• 406-894-2050
    • kevin@practicaltaxes.com

    Archives for Financial Planning Billings MT

    Business Expenses | Accountant Billings MT

    Taxes and Small Business: A Few Things You May Not Know…

    A small business is rewarding—especially on day one—but also it can be extremely challenging. And if you are planning to open soon a small business, then you first might want to know your particular business entity. What does this mean? This means that the Government will assess your taxes based on how your particular business chooses to operate. The most common entities recognized by the government are: Sole Proprietorship, Partnership, Corporation, and S Corporation. To break these down further, you should know that Sole Proprietorship means that you and your business are subject to an income tax that is calculated at the individual level; you alone run the business (Many small businesses are recognized by the Government as Sole Proprietorships) and you are also subject to the self-employment tax. Partnership is viewed by the Government as being similar to the Sole-Proprietorship in that the business owners are subject to the tax rate at the individual level, including the self-employment tax. Tax liability for a corporation is more difficult to calculate in that the business (corporation) is taxed at a corporate level, and also shareholders of the corporation are treated as employees, all of whom are subject to payroll tax, similar to how an employee would be taxed on their wages. The S Corporation entity is a corporation that is allowed to be taxed at an individual level, and the shareholders of that corporation are treated as employees to be subject to payroll-type taxes.

    There are obvious drawbacks and liabilities to each entity, and if you are considering the structure for a small business idea, then you may first want to assess how you view your business goals and the potential your business has for potential growth. Your tax professional at Practical Taxes is experienced in small business tax and even payroll options for when your business is ready to launch. And if you have any questions as to how Practical Taxes can help your business succeed, then call today.

    Read more

    Three Ways to Run a Better Business

    If you are a business owner then you are always on the lookout for how to run a better business. You want to have a clean and fluid business that can operate without you. You want to be able to take a vacation and know that when you return, there won’t be a pile of work for you to get done. But you wonder how can that can even happen? You’re scraping by now and can only dream of those days.

    It all starts with taking small steps. Let your accountant in Billings, MT explain the three steps it takes to run a better business.

    Invest in Your Presence

    There are two different types of marketing out there: branding and marketing. Branding is letting people know who you are; marketing is letting people know what you sell. Many businesses skip the first step, and jump right into the second step.

    Before you can sell a product to your customer, your customer needs to be familiar with your face. Let’s look at it this way. You need life insurance and the only two companies that you can find are MET Life and XYZ Financial. You have seen the Snoopy commercials, you know “Get MET, it Pays”, and you’re familiar with the brand. XYZ Financial says they offer a premium product for 20% less than MET Life offers. Who do you choose? Most people will go with MET because they trust the brand (although they know nothing about the brand other than they have heard the name often).

    As a business owner, you want your name to become a household name (Coca-Cola, Kleenex, Apple, Toyota, etc.). When people already know your name, then they will be more likely to buy your product.

    Sell to Your Customer; Not to You

    A good sales person knows this rule of sales: make it all about the customer. Don’t tell them what you have to offer, tell them how you can solve their problem.

    accountant and payroll services expert in Billingsaccountant and payroll services expert in Billings

    Often we hear sales pitches that go like this: “We have the best product on the market. Through years of research and development, we have developed a product that blows away the competition. Our product is ranked better than 98% of all others out there, and our sales show that we are the best!”

    Nobody cares. The customer wants to hear a pitch like this: “Are you tired of [xyz]? 98% of our customers report that [product name] has helped them. Don’t suffer any more, try us today. If it doesn’t work out, we have a money back guarantee.”

    See the difference? The first pitch is all about how great the product is. The second is all about how the product helps the customer.

    Meet the customer’s needs, and the sale will make itself.

    Get Organized

    One of the biggest business killers is lack of organization. If you want to run a better business, you have to invest time (every single day) into staying organized. Doing so will help ensure that you will remember to reply to all of those emails, return phone calls, and get everything done.

    Look at it like this. Suppose you remain unorganized. Every morning, before you get any work done, you have to spend an hour remembering where you left off the day before, figuring out what project you are working on, and de-cluttering your desk. Now let’s suppose you spend 15 minutes at the end of every day organizing for the following day. Now you have that entire hour at the beginning of the day (when you are fresh and thinking clearly), to get as much accomplished as possible. You can run a better business with ease because you gave yourself a boost.

    Let Practical Taxes help you Run a Better Business

    As a business owner, you have a lot on your plate. You have work to do, prospects to follow up with, and phone calls to return. The last thing that you want to do is worry about your taxes and payroll. Don’t muddle through doing your own taxes, leave them to us!

    We offer affordable tax preparation services here in Billings, MT. We spend our time on your taxes, so you can spend your time learning how to run a better business.

    Read more

    Estate Taxes vs. Inheritance Taxes

    castle-780982_1920-300x225Estate taxes are often referred to as death taxes. It seems that no matter what is going on, the government wants to get a piece of the pie. So when you pass away, if you have a large enough estate, there may be taxes that are owed. On top of that, there are inheritance taxes to be worried about. So how do you know the difference, how much you will owe, and what to plan for? Keep reading as Practical Taxes, your accountant in Billings, explains the difference between estate taxes, inheritance taxes, and who needs to worry about them.

     

    Federal Estate Taxes

    A few years ago, understanding estate taxes was a pain. There was a set amount that would be excluded, and that number stayed the same for a decade. After 10 years it needed to be adjusted for inflation, but congress was trying to decide what to do. There was a fear that it would reset, and anyone that died during the reset period would be subject to massive taxes.

    Fortunately that has been figured out, and the estate tax exclusion now adjusts annually. For tax year 2015, your assets can total $5.43 million before you owe taxes. That means if your assets total $5.45 million, you only owe federal estate taxes on $20,000. Current estate tax rates are between 35% and 45% depending on your situation.

    If you are fortunate to have an estate larger than the exclusion, and thus you will have to worry about the taxes, pay attention to the name of the tax. Estate taxes are paid by the estate before money is distributed to the heirs. The government doesn’t care if those assets are tied up in real estate either. The estate will have to raise the money any way possible to pay the tax.

    State Inheritance Taxes

    Fortunately there are only 15 states (and D.C.) that have an inheritance tax. Montana is not one of them. But in case you have two residences, pay attention.

    State inheritance tax varies by state. There are different exclusions, different tax rates, and different provisions. Since Montana isn’t included, we won’t go into any details; but we can discuss it with you if your situation calls for it.

    Just as estate taxes are paid by the estate, inheritance taxes are paid by the heir.

    How to Avoid Estate Taxes

    There are a couple of ways to avoid estate taxes. One involves reducing the size of your estate, the other actually involves increasing the size.

    Reducing the size of your estate – The only true way to completely avoid estate taxes is to have an estate smaller than the exclusion of $5.43 million. However, rapidly reducing your estate is tough since you can only give away a certain amount every year. You can give $14,000 each year to anyone and avoid gift taxes. So if you have 10 grandkids, you can move $140,000 out to UGMA or UTMA accounts. You can move money out by donating to charity, or setting up an ILIT.

    Increasing the size of your estate – Moving money into an ILIT will actually increase the size of your estate. Let’s suppose your estate is worth $6 million. You start an ILIT (the trust owns the insurance, the estate is the beneficiary) and give the trust $14,000 per year to pay the premiums. Suppose the death benefit is $4 million, your estate (at the time of your death) will be worth $10 million. The benefit here is that even though you owe taxes on the additional value; it is all paid with liquid money that comes from the life insurance.

    Let Practical Taxes Help with Your Estate Planning

    If you have estate planning needs, Practical Taxes can help. We can work closely with your attorney, your financial advisor, and you to draw up these plans. We will help you plan for your estate taxes, or help you avoid them if we can legally make it happen.

    If you don’t have estate tax issues, we offer affordable tax preparation services in Billings. Give us a call at 406-894-2050 to learn more and to schedule your appointment.

     

    Read more
    tax services billings mt

    Small Business Smarts

    It’s becoming a popular thing to do: start up a small business, even a “micro” small business (consider the tiny online stores on the Etsy and Ebay websites). And the talk in Government is all about the encouragement of more small business; encourage the working man or woman to set out on their own, get a tax break in the process… And it’s true that owning a small business has considerable benefit to those willing to take on the responsibility: there can be great pride in building a business, pride in ownership, in being your own boss. But there are many overlooked costs and responsibilities that people may not consider when starting out on their own. Here’s a few.

    Wait time and Cost of Licensure, Insurance, Registration…

    Most folks consider the process of licensure when they start up the business, but not everyone considers the cost and scope of insurance; the cost and scope of insuring employees, or the liability of using contractors, operating on their own specialized license, in relation to the liability of the business.

    Paperwork

    Sometimes people get into business without any real foundation of the required paperwork—everywhere in business there seems to be paperwork—and to be bogged down and unprepared for the banal methods of paperwork can be costly for your business. You may want to consider hiring an accountant to help with payroll and other accounting jobs; Practical Taxes will ensure your annual tax liability gets handled smoothly. Did you know, for instance, that when you work for yourself there is a self-employment tax? Have you ever considered how much of your precious time will be taken away by employee background checks and payroll?

    Unfortunately, even businesses built with the best of intentions don’t last long without proper financial planning. If you are planning to go into business on your own soon, or if you are still on the fence, considering it, remember that a quality accountant can help your business run smarter and more efficient. If you have any other questions as to how Practical Taxes can help your business, call today.

    Read more
    professional tax services billings mt

    April 15th Is Tax Day: Information For Anyone Needing An Extension

    It’s that time of year again; April 15th marks the end date to pay 2017 income tax. If you miss this date, you will be subject to a tax penalty—fee. But you do have a chance to file for tax extension, and a tax extension will allow a person a six-month-long period (Given an extension, October 15th will be the new date at which 2017 income tax filing will be due) in which they can file and avoid the tax penalty. You can get the extension on the IRS website here: www.irs.gov. And the deadline to request an extension from the IRS is April 17th, which allows people a few extra days, post Tax Day, to get their income tax affairs in order. There are special rules, however, for individuals who serve abroad in a combat zone or, what the IRS calls, a hazardous duty area. People who live outside the United States are also given certain consideration.

    The form to receive an extension is rather short and simple to complete, and, usually, tax extensions are provided automatically. Also, if you cannot afford to immediately pay your income tax, it’s best to either file on or before Tax Day and then sort out the particulars of the required income tax payment with the IRS—the IRS does offer several payment plans—or file for an extension by the 17th of April. To not have filed your taxes will end up costing you considerably more in the long run than an IRS interest rate or the percentage penalty for a delinquent payment (remember there is no penalty for an extension, as long as the income tax is filed on or before the 15th of October).

    If you have any questions as to how to communicate with the IRS about your financial situation, how to handle an extension, or would like advice on how to get your 2017 income tax filed, and then paid, then call the experts at Practical Taxes today.

    Read more

    Long Term Financial Planning

    Not everyone is a first-rate financial planner, and studies show that people today are working well past, what used to be, the average age of retirement—now, whether that is the cause of poor financial planning, or just the measure of our country’s current economic circumstances is debatable. But, what we do know is that almost all of us, regardless of how much we’ve saved for our financial futures, could always save more. This is especially evident for those of us running small businesses, in charge of our own retirements, and every dollar we make needs to be put to good use. So, how do we do it? How do we become better financial planners? Here are a few helpful tips.

    Know your goal and stick to it

    Even if you’re a twenty-something or thirty-something, know that your end goal is to retire as comfortably as you are able. This may mean setting up retirement accounts early, and remembering to always put money into your retirement account. When you’re young, consider short-term goals for financial independence: consider trying to pay down your mortgage loan, ridding yourself of those student loans, so that money won’t be adjusted further, with more interest added, and the amount you were using to pay down your loans can then be added to the amount you pay into your retirement fund every month.

    Try and find ways to manage your expenses, and know where you’re spending your hard-earned money. Obviously if you discover an abundance of overspending in a certain area, curtail the spending and stay on track with your financial goals. Create a budget, something to be stuck to weekly, maybe monthly. A budget is a constant reminder of how to best keep responsible for our money.

    Lastly, although there are so many ways in which you can focus your energies for retirements, these were just a few important tips, consider speaking with your accountant as to your spending, how you’re affected by retirement plans and the amounts you are paying into your retirements. If you own a small business, an accountant can be one of your most important assets.

    If you have any questions, call Practical Taxes today, and remember that it’s tax season, with just a little over a month left to file those income taxes.

    Practical Taxes

    Practical Taxes is a full service accounting firm in Billings, Montana. We can help you get the most from your taxes, and make sure that you will get the maximum refund every year. But we don’t just do taxes! We can help with your bookkeeping, payroll, bank reconciliation, budgeting, and more. Give us a call at 406-894-2090 to learn more.

     

    Read more