personal identity info

How Good are These Identity Thieves?

  • They are amazingly competent
  • They can build perfect replica web sites, rivaling the best large company it departments
  • They can create a very credible crisis, that is close to your heart

How Can I Become Educated on Identity Theft?

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TAX FRAUD PART 1

While almost everyone is familiar with Identity theft to some extent, very few people are aware that identity theft has now reached into the arena of personal tax return fraud.

Identity theft occurs when someone has stolen your identity information. If they have your social security number, this can give rise to Tax Fraud, in addition to the typical credit card fraud.

WHAT IS IDENTITY THEFT TAX FRAUD?

  • Your stolen identity is used to create a fraudulent tax return in your name, claiming large refunds.
  • A fraudulent return, if created carefully, can move through the IRS system successfully if you have not yet processed your tax return
  • The tax refund is then processed and delivered to the tax thieves.
  • When you process your legitimate tax return, the IRS rejects it because the social security number(s) have already been used and processed on a tax return.
  • Your return is now on hold, until the IRS fraud units have analyzed the situation and reached a determination on which is the correct tax return.
  • If you are in a tax refund situation, your refund will be delayed until the investigation is completed. This can be a very lengthy process.

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TAX PLANNING: PART 1

TAX YEAR 2013

Tax time will be arriving quickly, and this is a good time to begin thinking about your tax issues. We will be advising you of tax changes as they occur in our blog series. Following are some things to think about in the next few weeks:

  1. If you are inclined to think of tax preparation as an isolated, once a year ordeal, you may not achieve the best tax outcome.
  2. Think about a preliminary tax consultation with your tax service now. It could save you a lot of money, and eliminate potential costly surprises.
  3. Following is a list of life and/or financial changes that may impact your tax situation. If you have experienced or will experience any of these events, please call us at CPA Accounting and Tax Solutions for a free consultation:

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SAVINGS SERIES 6

As you know, Hayes CPA & Associates is an Accounting, Bookkeeping, Payroll, Audit, and Tax company. We are not financial planners. We do blog about the importance of saving, whether that be for retirement or special goals like a college education for your kids. We do pride ourselves as a solutions company, and we really care about our clients’ financial welfare.

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YEAR END TAX TIPS: PART II

SMALL BUSINESS OWNERS AND PROFESSIONALS

Time is growing short to strategize and execute retirement savings plans for 2013. As you know, CPA Accounting and Tax Solutions continually blogs about the importance of retirement savings. We often see tax clients approaching retirement age with little or no savings. There are tax advantaged retirement savings plans available to you. These small business retirement plans are more complicated than personal Traditional IRA or ROTH IRA’s, and it is wise to seek professional help in reviewing and selecting the best option for you and your company. We partner with some of the best Certified Financial Planners in Southwest Florida. Together we can analyze your company’s financials and help you select the most tax effective strategy.

Remember also, that CPA Accounting and Tax Solutions offers free consultations on your Accounting, Payroll, and Tax Preparation needs. We will analyze prior year tax returns as well. We often discover overlooked tax deductions, which can be recovered through amended tax returns. Please remember that we can only offer these free consultations before the beginning of tax season. Feel free to call us at 239-596-6050.

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YEAR END TAX TIPS: PART I

Following are some 2013 Federal Income Tax reduction strategies:

  • Fund your Traditional IRA: If you are eligible, you can contribute to a tax deductible traditional IRA up to April 15, 2014.  For Tax Year 2013, you can contribute up to $5,500 in a traditional IRA, and if you are age 50 and older, you can get an additional $1,000.
  • While ROTH IRA’s do not reduce your taxable income directly, do not overlook this superb longer term tax strategy.
  • Contribute to your 401k, or 403b. If your employer matches some of your contributions, you should always contribute at least the amount your employer matches. For example, if your employer will match up to 3% of your salary, be sure you contribute 3% into your 401K.  At this point you will have saved 6% of your salary, and reduced your taxable income by 3%. 401k or 403b contributions must be made by 12/31/2013 for the 2013 Tax Year. You can contribute up to $17,500, plus $5,500 more if you are age 50 and older.

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Residential Rental Real Estate: Part 3

SCHEDULE E:

Schedule E is the IRS form in which you enter the rental income, and your rental operating expenses. Think of it as a Profit and Loss Statement. Your profit or loss is the difference between your rental income and your expenses, including the depreciation on your rental property. This profit or loss is reported on your IRS form 1040. As I mentioned in an earlier part of this series, your loss may be limited based on your Modified Adjusted Gross Income (MAGI). Should your loss be limited or entirely excluded, it is carried forward, along with prior years’ accumulated excluded losses, and used as follows:

  • In a tax year where there are no restrictions limiting the loss
  • In the tax year you dispose of your rental property

The rules on loss limitation are complex, and are fully covered in IRS Publication 527, “residential Rental Property”. In general terms, the loss limitations work as follows, using a “married filing jointly” tax status:

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