A lot of folks probably looked at the title of this post and cringed – “Rethinking the Customer?  They’re not the problem!” I get it, it seems like the wrong thing to do … but it’s not.  The entire process your business follows, after all, is about the customer, right?  They already exist and they understand, at least intuitively, that your business has set out to solve a specific problem they need solved.  Your own Dream, Vision, Purpose, and Mission all work together...

Many, many times, in speaking with business owners, I hear the stories of how they inadvertently created a system – big or small – and even though the system isn’t a good one, they have trouble “fixing” it.  It’s even worse when the business has some size to it – managers don’t acknowledge change or are reluctant to change, and even minor tweaks to existing processes can be a struggle.  What if you try to change something “big,” like the culture, or the mindset of people in the...

When you travel to a business location where you spend the night, you are in travel status. But will the tax rules make this a business or personal night? The rules also affect your costs during the day. When you have an overnight business travel day, you generally deduct your costs of sustaining life for the day, such as breakfast, lunch, dinner, snacks, drinks, lodging, and taxis. Business days also are important in determining how much of your travel cost you may deduct. For example,...

The Work Opportunity Tax Credit rewards your good deeds. And now, because of new legislation, the rules are in place for longer than usual. If you need to hire workers in your business, this dollar-for-dollar reducer of your taxes is one to know about. Suppose your business hires a member of a targeted group. In that case, you can claim the potentially lucrative federal Work Opportunity Tax Credit (WOTC) for some of the wages paid to the individual. Overview of the Credit The credit...

Cryptocurrencies have gone mainstream. For example, you can use bitcoin to buy far more than you would think. To see, try googling “What can I buy with bitcoin?” You will get more than 350,000 hits. But using cryptocurrencies has federal income tax implications that may surprise you. With the price of bitcoin having gone through the roof (before its recent decline), and with increasing acceptance of bitcoin and other cryptocurrencies as forms of payment, the tax implications of using...

The PayPal loophole is going away in a little over six months from now. You may remember the strategy where you can avoid giving 1099s to contractors and vendors when you use PayPal or a similar service as your payment platform. With this strategy, you push the reporting requirements to PayPal. Current federal law requires that PayPal file Form 1099-K with the IRS and send it to you when your gross earnings are more than $20,000, andyou have more than 200 transactions. Example. You...

Here’s a vehicle story that you will find of interest. Taxpayer DJ is in an IRS audit of his 2018 tax return. It is now at the IRS appeals level. The vehicle in question is an SUV with a curb weight of 5,700 pounds and a gross vehicle weight of 6,100 pounds. If the tax code makes the SUV a passenger vehicle, the curb weight of 5,700 pounds limits DJ’s tax deduction to $18,000.If the tax code makes the SUV a truck using the gross weight of 6,100 pounds, DJ’s deduction is $55,000. The...

When you buy business or investment real property, such as an apartment building, you usually pay one lump sum for land, buildings, and other improvements. There’s no cost breakdown. You can’t depreciate land because it doesn’t wear out. So, as far as depreciation goes, land is useless.  What you need is a way to take that lump sum and allocate it to land, buildings, improvements, and equipment. Allocating costs to land and buildings for tax purposes is a factual determination initially...

The tax law can jump up and bite you in unexpected places. One example of that is the nanny tax.  Do you have a household employee such as a nanny, a caregiver for an elderly relative who moved in with you during the pandemic, or a live-in housekeeper?  You may have hired somebody to help out during difficult circumstances caused by the COVID-19 mess.  Maybe that was a temporary arrangement, or maybe it has turned into a permanent one. In either case, the dreaded nanny...

As you likely know, in times of economic dislocation such as the COVID-19 pandemic, the self-employed get no special government help. For example, you generally do not receive benefits that employees get, such as unemployment and paid sick leave. But this time it’s different. Because of the COVID-19 pandemic, you can qualify for the following seven benefits: 1. PPP monies. Self-employed individuals with no employees can obtain forgivable first- and second-draw PPP monies of up to $20,833...