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Retirement Saving Tips While Running a Business

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Senior man, insurance and contract with financial advisor and retirement plan to sign. Document, pension deal and business analyst with male person and paperwork in office for signature of willRunning a business is demanding, but saving for retirement is equally important. Here are some practical tips for entrepreneurs to balance both.

1. Set up a Retirement Plan Early

Consider retirement plans like a SEP IRA, SIMPLE IRA, or Solo 401(k)** to benefit from tax deductions and higher contribution limits. Choose a plan that fits your business size and cash flow.

2. Automate Contributions

Automate your retirement contributions to ensure consistent saving, even when cash flow is tight. Starting small and increasing contributions over time is a great way to stay disciplined.

3. Diversify Your Investments

Don’t rely solely on your business for retirement. Invest in stocks, real estate, or other assets to reduce risk and build multiple income streams for retirement.

4. Prioritize Personal Savings

Set aside some profits for personal savings, including an emergency fund and a taxable brokerage account, to avoid dipping into your retirement fund during business downturns.

5. Plan for Business Succession

Develop a business succession or exit plan early. Whether selling, passing it to family, or appointing a successor, planning will help ensure your retirement is well-funded.

6. Maximize Tax Benefits

Take advantage of tax benefits like deductions on retirement contributions and catch-up contributions if you’re over 50.

7. Consult a Financial Advisor

Work with an advisor to optimize your savings, minimize taxes, and plan for long-term financial security.

Balancing business operations with retirement planning is possible. By setting up the right plan, automating savings, and diversifying your investments, you can secure both your business and your retirement. Start early and stay consistent for the best results.

Understanding the Estate and Gift Tax Exemption

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The estate and gift tax exemption is a crucial aspect of tax planning for individuals looking to transfer wealth while minimizing tax liabilities. This exemption allows individuals to transfer a certain amount of assets either during their lifetime or upon their death without incurring federal estate or gift taxes.

Understanding the Estate and Gift Tax Exemption

The estate and gift tax exemption is set by the federal government and adjusted periodically for inflation. It represents the total amount an individual can transfer without being subject to federal estate or gift taxes. If the total value of gifts and estate transfers exceeds this threshold, the excess is subject to tax at the prevailing rate.

Current Exemption Limits

As of recent tax years, the exemption limits have been historically high, allowing individuals and married couples to shield substantial wealth from taxation. For instance:

  • 2023 Exemption: $12.92 million per individual ($25.84 million for married couples)
  • 2024 Adjustments: Expected to increase with inflation

These exemptions are set to sunset after 2025, potentially reducing the exemption limit unless Congress takes action to extend or modify the provisions.

Gift Tax Annual Exclusion

In addition to the lifetime exemption, individuals can take advantage of the annual gift tax exclusion. This allows taxpayers to give a certain amount per recipient each year without affecting their lifetime exemption. For 2023, this exclusion is set at $17,000 per recipient.

Planning Strategies

  • Utilize Annual Gifting – Leveraging the annual gift tax exclusion can help reduce taxable estates over time.
  • Establish Trusts – Irrevocable trusts can provide tax benefits while protecting assets for future generations.
  • Consider Charitable Giving – Charitable contributions can reduce taxable estates and provide philanthropic benefits.
  • Monitor Legislative Changes – Since exemption limits are subject to legislative revisions, staying informed about potential changes is critical for effective planning.

Conclusion

The estate and gift tax exemption provides significant opportunities for wealth transfer planning. Understanding current limits and employing strategic gifting techniques can help individuals and families minimize tax liabilities while ensuring a smooth transfer of assets. Consulting with tax and estate planning professionals is advisable to navigate complex tax regulations and maximize benefits.

5 Often-Overlooked Tax Credits for Your Small Business

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Notebook with tax credit sign on a table. Business concept.As a small business owner, tax time can be stressful. That’s why ensuring you’re garnering every benefit possible is essential. Many small businesses overlook some huge benefits when it comes to tax credits. This article reveals five of the most overlooked tax credits for small businesses. Read on to determine if any of these apply to your business.

Tax Credit vs. Tax Deduction

Before jumping to five tax credits often overlooked by small businesses, let’s clarify the difference between a tax credit and a tax deduction.

While tax deductions reduce your taxable income resulting in you paying a lower tax amount, tax credits are a dollar amount deducted from the taxes you owe. So, if you receive a tax credit of $500, you subtract $500 from taxes due.

Tax credits can be highly beneficial come tax time, so knowing which ones your small business is eligible to claim is good. Unfortunately, there are quite a few that many business owners aren’t aware of.

Here are five tax credits that are the most overlooked by small businesses. After you review the list, check with your accountant to see if your business is eligible for these or other tax credits to reduce the amount you owe to the IRS.

5 Tax Credits You May be Overlooking

1. Retirement Saver’s Credit

For small businesses that start a retirement plan for their employees, the IRS offers this credit to offset some of the startup costs they consider “ordinary and necessary.” Your business must employ fewer than 100 employees and not have had a retirement plan previously. The credit is for 50 percent of your startup costs, with a maximum credit of $500.

This tax credit can be claimed for three years, beginning the year before your plan becomes effective. If you do not currently offer a retirement savings plan for your employees, now may be the time to establish one.

2. Research & Development Tax Credit

The R&D tax credit is one of the most overlooked because small business owners not in a “research” field with a laboratory setting often blaze right past this one. But according to the IRS, “research” isn’t necessarily in a lab.

To qualify for this tax credit, a business must improve a product or process, often occurring in many companies as part of their everyday operations. For example, you may qualify if you own a software company and develop or improve an IT process.

Developing, designing, enhancing, or improving a product or process related to your business can qualify you for a credit of 13 cents on every dollar. Of course, you’ll want to confirm whether your business qualifies, identify qualifying activities, and keep copious records so that you can back up your claim to the credit.

3. Rehabilitation Credit (Historic Preservation)

If your business spent money to rehabilitate or renovate a historic structure, this credit likely applies to you. A 20 percent tax credit is available for rehabilitating historic, income-producing buildings determined by the Secretary of the Interior to be “certified historic structures.”

This does not apply to residential structures; however, many businesses purchase historic properties to house their office, restaurant, or other business. Historic structures are certified by the National Park Service, which reports to the IRS. If that applies to the structure where your business is housed, it is worth reviewing this credit with your accountant.

4. Empowerment Zone Employment Credit

Empowerment Zones (EZ) are distressed urban and rural areas needing revitalization. The purpose of the EZ credit is to encourage business owners to operate in these areas and employ EZ residents.

The credit is 20 percent of qualified wages paid during a calendar year. Businesses are eligible for a wage credit of up to $3,000 annually for each eligible employee.

5. Plug-In Electric Vehicle Credit

Suppose you purchase a new plug-in electric vehicle (EV) for your business between 2023 and 2032. In that case, you may qualify for a tax credit of $7,500. To be eligible for the credit, your adjusted gross income (AGI) must not exceed $150,000 in the year you take delivery of the vehicle or the year before (whichever is less).

The EV must meet qualifications regarding battery capacity, retail price, and weight. Speak to your tax accountant for the guidelines and qualifications if you purchased a plug-in EV for your business.

Ensuring you claim every tax credit your small business is entitled to is the key to paying the lowest tax possible. There are dozens of tax credits that small businesses are eligible for. Be sure to have your accountant or CPA review your eligibility for maximum savings come tax time.Notebook with tax credit sign on a table. Business concept.

How to Set Up a Bookkeeping Cycle in QuickBooks Online

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Young female financier with calculator working inside office at workplace, businesswoman behind paper work satisfied smiling, good achievement results, working with contract, accounts and charts.Do you have a regular schedule you follow with your QuickBooks Online work? It can be a good strategy.

Bookkeeping is cyclical. You tend to do the same things over and over, which may get to be a bit of a drag for you. QuickBooks Online can automate some processes, and it certainly helps minimize duplicate data entry, but you’ll undoubtedly find yourself growing weary of repetitive tasks.

We can’t help you avoid this drudgery completely, but we’d like to suggest a new, more organized way to attack your accounting tasks in 2025. It could be especially helpful if you’re a new QuickBooks Online user and don’t have a routine established yet. But even long-time users might find this routine helpful. It can keep things from slipping through the cracks and simply make you more productive and confident that you’re addressing all of your accounting issues.

Give it a try and see what you think.

What Should You Do Every Day?

Even if you don’t have expenses to enter or invoices to process, it’s a good idea to log into QuickBooks Online every day. If you’ve connected your online bank and credit cards to the site (which you absolutely should), there will probably be transactions to go over. So after you’ve taken a look at your Dashboard (especially your Tasks), hover your mouse over Transactions in the toolbar and click Bank transactions.

Click Update in the upper right to make sure you’re seeing the most recent transactions. If you’re doing this every day, it shouldn’t take long to go over the income and expenses that have been imported since you last logged in.

You should be looking at newly imported transactions daily and completing the fields provided as comprehensively as possible.

If you don’t know what Match or Record as transfer mean, we should schedule a session to go over transaction management in QuickBooks Online.

Every Week

You need to be monitoring your accounts receivable and payables on a weekly basis – at minimum. There are two ways to do this. You can:

Run reports.

• Click Reports in the toolbar and scroll down first to Who owes you. Run Accounts receivable aging summary. QuickBooks will display past-due transactions in several columns (Current, 1-30 days, 31-60 days, 61-90 days, and 91 and over). If you’re keeping up with your receivables, you shouldn’t be seeing numbers in most of the columns, unless you’re in a known collections process.

• Scroll down to What you owe and run Accounts payable aging summary. This works like the aging receivables report. Again, you shouldn’t be seeing much activity here unless you’re in a payment dispute with a vendor.

• You can also run the Open Invoices report to quickly see the Due date and Open balance entries here. Ditto the Unpaid Bills report.

Consult the All sales page.

Hover your mouse over Sales in the toolbar and click All sales. The colored bars and numbers at the top of the page show you the status of your sales. Click the orange bar in the middle to see a list of overdue invoices. If there are any, you can set a Send reminder by clicking the corresponding down arrow in the Action column. While you’re there, look at estimates and unbilled income and take any action needed.

Every Two Weeks (or more often, depending on product volume)

If you sell products and track inventory in QuickBooks Online, you should keep a close eye on your stock to see if you need to:

• Reorder,

• Bring in a larger supply because something is selling well, or,

• Discount or discontinue a product because it’s not selling.

Click Reports in the toolbar and run Product/Service List under Sales and customers and look at the Quantity on hand column.

Every Month

Reconcile your accounts (Transactions | Reconcile).

It’s really, really important that you reconcile your accounts every month. We can help you with this.

No one likes to do this, but it’s way easier to do regular reconciliations than it is to have to go back several months to track down a problem. If you’ve never done this in QuickBooks Online, it works similarly to how you used to reconcile your accounts by comparing a bank statement and your paper checkbook register. Only you’re comparing your bank or credit card statements to your accounts in QuickBooks Online. Before you start, make sure you’ve matched and categorized all of your downloaded transactions.

Run a Profit and Loss report for the last month.

Click Reports in the toolbar and click Profit and Loss under Business overview. Did you make a profit last month?

Every Quarter

If you’re planning to apply for a loan or looking for an investor, or if you just want a deeper understanding of how your business is doing, consider having us create and analyze standard financial reports for you, like the Balance Sheet and Statement of Cash Flows. You can run these yourself in QuickBooks Online, but it really takes an accountant’s eye to understand and interpret them.

If you decide that you want to work with us in any capacity, like helping you with reconciliation and/or modifying your Chart of Accounts, there’s another way we can help. If you ever have trouble categorizing an expense, select Uncategorized Expenses as the Category. If we’re meeting with you once a month, we can run a report on these and help you categorize them correctly.

Valuing Your Estate’s Assets

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Estate planning abstract concept vector illustration. Real estate assets control, keep documents in order, trust account, attorney advise, life insurance, personal possession abstract metaphor.In estate planning, you often come across the term “fair market value.” However, some assets are easier to value than others.

The IRS defines fair market value as “the value at which the property would change hands between a willing buyer and a willing seller, neither being under any compulsion to buy or to sell and both having reasonable knowledge of relevant facts.”

Some assets are easily valued. A stock, for example, that is listed on a major exchange can be valued simply by averaging the highest and lowest quoted selling price for that day. That price, multiplied by the number of shares you own, gives you the value of your stock on that day. Establishing value on most other property is not quite as easy, though. Let’s look at other forms of property and how they might be valued for estate tax purposes.

  • Real property. There are numerous factors that have to be considered, such as the size, shape, and location of the property, zoning restrictions, its potential use, and the value of surrounding property. The value of the buildings depends on whether they are rental properties, the present cost of reproducing them, and their loss of value because of depreciation. Also, certain properties, such as farm or business property, have special valuation issues that must be considered for estate tax purposes.
  • Personal property. Property such as your car, furniture, jewelry, etc., will be valued according to the definition mentioned above. If you have a house full of possessions, each object will be valued separately. Professional appraisals may be necessary for items such as collectibles or one-of-a-kind possessions.
  • Life insurance. Whether or not life insurance will be included in your estate depends on a number of factors. Do you own the policy or policies? Did you hold any incidents of ownership at the time of your death or did you transfer the ownership or incidents of ownership within three years of your death? Also, any insurance proceeds payable to your estate will be included in your estate for estate tax purposes. The value of the insurance is generally the lump-sum amount of the insurance proceeds.
  • Stock of closely held corporations. A professional appraisal is usually required. This stock is not often traded and, as a result, is difficult to value. Factors in valuation include: the nature and history of the business, its financial condition, its future outlook, its goodwill, and the market price of the stock of corporations in a similar business.
  • Professional practice. This is more difficult to value than other types of businesses because so much is dependent on the professional’s expertise. If, for example, a dentist dies, his or her family can’t simply take over the practice unless a family member happens to be a licensed dentist. The valuation will depend to a great degree on the practice’s client base, fee structure, competition, source of payments, strength of staff, location, and assets.

Regularly putting a value on your estate is a good idea because it allows you to plan for the payment of bequests, debts, and estate taxes. But it is only one step in the estate planning process. Your legal, tax, and financial professionals can help you understand the steps you need to take.

Weighing Your Options: Promoting vs Hiring Externally

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Business people, hand shake and success in meeting, support and applause, hiring or onboarding with team. Collaboration, shaking hands and congratulations, promotion and achievement with diversityIt’s a quite common dilemma to figure out if you need to hire externally or promote from within to see improvement with your business. There are benefits to both. We will now go over the pros and cons to each side.

Hiring Externally 

Pros 

  • Can help a company gain new perspectives – Oftentimes, hiring a new candidate will allow businesses to gain new ideas that they would not have gotten internally. These hires could be from a different industry and their ideas could make a difference. They also might see flaws in your business model that you were too close to see. The external hires could help improve your business due to their original distance.
  • Gives you more people to consider –  When looking at a pool of candidates for a job, you are able to have a wider pool of people when hiring externally. If you hire internally, it’s going to be a smaller pool. You also could be exposed to people of higher skill sets than the employees you currently have on your team.
  • No conflict within the existing team – Employees in your business will not feel like they are competing for a position if it is already announced to be an external hire joining the team. This makes the environment calmer and you don’t need to worry about any potential conflict.

Cons 

  • More time and money searching – It can take a while to set up the hiring platforms and advertisements saying that you are looking to hire. If the need for a person is immediate, it will be hard to fill it right away due to the time setting up the logistics.
  • You don’t get all the information from their resume – At the end of the day, you only have a few interviews to be able to determine whether or not this person is good for the job. You can look at references but there still can be uncertainty with the offer.
  • You don’t know for certain that they will fit into the office dynamic – When people interview, they are on their best behavior and talk up their abilities and strengths. You can never be certain that they will fit in with your employees and your pace of work. You don’t know their true personality and how well that will mesh with the office environment.

Promoting from Within

Pros 

  • Positive morale for staff – Hiring from within shows that an employee’s work is valued and they will be rewarded for their time going above and beyond expectations. This will also show other employees that if they work hard, they could be promoted in the future. If the promotion is for a managerial role, people can feel more comfortable that they know who they will be working with than an outside recruit.
  • Keep your costs down – Internal recruits will save you money because you don’t need to spend money on external recruiting. You will not need to spend money on sites promoting your position.
  • You know the candidate – Interviews can be much more relaxed when you know the applicants from personally working with them. This allows you to skip the awkwardness of a first interview and ask them what they hope to contribute in the new position.

Cons

  • Stuck in an endless loop of filling positions – You probably will now need to fill in your promoted employee’s position unless they are just getting a promotion of responsibilities rather than a completely different title. This can be frustrating because you probably would have to hire an external candidate to end the repetition of hiring to fill.
  • Lack of change – You are keeping the same ideas that have been in your office already. This may promote a sense of conformity with ideas. The culture will continue to be the same because there is nothing causing a change. You just may lack some originality due to promoting and not hiring externally.
  • Competition between workers – People may become competitive with a position opening up. If employees don’t like the person who gets the promotion, they may leave because they don’t feel properly supported. They also may leave because they don’t feel valued if someone with less experience in the company gets the promotion instead of them.

Overall, consider your employees and the need within your organization to determine whether or not it would be more beneficial to promote or hire externally.