At Rishi Shah, we are confident we can connect you with a bookkeeper who can understand and adapt to your unique needs. We can be easily reached at 619-766-5659. 

Do You Need a Bookkeeper?

Simply put, a San Diego bookkeeper can help you keep your records and transactions organized. When running a business, it can be challenging to keep track of everything and know what to collect. 

A bookkeeper can help you document transactions, payments, receipts, financial data, and ledgers. With all the paperwork, you can find it difficult to focus on the business or put your energy into what you love doing. This is where a bookkeeper can come in handy! 

Interviewing a Bookkeeper

Your business is your income, and you want to make sure you find someone you trust to manage everything that goes into it. As with any new role in your business, you can limit candidates by interviewing them and making sure their qualities are a fit for what you need. For this reason, it’s a good idea to ask the right questions. 

12 Important Questions to Ask Your Potential Bookkeeper 

So how do you know what to ask? To start, think of what experience you may want someone to have. Do you want someone who has worked with your specific business model or industry before? Do you want someone local with an office or someone who can work remotely? Do you want to have regularly scheduled meetings? Limit down exactly what you are looking for, then you can begin thinking of questions that align with that. 

Some people have a difficult time interviewing others and may find it intimidating. To start your interview, work on some icebreakers to make you both more comfortable. From there, some questions you may want to ask include: 

1. What is your experience in bookkeeping?
2. How do you stay organized?
3. I work with ___ program. Are you familiar with it or have experience with it?
4. What type of accounting systems have you worked with?
5. Do you have extensive knowledge of federal, state, and local legal requirements? 
6. Have you had any success in growing a company’s revenue or reducing costs?

There are also questions you can ask related to their work ethic, success in other fields, projects, etc. Some people prefer a more professional and structured interview, while others enjoy casual interviews. 

If you require your associates to have flexibility with their hours, such as working during holidays, weekends, or after normal business hours, asking about their availability will also be key.  Other questions you could ask include: 

1. What do you consider to be your strongest qualities?
2. Tell me about a time when you were struggling with a project and how you handled it 
3. What type of management style are you most comfortable with? 
4. Do you prefer frequent meetings on projects to discuss progress or work more independently?
5. What do you think would be helpful for you to succeed in this role?
6. Do you have any long-term goals you are working towards? 

Call Us Today for the Best San Diego Bookkeeping Services!

If you need help with finding a reliable and suitable bookkeeper in the San Diego area, Rishi Shah is here for you! Contact us today at 619-766-5659 and set up your free consultation today! 

What are some of the most commonly implemented tax planning tips for business owners in California? Let’s take a look!

If you own a business in the San Diego area, Rishi Shah works to implement tax strategies that benefit your business. Connect with a tax expert in San Diego today. 

What is Tax Planning? 

The concept is all about planning, strategizing, and employing knowledge of the tax code and economic outlook in a way that aligns with your business and business goals. 

Tax planning involves several factors, as people arrange and analyze the business’s financial situation to maximize tax breaks and reduce the tax liabilities efficiently and legally. With constantly changing tax codes and regulations, this can be much more difficult than first meets the eye. 

Tax professionals study tax law and observe how certain regulations can align with your business’s situations. 

Step 1: Assess Where You Are 

It is difficult to plan or strategize for the future without understanding your business’ current situation. Before your tax planning can take shape, you should take a moment ot assess where your business stands financially, including understanding your tax bracket, mapping out your future goals, and gathering data. 

Step 2: Understand the Difference Between Tax Deductions and Tax Credits 

Both tax deductions and credits are one of the most important concepts when it comes to tax planning for businesses. Understanding the balance and the difference between these two metrics can make for effective tax strategies. Through the filing of tax deductions and credits, businesses can reduce their tax bill. 

Step 3: Understanding Standard Deduction vs. Itemizing 

One central decision for some businesses is deciding whether itemizing or taking the standard deduction is the way to go. The standard deduction is a flat rate and makes tax preparation go faster. This standard rate is adjusted yearly depending on inflation. 

Itemizing is documenting and claiming tax deductions and credits one by one. With this method, you will be responsible for tracking and documenting individual expenses, deductions, and items to ensure accuracy. A San Diego tax professional can itemize deductions so you can focus on growing your business.

Tips to Make the Most Out of Tax Opportunities 

Navigating the tax system is not always straightforward. Whether you are a new business or your doors have been open for years, the reality of tax obligations and liabilities is never far behind. 

Businesses today opt for finding a tax professional that understands their business structure, mission, and goals to reduce tax bills and make the most out of the bottom line. 

So, what can you do to reduce your tax liability next tax season? 

Tip #1) Seek Out Tax Breaks 

Running a business operation takes revenue, and some expenditures can be written off. This includes deductions for car and truck expenses, wages, costs for a freelancer or independent contractor, or the cost of certain business items, utilities, and more. 

Working with a tax professional that knows all of the tax breaks your business is eligible for is one way to plan for the upcoming tax season and make expense decisions at the right time. 

Tip #2) Be Diligent About Documentation and Record-Keeping

Whether you are filing for the standard deduction or itemized deduction, accurate record-keeping is essential. No business wants to face an IRS audit, but sometimes it happens. 

These records are essential to ensure the right deductions and compliance but also in the event of an audit. In most cases, you want to keep tax records for three years, sometimes six or seven. 

Tip #3) Avoid Payroll Issues 

Business owners have another great responsibility: payroll. Whether you have five or fifty employees, the responsibility of fulfilling payroll obligations is the same. 

Your job as the business owner is to ensure that taxes are taken care of on your end and paid on behalf of your employees. Employers need to withhold a certain amount from the paycheck for tax obligations. A tax professional can help you keep this in check.

Tip #4) File With a Tax Professional 

Running a business is more than a full-time job. Business owners in California put in a lot of hours to see their companies grow and stay competitive. 

With all this groundwork and innovation, there is hardly room to think about:

• The number-crunching 
• How changing regulations might impact your business 
• How you can modify your spending to reduce tax liabilities and increase profits

A tax professional looks for patterns and employs their understanding of the tax code. 

Find a Tax Preparer that Positions You for Financial Success 

Every business in San Diego is different. Companies are structured differently, operate differently, and have varying goals and objectives. An experienced tax consulting firm is there to support your vision for the future by taking care of the tax side of things. 

Rishi Shah has been helping businesses in San Diego maximize their time and profits by offering professional tax strategies and tax planning. Whether you are a new business or a veteran business owner in the San Diego area, our team can take care of the numbers. 

Want to learn more about how we work and how we can help? Connect with Rishi Shah today. 

Let’s take a look at how an accountant help tech startups and new businesses with eCommerce and other tax questions.

If you’re a new startup in California looking for tax planning or tax strategies, call the Rishi Shah team — 619-766-5659

How an Accountant Can Help Tech Startups 

The United States leads the world in the number of startup companies that initiate their operations every year. The number of startups in the U.S. currently is about 71,153 and about 69% of new startups begin as home businesses. Many of those home businesses are operating completely online, using eCommerce and other online venues to host their companies and serve as their storefronts. 

Most emerging startups strongly lean into digital technologies, fintech industries, and other fields such as life sciences and healthcare, artificial intelligence, and gaming. Many of these companies involve some kind of eCommerce or online purchases or transactions, which can get complicated when it comes to tax liabilities. 

Common Tax Challenges for Online Businesses or Startups

There is no question that online businesses have been growing consistently and exploded in the past two years. According to Mckinsey, eCommerce has grown two to five times faster since the pandemic. This unprecedented spike in online sales and incoming revenue via online channels have completely changed the consumer landscape. However, things get complicated when you consider the addition of sales tax, shipping to people across the nation or across the world, and new remote work structures. 

Questions Revolving Taxes and Ecommerce Businesses 

Small businesses, startups, and sellers must often untangle new challenges that emerge as the marketplace and consumer behavior change. Let’s take a look at some of the most pertinent ones.

What are the implications for sales tax compliance with eCommerce? 

This question has been the source of some confusion as online sales ramp up. When a business ships an item or goods across the country, they might be responsible for collecting sales tax, depending on where the item ships to. The ship-to address becomes the point of sale. So, if your business makes a sale in a different state, you are responsible for that sales tax.  

How does remote work affect tax compliance?

During the height of the pandemic, a good chunk of the workforce was relegated to working from home. The remote work trend was already growing before 2020, but once the pandemic hit, companies scrambled to make this structure work for their company. 

• Companies can establish their headquarters or company nexus in a state where they have at least one employee. 
• For online businesses that provide eCommerce infrastructure, tax implications state that the company that facilitates online transactions is required to collect taxes.  
• Remote workers living in states outside of their company’s jurisdiction might have a tax liability to the state where they reside. Depending on your state of residence, how long you worked, and where the company is located, there may be a need to file more than one tax return. 

What are the complications of interstate tax?

A business has to collect sales taxes in states where they have economic nexus. Tax nexus refers to where a business is headquartered or the level of connection between a business and when tax obligations kick in. 

These questions and many online retailer-related questions were addressed by the U.S. Supreme Court case South Dakota vs. Wayfair. The case established that eCommerce retailers were subject to sales tax. The decision puts the legal responsibility of state taxes on the vendors, which—many have argued—can affect small businesses disproportionately. 

Business Daily reported that in 2018 there were 619 standard sales tax rate changes. This translates to a lot of legislation for the average business owner—preoccupied with running their business—to keep up with. 

Small businesses have to deal with the complications of many tax compliance prerequisites, the different state rules, and the frequent changes in rates. Since the Wayfair ruling, many states are changing their rules to accommodate small sellers or remote businesses. Nevertheless, eCommerce compliance has become a force to be reckoned with for many small online businesses. 

Tips for Small Businesses in Dealing with Tax Compliance 

Whether you are an online business, a tech startup, or a brick-and-mortar shop, tax compliance is part of your yearly responsibility. To stay ahead of the game, make sure to adhere to the following tips:

• Get a tax advisor: They provide tax planning and strategies that keep you in compliance but maximize your earnings.
• Familiarize yourself with tax deductions: Tax deductions are your friend. The more you know along the way, the better you can plan. These deductions include things like marketing, mileage, etc.

Get Help With Tax Compliance for Your Growing Business 

Whether you’re a new tech startup or have changed your structure due to coronavirus, dealing with complicated tax rules in this new paradigm requires time and patience. A tax advisor can help you navigate questions regarding your eCommerce small business, dealing with remote employees, or tax obligations to different states. 

Do you have questions about taxes for your company? 

Call Rishi Shah to speak with one of our tax experts! — 619-766-5659

Small businesses have experienced quite the roller coasters the past few years. As if small and mid-size businesses didn’t have enough on their plate, the world nearly came to a standstill, people were told to stay home, the economy stagnated, and uncertainty permeated over everything. Some outlooks, however, paint an optimistic view for small businesses in 2022 and beyond. We view the economic outlook based on some expert analysis and how tax planning can help your business out. 

The Economic Outlook on the Horizon 

It’s no secret that the state of the world has economic effects. What happens domestically and even internationally manifests, affecting the ebbs and flows of the economy. In addition to that, policy changes create a lasting impact as well. The unemployment rates, supply chains, investor confidence, and access to materials all play a role in how confident people feel about starting their own business or continuing to invest in a current business venture. 

So what are some of the main concerns for this year and how can tax planning help you better prepare? As we begin a new tax year, it’s important to look back and reflect on expenses and how better tax strategies can benefit us moving forward. 

The Great Resignation & Shifting of Labor Patterns

According to some experts, the Great Resignation could lead to a small business revolution. Intuit’s New Business Insights report predicted that 17 million new small businesses will be formed in 2022. So while many businesses had to close their doors during the pandemic, people surveyed by Intuit stated that Covid has also accelerated their plans to start their own business. 

For businesses that were already around in 2020, things have slowly begun to normalize. As the pandemic swept through the country, small businesses were forced to adapt to remain above water. For many of those businesses, those adaptations—particularly a change to digital—proved to be beneficial and are here to stay. According to Intuit, 75% had to make significant changes to their business due to the pandemic and 25% changed their entire business model.

Inflation and Gearing Up for Possible Losses 

A growing number of small businesses and corporations are now passing on the increasing costs of materials to customers and consumers. The supply chain issues and material shortages of 2021 continue to reverberate in the economy. According to a recent survey, 47% of businesses are passing on costs to customers and 32% say they will have to raise prices soon. All of this seems to indicate that inflation is here to stay. 

Some of the issues small business owners face due to these high prices include:

• Trouble with suppliers, as smaller buyers are often snubbed for larger buyers
• Shortage of materials and supplies, which means an increase in price
• Continuing supply chain issues at various levels
• Returning to pre-pandemic levels
• Difficulty in balancing the need to raise prices without losing customers

The Federal Reserve has a big hand in determining how the economy bounces back and what economic recovery looks like. The way the Federal Reserve controls monetary policy and sets interest rates impacts all sectors of the economy. 

The Fed’s role impacts the economy in three substantial ways: It sets the discount rate that banks use to borrow from regional Federal Reserve Banks, it buys and sells U.S. Treasury bonds, which influence interest rates, and the reserve requirement for banks. 

Tax Strategies to Implement Early on in the Tax Year

So whether you are a new business or one who has recently done some internal overhauling, here are some of the main tax strategies and tax planning tips to consider as the year kicks in. 

Pay Close Attention to Your Adjusted Gross Income

The Adjusted Gross Income (AGI)  directly relates to how many taxes you end up paying. There are several ways to adjust your AGI to avoid paying a higher percentage in taxes. This includes contributing to a tax-deferred retirement plan, itemizing deductions, and contributing to a health savings plan. 

Strategize Your Spending

You can reduce your taxable income by being strategic with your spending and tax elections. For example, if your business requires expensive equipment, but whether you spend this or not depends on where you are with profits. 

Establish Benefit Plans for Employees

By offering employee compensation, you can lower the employment tax costs. Some of these options include medical and dental insurance, long-term insurance, disability, insurance, tuition reimbursement, transportation, etc. 

Pay down your debt

Loan interest can be tax-deductible in most cases. If you have a business loan and have some cash in hand, consider implementing a strategy to pay that down as soon as possible. 

Talk to your accountant and plan for short-term and long-term strategies

This is an important part of running a business. Running away from taxes or scrambling at the end of the year is not a good strategy. Talking through a plan and implementing it early can go a long way. 

These are just some tax strategies that help small businesses make the right decisions. A CPA can help you with individualized advice and guidance based on your industry, sector, employees, tax structure, etc. 

Plan, Strategize, & Grow — Smart Tax Planning Can Help You Get Over the Hump 

Business owners are optimistic people. They are resilient, relentless, and completely dedicated to their work. Taxes are a financial and administrative burden that slap a lot of business owners in the face, especially in difficult times. How can you set yourself up for success? It’s simple. Plan ahead. 

Want to implement a strategy that works? Call Rishi Shah today! 

Getting a professional accountant in your corner is a wise move. 

There are several structures in place that benefit real estate investors. Understanding the constant changes and modifications to these, however, is no small task. It requires planning, strategizing, and making the right moves at the right time. 

Let’s delve into the specifics. 

Tax Planning Helps Real Estate Investors Save 

Planning and preparation are the keys to a successful tax year. Dreading the impending tax deadline does no good. Of course, as a real estate investor, you are a go-getter, a proactive over-achiever and this means you tackle things with tenacity and confidence, so you’re ready to find out more. A trusted CPA helps you on the journey to protecting, securing, and maximizing your investments.

There are several strategies for tax preparation as a real estate investor. Not all of them may apply to you and not all of them will reap rewards in your particular situation, but they are worth looking at. The five most often discussed include: 

• The Business Tax Deductions
• The 1031 Exchange
• Depreciation losses
• IRAs
• Long-term capital gains

Other planning considerations include things like capital improvements vs repairs and maintenance, passive losses, ins and outs of depreciation, and more. 

The Famous 1031 Exchange 

Experienced real estate investors will be familiar with 1031 exchanges, but if you’re just starting out, this concept might just be opening up to you. This is a common tax strategy that boosts portfolio growth and increases net worth faster. This strategy was put in place in the Revenue Act of 1921 to avoid taxation of ongoing investments and encourage reinvestment. 

The key here is that the property is of “like-kind,” meaning that the property is of equal or greater value and is used for trade or business. So this type of tax strategy allows real estate investors to boost their buying power and grow their portfolios. This tax strategy, however, is highly dependent on timeliness and scoping out the right properties. 

Digging Into Deductions & Other Breaks

Real estate is a popular form of growing wealth, and therefore offers substantial tax incentives and tax breaks. Deductions are one of the biggest forms of tax benefits and refer to tax write-offs. As a property manager, for example, ordinary expenses of maintaining, managing, and conserving the property can be categorized as business expenses. Repairs, such as roof leaks, painting, etc. can also be deducted, but there is a tax difference between repairs and improvements. 

The Act of Depreciation

Write-offs from depreciation can impact a property owner’s tax bill. Thanks to this tax deduction, a real estate investor can recoup some of the cost of a real estate investment. In other words, the tax law allows the real estate investor to write off the natural depreciation of the structure. 

It is filed as a type of deduction that—in the end—can reduce the amount of a tax bill. And while on its face depreciation sounds easy enough, the IRS is pretty particular about this tax deduction and should thus not be taken lightly. 

The IRS has set rules about which rental properties are classified as depreciable. Most rental property investors can include depreciation as an expense on Schedule E when they do their tax filing. 

Consider Capital Gains 

Capital gains tax refers to the taxes placed on a property that is bought and sold for profit. The profits are taxed differently and the amount of time the investor held on to that property comes into account. For example, homes held for more than a year will be taxed at long-term capital gains tax rather than short-term. 

For real estate investors who are into house flipping, this can sometimes be a fragile game of timing and balance. So, depending on the circumstances, it may be wise for an investor to hold onto a property for more than a year. Your CPA can further help you assess the benefits. 

Want to Learn More About Tax Strategies for Real Estate Investors? Contact Rishi Shah CPAs

The above is merely scratching the surface when it comes to understanding tax filing for real estate investors. There are a lot of other questions that come into play: How do I know the difference when a repair should be classified as an expense or capital item? What loan costs are deductible? And other questions about selling a property, buying a property, and more. 

Don’t take a chance with your investments. Want to learn more about tax strategies when investing in real estate? Call Rishi Shah today and speak to someone on our team. 

From the so-called “Great Resignation,” to the clogged supply chain, to inflation, to lockdowns, mask mandates, and fluctuating regulations, the year of covid was a year that fundamentally changed everything. California small business owners—like those throughout the country—face steep challenges as they seek to bounce back and adapt to the new landscape. 

Let’s take a closer look at the small business landscape. 

Top Small Business Trends in the Wake of 2021

Guidant Financial conducts small business surveys every year to understand and gather insights about life as a business owner during that particular year. In late 2020, their survey revealed a couple of major challenges that were plaguing company owners. 

The top takeaways from the survey included:

• Decreased profits. This is to be expected. According to the survey, businesses saw about a 19% decrease in profitability in 2020 as compared to 2019. There is a silver lining, however, small business owners remained optimistic, as 75% of them predicted their business would survive. 
• Government assistance was utilized. About 61% of small business owners took advantage of the government assistance provided through Paycheck Protection Program (PPP) or the Economic Injury Disaster Loans. So the question is how those businesses will fare as they are left on their own through the recovery. 
• Small Businesses resisted layoffs as much as possible. According to the survey, only 5% of businesses had layoffs, but 10% cut their own profits. So, while it appears to be a small number it could be due to employers cutting hours for everyone to avoid layoffs, using furloughs instead of layoffs, or cutting off their own profits to offset the balance. 

Source: GuidantFinancial.com

Challenges Faced by Small Businesses Post-Covid

Even though small businesses held on tooth and nail during the height of the pandemic, there is no shortage of challenges moving forward. Some of the main challenges businesses face include: 

• Filling positions & finding talent: “Now hiring” signs have become ubiquitous as states begin to open up. All across the nation, companies are having trouble filling slots and finding talent. 
• Transitions to Digital Platforms and Formats: Many industries have had to switch to some form of digital workflows or platforms. The transition comes easier to some and is more difficult to others. 
• Keeping up with tax law and regulatory changes: The ever-increasing complexity of tax law only got worse during covid, when government programs, assistance programs, and changing regulations had everyone scrambling.
• Data privacy and security: As workflows and operations go digital and remote, companies have to contend with ensuring network security and data privacy of their customers. 

Potential Government Mandates and the Impact on Companies

The 2021 Small Business Profiles indicated that 32.5 million small businesses across the nation employ about 46.8% of the private workforce.  That’s almost half of American workers are employed by small to midsize companies. In November of 2021, the Biden Administration announced its plan to impose a sweeping vaccine mandate to private companies with 100+ employees. The rules affect 84.2 million workers, according to Reuters. 

For many companies, this means contending with possible fines and/or firing employees who refuse to get the shots. It also might necessitate maintaining employee health records, checking testing status, etc. The action is already triggering major lawsuits, which means uncertainty for many businesses going forward into 2022.

How Can a Trusted CPA Help You Conquer These Challenges? 

While uncertainty reigns, the best defense is staying organized and getting help from tax professionals that get paid to sift through government changes on a day-to-day basis. When it comes to conquering some of the 21st-century small business woes, CPAs are part of your much-needed arsenal. 

Here’s how a CPA springs into action for your business:

Payroll Challenges

Small business owners reported that one of the most concerning and time-consuming challenges had to do with payroll. Part of this was keeping up with federal, state, and local compliance recordkeeping. Other payroll challenges that a trusted CPA can help you with include:

• Data processing: Manual data processing takes time and is prone to errors. Employing automated payroll solutions helps mitigate that. 
• Data security and payroll fraud prevention: As noted above, data privacy is a big deal these days. Data breaches are a threat to companies and pose serious challenges when systems are not equipped to deal with those risks. One report cited that data breaches cost companies up to $3.86 million. 
• Payroll for independent contractors: If you employ independent contractors, the rules for tax compliance for these workers are a little different. The government has strict regulations about classifying 1099 workers, so accuracy is important. With many businesses participating in the “gig economy” ensuring full compliance on this is essential. 
• Payroll tax compliance: Adhering to all federal, state, and local regulations is necessary to avoid IRS audits and to ensure the integrity of your business. 

Tax Planning 

Part of staying ahead means planning. Tax planning serves as a way to organize your business expenses to maximize profits and reduce costs or tax liabilities. Having a trusted CPA helping your business with tax planning and strategy helps your company stay ready for unprecedented changes. 

Maximizing your profits, timing major expenditures, and taking advantage of available credits or deductions can help your business grow over time. 

Get Your Small Business Rolling With a Trusted CPA 

If you’re looking to come back strong after a tough year, putting your financial house in order is likely among the top priorities. Here, at Rishi Shah, we can help your small business strategize, plan, and roll with the punches as things start to normalize. 

Want to learn more about how we help small businesses? Call Rishi Shah today!

When it comes to tax preparation for small businesses, accuracy and efficiency are key elements of prosperity and growth. Otherwise, the IRS may come a-knocking. So, as a small business owner, how can you protect yourself and prevent that knock on the door?

Let’s take a closer look at the numbers. 

What are the Chances My Small Business Gets Audited?

The chances of an IRS audit are actually pretty low. One percent of taxpayers are audited, but your chances are higher if you run a small business. After the year 2020 and the slowdown of the pandemic, the IRS has announced that they will be ramping up audits of small businesses. 

The IRS audited about 140 partnerships tax returns out of the 4 million or so filed in 2018. This comes out to less than .00004%. When it comes to S corporations, the numbers varied some, as 397 returns were audited or .01%.

After a difficult year for all business owners, the IRS will be tightening up in 2021 and making up for lost ground. The good news is that although an audit sounds foreboding, it doesn’t have to be. There are effective strategies your business can implement to avoid raising red flags.

At the same time, implementing these organizational strategies will actually benefit your business in the long run and ensure that you’re not operating on faulty numbers. 

Things that may increase your chances of being audited include:

• Surpassing the $1 million dollar threshold. If your business is raking in more than $1 million then congratulations! This is great news, but it also means that the IRS might look at your taxes with a much more careful eye, so incorporating (if you haven’t done so) is a must by this point. 
• Failure to report income or earnings. 
• Suspicious numbers with your deductions

4 Strategies to Prevent IRS Audits

Like in all matters of life, there are some things that you can control and some things that you cannot. The IRS does conduct some random audits, which fall under the category of things you cannot control. What most business owners can control is raising unnecessary red flags. 

#1 Good Recordkeeping is a Must 

Recordkeeping is powerful. It gives your business a strong grip on the numbers and gives you an accurate picture of your profits, losses, and cash flow. Maintaining good records is not only beneficial for tax purposes but for the overall strength of the company. Keeping good books will help you avoid mistakes or miscalculations on your taxes and it will give you a solid defense in the event of an audit. 

#2 Be Accurate With Deductions 

Deductions are there to help business owners thrive, but they are often a pitfall for people that are ill-advised or ill-informed about how to accurately report and categorize these deductions. You should take deductions that you qualify for, but note that the IRS has sophisticated ways of measuring and comparing deductions from other businesses in your tax bracket. 

Even a correct but incorrectly itemized deduction can raise suspicion, so clarity and accuracy are essential. In addition, the IRS no longer allows what used to be known as miscellaneous deductions unless you qualify for a specific category. 

If a business in your tax bracket generally takes 15 deductions and you file for 178, it might very well raise a red flag. And yet, taking legitimate deductions for your business should not be discouraged on the grounds of fearing an audit. According to some CPAs, home office deductions, business travel, and vehicle mileage are commonly misused deductions and should be used with caution. 

#3 Check Your Business Expenses 

Changes to deductions and what qualifies as business expenses have also thrown some people off. The Tax Cuts and Jobs Act of 2017, for example, did away with business-related entertainment deductions. So, taking that prospective client out for a round of golf can no longer count as part of the company’s dime. Meals, however, can still qualify for some deductions. 

As the IRS clarifies:

“Taxpayers may continue to deduct 50 percent of the cost of business meals if the taxpayer (or an employee of the taxpayer) is present and the food or beverages are not considered lavish or extravagant.”

#4 Watch Your Business Losses 

Taxpayers that have not incorporated may be subject to excess business loss limitations. If a business is reporting losses for multiple years, this may be cause for questioning. After all, the IRS knows that every business is in it to make some money, and reporting constant losses can be an indication of something that is being inaccurately reported. 

Small Businesses, Audits, and the Quest for Accuracy 

In 2012, singer Rihanna was audited by the IRS and ended up suing her accounting firm for what she called bad bookkeeping and gross mismanagement of her finances. The pop singer’s tax forms made headlines when the IRS caught onto the failure of proper documentation and massive losses, which the singer then blamed on her accountant taking exorbitant cuts. 

This was a stark lesson to taxpayers across the country. Everyone is subject to audits and how important it is to maintain proper records and hire trusted tax professionals. Her costs associated with defending the tax audit were significant and quite painful for the singer. 

The quest for accuracy and proper bookkeeping is very real. Taking steps to minimize the potential for mistakes goes a long way. 

As if Ben Franklin didn’t do enough for this great country—pioneer print journalism and help pen the Declaration of Independence, among other things—he also coined the oft-repeated phrase, “An ounce of prevention is worth a pound of cure.” 

An ounce of prevention can be fundamental to the longevity of any company. 

Get the Tax Resolution and Tax Preparation Help for Your Business

Whether you are a small business or a corporation, keeping accurate records and filing taxes on time with no errors is an inevitable part of your yearly preoccupations. There is no need to panic, however, even when up for an audit. Helping hard-working business owners untangle themselves from debt and IRS audits are part of what we do. 

Looking for professional tax guidance for your business? Have you received a letter from the IRS? Don’t drown in hot water. Call us today and learn how we help you emerge successfully. 

Inevitably, however, you have since then encountered the reality of tax obligations and compliance and seen just how crucial it is to maximizing your revenue and remaining in operation. While there is no escape from taxes, careful tax planning is a necessary part of a business’s arsenal, as it serves as a necessary defense and offensive strategy. 

What Role Should Tax Planning Play in My Operations? 

A big one. 

Taxes are a large expense that all companies, from LLCs to corporations, must contend with. Seeking to reduce this obligation while paying the “fair share” is a big part of navigating the sea of tax requirements. Depending on the state and the kind of business you’re running, your situation will be distinctly unique. 

Don’t let taxes become a barrier or hindrance to your growth or profitability. Engage in tax planning that seeks to make use of rebates, charge-backs, deductions, exemptions, and other benefits. 

Companies must engage in a persistent and strategic balancing act when it comes to spending, hiring, investing, taxes, and risk oversight. Tax planning is more than just hiring a CPA once a year to file your taxes, it’s about maximizing expenditures, taking advantage of tax exemptions and credits, and remaining in compliance with federal and state tax codes.

As Harvard Business Review reports, a company’s balancing act of risk and reward in tax planning comes from constant assessment and analysis of enterprise risk management—understanding your company’s unique circumstances and structure, factoring in retirement plans, insurance plans, and more. 

Avoid Tax Penalties and Maintain Public Trust 

Big players in the U.S. market like Microsoft and Hewlett-Packard have faced public scrutiny for tax avoidance. Not only is this a problem with the IRS, but it also leads to public loss of trust.  

So while tax minimization is part of a company’s tax plan, crossing the line into non-compliant territory comes with its fair share of adverse outcomes such as IRS fines, damage to reputation, and a loss of revenue. It’s why working with a tax professional is a must. 

4 Strategies to Help Your Business with Tax Planning 

Reducing tax liability is a moving target. 

As business transactions become more complicated, the complexity of tax liability laws increases as well. Businesses have a lot to consider, especially if they conduct business across multiple jurisdictions. Many tax-saving opportunities are temporary or cycle out as new administrations come in, so it makes it exceedingly difficult for business owners to steep themselves in these complicated codes. 

Tax planning is a tailored approach to your business situation, so these tips are general considerations. For individualized tax advice, call one of our tax professionals and tax consultants to dive into your questions.  

#1 Consider or Reconsider Your Tax Structure

The U.S. code allows businesses to structure their operations in several ways and each offers different benefits and incentives. Companies outgrow their tax structure all the time depending on growth and revenue expansion, so assessing whether changing your tax structure is necessary might help come tax season. 

# 2 Explore all of the Tax Credits & Deductions Available

Tax credits and deductions are not stagnant. They ebb and flow depending on who’s calling the shots, economic turmoil, federal policies, etc. A company can pursue tax benefits and reduction of liability in different ways. Tax credits may become available to business owners that vary each year. Also, businesses can look into employee benefit plans and investments that provide tax deductions. 

#3 Using Inventory Valuation Methods 

Choosing the right method for inventory valuation can have an impact on tax savings at the end of the year. The different inventory valuation methods vary on how your company does business and how inventory is bought and sold. The two methods, FIFO and LIFO (first-in, first-out method, and last-in-first-out method respectively) can help companies save money in times of rising costs or periods of inflation. 

#4 Equipment Purchases 

The IRS code Section 179 businesses are allowed to deduct a certain amount in equipment purchases throughout the year the purchases are made. Businesses can benefit from increasing their deductions in any given year, which reduces their taxable income. The purchases can be timed to happen towards the end of the year and still be deductible for that year. 

Bonus: Find a CPA that Understands Your State’s Code 

In California, for example (where we are headquartered), the state is known to have higher tax rates than other states but also offers other benefits. In 2019, small businesses made up 99.8% of all businesses within the state. Tax compliance shifts constantly, as the state seems to favor experimentation with regulations and that makes filing taxes as a California business tricky. 

Maximize Your Resources, Revenue, and Time with Professional Tax Planning

Tax obligations are not just an annual preoccupation if you own a business. Whether you live in California or any other state in the Union, or whether you live abroad and operate a U.S.-based business, taxes are interconnected with your day-t0-day operations. Make the most of it by protecting your revenue, staying in compliance with the law, and improving the lives of your employees. Talk with a tax planning expert at Rishi Shah and learn about what we can do for you. 

Ready to tackle the year with tax planning strategies that will set you up for success come tax season? Connect with us today. 

Millions of businesses have tried or are trying DIY bookkeeping, and it’s unfortunately not going in the direction they planned. If you’re on this route, then here are a few reasons why you should call in a professional accountant when it comes to bookkeeping. 

Home And Personal Finances Get Mixed

As a business owner, you most likely wear many different hats, and the responsibilities involved can take you in different directions. Adding on the heaviest of financial aspects on top of other million things you have to do can get pushed to the back burner at times. Many businesses that do their own bookkeeping tend to do it while working on their personal finances to get it all done at once. 

This is a poor time management situation, and home and business finances should never mix together. Having even the smallest of clerical errors can lead to profits lost and miscalculations. If these mistakes snowball over time, then you can strain relationships on both business and personal, along with a horrid tax season coming up. 

Sorry, You’re Probably Not A Bookkeeping Expert 

Accounting, no matter how large or small, is a tedious and time-consuming task that does require a certain amount of experience and expertise to get it done correctly. Very few have gone out of their way to becoming certified in Quickbooks or ProAdvisor, and even though you took a class in college, that does not mean you know everything you need to know. 

Time Will Run Out 

As you’re running your business and making sure that everything is going along smoothly, what time do you have to go over bookkeeping? As it becomes more and more of a chore, you’ll be getting closer and closer to deadlines or filing taxes late. As each day passes, the number of invoices and receipts can pile up and leave you scrambling to get the job done.

Having To Learn Bookkeeping Software 

Thinking that you can jump on your computer and start up Xero, Quickbooks, or any other bookkeeping software is a major mistake. Many also rely heavily on technology, thinking it will do all the work for you. However, learning how to use it so it can do most of the work takes time and practice. Keep in mind that one form of bookkeeping technology may work for one company, but it doesn’t mean it will work for yours. You may even need financial management needs that are beyond the accounting software. 

Accuracy Is Everything

If you rely on DIY bookkeeping and software programs, know that it is not foolproof. The software will only be as reliable as the information put into it. Having the knowledge and understanding of actual bookkeeping and accounting is a whole different ballpark. Mistakes are more easily made, and if a professional accountant isn’t looking over it, then there can be a number of inaccuracies. It could be worse than having no sort of bookkeeping service. Accuracy is vital, so if you’re not looking to lose time, money, and possibly your business, you should get a professional to help you. 

Expert Advice Goes A Long Way

Overall, accounting and math are two of the most failed classes in any school program, and with good reason – it’s hard! To do your own accounting then you need to have a firm grasp on the type of accounting and bookkeeping and how it will apply to your business. Bookkeepers and accountants spend years in their field to become experts. In the long run of things, you should stay more focused on running your business and knowing when to ask for help than doing everything yourself. 

Rishi Shah Is Here For You

Rishi Shah is staffed with fully trained and educated professionals that can help you in business accounting, taxes, and other financial services. Leave the number crunching to us so you can stay focused on your goals. If you need help or need bilingual bookkeeping and accounting help, then we’re the firm for you. Give us a call today or explore our website for more information.  

Do you have a diverse team of employees that speak multiple languages? Consider hiring bilingual bookkeeping services so that everyone can communicate with your bookkeeper.

Plus, your bookkeeper can help you expand your business, and you can save money in the process. Then, you can focus on growth and profits.

Keep reading to learn more.

Improve Communication

One of the most significant benefits of hiring bilingual bookkeeping services is that it can help with communication. You don’t have to worry about hiring the best bookkeeper who speaks your language.

Even if your language isn’t the bookkeeper’s first language, they can still communicate well. Then, you can understand how your finances are, and you can ask questions like you would if you hired someone who only spoke the same language as you.

However, you may decide to hire someone else in your company who is bilingual. Maybe you hire an accountant or some other finance manager who can speak multiple languages.

If you ever need to take time off, the finance manager can still work with the bookkeeper. But they can speak in either language, so they can communicate as effectively as possible.

Help With Productivity

Bilingual people can also be more productive than people who only speak one language. When you speak a second language, you have to be able to switch between the two quickly.

That means you can use those skills in other areas. So your bookkeeper may be able to switch between different tasks within their work, even when working in one language.

Hiring a bookkeeping service with two language options can also help your business be productive. The bookkeeper can use whichever language you prefer, so you and your team can analyze the information more easily.

Bilingual people can also be great at solving problems. If you ever can’t figure out why your finances are the way they are, your bookkeeper may be able to help.

Save Money

Even if you decide to hire bilingual bookkeeping services instead of an employee, you can save money. Of course, outsourcing costs less than hiring someone full-time.

But you only need to hire one bookkeeping service. Maybe your business will expand to cover different countries and languages. If you hired a monolingual bookkeeper, you may need to hire someone else for the international office.

When you hire someone who is bilingual to do your bookkeeping, you’ll be able to work with them in both languages. That way, they can keep helping you when you expand to a different country.

Now, that does mean you need to expand to a country that speaks the bookkeeper’s second language. But it’s still a benefit worth considering.

Expand Your Business

Speaking of expansion, you never know when you may want to take your business international. If you ever want to set up an office overseas or start working with international clients, a bilingual bookkeeping service can help.

When you hire a bookkeeping service, you won’t have the same control as over an employee. However, you can ask about bookkeeping service options.

Maybe your bookkeeper will be willing to interpret for you as you look at offices. Or perhaps they will know locals in another country who can help you.

Either way, working with someone bilingual can help you expand your business. Then, you can keep growing at home and abroad.

Work With Investors

If you want to grow your business, you may want to work with investors. Of course, you can find investors in your city and who speak the same language as you.

However, that may limit your options, and you may not get to find the best investor for your company. When you have someone who can do bookkeeping for other languages, you may have a leg up in getting investors.

The bookkeeper can translate your financial records to their other language. Then, they can meet with investors to talk about your company and its financial situation.

Your potential investors can learn about your company in their native language, so they may better understand everything. The bookkeeper can then ask questions or interpret for you if you want to answer questions.

Make Better Decisions

Another benefit of being bilingual is that it can help someone make decisions more quickly. Whenever you need to review your finances and see how you can improve them, your bookkeeper can help.

Now, some bookkeepers only record transactions. But some may be able to help you review and analyze your numbers. Then, you can see where you need to improve.

A bilingual bookkeeper may be able to tell you that you need to spend more money on marketing. Or they might tell you to stop offering one or more of your products.

Working with a bookkeeper who can make good decisions will help your business overall. That way, you can focus on growth and improvement.

More Specific

Hiring a bilingual bookkeeping service can also be useful because of that specific focus. Someone who does bookkeeping in one language may focus on a certain geographic location or an industry.

However, bilingual bookkeeping is a niche in and of itself. Someone has to have the knowledge to record transactions, but they also have to be proficient in two languages.

If you know you want to speak with a bookkeeper in two languages, you can look for a service that focuses on that. Then, you can make sure you get the services you need.

A bilingual bookkeeper can do the same things as a monolingual bookkeeper. But hiring a bookkeeper with some sort of specialty can help you work with an expert that can help move your business forward.

Finding the Right Bilingual Bookkeeping Services

Bookkeeping is essential for any business, but bilingual bookkeeping services take it a step further. If you hire a bookkeeper who can speak two languages, you can work with them on twice as many projects.

Whether you want to expand your business internationally or get international investors, your bookkeeper can help. Then, you won’t have to spend more money on an interpreter.

Are you ready to hire a bookkeeper? Schedule a free consultation today.