Schedule midyear tax planning soon

As summertime approaches, tax planning is probably the last thing on your mind. The problem is that if you wait until December, there’s little time for changes to take effect. But if you take the time to plan now, you still have six months for your actions to make a difference on your 2013 tax return.

Making time for 2013 tax planning now not only helps reduce your taxes, but also helps to put you in control of your entire financial situation. Tax planning should be a year-round process, but it’s especially effective at midyear. Give us a call for guidance in implementing the best moves for your particular situation.

A bank line of credit: Should your business have one?

Just exactly what is a bank line of credit and who should be using one? A bank line of credit is not a great deal different from a credit card. You make draws against your line of credit from time to time as you need cash. You pay interest only on the amount of the loan balance outstanding. You are expected to make payments and occasionally bring your outstanding balance to zero. Let’s look at an example.

Let’s say that your bank has arranged for you to have a $100,000 line of credit. You are not obligated to draw any of it at any given time, and you will pay no interest until you actually make a draw (much as you do with a credit card).

Assume that you want to build up your inventory for the holiday shopping season and need $30,000 to do so. After your inventory purchase, you still have $70,000 available even if the $30,000 is still outstanding, but you are only paying interest on the $30,000. You may have several occasions during the year to borrow on your line of credit. Since your line of credit is intended for short-term cash needs, your banker expects your balance to be paid down as your cash flow improves. [Read more…]

IRS announces 2013 deduction limits for business vehicles

The IRS has published depreciation limits for business vehicles first placed in service this year. The limits for passenger autos remain the same as the 2012 limits, but limits for light trucks and vans have some changes.

Because 50% bonus depreciation is allowed only for new vehicles, the limits are different for new and used vehicles. Here’s a quick review.

For new business cars first placed in service this year, the first-year depreciation limit is $11,160; for used cars, it’s $3,160. After year one, the limits are the same for both new and used cars: $5,100 in year two, $3,050 in year three, and $1,875 in all following years. [Read more…]

Don’t fall for bogus IRS e-mails and websites

Crooks wanting to steal your identity are using bogus e-mails and websites designed to look like genuine IRS communications. You might expect the April 15 filing deadline to mark the end of these scams, but they, in fact, are expected to continue for months.

An example of these bogus e-mails: You receive a message confirming IRS receipt of your tax return, but the IRS needs more information to process your return. The e-mail looks official and completely legitimate. But it isn’t. The IRS does NOT contact taxpayers asking for personal and financial information. These e-mails should be deleted immediately. Fake IRS websites are also created by scammers to lure victims into filling out forms providing information that results in identity theft.

Does your 2013 withholding need adjusting?

If you have a sizable refund of your 2012 taxes, it may be time for you to check your withholding. After all, when you overpay your taxes, you’re making an interest-free loan to the government.

Reducing your withholding is as simple as filing a new Form W-4 with your employer. The form comes with a worksheet to figure out how many allowances you should claim. Don’t forget to allow for other taxable income besides wages, such as dividends or investment gains. [Read more…]

Reminder: Second estimated tax payment due June 17

June 17, 2013, is the due date for making your second installment of 2013 individual estimated tax. Your check to the United States Treasury should be accompanied by Form 1040-ES. June 17 is also the due date for calendar-year corporations to make their second quarter 2013 estimated tax payment.

If you say that your product is ‘reliable,’ does it have to be?

Companies advertise all the time saying that their products are terrific and better than the competition. But at what point can a company be sued if a product doesn’t live up to the hype?

That question came up recently when a customer sued Apple, claiming that his iBook G4 laptop failed shortly after the one-year limited warranty ran out. (He claimed that certain solder joints degraded each time to laptop was turned on and off, resulting in the computer eventually breaking.)

According to the customer, Apple was guilty of “misrepresentation.” That’s because Apple had advertised the product as “durable,” “rugged,” “reliable,” “high-performance,” and “ideal” for students. The customer argued that such a product ought to last at least a couple of years. [Read more…]

Businesses should have a policy on cell phones and driving

Any business whose employees drive or use the telephone should probably consider having a written policy on cell phone use while driving.

Why? Because if an employee causes an accident while driving on business…or causes an accident while driving on their own time, but while texting or making a phone call related to the business…then it’s possible that someone who was injured in the accident will sue the company, and try to hold it liable as well as the employee.

This is especially true now that more and more states are passing laws limiting texting and talking while driving. If an injured person can show that the employee violated a law, it makes it that much easier to sue. [Read more…]

Companies, former employees battle over LinkedIn accounts

Linda Eagle co-founded a company to provide training for financial services employees. Two years later, the company was purchased and Linda was named CEO. But six months afterward, she was fired.

Linda and the company then became embroiled in a lawsuit over – surprise! – Linda’s LinkedIn account.

Linda claims that the company accessed her account, changed her password, and replaced her profile with that of the company’s new CEO. She says that by doing so, the company prevented her LinkedIn connections from contacting her, and hijacked those connections for its own benefit. (Eventually she managed to get control of the account back.) [Read more…]

A good records management policy can protect you legally

Every company should have a policy for what records to keep and what to discard…and should review it annually.

On the business side, a good policy can make sure that records are kept consistently and are accessible when required. It should balance the need for careful records against the cost of keeping outdated or useless materials.

But there are important legal considerations as well. For instance, a number of federal and state laws require certain records to be kept (including those pertaining to taxes, workplace safety, and family and medical leave). Failure to keep these records can result in government penalties. [Read more…]

Wage-and-hour complaints are at an all-time high

Federal wage-and-hour lawsuits against employers are at an all-time high. In fact, the number of employee lawsuits has quadrupled in the last 10 years, according to government figures.

Most of the recent suits accuse companies of wrongly calling an employee an independent contractor. (The remainder are for failure to pay overtime, wage miscalculation, and similar issues.)

Of course, more and more businesses want to treat their workers as contractors, because they can often avoid overtime rules, payroll taxes, employee benefits and medical leave requirements. The problem is that companies are often careless about observing the rules, and they get in trouble as a result. [Read more…]