Tax Strategy for Small Business

A lot of small business owners assume that if they’re already paying rent on an outside space, the home office deduction is off the table. That assumption is costing them money.  The IRS doesn’t limit you to one place of business. What they care about is something more specific, and once you understand the rule, you may realize you’ve been leaving a legitimate

If you are an S corporation owner, this question matters more than most people realize.  Reasonable compensation is the amount a business owner-employee should be paid for the work they actually perform. In plain English, it is what you would have to pay someone else to do your job under similar facts and circumstances.  This is

Real estate activities fall into several different tax categories.  It could be classified as a business or an investment, and that difference can change your tax bill.  Rental Properties  Rental real estate is sometimes treated like a business and sometimes treated like an investment activity, depending on what aspect of the tax law you want to dive

When a taxpayer owns a house where a relative resides, they navigate tax considerations related to rent, expense reimbursement, and impact on deductions. Let’s explore three common approaches based on the document provided and relevant IRS guidelines.  1. Charging Rent at Fair Market Value  Charging fair market rent ensures the property is treated as a rental for tax purposes. This

Many business owners believe that leaving money in the business checking account can delay or even eliminate taxes on that income. At first glance, that feels logical. If you do not take the money out, it seems like it should not count as income.  Unfortunately, that is not how the tax rules work.  This misunderstanding is extremely common and often

When does side income become a business?  Many people are surprised to learn they already have a business for tax purposes — even if they never formed an LLC or thought of themselves as “business owners.” The IRS uses a very broad definition of a business for tax purposes. Understanding whether what you’re doing counts as a business can dramatically affect your taxes. It determines whether you can