How a Trusted Business Advisor Helps You With Post-Pandemic Business Planning

No one could have predicted what the COVID-19 pandemic would mean to our personal health and security, let alone our businesses. Now is the time to begin post-pandemic business planning. In today’s blog post, the trusted business advisors at LongSchaefer will explain where to start. 

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Review Your Current Situation

One of the many services we offer is strategic business planning. When you started your business, you had a plan, a blueprint, to work with. But that never involved a global pandemic or the sudden rise of online shopping. It may be time to revisit your plan, determine what roads are still worthy to travel, and decide what must be redesigned to suit your new path. 

We will sit down with you to review your current financial situation, including tax statements, profit and loss statements, payroll, and expenses. From here, our trusted business advisors can develop a business plan. 

Develop a Plan

Effective strategic planning is important to the success of any business. To be effective, you need two things: 

  1. A strong understanding of your current finances, and 
  2. A deep knowledge of tax laws and regulations, local and national markets, finance, and accounting. 

Our trusted business advisors work with you to develop a strategic goal for current stability and future growth, identifying areas you may not have considered. Our team of highly trained professionals can provide guidance on current and emerging market trends in a post-pandemic world for any type of business. 

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Integrate Your Financial & Accounting Services 

At LongSchaefer, we want to be your trusted business advisor. That means trusting us to handle the financial aspects of your business. This gives us a better understanding of where your needs lie and how we can help. We offer tax planning and preparation, payroll services, strategic business planning, and even part-time CFO services

Trust LongSchaefer Financial Services 

Do you have questions about your post-pandemic business plan? Do you need accounting, tax, or payroll services? Contact us today or call (513) 245-0300 to discuss how we can help and become your trusted business advisor.

2021 Financial New Year’s Resolutions From LongSchaefer

2020 was a horrible year for finances, despite the stock market closing at record levels in the last part of the year. Massive unemployment, reduced spending power, and stay-at-home orders dominated the country for most of 2020. As we look ahead to 2021, the Cincinnati CPAs at LongSchaefer talk about some financial New Year’s resolutions to strengthen your bottom line.

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Spend Stimulus Funds Wisely, If Possible

It took around nine months, but Congress finally passed (and the president signed) additional stimulus measures to prop up the fragile economy in December 2020. Spend this money wisely, if possible. Use it for essentials, save it for an emergency, or pay down credit card debt. Try not to splurge on anything with your stimulus payment because you don’t know what the economy will do in 2021.

Refinance Your Loans

One effect of the COVID-19 pandemic in 2020 was record-low mortgage rates. If you haven’t considered refinancing your mortgage yet, 2021 still presents an excellent opportunity to do so. 

Congress’ stimulus package from March 2020 included a forbearance on student loan payments. Consider refinancing student loans before Jan. 31, when the forbearance timeframe ends.

Create a Solid Plan

Don’t have a solid financial plan in place for 2021? Now is the time to start one. Begin with your monthly budget and expenses. Find ways to start saving money at the start of 2021 to calculate how much you should have by the end of the year. LongSchaefer can help you create a solid financial plan for your windfall. Saving money brings us to our next point.

Begin an Emergency Fund

We can’t necessarily count on repeated stimulus money from the federal government, although federal policymakers have indicated more may be on the way. Rather than wait for federal money, use your planned savings to create an emergency fund. Experts say you should save at least six months’ worth of expenses in case you need them.

Start Saving for Retirement

Still need a resolution to follow for 2021? Boost your retirement savings. Contribute to an employer’s 401(k) matching plan. Diversify your investment portfolio for the long term by shying away from money market funds and moving towards long-term growth from stable mutual funds that invest in many types of securities. Your retirement savings add up quickly when you have a solid, consistent plan that you stick with over the years. LongSchaefer’s advisors can help you invest in the right funds for your unique situation.

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Happy New Year From LongSchaefer

The Cincinnati CPAs at LongSchaefer wish you and your family a Happy New Year for 2021! Contact us online or call (513) 245-0300 for more information on how we can help you achieve your financial goals this year.

Tax Planning: What Are the Differences Between Tax Credits & Tax Deductions?

As you prepare to file your income tax return, you’ll probably run across the terms tax deduction and tax credit. Both individuals and businesses can take advantage of tax deductions and credits to lower their income tax and possibly increase their refund. In today’s blog from LongSchaefer, our tax planning experts take a look at the differences between tax credits and tax deductions. 

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Reducing Income Versus Reducing Taxes You Pay

The major difference between a tax deduction and a tax credit is that deductions lower the income on which the government bases its tax calculations, while tax credits directly reduce the amount of tax you owe.

For example, you get to take a tax deduction of $18,650 because you’re the head of a household. If you made $50,000 in that year, the head of household deduction lowers the amount of your gross income to $31,350. Rather than pay 15% of your income at $50,000, you pay 15% of $31,350. You would pay $4,702.50 rather than $7,500 for taxes in this simplified example.

After you calculate how much money you owe in taxes, a tax credit can lower the amount of tax you pay (or even lead to a higher income tax return). For instance, your tax bill comes to $700. However, you qualify for two tax credits. One is refundable for $500, and one is non-refundable for $750. The $750 credit reduces the amount of tax you owe to $0, while the refundable tax credit means you receive $500 from the IRS.

Deferring income to retirement also has tax benefits for you before you retire. The IRS allows an annual $19,500 elective deferral to 401(k) plans. When you reach age 50, that maximum amount increases to $26,000. You don’t pay income taxes on that pre-tax deduction when you’re working because you’ll pay income taxes after you retire.

Tax planning services can point you to the right types of tax credits or tax deductions available to you.

Examples of Tax Credits

The most common tax credit for individuals is the Child Tax Credit from the Internal Revenue Service. In general, your child must be 16 years old or younger and meet certain qualifications. Each individual can earn up to $2,000 per qualifying child, and up to $1,400 of that is refundable, meaning you can get money back from the IRS. 

There’s also the Earned Income Tax Credit for working people with low to moderate incomes who have children. The EITC is in addition to the Child Tax Credit. 

Business owners can take advantage of tax credits, too. Small employers can take the General Business Credit for undertaking certain activities, such as investing in electric vehicles, increasing research activities, retaining employees, and having employer differential wage payments. Tax planning staff at LongSchaefer will show you what tax credits you may be eligible for.

A refundable credit means you could get that money back from the IRS. A non-refundable credit simply lowers the amount of taxes you may owe, all the way down to zero.

Examples of Tax Deductions

Tax deductions work differently for individuals and businesses. Individuals can take a  standard deduction based on your filing status (single, head of household, or married filing jointly). 

Individuals may choose to deduct certain health care expenses, interest paid on mortgages, and charitable donations. There is one caveat: You can itemize your deductions for federal income taxes, but they must be more than your standard deduction. 

You can deduct certain business expenses from your income to lower your income. Let’s say your business earned $200,000 in 2020. But you invested in new equipment that cost $25,000, advertising for $5,000, and computer software at $3,000. All of these items could lower your income to $167,000. At 25%, you would pay $41,750 in income taxes rather than $50,000 in this simplified example.

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Tax Planning From LongSchaefer

The tax planning pros at LongSchaefer can help you get the most out of your income taxes, whether you’re a business or an individual. Contact us online or call (513) 245-0300 for more information on how our firm can help.

Tax Planning for the Taxes You Must Pay as a Business Owner

All businesses must pay taxes to state and federal governments. The types of taxes vary, so paying taxes every year can get confusing. That’s why you need a tax preparation and tax planning partner on your side. In today’s blog, LongSchaefer’s tax planning experts discuss the taxes you must pay as a business owner.

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Income Tax

All businesses must pay a tax on their income, much in the same way individuals pay income taxes. Your business structure determines how you pay income taxes. Self-employment taxes are essentially double what you pay as an employee of a business. Sole proprietors may have similar income taxes to that of self-employed individuals, in that both self-employment and sole proprietors pay taxes on the net income of the business (profit minus expenses).

Partners in a partnership arrangement pay their income taxes separately, based on their share of the business. Limited liability companies and S-corporations pay income taxes based on the owners’ share of the companies. Corporations pay income taxes as separate entities from the owners. LongSchaefer’s tax planning experts help you determine what income tax strategy is right for you based on your company structure as a legal entity.

Employment or Payroll Tax

Business owners pay their share of payroll taxes based on the number of employees on staff. How much payroll tax you must withhold is based on an employee’s gross pay. Each employee’s portion of the payroll tax (called FICA, collectively) lowers their overall paycheck. Business owners must pay their portion of Social Security, Medicare, and federal unemployment taxes based on their employees’ income. Our tax planning experts can show you what this means for your workers and your revenue.

Property Taxes

Do you own your facility or office? What about any company vehicles? Chances are good you’ll pay property taxes to the city or county in which your business is located. Contact your local tax authority, usually a county treasurer, auditor, or assessor, to find out how much property taxes you owe and when they are due. LongSchaefer can help with this process.

Sales or Excise Taxes

Sales and excise taxes are similar to each other. Your company pays sales tax on products and services bought or sold. For example, your company sells lawnmowers. Your business pays sales tax to state and local authorities based on a percentage of the sale price. If your business purchases certain goods or services, you’ll pay sales tax as part of the overall price (but the company selling the item distributes the tax).

Excise taxes involve using or consuming certain products, such as fuel used in transportation. If you have a fleet of vehicles, your business may have to pay state or federal excise taxes. Tax planning experts at LongSchaefer can teach you how to account for excise taxes and when to pay them based on your company’s unique situation.

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Tax Planning From LongSchaefer

The tax planning pros at LongSchaefer can help you get the most out of your income tax filing every year. Contact us online or call (513) 245-0300 for more information on how we can help.

Tax-Saving Strategies for Small Business Owners

It’s the final quarter of the year. You’re looking to end the year strong while planning for next year’s budget. LongSchaefer showcases some relevant and practical tax-saving strategies for small business owners in today’s tax planning blog.

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Capital Investments

Capital investments in equipment offer huge tax deductions for your federal income tax return. In 2020, the deduction maxes out at $1.04 million. The deduction covers new and used equipment as well as software. Accountants and tax planning specialists call this a Section 179 Deduction. The team at LongSchaefer can advise you as to what kind of equipment applies to this deduction.

Depreciation

Congress passed a law in 2017 to make it easier to depreciate any property you purchase. Depreciation occurs when a piece of equipment loses its value over time. For example, you buy a new car worth $20,000 in 2020, but in 2021 it’s worth only $15,000 because it depreciates due to wear and tear as well as normal use.

In the past, you needed to depreciate your property over time. Until the 2023 tax year, business owners can depreciate the entire value of qualifying property. You record the depreciation as an expense on your taxes, thereby lowering your tax liability. The IRS lets you depreciate up to $1.04 million in property this way.

Qualifying property includes, but is not limited to, computers, machinery, furniture, vehicles, and building equipment. The LongSchaefer tax planning team can point out what assets you have that may qualify for this deduction.

Deferring Income

Businesses can defer income by delaying sending invoices in the fourth quarter of the current year and sending them in January of the next year. The main benefit is that taxes on the income aren’t paid until next year. This strategy works if you plan on having about the same income next year. 

If your business expects to take off and you make significantly more income next year, you might consider sending those invoices in the current year versus next year. The tax planning pros at LongSchaefer will examine your situation and plan the best possible strategy for you.

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Tax Planning Services From LongSchaefer

We recognize that everyone’s definition of success is different. It’s part of our company culture. The tax and accounting pros at LongSchaefer can tailor a tax planning strategy to your specific situation. Contact us or call (513) 245-0300 for more information on our tax planning services and end-of-year tax strategies.

The New $125 Million Grant Fund for Small Businesses in Ohio

In late October 2020, Gov. Mike DeWine and legislative leaders announced a new program called the Small Business Relief Grant (SBRG). Ohio has up to $125 million to give to small businesses affected by the COVID-19 pandemic. Today’s blog from LongSchaefer highlights the basics of this program.

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Who is eligible to receive SBRG funding?

Small businesses with between one and 25 employees will be able to receive grants of up to $10,000.

Bars or restaurants with an on-premise liquor license may receive a $2,500 grant from the Bar and Restaurant Assistance Fund. This fund applies to the more than 15,000 liquor permit holders in Ohio, including restaurants, bars, breweries, distilleries, wineries, casinos, and private clubs.

When can my small business apply for a grant?

Small businesses can start applying for SBRG funding at 10 a.m. on Nov. 2, 2020. Applications will be accepted until the end of the year. LongSchaefer can advise you on how to fill out the application properly to ensure you receive this grant in a timely manner.

What documentation must I show for the application?

Small business owners must show proof of all paid W-2 employees on the payroll as of Jan. 1, 2020. You must also show proof of business expenses from at least 60 days before the grant application period. You’ll also need your most recently filed state or federal tax return. 

Liquor permit holders must show they must have one of 30 active liquor licenses and an on-premise permit as of the close of business on Oct. 23, 2020. 

These resources must be in digital format instead of paper. LongSchaefer can help you gather the information you need. 

Where can I find more information?

The Ohio Development Services Agency website has all of the information you need for the SBRG. There is a dedicated page this link for liquor permit holders.

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Business Services From LongSchaefer

The tax and accounting pros at LongSchaefer can help you apply for Ohio’s SBRG funding to help your small business succeed during these challenging times. Contact us or call (513) 245-0300 for assistance.

May 2020 COVID-19 Update

In order to comply with the Ohio Health Department Order & CDC social distancing recommendations, our offices are closed until further notice. Rest assured that our established protocols and available technology will allow us to provide the same level of service and quality you expect from LongSchaefer during this time.

The SBA has announced details of how it’s helping small businesses through the Coronavirus outbreak. The IRS is sending payments to families affected by this crisis. 

Please click on our Coronavirus information pages for more information.