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Planning ahead for your finances can save you stress down the road, and ensure the success of your personal and professional goals. Outlining a monthly budget is one of the most effective ways to both organize your finances and chart your progress. The following guideline offers some helpful suggestions to stay organized and motivated as you chart your financial future.
The Importance of Setting Up a Budget
Assessing the amount of money you earn every month after taxes is the first step toward setting up a reliable budget. Next, you should determine how much is needed to satisfy monthly bills and necessary living expenses. Setting up a budget will go a long way toward helping you accomplish your financial goals as you streamline purchases. Splitting your monthly income into three categories is a popular budgeting method. Under this system, half goes toward absolutely necessary expenses like housing, transportation, utilities, and food, 20% covers retirement and debts, and the last 30% is spent on personal expenses, such as entertainment, personal care, or charity, to name a few examples. As far as personal purchases are concerned, you should really weigh the overall value of what you’re spending money on. Is the purchase an impulse? Does it benefit your daily life in any way beyond instead gratification? One popular sentiment many apply to their spending habits is the idea that memories are more valuable than individual material goods.
The Big (and Small) Picture
As you establish your financial goals, it’s helpful to organize a plan that addresses each goal in smaller, bite-sized installments. We can easily overwhelm ourselves with long-term goals, so assessing what can be realistically accomplished within the near future may ensure long-term success. Along with drawing up a budget, creating a financial calendar will help organize your tax schedule, whether you have upcoming appointments or need to remind yourself to pay quarterly taxes on time. This visualization can also help you track long term goals through smaller, more immediately achievable tasks, while also allowing you to track your current status. Knowing where you stand will help you stay current on financial goals. Tracking your net worth can also prevent the resumption of bad spending habits and stop current ones in their tracks.
Making the Most of that 20%
The simple act of listing your debts will help you form a plan of attack. Focusing on interest rates instead of what you owe will allow you to effectively prioritize the payoff of individual debts. The bill with the highest interest rate is costing you the most money, so it should take top priority on your list. Once that debt is paid, apply the same method to the next item.
Every year, investigative tax notices are mailed to small business owners. While these are not always official audits, they raise a red flag, and proprietors should know how to prevent and address these inquiries in turn.
This list addresses the best tax practices for small businesses to keep them abreast of tax changes and trends, and away from IRS scrutiny.
List of top 15 Best Tax Practice Tips for Entrepreneurs
1. Maintain thorough and separate records of employees and contractors.
2. If you set up any location based business, even temporarily, keep records of all expenditures and educate yourself on the local tax laws.
3. Use a tax software accounting system – this can help you develop appropriate reports at tax time and can alert you of changing tax rules.
4. If you hire a tax accountant make sure they have experience with taxes as they relate to your specific business.
5. Keep records—including serial numbers and detailed receipts—for all business equipment, office machines, and vehicles.
6. Don’t use funds that are earmarked for taxes as a means to tide your business over in hard times. This will result in a worse financial crunch come tax time and if you can’t pay, you risk the loss of your tax ID.
7. Educate yourself on the correct way to estimate your taxes – This may be overwhelming and a tax professional is highly recommended for small business owners.
8. Determine an appropriate fiscal year so that you can plan better for tax time: A fiscal year refers to an accounting year that does not end on December 31.
9. Tax records should be kept for a minimum of three years – unless related to property and depreciation. In that case, tax records should be kept for three years past the time ownership ends.
10. Keep detailed records on business vehicles’ usage – both on the job and off.
11. When operating on foreign soil and dealing with other currencies and tax laws, be sure your tax professional is vigilant in obeying the new rules on foreign bank accounts enacted in the Foreign Account Tax Compliance Act, or FATCA.
12. Work with your tax professional to determine whether you should operate as a partnership, an S corporation, an LLC, or a sole proprietorship.
13. Become familiar with your requirements in regards to the Affordable Care Act.
14. If you are not able to pay taxes owed to the IRS, or another tax agency, contact your tax professional right away. There are appropriate steps that can be taken and ignoring it only makes it worse.
15. If you are paid in cash – that payment is taxable. The IRS has sophisticated technology to track spending habits and bank accounts to build their case.
Let the experts handle your taxes for you. It is usually a mistake for a business owner to complete their own taxes, and doing so can distract you from making your company a success.
After you’ve gone through a tax audit by the IRS, the concluding results may not end up in your favor. If you disagree with the auditors ruling against you, you can appeal the decision. Within the next 30 days, you should receive a copy of the ruling as well as details on how to appeal. At Ryan Tax Defense, we offer tax appeal mediation services without expert tax attorney at our office. However, here is how you can prepare for this appointment and how we can help.
30 Days to Appeal
Once you’ve received your ruling letter, this document will also detail how to appeal. The IRS may require information such as a statement that you wish to appeal the audit finding. A list of each proposed item by the auditor with which you disagree and why you disagree with each item. If you find that during the audit process your rights were not kept or if you charge them for perjury, a statement must be sent. Gather all bank statements, checks, and other documentation needed to appeal.
Before your hearing, you must submit a Federal Freedom of Information Act letter to the FOIA office at the local IRS office. This must be sent through certified mail with a request for a return receipt, and in about a month, you should receive the file.
Preparing for the Hearing
Although appeal hearings may be informal, it is important to create an organized persona to ensure the disagreed changes are dropped. Consider the assistance of the tax professionals and tax attorney at Ryan Tax Defense during this time. They can help run through each proposed item of discredit and be an authority in the hearing room. They can represent you and present records and the appeal plea to the appeals officers. Our tax attorney can also negotiate a settlement and payment plan that is manageable and reasonable.
Seek Assistance During an Appeal from Ryan Tax Defense
Audits and appeals are necessary to keep taxpayers accountable. If you are seeking to appeal a change made by the IRS on your tax returns, contact our office to see how we can help you get the settlement you deserve.
Receiving a notice of an audit by the IRS can be stressful and scary. However, this doesn’t imply that you’ve done something wrong. Tax returns are complicated pieces of data that require a diligent eye from the tax giant. Many times, audits are chosen at random, or the IRS has found a discrepancy in your documents and would like further insight. At Ryan Tax Defense, we offer expert tax and accounting services that can help prevent or prepare for an audit.
Whether you’ve been notified through the mail or requests an in-person interview, it’s important to provide all the documents needed for the IRS search. The IRS will contact you through by mail only, so be sure to avoid any phone calls that suggest an audit. All continued contact information and instructions will be included in the letter.
The IRS will request the specific forms that are being audited. Some types of documents include home mortgage statements, previous tax returns, receipts, retirement account records, pay stubs or brokerage statements. Any documentation that reflects what you’ve included in any tax return forms you’ve sent. If you have misplaced certain record, call the IRS and request for the duplicates to be sent to you.
The IRS can have included returns from within the last three years during an audit. If an error is found, additional years may be added, but they do not exceed more than the last six.
Although it is possible to correspond with the IRS during an audit, it may be effective to have a professional help represent you during your appointment. Consider a CPA or an Enrolled Agent who has dedicated their education to tax law and preparation. They can supervise your work with the IRS to determine whether there are no changes, agreed upon changes proposed by the IRS, or if disagree with the changes and help request an appeal.
We offer effective tax preparation services that ensure accurate filing. For more information on how we can help you with taxes this season or prepare for an audit, contact our office today.
The new tax laws enacted over the last few years have company owners experiencing an increased vulnerability to issues that can have a negative impact on their future success and viability. If you are an entrepreneur and unsure about how to resolve your mounting tax problems, there are several measures you can take to avoid some of these common pitfalls.
Below are some recommendations that can be helpful to prevent errors that could potentially catch the attention of the IRS.
The most common tax problems are often the result of an inaccurate filing or one that could not be proven through proper documentation and receipts. When a business owner commits to maintaining an efficient and accurate bookkeeping process, these types of errors can be prevented and help you avoid the scrutiny of the federal government.
Tax-saving deductions are left on the table by business owners year after year. Deductions are beneficial to limit your tax liability, so ensuring you have tracked all eligible expenditures is crucial. It’s important, however, to make sure the deductions you claim are valid. Too many deductions can cause the IRS wanting to take a closer look at your information, resulting in potential audits of your tax returns.
Making a mistake on your payroll taxes can be more costly damaging than any other error. Failure to file on time or filing inaccurate numbers can result in criminal implications on top of significant monetary penalties. It’s important to note that using funds designated for payroll taxes for anything else is also considered a federal crime. This money does not belong to the business.
The IRS has upped their enforcement efforts against companies neglecting to practice proper payroll tax compliance. They have complete authority to seize property, place levies on funds, and even shut down your operation for good.
In addition to being illegal, not filing your payroll taxes can be crippling to the continued success of your business. Penalties for failure to file or pay can accumulate to more than one-third of the amount owed. These penalties can become more severe if the amount owed is not paid within their short extension window.
There are many pitfalls for a business owner to avoid when it comes to their tax situation. Tax laws are complicated and ever-changing, so instead of trying to tackle this important aspect for your company on your own, enlist the help of the qualified tax resolution specialists at Ryan Tax Defense. Our expert team has years of experience helping our Tampa business clients with their concerning tax issues. Call our firm today to set up a consultation.
Failing to file your tax return may not be noticed by the IRS right away, but once it’s discovered, they will charge penalties, and continue to do so until they receive the return. If you are experiencing this unfortunate circumstance and are uneasy about the repercussions, there are amicable solutions that will satisfy your debt to the federal tax agency without putting you in financial turmoil.
Don’t let a delinquency status with the IRS further compound your financial woes. Set a plan of action to report any unfiled returns, so you avoid additional fines and penalties.
Once the tax deadline has passed and you haven’t sent in your return, you’re subject to a five percent penalty of any tax liability due with your return, for each month after the deadline until the return is received. Additionally, neglecting to report your income could lead to credit issues, garnishments, and potential criminal charges. The cost of failing to file a tax return can be far more expensive than any penalties assessed for a failure to pay.
If you allow too much time to pass before committing to resolve your tax complication, you may find yourself ineligible for many of the favorable resolution options offered by the IRS.
Once all returns are prepared and sent to the IRS, you can work with them to develop a reasonable approach to settling the debt. There are plenty of options that could allow you to fulfill your obligation without crippling you financially.
If you or your tax resolution specialist need additional time to organize your records, you can ask for an extension of up to a half a year. If granted this extra time, it’s important to settle the tax debt within the timeframe to avoid more significant penalties.
Many delinquent taxpayers appreciate the installment agreement option for repayment. This provides you the chance to settle your tax bill in manageable monthly increments. Additionally, the IRS may agree to an offer in compromise, which allows you to pay an agreed upon reduced amount if you qualify under their stipulations.
Ryan Tax Defense is a firm with CPAs and tax attorneys that takes great pride in our ability to provide tax relief to our clients who are struggling to settle their obligation to the IRS. We take the time to review and examine all plans of action to ensure a favorable solution. Contact us today if you would like to set up a consultation with one of our professionals. We proudly assist clients living or working in Tampa and the surrounding communities.
An expensive tax bill from the Internal Revenue Service can cause anyone to go into panic mode. The good news is that when you communicate your difficulty to settle your debt to them, they are practical and easy to work with. Instead of ignoring the problem and letting the obligation go into arrears, consider choosing one of the installment payment plans offered by the IRS.
Below are some options for taxpayers struggling to make their full payment can pay their bill without incurring a multitude of fines and other consequences.
For those who would need more than four months to repay the entirety of their tax obligation, the IRS offers the individual installment agreement. You have the freedom to pay your debt monthly and take up to 72 months to do that. Interest will accrue as you make your monthly payments, so it’s beneficial to pay the amount in full as soon as possible.
Depending on the amount you owe, the government will request to take a comprehensive look at your finances to approve you for a payment plan. The fees associated with taking this course of action are minimal in comparison to the financial burden that avoiding the issue could cause.
CPA Alex Moghadasi and our driven team of tax professionals have extensive experience helping our Tampa clients achieve a workable solution when their IRS obligation is too lofty to settle by the deadline. If you are looking for a firm that takes an innovative approach to tax problem resolution, call Ryan Tax Defense to set up an initial consultation today.
Unexpected tax obligations can be a stressful experience for a company owner. Falling behind on payments to the IRS leads to additional fees, which further compounds your financial dilemma. What some entrepreneurs don’t realize, however, is that the Internal Revenue Service will extend relief of that tax debt through an offer in compromise.
This option helps prevent further complications with the IRS, such as liens and levies that could potentially cripple your business. Below are some of the benefits of a business owner requesting an offer in compromise to settle a mounting tax bill.
The goal of an offer in compromise request is to convince the IRS to accept payment for less than what is owed. The process involves negotiating an agreeable, reduced amount that will allow you to continue running your business without financial restraint. There are strict guidelines to follow for a company to qualify for this reduction. Agents will thoroughly examine your financials to determine the uncertainty of collecting.
You will want to disclose any factors that will help you in demonstrating that you cannot feasibly repay the full amount. If economic hardship, your age, or health concerns are contributing to your inability to repay your debt, providing this information can help you reach a favorable conclusion.
Once you’ve filed for an offer in compromise, you are released from having to continue to pay toward the bill until a decision is reached. Additionally, no garnishments or liens will be placed on your account during that time. If the federal government accepts your request for an offer in compromise, repayment is a convenient process. You will be provided with two options to settle the newly reduced obligation. You can elect to settle it in a lump sum or monthly installments.
Alex Moghadasi and our detail-oriented team at Ryan Tax Defense truly enjoy being able to help clients find solutions to their tax debt. Regardless of the complexity of your case with the IRS, we take the time to explore all plans of action, including the benefits of an offer in compromise so that you can achieve a manageable resolution. Call our Tampa office today to schedule an initial consultation.
Many business owners and taxpayers are accustomed to the idea of “reactive” taxes. In this style of filing, you make your various expenditures throughout the year, see your company’s sales and expenses, and determine how much you owe at the end of the year. However, this form of filing often leads to business owners owing more in taxes. As a result many accountants work with businesses to curb the amount you would owe during tax season.
Why engage in Proactive Planning?
Proactive tax planning allows a business owner to limit tax liability by working within the various state and federal tax laws. Not only does this approach save business owners money, but allows your accountant more time in finding the best deductions and tax credits each year.
The tax landscape is always changing, and implementing an effective tax plan can also help to ensure that your business’ books are kept up to date. This continuous knowledge of the state of your business and the developing tax laws can also help you find beneficial reductions to how much you need to pay.
Business owners looking to expand, incorporate, or otherwise change their business model during the year are especially well served by an adaptive tax plan. This way, you will be able to account for the change in your company and can have a strategy in place to mitigate the corresponding differences in the tax code.
How to start your Proactive Tax Plan
The first step in planning for the upcoming tax season is to find an experienced accountant or CPA. Hiring a professional will allow you to keep your attention on your business ventures, without needing to focus too much on current tax laws. Additionally when creating your tax plan, it is always beneficial to allow your tax professional to assess the current state of your company to strategize a savings plan.
If you have questions about tax planning or are looking for a strategy that is tailored to your specific income or business, contact our firm today.
April 15 is a stressful day of the year, and especially when attempting to cram in months of tax preparation in a few days. If receipts and records are not well-organized, keeping track of deductible expenses grows increasingly difficult. This limits the size your return, or can even cause you to pay taxes incorrectly, which incurs liability that the IRS can penalize. A stressful tax season is entirely avoidable, but it requires time, effort, and planning.
Keeping Records for a Successful Tax Season
Detailed records, either physical or digital, is beneficial when it comes to successfully submitting your tax payments. Invest in organization for you receipts and records, either with a physical filing cabinet, or web-based resources. Online services such as QuickBooks are available to digitize all records and to make financial transactions accessible 24/7. Records are important for they keep individuals and small businesses aware of their cash flow and tax deductible items that will save money each April.
Stay Up-to-Date on Tax Code
Tax law changes frequently enough to affect how much an individual owes the state or federal government. It’s easy to stay on top of these changes by attending free classes in your community, doing online research, or speaking to a tax professional. Keep abreast of the changes to avoid surprising bumps in taxes owed, and doing so on a regular basis will ensure year-long tax prep success. Quarterly reviews of your taxes are recommended to make sure your information is accurate.
Hire Tax Professionals
The hardest part of preparing for taxes year-round is doing so while managing other areas of your life. Taking control of tax preparation ties up your time and energy that is needed elsewhere. Our affordable services will grant peace of mind, financial stability, and precise tax preparation for year-round success. The tax code is infamous for being complex and challenging for most individuals, but professional help can untangle your tax complexities and enable you to receive the return you deserve. This will keep your finances in check and ensure that the IRS doesn’t follow up with audits or penalties.