Does your business need to file Form 1099?

Does your business need to file Form 1099?

Forms 1099 are due to recipients by February 1, 2016. You may be most familiar with Form 1099-MISC, which you use when your business makes miscellaneous payments in excess of $600 for services to non-employees. What are miscellaneous payments? Reportable payments can include fees for services paid to independent contractors, such as consultants, lawyers, and cleaning services. Generally, you don't report fees paid to corporations, but there are exceptions (payments to lawyers, for example).

For filing assistance, give us a call.

Adjust your mileage reimbursements for 2016

Adjust your mileage reimbursements for 2016

Standard mileage rates for deductible vehicle expenses have decreased from the 2015 rates. Here are the rates to use to calculate 2016 reimbursements and deductions.

Business. Starting January 1, the rate is 54 cents per mile for the use of a vehicle for business purposes. That's down from 57.5 cents in 2015.

Medical and moving. The rate for medical and moving mileage decreases from last year's 23 cents a mile to 19 cents a mile.

Charitable. The standard per-mile rate for charitable service remains at 14 cents.

Keep track of these upcoming tax deadlines

Keep track of these upcoming tax deadlines

●   January 15 – Final 2015 individual estimated tax payment is due, unless your 2015 tax return is filed and taxes are paid in full by February 1, 2016.

●   January 15 – Due date for calendar-year trusts and estates to pay final installment of 2015 estimated tax.

●   February 1 – Employers must furnish employees with W-2 statements for 2015. Payers must furnish 1099 information statements for 2015 to payees. (Deadline for Form 1099-B and consolidated statements is February 16.)

●   February 1 – Employers must generally file 2015 federal unemployment tax returns and pay any tax due.

Take control of holiday spending

Take control of holiday spending

Exchanging gifts, entertaining family and friends, and extending goodwill to others are the activities that make holidays joyful. But sometimes the enjoyment is followed by financial headaches. January's bank statements and credit card bills bring the unhappy realization that you lost control of your finances.

How can you prevent this financial hangover? Start with a budget. Estimate the cost of what you plan to purchase. Include gifts, holiday decorations, entertaining, and special events. If the total cost is manageable, stick to your budget as you shop.

But what if the cost grows – and grows some more? There's no need to resort to miserly behavior to trim that out-of-control gift list. One option is to draw names of family members and give one nice gift to each person, rather than multiple small gifts to everyone. Elderly relatives might appreciate "gift certificates" that can be redeemed for your help with home or garden chores. Other cost-saving ideas: make or bake gifts instead of buying them; give combined gifts from parents and children instead of individual gifts; agree on a spending limit with close friends.

While you no doubt want to splurge on the kids during this time of year, don't feel you have to give your children every gift they ask for. When they make their list, have them prioritize the things they really want. At the store, take a lesson from your own childhood, when your favorite gifts were simple toys that encouraged you to use your imagination.

Remember, too, the holidays are more than gift-receiving time. Create a family tradition of choosing and wrapping a present for those less fortunate. Encourage your children to make gifts for family and friends. Arrange family outings and fun activities so the holidays become a series of enjoyable events.

An emphasis on holiday experiences in place of shopping extravaganzas will let you enjoy the season more – both this month and next, when the bills come due.

Do you know who you're giving to?

Do you know who you're giving to?

Many charities use your donations wisely. Unfortunately, others spend too much of your contribution on fundraising and administrative expenses. Some even misrepresent themselves and solicit your money for phony causes. In today's world, investigating a charity before you make a donation is wise. Here's a checklist of precautions.

● Request written documentation about the charity's mission and how your contribution will be spent. Ask for proof that your donation is tax deductible. If a charity is reluctant to provide information, think twice about making a gift.

● When you receive a phone solicitation, the caller must provide his or her name, the name of the person or entity on whose behalf the call is being made, and a telephone number or address at which that person or entity can be contacted. If a caller refuses to give you this information, hang up. Report the call to local authorities to help protect others.

● Be wary about giving your credit card number over the phone. Instead, consider mailing your contribution once you've verified that the charity is legitimate and that it represents a cause you'd like to support.

● Just because an organization gives you a receipt for your records doesn't mean the organization is tax-exempt or that your contribution is tax-deductible. To find out if an organization is exempt from federal income tax and how much of your contributions to it are tax deductible, visit the IRS website at https://apps.irs.gov/app/eos.

Asking the right questions and obtaining information from and about a charity is the only way you can be sure your contribution will be used to benefit the causes and people you want to support. If we can help you sort the legitimate from the fake, give us a call.

Give a gift that will last a lifetime

Give a gift that will last a lifetime

Financial gifts can bestow benefits for many years to come. Here are options to consider.

 

● Fund an IRA. Give your children or grandchildren an early start on a comfortable retirement. For 2015, you can contribute the lower of $5,500 or the earned income of the child to an IRA.

● Fund a 529 education account. Contributions to a Section 529 college savings plan grow tax-free and withdrawals are tax-free when used to pay qualified education expenses of the account beneficiary.

● Fund a Coverdell education savings account. You can contribute up to $2,000 annually to a Coverdell. These IRA-like accounts grow tax-free, though the total amount of your gift may be limited, depending on your income.

● Fund a custodial account. Want to encourage an interest in saving and investing? Buy shares in a mutual fund and combine the gift with a book on investing. Your child can watch the investment grow over time and enjoy dividend payouts too. Modest amounts of investment income can be tax-free to children, although the kiddie tax may apply at higher levels.

Call us to review the tax issues related to these financial gifts.

Take time to review the health of your business

Take time to review the health of your business

As an owner and/or manager, you probably spend a lot of time monitoring business operations and dealing with everyday problems. But a longer-term approach is also useful. Just as an annual checkup from your physician helps monitor and manage your personal health, an annual checkup can do the same for your business.

Here are tips to get started.

1. Insurance coverage. Instead of automatically writing a check to renew insurance policies when they come due, sit down with your agent. Review your business operations, focusing on any changes. Discuss types of risk that could arise. Ask about new developments in business insurance. Use your agent's expertise to identify risk areas and suggest suitable coverage.

2. Tax strategy. Consider adjusting taxable earnings for the year, perhaps by accelerating expenses or delaying income at year-end. If your business reports on the cash basis, you could boost 2015 deductions by declaring and paying bonuses in December rather than in early January. Deferred invoicing or early purchases can also reduce your 2015 tax bill.

3. Customer survey. Track customer satisfaction with an online survey. Focus on questions that reveal how well your company performs in areas such as prompt service, staff responsiveness, and understanding of customers' problems. Ask your customers for insight on potential new products or services, and let them know how much you value their business.

4. Marketing review. Are your current methods and channels working well, or are you simply doing what you've always done?

5. Succession planning. Do you have a specific plan for each key managerial position, including yourself? Are you prepared for a short-term absence or a permanent vacancy? Your plan might point out the necessity of promoting from within or recruiting externally.

6. Banking relationships. Meet with your banker. Ask about new products or services that could help your company. Address service concerns or problems that occurred during the year. Look for ways to reduce idle cash, boost interest earned, and improve cash flows.

An annual business checkup can help you evaluate current performance, better manage and execute future operations, and provide a plan for keeping your business on track. If you need assistance, give us a call.