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Protect Your Business Data from Hackers

December 20, 2020 by admin

Analyzing electronic documentDo you know where your company’s data is? Without strong security controls in place, your data could be anywhere — and you could be dealing with a privacy breach. As technology grows more complex and the flow of information accelerates, opportunities for the misuse and abuse of data are bound to increase.

Flow Chart of Data

It’s imperative that you know exactly what data your business collects. Pay particular attention to the personally identifiable information (PII) you have for both customers and employees. Create a detailed flow chart showing what information is gathered, how it is captured, how it is used, where it is stored, how it is shared, and how it is ultimately disposed of.

Risk and Regulations

An effective data management plan helps ensure compliance and manage risk by establishing policies and procedures that control the flow and use of information. In addition to federal privacy legislation, the vast majority of states have laws to prevent security breaches, and some industries have developed their own privacy guidelines. Note that each phase of the information “life cycle” may require a unique set of controls.

Privacy Policies

Privacy policies are the “public” face of your data management plan. Best practices include:

  • Notify customers about your privacy policies. Explain why information is collected, how it is used, why it is retained, and why it is disclosed (if it is).
  • Obtain customers’ consent to use the information as outlined in your policies.
  • Collect only the information you need and only for the purposes outlined.
  • Keep personal information secure.
  • Allow customers to review and update their PII.
  • Do not retain information any longer than needed to fulfill your stated purpose or as required (by law or regulation).
  • If you disclose information to a third party, do so only with consent and only for the purposes outlined.
  • Monitor your compliance efforts on an ongoing basis.

For more tips on how to keep business best practices front and center for your company, give us a call today. We can’t wait to hear from you.

Get back to the job of running your business and leave the accounting to us! Call us at 208-215-2112 now and request a free consultation to get started.

Filed Under: Best Business Practices

Does Your Estate Plan Consider Income Taxes?

November 21, 2020 by admin

Lbusinessmen shaking handsike most people, you may have very clear ideas about the legacy you intend to leave to your loved ones. And your plans may include dividing your financial assets equally among your children, which seems to be the fairest approach. If you have four children, for example, you could leave each one of them a quarter share of your assets.

However, this approach, while seemingly equitable, may not deliver the results you hope for. The issue lies with the taxes that your beneficiaries pay. If, as is likely, your children have different marginal income tax rates, they could inherit unequal amounts after paying taxes. Furthermore, more taxes may end up being paid than necessary.

Taxes and Investment Accounts

If your financial assets consist largely of investment accounts, you know that different types of accounts, tax-deferred and taxable, have different tax implications for beneficiaries. For example, the income taxes you deferred while contributing to a tax-deferred account, such as a traditional individual retirement account (IRA), must ultimately be paid to the IRS. (State taxes may also be due.) You will pay these taxes when you make withdrawals from your IRA or those who inherit it will have to pay taxes. Essentially, your beneficiaries will inherit the income tax liability of your IRA.

The opposite occurs with a taxable investment account. With a taxable account, you pay taxes annually on any realized net capital gains, dividends, and interest earned by the account investments. When you die, your beneficiaries get the full value of the account since there is no embedded income tax liability. (For income tax purposes, the cost basis of appreciated assets is “stepped-up” to their fair market value at the time of death.)

Maximizing the Total Inheritance

As noted already, when beneficiaries have different marginal tax rates, the sum each ultimately receives is determined in part by the types of assets that are inherited. For example, let’s say your estate plan states that each of your four children will receive $750,000 from your IRA, worth $3 million. If the children are in the 35%, 24%, 22%, and 12% tax brackets, each child would receive a significantly different after-tax amount.

Instead of leaving your four children an equal distribution, you and your tax advisor may be able to craft a strategy that would give each beneficiary a different initial amount but nearly equal amounts after taxes are considered. Depending on the composition of your assets and your children’s tax situations, this type of tax planning could also result in a lower overall tax liability.

Distributing assets unequally like this is a complex approach. Alternatively, if you have a traditional IRA, you might consider converting all or part of it to a Roth IRA. When you convert a traditional IRA to a Roth IRA during your lifetime, you incur the income taxes on your retirement savings at the point of conversion. That means that your savings can be passed on to your beneficiaries with no income tax liability. Moreover, the assets in the Roth IRA can potentially grow and be distributed free of income taxes. Again, this strategy can be potentially favorable if your beneficiaries are in different tax brackets.

When it comes to estate and tax planning strategies, we recommend that you work closely with your tax and legal advisors before taking any steps.

From individual tax returns to complex tax strategies for small businesses, we institute cutting-edge tax strategies that are reliable, legal, and effective. Call our Coeur d’Alene, ID CPA firm now at 208-215-2112 to find out how we can decrease your tax obligations. We offer a free consultation to new clients so contact us today.

Filed Under: Individual Tax

Beware the Social Media Swamp – Learn How to Deal with Unhappy Customers

October 20, 2020 by admin

Young businesswoman with glasses calculates tax at desk in officeThe reach of social media goes beyond sharing family photos. Shoppers are reading product reviews online before deciding what to purchase. And disgruntled customers are sharing their displeasure with anyone who will read their rants.

A New Risk

The benefit of social media to small businesses is considerable. It has leveled the playing field in many ways. But it has also introduced new risks. One of the most critical is that bad reviews or negative comments could ruin your business’s reputation — or worse.

A Proactive Approach

How can you protect your business from online attacks? Here are some suggestions:

Join the conversation. If you’ve been visible on social media, you’ll have more credibility if something erupts. But that’s not the only reason to have a social media presence. Even if your business is never involved in an online dustup, social media offers an opportunity to market and promote your business and engage with your customers. Smartphones and tablets have made it even easier for people to go online.

Pay attention. Monitor the Internet for news about your brand. Routinely check online review sites (if appropriate) and social networking sites for references to your company, and run your company’s name through a search engine.

Be prepared. You can’t draft specific responses ahead of time, but you can identify your vulnerabilities and draft a response strategy. You’ll be well ahead of the game if you do this before a crisis hits rather than during one. You’ll also be able to dial down your emotions and respond more objectively. There’s another upside to identifying your vulnerabilities ahead of time: You have an opportunity to eliminate them.

Respond. Make sure you have the facts straight before you do anything. However, things can escalate rapidly online. So if you’re going to respond, do so quickly and publicly. That said, not every attack warrants a public response. The complaint may not be legitimate or the person complaining may be a troublemaker, in which case responding may be a waste of time.

Half Full

Any time your business is under attack — online or off — try looking at it as an opportunity to change some minds and bolster your reputation.

Get back to the job of running your business and leave the accounting to us! Call us at 208-215-2112 now and request a free consultation to get started.

Filed Under: Best Business Practices

Will the SECURE Act Affect Your Retirement Planning?

September 28, 2020 by admin

Senior couple walking together in the countryside, back viewThe Setting Every Community Up for Retirement Enhancement Act of 2019 (the SECURE Act) was signed into law on December 20, 2019. The Act will likely impact large numbers of working Americans as well those already retired. In general, the Act is intended to increase access to tax-advantaged retirement plans and to help prevent older Americans from outliving their assets.

Here are some of the changes that could affect your planning.

Delayed Deadline for Taking Required Minimum Distributions

Tax law has generally required individual retirement account (IRA) owners and retirement plan participants to begin taking required minimum distributions (RMDs) from their accounts once they reach age 70½. The new law pushes back the age at which these distributions must begin to age 72 for IRA owners and plan participants born on or after July 1, 1949. This change allows individuals to take advantage of their retirement account’s tax-deferred nature for a longer period.

No Age Limit for Making Traditional IRA Contributions

Beginning with the 2020 tax year, the new law eliminates the 70½ age limit for making annual contributions to traditional IRAs. This is a plus for those people who continue to work past age 70½ and want to keep saving for retirement on a tax-deferred basis.

Penalty-Free Birth and Adoption Distributions

The new law also expands the exceptions to the 10% penalty for early withdrawals from IRAs and other tax-deferred retirement plans by adding an exception for “qualified birth or adoption distributions” up to $5,000. The new law defines a “qualified” birth or adoption distribution as a withdrawal from an IRA or other eligible retirement plan made during the one-year period beginning on the date the IRA owner’s or the plan participant’s child is born or the adoptee’s adoption is finalized. If desired, parents may replenish their retirement savings by repaying the amount distributed.

Restrictions on Stretch IRAs

The new law places severe restrictions on the use of “stretch” IRAs. A stretch IRA generally permitted beneficiaries to take their RMDs from an inherited IRA over their life expectancy. Thus, beneficiaries were able to stretch payments from the inherited IRA over many years and potentially pass on the inherited IRA to their own beneficiaries. The SECURE Act changes the RMD rules for beneficiaries of IRA owners (and plan participants) who pass away in 2020 or later. Under the SECURE Act, the use of stretch IRAs is restricted to a limited group of IRA beneficiaries. The specific details on who is eligible to use stretch IRAs is complex, and IRA owners who base their estate plans on the use of a stretch IRA should consult with a financial professional to see how they might be impacted.

Small Business Retirement Plans

Good news if you own a small business — the SECURE Act provides incentives to make it easier for you to establish a retirement plan. Starting in 2020, eligible employers that establish a 401(k) or SIMPLE IRA plan with automatic enrollment may qualify for a new tax credit of $500 per year for up to three years. In addition, the existing credit for small employer plan startup costs has increased to as much as $5,000 per year for three years. Previously, the annual credit maximum was $500. Employers also have more time to establish a qualified retirement plan. Previously, a qualified plan, such as a profit sharing plan, had to be adopted by the last day of the employer’s tax year to be effective for that year. The SECURE Act allows a qualified plan to be adopted as late as the employer’s tax filing deadline (plus extensions).

Your financial and tax professionals can provide more details about these and other important SECURE Act changes and how they may affect your retirement planning.

From individual tax returns to complex tax strategies for small businesses, we institute cutting-edge tax strategies that are reliable, legal, and effective. Call our Coeur d’Alene, ID CPA firm now at 208-215-2112 to find out how we can decrease your tax obligations. We offer a free consultation to new clients so contact us today.

Filed Under: Best Business Practices

Get Your Business Costs Under Control Today

August 20, 2020 by admin

Analyzing electronic documentIncreasing your profits requires selling more and/or spending less. While building up your sales may require an extended effort, business costs are often very ripe for a quick trimming. Here are some possibilities.

Supplies and Other Purchases

Usually, in any business, relatively few items represent a very large share of all outlays. The first step in cutting expenses is, therefore, to identify your highest costs. You may be able to trim many of these costs by making sure you always bid out significant purchases or by more actively seeking less expensive alternatives.

For many companies, inventory carrying costs are a very significant expense. Focusing on matching your inventory quantities more closely to your short-term needs could result in significant savings.

Telecommunications and Other Services

The ongoing services you buy may also offer the potential for cost savings. Revisit your choice of telecommunications vendor and your usage.

Look carefully at your costs for financial services. If you borrow or maintain a line of credit, always compare the rates from more than one financing source before you commit. Make sure you are not paying higher-than-necessary fees for your company’s checking and deposit services.

Cash Management

To control cash outlays, take advantage of discounts for early payment whenever possible. And look to delay payments for as long as you can without giving up discounts.

On the receiving side, deposit all receipts daily. And always actively pursue collection of any invoices that are past due. To help control your working capital needs and, therefore, your credit costs, try to match any new liabilities to your anticipated cash flow.

Fixed Expenses

One other category worth examining is fixed expenses that are long-term commitments. While you usually can’t change these quickly, be aware of when a window for change will open and prepare well in advance by considering lower cost alternatives.

To learn more ways to control your business costs give us a call today. Our trained staff of professionals is always available to answer any questions you may have.

Get back to the job of running your business and leave the accounting to us! Call us at 208-215-2112 now and request a free consultation to get started.

Filed Under: Best Business Practices

General Overview of Business Deductions

July 31, 2020 by admin

 

Business team analyzing market researchGeneral Overview of Business Deductions

Business expenses are the cost of carrying on a trade or business, and there may be some tax breaks there. But a lot has changed in recent months, and the rules can be complicated.

Are there business deductions you can take advantage of? Yes, but first you have to make sure your expenses are truly business-related. The lines can blur, especially with a small business, because you generally cannot deduct personal, living or family expenses. However, if you have an expense for something that is used partly for business and partly for personal purposes, divide the total cost between the business and personal parts, and then deduct the business part.

An example: You borrow money and use 70% of it for business and the other 30% for a family vacation. You can deduct 70% of the interest as a business expense. The remaining 30% is personal interest and isn’t deductible.

Let’s look at business use of your car and your home:

  • Business use of your car: If you use your car in your business, you can deduct car expenses. If you use your car for both business and personal purposes, you must divide your expenses based on actual mileage.
  • Business use of your home: If you use part of your home for business, you may be able to deduct expenses for the business use of your home. These expenses include mortgage interest, insurance, utilities, repairs and depreciation.

Other types of business expenses? Let’s take a closer look:

  • Employees’ pay: You can generally deduct the pay you give your employees for the services they perform for your business.
  • Retirement plans: These are savings plans that offer you tax advantages to set aside money for your own, and your employees’, retirements.
  • Rent expense: Rent is any amount you pay for the use of property you don’t own. In general, you can deduct rent as an expense only if the rent is for property you use in your trade or business. If you have or will receive equity in or title to the property, the rent is not deductible.
  • Interest: Business interest expense is an amount charged for the use of money you borrowed for business activities.
  • Taxes: You can deduct various federal, state, local and foreign taxes directly attributable to your trade or business as business expenses.
  • Insurance: Generally, you can deduct the ordinary and necessary cost of insurance as a business expense, if it is for your trade, business or profession.

This list is not inclusive but endeavors to offer some common business expenses and explains what is and isn’t deductible. Of course, in some cases, expenses might need to be amortized — deducted over a period of several years — if they are startup costs or if they’re related to the purchase of business equipment.

You must capitalize, rather than deduct, some costs that are part of your investment in your business — these are called capital expenses. Capital expenses are considered assets in your business.

Of course, some business deductions can be very complex, so professional advice is necessary to make sure you’re getting what you’re owed without raising any red flags with the IRS. We’re here to help you with your business tax needs.

Get back to the job of running your business and leave the accounting to us! Call us at 208-215-2112 now and request a free consultation to get started.

Filed Under: Business Tax

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