Nick Magone, CPA, CGMA, CFP®

SBA disaster relief for small businesses & nonprofits in NJ and other states

by

Small business owners and nonprofit agencies may have been tossed a lifeline from the U.S. Small Business Administration, which just named New Jersey and several other states a declared disaster state in the wake of the Coronavirus pandemic.

This declaration will allow New Jersey small business owners and non-profit organizations impacted by COVID-19 to apply for SBA Economic Injury Disaster Loans (EIDLs) that provide financial assistance to help support their businesses.

EIDLs are secured loans up to $2,000,000 as determined by the SBA, with a maximum interest rate of 3.75% for small businesses — less if you are a non-profit organization. These working capital loans are designed to help small businesses and most private, non-profit organizations of all sizes meet their ordinary and necessary financial obligations like payroll and vendor payments that cannot be met as a direct result of a disaster.

These loans are intended to assist through the disaster recovery period, so we encourage every small business and nonprofit that qualifies to register and apply ASAP whether or not you ultimately end up requiring assistance. Note that these loans cannot be used to refinance long-term debt of a business.

Questions? The Magone & Company team of business advisors is here to help. Contact us if we can be of assistance.

Guess what? The IRS knows about your un-filed tax returns

by

No one likes filing their taxes, but not filing them isn’t just a bad idea. It’s illegal. The IRS keeps detailed records, and chances are they’ve already noticed your lack of compliance. If you’re guilty of an unfiled return, it’s only a matter of time before they catch up with you and demand payment. So, do yourself and your finances a favor, and bring your return filing status up to date as soon as possible.

Here’s how to get started…

Consult with a professional. While the desire for a clean slate is commendable, now is not the time to go it alone. Before filing missing returns, you may want to consult with a qualified tax professional who can offer advice and support, from gathering the proper documents to ensuring that the necessary paperwork is completed correctly.

Gather documentation. Sort through your records and compile all the tax-related information you have on hand. If you’re missing W2 or 1099 forms from past years, your tax pro has the ability to help retrieve them. A professional can also help you construct your income and expenses when records have been lost or destroyed.

Run the numbers. A tax professional can file on your behalf, so you can learn the exact figures you may owe. According to the IRS, a surprising number of unfiled returns may actually be due for a refund. In fact, unfiled 2015 federal income tax returns left 1.4 billion in unclaimed refunds on the table.

If you’re dealing with the potential repercussions of unfiled tax returns, contact the tax resolution specialists at NJ CPA firm Magone & Company at (973) 301-2300 to schedule a no-obligation consultation, and get back on good terms with the IRS.

The latest guidance on tax payment relief

by

We have received guidance regarding the special payment relief proposed by the Treasury Department on March 17. This payment relief includes:

Individuals: Income tax payment deadlines for individual returns, with a due date of April 15, 2020, are being automatically extended until July 15, 2020, for up to $1 million of the 2019 tax due. This payment relief applies to all individual returns, including self-employed individuals, and all entities other than C corporations, such as trusts or estates. The IRS will automatically provide this relief to taxpayers. You do not need to file any additional forms or call the IRS to qualify for this relief.

Corporations: For C corporations, income tax payment deadlines are being automatically extended until July 15, 2020, for up to $10 million of the 2019 tax due.

This relief also includes estimated tax payments for tax year 2020 that are due on April 15, 2020. Penalties and interest will begin to accrue on any remaining unpaid balances as of July 16, 2020. If you file your tax return or request an extension of time to file by April 15, 2020, you will automatically avoid interest and penalties on the taxes paid by July 15.

We remind our clients and friends that for the vast majority, your tax return is due on April 15, 2020 without extension. This relief does not extend the filing date, only the payment of the tax liability.

We also remind you this relief applies only to federal income tax (including tax on self-employment income) payments otherwise due April 15, 2020, not state tax payments or deposits or payments of any other type of federal tax.

Here is the latest on the payment deferral and filing due dates for the states that have published information:

  • California — Filing and payments extended until June 15, 2020. Includes quarterly estimated tax payments.
  • Connecticut — Business returns extended until June 15, 2020, individuals until July 15th.
  • Michigan, Colorado, Georgia, Maryland, Massachusetts, Ohio, Oregon — State treasury departments have said they will mirror IRS guidance; however, there have been no official pronouncements issued yet.
  • South Carolina – Filing and payments extended until June 1, 2020 for individuals and corporate taxpayers. Quarterly estimates were not addressed.

Many state treasury departments are closed, but monitoring the IRS guidance. We continue to monitor various state payment deferral plans and due dates, and will communicate them if and when they are adopted.

Our team of tax professionals is here for you during this uncertain time. Please call the office at 973-301-2300 with any questions.

Are you setting the right pace for business growth? 6 mistakes that can cost you

by

The market is great. Orders are coming in. Customers are happy. As we head toward Q2 of 2020, it may be an opportune time for you to focus on business growth.

But not so fast. Literally.

According to a recent study, two-thirds of the companies on the Inc 5,000 fastest-growing companies list have gotten smaller, been sold or closed their doors indefinitely, just five to eight years after earning the publication’s distinction.Business growth is good — if you’re managing it properly. As you’re planning for an expansion, be sure you’re making decisions that’ll support your business for the long haul.

From overestimating sales to hasty hiring missteps, the wrong moves can create disasters that you never saw coming.

  • Letting quality suffer. As your business becomes fixated on quantity — whether it’s servicing more customers or increasing product production — it’s easy to let quality slip. Keep in mind that first and foremost, you’re in business to provide superior products and services. If buyers lose faith in your brand, you may have a hard time repairing the damage.
  • Sluggish cash flow. Businesses need (a lot of) money to operate. As you’re growing, you may find that spending starts to outweigh revenue. Just because money is coming in the door doesn’t mean you can sidestep cash flow growing pains. It’s important to remain strategic and conservative, so you don’t end up in the hole.
  • Hasty hiring decisions. You’re expanding fast, and that means you may also need to expand your team. When time is of the essence and you’re rushing to fill a need, you may not allocate the necessary time or resources to find the best fit for critical positions. Remember that you want top-notch employees working on your behalf, and that process deserves careful time and consideration, as well as a comprehensive onboarding strategy.
  • Dropping the ball on service. Customer service demands will continue to increase with your business. If you don’t have the staff to handle the volume of product-related calls, orders or inquiries, your customers will feel the loss of customer care and personal attention, which may be perceived as poor management.
  • Putting all your eggs in one basket. Growing companies can set themselves up for failure by depending on one particular customer, vendor or employee for the majority of their success. The truth is, even the most loyal customers and vendors can jump ship and go elsewhere, and your employee of the month may be one job offer away from working for the competition.
  • Not scaling your technology. Every growing business needs technology that can grow along with it, ensuring your systems and processes are running efficiently. From data storage solutions to cloud-based applications, what does your business need now, and what technology might it require down the line? Don’t invest in solutions that aren’t going to serve your size, goals and budget for the future.

The tortoise or the hare?
Sometimes, in the race to grow, it’s better to step back and take your time to the finish line, so you can avoid costly mistakes that can hurt your business. If you need objective guidance mapping out a plan for long-term success, let us know how we can help.

Tackling your own business tax issues? Bad idea

by

Running a small business means wearing multiple hats — from salesperson to HR manager to collection agent. But should you add tax expert to your growing list of duties?

You may think preparing tax returns for your small business is no big deal. After all, there’s no shortage of tax software options and apps on the market that can help simplify the do-it-yourself route. But before you fill out the endless forms and scan a mountain of receipts, consider these three compelling reasons to leave your taxes to the professionals:

  1. It’s too easy to make a mistake. Even a small business tax return can span dozens of pages. And with so many figures and numbers, there are literally thousands of opportunities for an error to occur. Inadvertent blunders could mean hefty overpayments. Or worse, they could trigger an audit and tie your up business for months.
  2. If there’s an audit, you’re left to fend for yourself. The IRS is increasingly setting its sights on the small business community, and that means you have a target on your back. As an individual taxpayer, your chances of being audited are less than 1%. But as business owner who’s filing a Schedule C, the odds are far higher. Would you know how to proceed without the knowledge of a trusted tax professional?
  3. The tax laws are always changing. Even if you’re an expert on the current tax code, that expertise will not last long. Every new year brings a slew of changes, and many directly impact small businesses. If you rely on your own knowledge, you could miss a vital update that could save your firm money or get hit with a penalty that you didn’t know existed.

Putting a price tag on peace of mind
 Having your taxes professionally prepared can be one of the best investments you make this year. If you don’t already have a trusted tax professional on your team, give Magone & Company a call at (973) 301-2300.

Business location, location, location: The best and worst U.S. states to set up shop

by

Whether you’re launching a business or expanding an existing one, location plays a critical role in the formula for success. Choosing where to open your doors can make or break your entire business plan — especially for smaller startups.

To give you a head start on identifying possible locations for your next venture, WalletHub recently published a study that ranks all U.S. states on the optimal conditions for new businesses. They compared all states across three elements: the overall business environment, access to resources and business costs.

How the states stack up
Texas claims the number one overall spot, also ranking number one in business environment, which includes the average length of the work week, five-year business survival rate and the number of startups per capita. While the Lone Star State earned a lackluster rating for costs from WalletHub, the Tax Foundation’s 2019 State Business Tax Climate Index reminded entrepreneurs that Texas doesn’t have an individual income tax or corporate income tax, lending to the state’s appeal for a startup.

Spending is a necessary part of building a business, but lower operating costs can of course help increase your profit margins and boost your bottom line. With costs in mind, Oklahoma and Mississippi were found to be the most affordable states for doing business, taking the number one and number two spots based on:

  • Office space affordability
  • Labor costs
  • Insurance premiums
  • Cost of living

Looking to stay in the New York tri-state area? New Jersey is 49th on the overall WalletHub list, ranking 50th in business costs and 44th in business environment. In terms of cost, New York clinches the 49th spot, but ranks 42nd overall. And thanks to New York City, it’s no surprise that the Empire State comes in at an impressive number six for access to business resources. Connecticut rounds out the tri-state, ranking 48th in business costs and 48th in overall business environment.

Choose wisely based on what matters to you
One survey isn’t going to dictate your business’s optimal location. Be sure to consider other factors that can play a pivotable role. Are competitors in the area? Is the location consistent with your brand’s style and image? Do the demographics match your ideal customer profile?

According to the Bureau of Labor Statistics’ Business Employment Dynamics, just 50% of businesses with employees make it to their fifth year in business. To increase your survival odds, do your research and pick a location that will work for your current and future needs.