2 Ways To Reduce Taxes Dollar-For-Dollar

post-it-819682_640The Protecting Americans from Tax Hikes Act of 2015 (PATH Act) extended a wide variety of tax breaks, in some cases making them permanent. Extended breaks include many tax credits — which are particularly valuable because they reduce taxes dollar-for-dollar (compared to deductions, for example, which reduce only the amount of income that’s taxed).
Here are two extended credits that can save businesses taxes on their 2015 returns:

1. The research credit. This credit (also commonly referred to as the “research and development” or “research and experimentation” credit) has been made permanent. It rewards businesses that increase their investments in research. The credit, generally equal to a portion of qualified research expenses, is complicated to calculate, but the tax savings can be substantial.
2. The Work Opportunity credit. This credit has been extended through 2019. It’s available for hiring from certain disadvantaged groups, such as food stamp recipients, ex-felons and veterans who’ve been unemployed for four weeks or more. The maximum credit ranges from $2,400 for most groups to $9,600 for disabled veterans who’ve been unemployed for six months or more.
Want to know if you might qualify for either of these credits? Or what other breaks extended by the PATH Act could save taxes on your 2015 return? Contact us!

New depreciation limits for 2015 business vehicle purchases

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 2014 limits, but the second year limit for light trucks and vans is $100 higher.

50% bonus depreciation is no longer allowed for most business equipment purchases, including vehicles.

Here’s a quick review of the limits for 2015.minivan-41476__180 For business cars first placed in service this year, the first-year depreciation limit is $3,160. After year one, the limits are $5,100 in year two, $3,050 in year three, and $1,875 in all following years.

The 2015 first-year depreciation limit for light trucks and vans is $3,460. Limits for year two are $5,600, in year three $3,350, and in each succeeding year $1,975.

For details relating to your 2015 business vehicle purchases, contact our office.

What should you as a business owner consider when you are faced with this important decision?

 to grow or not to grow

There can be opportunity and profit in growth, but there can be perils and risks as well.

► BENEFITS. First, analyze the potential benefits of expanding your business.

  • The business can often achieve attractive economies of scale from increased buying power and operational efficiency. This can often reduce your cost structure and improve your margins. Growing your margins at a faster rate than your sales growth can achieve remarkable financial results.
  • Growing organizations can often attract more skilled employees who prefer larger organizations with more opportunities for promotion and development.
  • Growing organizations generally have a greater opportunity to go public.

► RISKS. Next, take a look at the risks your business faces if you expand operations.

  • Larger organizations typically require more elaborate systems and tend to be less personal than smaller companies. As it grows, the business will probably have a more rigid management structure.
  • Increased complexity can result as operational issues tend to expand faster than anticipated. Operating remote locations can be very challenging.
  • Loss of control may be a consequence of expanded operations. Growing companies face significant integration changes, and developing capable managers can be difficult.

For help in analyzing your company’s situation, please talk to us. We can help you weigh the benefits and risks of expanding your business.

8 step checklist to monitor and manage your business’ health

You get an annual checkup from your physician to monitor and manage your personal health. Shouldn’t you do the same for your business? To keep your operation in top shape, consider an annual business review. The benefits of such a review are evaluating current performance and better planning of future operations.hook-405091__180

Some things you should evaluate in an annual business review include the following:

1. Revisit your business strengths, weaknesses, and opportunities. Is your competitive position improving, or are you losing ground?

2. How did you perform relative to your business plan? Did you meet or exceed your objectives? Are sales, profit margins, and cash flow improving?

3. Get a pulse on your customers. An annual customer satisfaction survey is a great way to assess performance, obtain insight on potential new products or services, and to let your customers know how much you value their business.

4. Evaluate your team. Are you developing a superior team, employing their unique talents, and training them to improve performance? Do you reward on merit or simply on seniority?

5. How effective is your marketing? Are your current methods and channels working well, or are you simply doing what you’ve always done?

6. Meet with your insurance agent. Is your coverage adequate and appropriate for changes in your business activities and acquisitions?

7. Review your business tax strategy. Identify opportunities for tax savings. Are you using the right form of business entity? Are you aware of recent changes in the tax code that might benefit your business?

8. How is your score-keeping? Do your measurements track your progress or do they measure things that don’t matter? What are the key performance measures that drive your business?

If you are serious about improving your business, consider a yearly assessment of your operation. For any assistance you need, give us a call.