13th March
Many taxpayers think they can save taxes by giving property to a close relative before they die. If you’re thinking about doing this, you could be making a mistake that can cost your heirs a substantial amount of tax money.
Take Ben Williams, for example. For many years, Ben had been the favored painting contractor in his home town. Inside or outside, from doorsteps to double-deckers, Ben Williams got the call when homeowners wanted a first class paint job at a reasonable price.
Ben wielded a mighty paint brush, but his climb up the ladder of success was modest. as he gave a fresh new look to house after house, Ben wondered when he could touch up his financial affairs and buy a house he could call his own. The opportunity finally came in 1990 when Ben, negotiating from atop his painter’s …
13th March
• Don’t set impossible quotas. Many managers automatically in- crease individual sales quotas ev- ery year so that salespeople have to book more business before they can earn incentive income. This is a common approach to keep- ing costs down, but it can have an adverse effect on sales because salespeople become discouraged by quotas which are impossible to reach and may leave the company for greener pastures. If selling costs are a real problem, it’s usually a bet- ter strategy to keep sales quotas re- alistic and offer lower commissions instead.
• Don’t limit income potential. Putting a ceiling on total sales commissions and bonuses tells salespeople that once they’ve reached the limit, there’s no reason for them to continue to work for additional sales.
• Don’t waste sales ability. Good salespeople need new challenges. Selling the same customers over an extended period may …
13th March
If an occasional trip to the race track is one of your hobbies, you probably know that your winnings are taxable and your losses are deductible only to the extent of your gambling gains. The IRS certainly won’t object to your paying taxes on your race track winnings, but proving your losses is a horse of a different color.
When one horseplayer brought a bag of parimutual tickets to tax court as proof of his losses and asked that their cost be deducted from his winnings, the court declared him a loser because the tickets had footprints on them.
another veteran horseplayer produced a similar collection of losing tickets as proof of his losses. But the court noticed that although the tickets had no heel marks, their denominations and serial numbers were so varied that the gambler would have had to buy …
13th March
You can deduct actual mileage costs when you use your car for business purposes. as a general rule, you must keep a diary that includes the beginning and ending odometer readings foreach trip, as well as the trip’s purpose. Loophole: The diary entry is sufficient to prove your deduction if you are taking the IRS standard mileage rate for driving costs. You don’t need to collect receipts for gasoline, repairs, insurance and other automobile expenses unless you’re deducting your actual driving expenses rather than the IRS rate.
13th March
Many people don’t realize that sound tax strategies are part of a solid personal financial plan. So what’s practical and effective for some taxpayers may not be the best strategy for others. However, regardless of your financial goals, it’s important to look at possible tax strategies now, so you can generate tax savings for the entire year. Here are some of the best ways you can save tax dollars this year.
1. First, look at the big picture. Establish your investment goals and your insurance, education, and retirement needs. Make sure you under- stand the benefits that your company can offer you. Tax savings strategies will only make sense to you when you have a financial plan.
2. Make your retirement plan contribution now. Even if you can’t take a deduction for your contribution, remember that the money you put into the plan will compound on a tax deferred basis. …
28th December
It’s not unusual for closely-held corporations to operate through more than one division and for key employees to be on the payroll of both. If an employee’s combined salary from each corporation totals more than $110,100 excess Social Security taxes might be incurred.
There’s a way, however, to avoid this problem. Instead of each corporation issuing its own payroll check, designate one company in the group as a common paymaster, which can issue one check to the employee on behalf of all the companies involved. To do this, you must meet one of these three criteria:
The corporations involved must have at least 50% common ownership.
Half or more of the officers of one corporation must also be officers of another.
The corporations must share at least 30% of their employees.
The result? Let’s say an employee is drawing a $100,000 annual salary from each …
28th December
One of the biggest expenses most people will face during their lifetime is the cost of education, both for their children and for themselves. However, with a little creative planning, you can lower those education expenses with some help from the IRS.
Your children’s education
Buy a second home for your child to live in at college. Instead of paying housing expenses to a college or paying rent to a landlord, your child can live in your second home. If it is your only second residence, you can take several deductions.
You can deduct the interest on the mortgage for your second home as long as the total of the mortgages on your primary residence and your second residence is not more than $1,000,000. You must use the mortgage proceeds to buy, build, or improve the home.
You can deduct the interest on a home …
28th December
I t’s widely acknowledged that bank credit standards vary among banks and that, even with one bank, its credit policy will vary depending upon changing economic conditions. Coupled with the cost of borrowing, tougher credit standards mean you should make every effort to keep your borrowing requirements down. But when you do have to borrow, here are four tips to help you keep the cost of borrowing to a minimum.
1. Negotiate interest rates.
Not all banks will immediately quote their lowest rate. If you can’t get a somewhat better rate by asking a few questions, it might pay you to shop around – preferably with your bank’s biggest competitor.
2. Don’t borrow more than you need.
In most cases, the best strategy is to establish a line of credit for a given period of time. However, be sure to keep a close watch on …
28th December
Although lowering your prices usually means that you’ll sacrifice profits, selective price cuts can attract business you might not get at your regular prices. That business is incremental and can mean increased profits.
The key to profitable price cutting is to offer lower prices only to those customers who won’t buy at regular prices or to those customers whose volume makes them major contributors to your profits. Selective price cutting for these two kinds of customers requires some thought and planning, but the payoff can be big.
Strategy #1: Identify price-sensitive customers and reduce prices for them
Cutting prices for first-time buyers often creates enough new sales to justify the lower prices. For example, many concert promoters realize that young people can’t afford to pay the regular ticket price. Instead of lowering ticket prices to everyone, they offer discount prices to students.
While it’s easy to selectively identify students because …