business - Linkenheimer LLP CPAs & Advisors

Solo Business Owner? There’s a 401(k) For That

If you own a successful small business with no employees, you might be ready to set up a retirement plan. Now a 401(k) might seem way out of your reach — only bigger companies can manage one of those, right? Not necessarily.

Two ways to contribute

With a solo 401(k), the self-employed can make large annual deductible contributions to a qualified (that is, tax-advantaged) retirement account. However, this prime nest-egg-building opportunity comes with some administrative complexity.

How much can you contribute? For the 2023 tax year, you can make an “elective deferral contribution” of up to $22,500 of your net self-employment (SE) income to a solo 401(k). If you’ll be 50 or older as of December 31, 2023, you can make additional catch-up contributions up to $7,500 for a grand total of $30,000.

On top of your elective deferral contribution, an additional contribution of up to 25% (depending on your business structure) of net SE income is also permitted. This additional pay-in is called an “employer contribution,” though of course there’s no employer other than you when you’re self-employed.

For purposes of calculating the employer contribution, your net SE income isn’t reduced by your elective deferral contribution. So, for […]

By Linkenheimer LLP|2023-07-24T14:57:25+00:00July 24th, 2023|401k, business|0 Comments

Starting a Business? How Expenses Will Be Treated On Your Tax Return

Government officials saw a large increase in the number of new businesses launched during the COVID-19 pandemic. And the U.S. Census Bureau reports that business applications are still increasing slightly (up 0.4% from April 2023 to May 2023). The Bureau measures this by tracking the number of businesses applying for Employer Identification Numbers.

If you’re one of the entrepreneurs, you may not know that many of the expenses incurred by start-ups can’t be currently deducted on your tax return. You should be aware that the way you handle some of your initial expenses can make a large difference in your federal tax bill.

Handling expenses

If you’re starting or planning to launch a new business, here are three rules to keep in mind:

Start-up costs include those incurred or paid while creating an active trade or business — or investigating the creation or acquisition of one.
Under the tax code, taxpayers can elect to deduct up to $5,000 of business start-up and $5,000 of organizational costs in the year the business begins. As you know, $5,000 doesn’t go very far these days! And the $5,000 deduction is reduced dollar-for-dollar by the amount by which your […]

By Linkenheimer LLP|2023-07-03T17:20:36+00:00July 3rd, 2023|business, deduction, expensing|0 Comments

The Benefits of Operating Your Company with a “For Sale” Mindset

Selling your business may not be a current goal or something you plan to pursue in the future. However, it’s important not to dismiss the idea entirely, as running your company as if it were up for sale can bring numerous advantages. It is a strategic approach that emphasizes efficiency, organization, and value creation. By adopting this mindset, you can enhance your business operations, attract potential buyers, and maximize its long-term success. It also enables you to maintain excellent business records and address minor issues before they escalate into major problems.

Define Your Vision and Goals

Clearly articulate your long-term vision for the business and establish specific goals you want to achieve. Having a clear direction will help guide your decisions and actions.

Streamline Policies

Review and optimize your business processes to increase efficiency and eliminate any unnecessary steps or bottlenecks. Identify areas that can benefit from automation, technology, or outsourcing to improve productivity.

Imagine you’re in an elevator with a potential buyer, and you have a brief moment to describe your company. What would you say? Having a concise, easily understandable vision for your business is vital not only for appealing to outside buyers but also […]

By Linkenheimer LLP|2023-06-26T19:25:46+00:00June 26th, 2023|business|0 Comments

Why Businesses May Want to Consider ESG in Strategic Planning

When engaging in strategic planning, business owners and their leadership teams must consider various factors. These commonly include the state of your industry, the national and local economies, the company’s financial position and cash flow, and opportunities in the marketplace.

However, in today’s world, where transparency is everything, another factor that may be important for some companies is a clearly defined approach to environmental, social and governance (ESG) issues.

3 areas of focus

As a general concept, ESG (as it’s often called for short) focuses on three areas:

The environmental component considers your company’s impact on the environment, including the energy it uses, the waste it produces and the resources it consumes.
The social element examines your business’s relationships with people, communities and institutions. It includes fair labor practices; worker health and safety; diversity, equity and inclusion; and your company’s impact on the people of the community or communities where it operates.
The governance portion includes policies, practices and procedures your business adopts to govern itself. Considerations include ethics, transparency, legal compliance, executive compensation, supply-chain management, data protection, and product quality and safety.

The idea is that, to be a good “corporate citizen,” it’s important to recognize the impact of […]

By Linkenheimer LLP|2023-06-07T19:27:01+00:00June 7th, 2023|business, planning, strategy|0 Comments

Traveling For Business This Summer? Here’s What You Can Deduct

If you and your employees are traveling for business this summer, there are a number of considerations to keep in mind. Under tax law, in order to claim deductions, you must meet certain requirements for out-of-town business travel within the United States. The rules apply if the business conducted reasonably requires an overnight stay.

Note: Under the Tax Cuts and Jobs Act, employees can’t deduct their unreimbursed travel expenses on their own tax returns through 2025. That’s because unreimbursed employee business expenses are “miscellaneous itemized deductions” that aren’t deductible through 2025.

However, self-employed individuals can continue to deduct business expenses, including away-from-home travel expenses.

Rules that come into play

The actual costs of travel (for example, plane fare and cabs to the airport) are deductible for out-of-town business trips. You’re also allowed to deduct the cost of meals and lodging. Your meals are deductible even if they’re not connected to a […]

By Linkenheimer LLP|2023-06-05T18:48:34+00:00June 5th, 2023|business, deduction, deductions, travel|0 Comments