Maintaining Corporation Status: To Reap the Benefits, Follow the Rules

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Businesses often choose to structure as a corporation, because it offers owners the strongest protection from personal liability by treating it as a separate legal entity. But if you’re not operating your business like a corporation, you risk losing the liability security that you count on.

Getting back to the basics
No matter how long you’ve been in business, there are some elemental rules of thumb that corporations should follow to maintain their status:

  • Include the corporation’s name on all company letterhead, checks and invoices
  • Make checks out in the corporation’s name, not yours or another individual’s
  • Avoid mixing personal affairs with corporate business
  • Maintain separate bank accounts and credit cards, and keep careful records of corporate transactions
  • File tax returns and pay any corporate taxes on time

Document everything
In addition, shareholder and director meetings should be held on a regular schedule, with official minutes on the proceedings. Corporate minutes should provide documentation of key financial and legal decisions, such as:

  • Authorization for a substantial loan to or from the corporation
  • Adoption of a retirement plan or approval to make a contribution to an existing plan (for example, a profit-sharing contribution)
  • Issuance of stock
  • Purchase of property or approval of a long-term lease

By observing these formalities, you’ll have solid records on hand if the IRS, a creditor or a company insider challenges critical decisions.

Questions?
Contact Magone & Company today at (973) 301-2300 to learn how we can help you keep your corporate operations on the right track.

Time to Pay Up! Why it’s in Your Best Interests to File Your Taxes Early

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With the filing deadline moved to July 15th, you may have put off filing your taxes for as long as possible. Maybe you even requested an extension for October 15th. Most taxpayers dread the tedious task of compiling their financial documents and filing their taxes. Unfortunately, the longer you procrastinate, the greater the chances that something will go wrong. No matter the deadline, it’s always smarter to file your taxes sooner rather than later. Here’s why:

Help avoid tax identity theft. Tax return fraud is one of the most common and fastest growing forms of identity theft. In a nutshell, an identity thief steals your employment information and Social Security number, and files a fraudulent tax return on your behalf. They can steal your refund, or put you in the hole owing back taxes you might not actually owe. By filing your taxes as early as possible, a thief won’t have the chance to file a fraudulent return.

Find and correct mistakes sooner. Give yourself more time to fix any mistakes on your tax documents. For example, your employer might record the wrong earnings on your W-2. If you discover the mistake right before the filing deadline, you aren’t going to have enough time to get it resolved. Your tax return will end up getting delayed, which can result in having to request an extension and accrue penalties and interest.

Pay smaller penalty fees. Unfortunately, many taxpayers underestimate their tax liability during the year. That means they underpay and end up owing the government money. The IRS charges taxpayers a penalty for underpaying their taxes, as well as interest on the amount of taxes that they owe. So the sooner you file and pay any remaining taxes, the smaller your financial penalty and interest will be. If you can’t pay up front, you may have tax relief options to help you settle your debt.

Get it over with. There’s no better tax relief than just finally taking care of your taxes. If you are one of the many taxpayers that get stressed over taxes, you will actually feel better if you don’t procrastinate filing your tax return. Even if you owe back taxes, having a firm like ours represent you can be worth it in the long run.

Magone & Company specializes in tax resolution, and we’re experts in navigating the IRS maze. Reach out to our firm at (973) 301-2300 to schedule a no-obligation confidential consultation to explain your options to permanently resolve your tax challenges.

Taxation in a Time of Crisis: 4 Tips to Make Tax Time Less Taxing

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Whether it’s a global pandemic shutting the economy down for months, a stock market crash that terrifies investors or a housing industry slide that makes real estate a risky bet, living through tough economic times is never easy. But how you handle yourself and your money during a crisis can make all the difference. If you do it right, you could emerge stronger, wiser and richer on the other side.

If your income is uncertain, it can be hard to predict how much you might owe the IRS or how you can make those payments. And if you’re self-employed or a gig worker, this economic uncertainty can be even greater. So what can you do about your taxes when the economy takes a downturn? Here are some tips to make tax time less taxing when a crisis hits.

  1. Research filing extensions and be aware of new deadlines. During a period of economic turmoil, tax filing deadlines may be extended or relaxed. Do your homework and see how much time you really have. In the wake of the COVID-19 pandemic, the IRS extended the normal tax filing deadline to July 15, and many state and local governments followed suit. The same may happen in future crises, and it never hurts to find out for sure.
  2. File promptly if you’re expecting a refund. Getting extra time to file can be a welcome relief if you owe money to the IRS. But if the government owes you, it makes sense to file as quickly as possible. The processing of tax refunds is often disrupted during a crisis, due to short staffing and different procedures suddenly in place. The sooner you file, the sooner you will have your tax refund money.
  3. File promptly even if you’re NOT expecting a refund or might owe back taxes. The IRS is starting to enforce collections again, but they’re not oblivious to the financial crisis that many Americans are experiencing. The unemployment rate recently jumped to almost 15% — the highest unemployment rate since the Great Depression. And the outlook is uncertain. The IRS will likely consider settlements and more favorable terms to taxpayers in trouble, especially if their income drastically decreased due to COVID-19. So it’s important to file your taxes and be current in order to explore tax relief options.
  4. Use investments to cover the amount you owe. It’s easy to feel depressed when the stock market is reaching new lows every day. That’s why engaging in strategic tax loss harvesting could reduce your tax bill substantially when filing season rolls around. Tax loss harvesting is when you sell investments at a loss in order to reduce your tax liability. If you have investments that have not worked out as you’d hoped, selling them now and locking in the loss can be a great way to offset capital gains and lower your taxable income. As always, this is general guidance for informational purposes only. Be sure to consult your tax advisor for advice specific to your situation.

An economic crisis can make tax time even more difficult. That’s why it’s critical to have the right CPAs in your corner. Reach out to the experts at Magone & Co at (973) 846-8265, and we’ll schedule a no-obligation confidential consultation to explain your options.

 

6 Trends That Can Impact Your Talent Acquisition Strategy

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Now more than ever, having the right talent is critical to the health of your business, giving it the best chance to grow and thrive. Though it may seem like a hirer’s market right now, having a flood of candidates can make finding the right fit even more of a challenge.

As any HR pro will tell you, success means prioritizing the candidate experience and staying up to date on these current talent acquisition trends:

Collaborative hiring. Did you know that 66% of candidates believe interactions with employees are the best way to get insight about a company? So when you have a team that loves where they work, why not involve them in the recruiting process? By tapping into the personal networks and reach of current team members, you won’t just expand your talent pool; you’ll also generate referrals from candidates who’ve heard about all the advantages of working for your company.

Personalization. Do you treat each job offer as a unique proposition for the individual or a generic package that you hand out to anyone filling that position? By tailoring employee perks and benefits to better meet the needs of specific demographics, your organization can set itself apart from the competition. From volunteer time off to student loan repayments, think about how you can make your next offer uniquely attractive to the person receiving it.

Workplace flexibility. Today’s job candidates are increasingly looking for companies that provide an appealing work/life balance. Offering remote workplace hours or even a four-day workweek can help attract new prospects and increase engagement with your current workforce. Flexibility can be the deciding factor on whether someone accepts your offer or goes elsewhere.

Culture. What makes your business stand out? How do you support your employees day in and day out? Twenty-two percent of American workers say that culture matters most when it comes to employee satisfaction. It’s critical to create and foster a workplace environment that makes people want to come to work each day.

Employer branding. In today’s job market, employer branding is more significant than ever. How visible is your brand? Is your presence consistent across every touchpoint? Cohesive branding done right will embody your business philosophy and values throughout every interaction, building your reputation as a desirable place to work.

Artificial Intelligence (AI). Automated recruiting platforms help hiring managers cut through the clutter of unqualified candidates and better focus their resources on bigger-picture issues. From screening resumes and scheduling interviews, AI can help ensure you’re only dealing with the best people for the job.

Step back and take a fresh look at how your organization approaches talent acquisition. If your recruiting efforts are falling flat, it may be time to rethink your strategy with these trends in mind. The success of your business is counting on it.

IRS Installments Agreements — When You Can’t Pay Your Taxes in Full

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Despite the IRS being slammed right now due to the pandemic, millions of Americans still owe back taxes for previous years. And they are increasingly finding themselves unable to pay up all at once. An installment agreement is just one of many tax relief options that may help you settle with the IRS or lower your amount owed.

COVID-19’s impact on collections
The current pandemic has forced many businesses to shut down or modify how they do business —including the IRS. Not only is the agency busy processing their usual tax returns, it’s also tasked with processing the stimulus payments for millions of Americans. To top it all off, the IRS is scrambling to adjust to the new filing deadline (July 15, 2020), while a large portion of its workforce is working from home, making things slower than usual.

As a result, the IRS announced its “People First Initiative”, taking unprecedented actions to ease the burden on Americans facing tax issues. These new changes range from postponing certain payments related to installment agreements and Offers in Compromise, to limiting certain enforcement actions.

When the bill comes due
Despite their immediate actions, the IRS will soon flip the enforcement switch back on. Come July 15th, a lot of people who made higher income in 2019 will likely owe back taxes. Failure to pay your tax bill immediately may result in penalties and interest on the balance due after July 15th. If you find yourself unable to pay in full, an installment agreement may help you settle your tax burden over a period of time.

How installment agreements work
The IRS divides their installment plans by taxpayers who owe more than $50,000 and less than $50,000:

Taxpayers owing less than $50,000 may request an installment agreement via the IRS website, by mailing Form 9465-FS Installment Agreement Request or by phone at (800) 829-1040. You’ll need to provide your Social Security number, date of birth, caller ID from your recent IRS notice, PIN number or AGI, bank address, employer address and the proposed monthly payment amount.

Taxpayers owing more than $50,000 may request an installment agreement by filling out form 433-F Collection Information Statement. This form requires information regarding your bank accounts, lines of credit, real estate, total number of dependents, assets, credit cards, wages, non-wage household income, monthly living expenses, down payment amount and proposed monthly payment.

Installment agreements require a minimum monthly payment of $25, and can vary from 120 days to 60 months, depending on your ability to repay. Installment agreements that take more than 120 days also require a set-up fee. You may be eligible for a decreased fee if you meet their low income guidelines. Also note that the IRS charges a reinstatement fee if you don’t pay your bill and your agreement goes into default.

Help is a call away
At Magone & Company, we can help you navigate the IRS maze and help ensure that you’re on the right payment plan. Don’t hesitate to reach out at (973) 301-2300 to schedule a no-obligation, confidential consultation to explain your options to permanently resolve your tax issue.

Returning to Business: The COVID-19 Comeback

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Business leaders across the country are focused on overcoming the onslaught of challenges brought on by COVID-19. For many, it was a revelation of strengths and weaknesses. Others with more adaptable business models may have been able to weather the storm and come back poised for growth — but not so fast. Literally.

As business gets back on track and your phone starts ringing again, you may be thinking ahead about expansion plans. Perhaps you’d started some acquisition due diligence before the pandemic hit. Or a quarantine brainstorm has you exploring a product line extension or new service offering.

Keep in mind, the world has changed, and reopening and expanding all at once may not be very realistic. Set a timeline, prioritize your most important actions and be wary of these six mistakes before taking the plunge:

#1 Not prioritizing your spending wisely

If expansion is the ultimate goal, you need to get your ducks in a row ASAP. While investing in hiring and staff training may be a priority, chances are inventory may also need to be purchased, and your marketing budget may need a boost to get things off the ground. Put the money where it’s needed most now.

#2 Letting quality suffer

You’re ramped up and ready to spring back into action. But as your business becomes fixated on quantity — whether it’s servicing more customers or increasing production to keep cash coming in — it’s easy to let quality fall to the wayside. Keep in mind that first and foremost, you’re in business to provide superior products and services. If buyers lose faith, you may have a hard time repairing the damage.

#3 Not having enough cash on hand

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’t suffer from cash flow problems. These days, budgeting and accurate cash flow projections are more crucial than ever before.

#4 Dropping the ball on customer service

Customer expectations may be somewhat unrealistic if they’re looking for the same pre-pandemic level of service, especially in hard-hit sectors like hospitality or personal care services. If you don’t have the staff to handle a sudden flood of calls, inquiries and orders or appointments, your customers may not be as forgiving as you’d like. Planning and communication go a long way in  managing buyer expectations.

#5 Putting all your eggs in one basket

Companies on a path toward growth can set themselves up for failure by depending on one particular customer, vendor or employee for the majority of their success. The truth is, your employee of the month may be one job offer away from working for the competition. Plus, vendors you relied on prior to the pandemic may not be in the position to immediately support your business at the same volume.

#6 Not scaling your technology

Every growing business needs technology that can grow with it, ensuring all systems and processes are running efficiently. From data storage solutions to cloud-based applications, what does your business need now, and what technology may it require down the line? Consider the increase in remote working that you may have adopted in recent months. Do you have the technology to sustain this model and add more employees to the mix if necessary? 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 — especially now as your business settles into the new normal. You want to avoid costly mistakes that can hurt your business and set you back even further. Not sure where to start? At NJ CPA firm Magone & Company, we can help you plan for a growth strategy that sets you up for long-term success. Reach out to us today at (973) 301-2300.