Welcome to our ‘Tax Strategy for Small Business’ section, where we offer a wealth of knowledge and insights on various aspects of business taxation. Our team of experienced CPAs and financial experts regularly share articles to help you navigate the complex world of business taxes. Whether you’re seeking tips for deductions, updates on tax regulations, or strategies for tax optimization, you’ll find valuable information here. Stay informed and make informed tax decisions with Bearden, Stroup & Associates, CPAs.
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 […]
What Is Reasonable Compensation? Read More »
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
Real Estate: Business or Investment? Read More »
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
How Should a Taxpayer Handle Owning a House Occupied by a Relative? Read More »
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
Does Money Left in the Business Bank Account Impact Taxes? It’s Complicated Read More »
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
Surprise! You Just Started a Business Read More »
Electing S corporation status can feel like a smart tax move, and in many cases, it is. You may reduce self-employment taxes and keep more of what you earn. Those savings come with real responsibilities though: running payroll, filing Form 1120-S, tracking shareholder basis, and following strict IRS rules. Before you file Form 2553, make sure
S Corporation Election: Tax Savings with Strings Attached Read More »
Business owners often ask if they can write off bad debts from customers. The answer depends on whether the taxpayer is using the cash basis or the accrual basis of accounting. For cash-basis taxpayers, however, the short answer is no. You generally can’t take a deduction for unpaid amounts because your taxable income already shows only the cash you actually received. Cash Basis vs. Accrual Basis Accounting Why Cash-Basis Taxpayers Don’t Deduct Unpaid Invoices At
Can A Business Deduct Bad Debts? Read More »
When to Create a Second Legal Entity Separate from Your Main LLC Most small businesses begin with a single LLC, and that is usually the right approach. One entity is usually simpler, cheaper, and easier to manage. But as a business accumulates assets, expands activities, or engages in more complex transactions, sometimes a second LLC is not only reasonable, but strategically
Reasons to Start a New LLC Read More »
Understanding how to deduct transportation costs could significantly reduce the tax burden on your small business. You and your employees likely incur various local transportation expenses each year, and they have tax implications. Here’s a roadmap to drive down business taxes with vehicle cost deductions. Let’s start by defining “local transportation.” It refers to travel when
Drive Down Business Taxes with Vehicle Cost Deductions Read More »
Just a few days ago, Congress passed a huge piece of tax legislation, the “One Big Beautiful Bill,” that reinstates 100% bonus depreciation! If you are a small business owner, this can add up to some beautiful savings if you use the right tax strategies when you buy qualifying business property like machines, equipment, vehicles
100% Bonus Depreciation is Back, Baby! Read More »
