Tuesday, January 13, 2009

Some Breaking News from AIPB

I just received this great information from the American Institute of Professional Bookkeepers. Be sure to speak with your financial advisor to verify if this does in fact impact your situation.

An unpleasant surprise may await
S corp and partnership owners

Under recent IRS guidelines, owners may not receive the full benefit of the 2008 Sec. 179 write-off of $250,000. The IRS says that the deduction applies separately to the entity v. individual owners. (Here, "owner" refers to both the S corp shareholder and the partner in a partnership.)

The amount of Sec. 179 pass-through an owner can deduct will depend on the maximum Sec. 179 deduction allowed in the owner's tax year—not the S corp's or partnership's tax year. This is potentially bad news for owners who have a calendar tax year who receive a pass-through Sec. 179 deduction from an S corp or partnership with a fiscal year. Here's what to tell company owners:

Entity treatment. An S corp or partnership with a tax year beginning in 2007 and ending in 2008 has a Sec. 179 ceiling of $125,000 for property placed in service in 2007. An S corp or partnership with a tax year beginning in 2008 and ending in 2009 has a Sec. 179 ceiling of $250,000 for property placed in service in 2008.

Owner Treatment. A calendar-year shareholder or partner has a Sec. 179 deduction of up to $250,000 when:
  • property is placed in service by the entity during 2008.
  • the pass-through portion of any Sec. 179 deduction(s) to the owner occurs in 2008 and that owner has a taxable year ending in 2008.

Here is the potentially bad news: Say that the entity's tax year begins in 2008 and ends in 2009, giving it a maximum Sec. 179 deduction of $250,000—but the pass-through to the owner occurs in 2009 and the owner has a calendar tax year in 2009. The maximum Sec. 179 deduction for that owner will be limited to the 2009 maximum Sec. 179 deduction of $125,000 (plus any inflation adjustment).

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posted by The Office Grapevine at 7:58 AM 0 comments

Thursday, November 27, 2008

Getting Back Into the Swing Early

It has been over a year since I've posted to my own blog. A friend of mine just recently commented on this to me and said, "Either get something up there or take it down."

As we head into the holiday season, one thing that always comes up is how much family, friends and significant others really mean. We talk about the need to stay in touch more, the desire to start out the new year as a new you, etc.

From a business perspective, this usually means getting budgets and plans in order. My first question is always, do you have any of these completed? If you don't then it's time to consider doing these things.

They can be done very easily through a quick analysis of your business financials. Run a quick Profit & Loss statement. You'll know where you're spending your money and you'll know where you can cut just by getting that macro-level look. I always start there.

Next, look at how you are spending your business dollars. Are you tracking how the money being spent is coming back to you in new business or upgraded business from your current client base? This is another key area that will help you grow your business over the long term.

With the amount of bookkeeping for small business that we do, this is one area where we focus so we can help our clients make smarter choices on expenses. You may not be at that corporate-style budget stage in your business, but that does not mean you can keep spending like your business is a hobby.

This current economy is going to be a challenge but business will continue to be done. Those of us who are ready, have plans in place and maintain good customer service will come out as strong businesses with a great profit to show for it.

With that in mind, you can get that extravagant gift tomorrow morning if you are a Black Friday shopper. Now, click here, so you can plan your early Friday morning shopping.

Cheers,
Virtual Cathy

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posted by The Office Grapevine at 9:00 AM 0 comments