These are the text excerpt from the Ladolcetta Ledger
Volume 1 Issue 2
December 1996
Ladolcetta CPA, Helps Business startups, Incorporates Them, Creates Their Web Page, Installs/Trains On Their Accounting Software
Many new businesses start out as an idea. The business person explores his options and makes his move and often does it right out of his spare bedroom. But the business needs professional guidance from the outside and comes to us.
There are many decisions and actions to be implemented. Should you be a corporation, partnership or sole proprietor? What are the licensing and reporting requirements? How do I record my transactions or market myself? How you make these decisions can affect you for years to come.
In order to be a complete resource to our customers we help them start off on the right foot so they will benefit for years to come and a great business relationship will result. To achieve this we offer the client a variety of services where the client can receive the full benefit of our expertise.
Now a customer can come to our CPA firm and receive start up counseling, get himself incorporated, decide on a computer software system, have the software professionally installed, receive training on its' use (specifically accounting/bookkeeping software so they can do their own work, if desired, or let us handle it) and even have a WEB Page created in order to market their product throughout the world on the World Wide Web. The concept is simple and easy to achieve.
Of course, not all clients need the full scope of our services and may just want assistance in their particular area of need. We will be glad to supply those services as they occur.
Tax Planning-Save on 1996 Taxes By Acting Before New Years Eve.
Time is running out on your options for savings on taxes for this year. If you act now there are still some things you can do to reduce your tax bill with Uncle Sam, but you have to do them before 12/31/96. Here is a list of some of the more common tax savings tips for individuals, businesses using the accrual method, and businesses using the cash method:
Individuals
Invest in your Keogh, IRA or 401k plan.
Transfer up to $10,000 in income producing assets to someone in a lower tax bracket provided he is 14 years of age or older.
Ask your boss for your bonus after 1/1/97.
Bundle itemized, miscellaneous and/or medical deductions for deduction in 1996 or 1997 (if the potential to exceed the standard deduction, 2% threshold, or 7.5% threshold exists for the year in question.) In other words pay for these items in the year that they can be deducted.
Time losses/gains on the sale of your investment portfolio assets to best suit your tax position for 1996 or 1997.
Make a charitable donation.
Take a double tax break when you donate appreciated property to a charity.
Defer income by buying investments that mature in 1997.
If your marginal tax rate is 31%. 36% or 39.6%, hold your capital assets for more than 1 year before selling so you can use the maximum rate of 28% on capital gains. Combine Capital gains and losses to generate lesser gains.
If you own bonds and have a high marginal tax rate, consider reinvesting in tax free municipal bonds.
Buy Series EE Savings bonds to finance a child's future college costs.
If you plan to marry a person who has already used their once in a lifetime exclusion of tax on the gain from sale of residence and you individually own a home with a built in gain you better sell the home before you marry
If you are within certain age limits but collect social security retirement payments, you should consider limiting your earned income before you lose valuable SSI benefits.
Consider leasing your personal assets used by your corporation to reduce employment taxes
Analyze your withholding or quarterly tax payments to make sure they are adequate to avoid late payment penalty.
Businesses/Accrual.
Buy and place in service up to $18,000 in new equipment (if you don't have cash you can charge it.)
Establish a Bonus Plan based on this years sales. You don't have to pay the bonus for 2 & 1/2 months but it can be deducted in 1996.
Spend up to $25/client for Christmas gifts this year.
Deduct bad debts.
Make a charitable contribution
Consider whether you should be a C-Corp. or S-Corp. for the most beneficial Tax break for you. Consider salary options if you are a C-Corp.
Analyze your quarterly tax payments to make sure they are adequate to avoid the late penalty.
Businesses/Cash
Buy and place in service up to $18,000 in new equipment (if you don't have cash you can charge it.)
Mail invoices at the end of December so you receive payment next year.
Get necessary business repairs and buy office supplies before year end.
Buy tickets for next years travel, before year end.
Spend up to $25/client for Christmas gifts this year.
Consider whether you should be a C-Corp. or S-Corp. for the most beneficial Tax Break for you. Consider Salary options if you are a C-Corp.
Analyze your quarterly tax payments to make sure they are adequate to avoid the late penalty.
While these tips are not all encompassing, and some taxpayers may have special qualifying rules or limitations, the opportunity to reduce your taxes for 1996 exists now and you need to take action while you have the chance. This also might be the time to contact Don or Patty to arrange a $75 1996 tax planning strategy meeting to discuss your particular needs. Give us a call at 954-436-4199
Quote for the day
Never be idle. No one who uses his time well, ever complains about lack of time. It is amazing how much can be done by the person who is always working.
Thomas Jefferson
Planning for 1997
While your congressional representative seems to have ignored you for 1996, new changes for 1997 have been made in favor of the taxpayer. The only catch is to know what they are and how to use them. Call us at 436-4199 to discuss them. Several of them are addressed here
Couples with stay-at-home spouses can now increase their annual IRA contribution for a total of $4,000/year. Limitations as to deductibility still exist and you should review your position to determine how much deduction is yours for the taking. That which is not deductible still grows annually on a tax deferred basis.
Uncle Sam will now let you withdraw IRA funds on a penalty free basis for certain types of withdrawals as it relates to certain medical expenses and unemployment compensation receipts.
The IRS has extended looser “Retirement Plan Minimum Required Distributions” for people who reach 70 & 1/2 years of age and who meet certain requirements
People with legitimate adoption expenses will be granted an adoption tax credit up to $5,000. As with all tax treatments, certain rules apply and each persons' eligibility will be impacted based on their specific circumstances. Some of the expenses that will be deductible will be attorney costs, birth-mother medical bills, and certain home renovation costs.
Long Term Care Insurance Premiums to Care for the Elderly will now be deductible as medical insurance costs.
Self employed individuals who pay for medical and dental care insurance will be allowed to increase their deduction from 30% to 40%.
There will be a three year window from 1997 to 1999 where there will be no excise taxes on large retirement plan distributions. The time to avoid future taxes is here and a planned timely withdrawal of pension benefits now could save serious taxes in the future.
Did You Know
Certain rules exist that allow penalty free IRA withdrawals for anyone, even though they have not reached age 59&1/2