RESOURCES
Current Clients read more
New Reporting Requirement: FINCEN Information Reporting read more
LLC: A Misunderstood Concept in Business read more
Reasonable Compensation read more
Self-Directed IRAs: Possibilities and Pitfalls read more
To Roth or Not to Roth read more
Potential Tax Deductions read more
CURRENT CLIENTS
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New Reporting Requirement:
FINCEN Information Reports
The Financial Crimes Enforcement Network is a bureau of the US Department of the Treasury. Its mission is to “safeguard the financial system from illicit use, combat money laundering…and promote national security” through the collection and analysis of financial information. Beneficial Ownership Information Reports are required as of January 1, 2024 for most small (less than 20 full-time employees) corporations and LLCs.
Deadlines for existing companies created or registered before 01-01-2024 is January 1, 2025; for new companies created or registered on or after 01-01-2024: 90 calendar days after receiving notice of your company’s creation/registration and for new companies created or registered on or after 01-01-2025: 30 calendar days after receiving notice.
Penalties for willfully failing to report or for providing false or fraudelent information are both civil and criminal-- $500 per day that the violation continues and up to $10,000 and/or up to 2 years in prison.
Click the link for filing instructions.
LLC: The Most Misunderstood Concept in Business
An LLC is a designation by the state. It is intended to give your personal assets protection against claims that may be made resulting from your business activities.
Simply being an LLC says nothing about the business' tax status before the IRS. If all you do is create an LLC, the IRS will "disregard" the LLC and the income from your LLC must be reported on your personal income tax return. It will be subject to an additional "self-employment tax."
For many of our clients, it makes sense to take the next step to declare to the IRS that you want your LLC to be taxed as a corporation-- either C-Corp or S-Corp.
Among the many advantages of taking this additional step is reduced self-employment or social security taxes, greater retirement plan deductions, and diminished audit risk for higher income taxpayers.
Reasonable Compensation
There are temptations to both underpay and overpay employees, so to steer clear of IRS questions take a "market approach" when determining reasonable compensation. Compare the employee’s compensation with the compensation of employees performing similar duties at similar companies. Consider:
The duties performed by the employee.
The volume of business handled.
The character and amount of responsibility.
The complexities of your business.
The amount of time required.
The cost of living in the locality.
The ability and achievements of the employee
The pay compared with the gross and net income of the business, as well as with distributions to shareholders if the business is a corporation.
Your policy regarding pay for all your employees.
The history of pay for each employee.
Self-Directed IRAs: Possibilities and Pitfalls
With the volatility of the stock market, clients look for alternatives for their retirement savings investing. These alternatives include real estate and loans. Self-directed IRAs can hold these types of investments.
While the possibility of steady returns is enticing, there are pitfalls along the way that need to be overcome. There are prohibited investments and transactions, as well as Unrelated Business Income Tax (UBIT) and Unrelated Debt Financed Income (UDFI).
Any of these pitfalls can result in severe and significant tax consequences even on small amounts of income. Since each situation is unique, it is best to review
these transactions before deciding.
To Roth or Not to Roth
People often ask which is better -- a Roth or a Traditional IRA?
Financial institutions sometimes provide calculators that attempt to answer this question. Unfortunately, these calculators have assumptions built into them and the big assumption that determines the answer is "What will your tax rate be at retirement?"
Simply put, if you know your tax rate will be higher in retirement than it is now, the Roth is probably better. If not, then Traditional is better. And if you are not sure, it is ok to have both Roth and Traditional.
Tax Deductions for Real Estate Professionals
There are the obvious deductions, like office expenses and utilities, but here are some you may not have thought of. Our tax preparation service can help you find:
Advertising
Web Design, Hosting and Domain Fees
Leads/Mailing Lists
Equipment
Briefcase
Camera
Lock Boxes/Locksmiths/Keys
Staging Items
Selling Expenses
Appraisal/Finder/Referral/Inspection/Staging Fees
Open House Expenses
Photo Editing
Professional Fees
Association Dues
Chamber of Commerce
Franchise/Affiliation Fees
Agent Improvement