Engelman Accountancy Corporation News Blog

Put year-end tax planning on your schedule

RRWeb — Tue, 24 Aug 2010 20:43:45 +0000

At the end of 2010, most of the provisions in the Economic Growth and Tax Relief Reconciliation Act of 2001 will “sunset” or expire. Only those provisions extended or made permanent by later tax legislation will remain effective in 2011. That fact makes year-end tax planning crucial for 2010. At the point of major tax change, there are always opportunities and pitfalls that should be analyzed if you want to keep your taxes as low as possible. With all the tax changes that have already occurred and the many more sure to come this year and next, you must review your tax situation now.

An important part of our service to you is helping to identify actions you can take before year-end to minimize your income tax bill. If you’d like to discuss tax-cutting options that fit your particular situation, please contact us soon for a year-end tax planning review.

ENGELMAN ACCOUNTANCY CORPORATION
520 So. El Camino Real, Suite 410
San Mateo, CA 94402
650.344.6525 FAX 650.344.6369
www.engelmanaccountancy.com

Tax filing reminders

RRWeb — Tue, 24 Aug 2010 20:25:03 +0000

September 15 – Third quarter installment of 2010 individual estimated income tax is due.
September 15 – Filing deadline for 2009 tax returns for calendar-year corporations that received an automatic extension of the March 15 filing deadline.
September 15 – Filing deadline for 2009 partnership tax returns that received an extension of the April 15 filing deadline.
October 1 – Generally, the deadline for businesses to adopt a SIMPLE retirement plan for 2010.
October 15 – Deadline for filing 2009 individual tax returns on extension.

For assistance with meeting your tax deadline, or with any tax related concern, give us a call.

ENGELMAN ACCOUNTANCY CORPORATION
520 So. El Camino Real, Suite 410
San Mateo, CA 94402
650.344.6525 FAX 650.344.6369
www.engelmanaccountancy.com

Everyone needs a cash reserve

RRWeb — Tue, 17 Aug 2010 13:19:53 +0000

Many of us are living close to our financial limit these days. We pay our bills on time, but there’s not a lot left over. That could be a dangerous situation. If things go wrong, your financial situation can change very quickly from adequate to critical. Without a cash reserve, you could find yourself in serious trouble.

It’s important to have a cash reserve of at least three months’ living expenses. Invest your reserve in a safe, liquid account. Consider investments such as a bank CD, a money market fund, or a very short-term bond fund. Make sure you have easy access to the funds without losing too much interest. And once you’ve built your fund, avoid temptations to raid it for non-essentials.

Do you have questions about your case reserve planning? Please give us a call.

ENGELMAN ACCOUNTANCY CORPORATION
520 So. El Camino Real, Suite 410
San Mateo, CA 94402
650.344.6525 FAX 650.344.6369
www.engelmanaccountancy.com

Are all your business eggs in one basket?

RRWeb — Thu, 12 Aug 2010 21:29:07 +0000

Many small business owners share one problem, especially in their early days. It’s being over reliant on a single customer or supplier for much of their business. If you’re in that position, your business is operating with higher risk. Just as with investments, you don’t want all your eggs in one basket. Your goal should be a well-diversified portfolio of customers and suppliers.

That’s in an ideal world. In the real world you may have to live with the situation, at least short term. But there are steps you can take to understand your risk and, over time, to change it.

Measure the problem. Work with your managers and accountant to quantify how your sales break out by customer. You only need to do this for the top five or ten customers to see whether you have an over-reliance problem. If you’re a manufacturer or retailer, take a similar look at your principal suppliers. Quantify how dependent you are on the top few.
Understand the risks. List the factors that could jeopardize your business with your chief customer or supplier. These will vary with your specific circumstances. They might include a natural disaster that interrupts your customer’s business or that prevents you from shipping or receiving goods. It could be a change in the marketplace or a new technology that cuts demand for your product. It could be actions by your competitors. It might even be problems in your own operation, such as a drop in quality, delays in shipping, or poor inventory control. The list may be daunting, but until you understand the risks, you can’t develop solutions.
Look for ways to minimize your risks. Brainstorm with your managers on long-term steps to reduce each risk. It might be to enter new markets or to tweak your product design. Think through contingency plans to address possible disasters or find alternative suppliers. Discuss how you would respond to changes in the marketplace. Try to set measurable goals for change and clearly assign responsibility.

For assistance with this issue or with any of your business concerns, give us a call.

ENGELMAN ACCOUNTANCY CORPORATION
520 So. El Camino Real, Suite 410
San Mateo, CA 94402
650.344.6525 FAX 650.344.6369
www.engelmanaccountancy.com

Give your business a competitive edge

RRWeb — Tue, 10 Aug 2010 12:55:12 +0000

It’s a fact. When competition is based on price alone, smaller companies often find themselves squeezed by high-volume, low-priced competitors. How do you, as a small or mid-size business owner, survive in such an environment? You survive by differentiating yourself from the competition, creating a niche or identity that isn’t based on cut-rate pricing. In other words, you offer something that your competitors don’t offer, something that’s different.

To truly differentiate your business, you need to identify your target customers and their needs. Let’s say your firm sells stereo speakers. You might decide to focus on serious audiophiles only. Such customers will likely pay a premium for higher performance, technological innovation, or customization. Perhaps you’ve dined at expensive restaurants that offer an unusual menu, a remarkable atmosphere, or superior service. Such eating establishments are often packed at the dinner hour. Why? Because customers perceive value in the products and services that these businesses offer, a value they’re willing to pay for.

The key is to identify the qualities that make your company different. How do you discover such qualities? One way is to study your competition. Clip their ads, examine their websites, buy their products and services. Determine what makes your product or service different and more valuable than that of your competitors.

Once you’ve identified the qualities that could set your company apart, it’s time to prioritize them. Decide which would be easiest to develop, which would address your customers’ most important buying criteria, and which would be hardest for your competitors to emulate.

Finally, seek to convey that value to your target customers. The goal is to “brand” your product, being clear about what you want to be in your customers’ minds.

If you need help identifying the qualities that could set your business apart, give us a call.

ENGELMAN ACCOUNTANCY CORPORATION
520 So. El Camino Real, Suite 410
San Mateo, CA 94402
650.344.6525 FAX 650.344.6369
www.engelmanaccountancy.com

Working after retirement affects your benefits and taxes

RRWeb — Tue, 03 Aug 2010 12:41:27 +0000

Working after retirement affects your benefits and taxes People often work beyond the “normal” retirement age. Here’s how extending your work life can affect your taxes and retirement benefits.

“Normal” retirement age is not a fixed number. For social security purposes, the “full” retirement age threshold ranges from 65 to 67, depending on your birth date. However, you can elect to start receiving lower payments as early as age 62, or you can maximize your benefits by forgoing them until you’re 70. Once you reach age 70, there’s no incentive to postpone your benefits further, since you’ll already have reached your maximum.

Earnings limit. If you’re working, you probably should forgo the early payment option. Benefits received before full retirement age will be reduced by $1 for every $2 earned over an annual limit (currently $14,160). However, you will receive a compensating increase when you do reach full retirement age, and your payments will not be reduced thereafter no matter how much you earn.
Taxable benefits. Whether or not you draw benefits, you’ll continue to pay social security and Medicare taxes on any income you earn from wages or self-employment. Up to 85% of your benefits may become subject to income tax, depending on the amount of your other income.
Medicare. Medicare eligibility begins the year you reach age 65. The program encompasses four types of coverage: hospital insurance, general medical insurance, Medicare Advantage, and prescription drug coverage.

Working beyond retirement age can require several complex decisions. Call us for help with planning the outcome that’s best for you.

ENGELMAN ACCOUNTANCY CORPORATION
520 So. El Camino Real, Suite 410
San Mateo, CA 94402
650.344.6525 FAX 650.344.6369
www.engelmanaccountancy.com

Homebuyer tax credit is extended

RRWeb — Sat, 31 Jul 2010 12:30:25 +0000

If you signed a contract before May 1 to buy a home, but have been unable to close the deal, you still have time to apply for the homebuyer tax credit. The deadline for finalizing the paperwork on your new home has been extended through September 30, 2010. Here’s what you need to know:

The extension applies only if you already had a contract in place by April 30, 2010. The new deadline is available for first-time homebuyers and long-time residents.
The maximum credit remains unchanged ($8,000 for first-time homebuyers and $6,500 for long-time residents), as do other rules for qualifying.
You can claim the credit on your 2009 or 2010 federal income tax return. You’ll have to complete Form 5405, First-Time Homebuyer Credit and Repayment of the Credit, and attach proof that you meet the requirements.

Not sure if you qualify? We can help. Please call for more information.

ENGELMAN ACCOUNTANCY CORPORATION
520 So. El Camino Real, Suite 410
San Mateo, CA 94402
650.344.6525 FAX 650.344.6369
www.engelmanaccountancy.com

Tax filing reminder - August 2

RRWeb — Sat, 31 Jul 2010 12:13:52 +0000

August 2 – Deadline for filing 2009 retirement or employee benefit returns (5500 series) for plans on a calendar year

For assistance with filing 2009 retirement or employee benefit returns, give us a call.

ENGELMAN ACCOUNTANCY CORPORATION
520 So. El Camino Real, Suite 410
San Mateo, CA 94402
650.344.6525 FAX 650.344.6369
www.engelmanaccountancy.com

Second estimated tax payment due June 15

admin — Thu, 27 May 2010 11:47:31 +0000

June 15, 2010, is the due date for making your second installment of 2010 individual estimated tax. Your check to the United States Treasury should be accompanied by Form 1040-ES. June 15 is also the due date for calendar-year corporations to make their second quarter 2010 estimated tax
payment

Taxes & summer jobs

admin — Thu, 27 May 2010 11:10:34 +0000

Is your child looking for a job this summer? If so, you both may have questions about taxes. Here are three common concerns.

Is a tax return required? The answer depends on several factors, including the total amount of income received. For instance, if wages are the only source of income, your child can generally earn up to $5,700 during 2010 before a federal tax return is necessary. However, unless your child can claim an exemption from withholding, a return may be required even when wages earned are lower than the filing requirement. That’s because filing is the only way to claim a refund of overpaid taxes. In addition, self-employment income, tips, interest, dividends, and stock sales can affect the filing requirement.

Can my child open an IRA? Anyone under age 70½ who has earned income can contribute to a traditional IRA. There’s no age restriction for Roth accounts, though the amount of the contribution phases out at higher income levels (starting at $105,000 for single individuals in 2010). The maximum standard contribution for 2010 is $5,000.

Are there any tax breaks if my child works for me? You can take a business tax deduction when you pay a reasonable wage for work your child performs in your business. If your business is a sole proprietorship or a partnership you and your spouse operate, and your child is under age 18, you don’t have to pay social security, Medicare, or federal unemployment taxes. The child’s wages are subject to income taxes.

If you have other questions about the tax implications of a summer job, give us a call.

ENGELMAN ACCOUNTANCY CORPORATION
520 So. El Camino Real, Suite 410
San Mateo, CA 94402
650.344.6525 FAX 650.344.6369
www.engelmanaccountancy.com