Know Your Options During A Financial CrisisPosted on August 30th, 2018
For companies experiencing financial collapse or the inability to keep up with debts, bankruptcy laws help individuals and businesses start over.
There is a variety of bankruptcy options for individuals and businesses, from offering to pay down a fraction of the debt to complete debt relief. Accountants and financial professionals can get people started in the process of bankruptcy, but a lawyer is needed to complete the process. Here is the breakdown of what bankruptcy is, the process of it, and the consequences of it.
What is Bankruptcy?
Individuals and business file for bankruptcy if they have too much debt and cannot expect to pay back down the debt in an allotted period. Many filers are individuals and not businesses, but it is not uncommon for businesses to file for bankruptcy.
The main purpose of bankruptcy is to allow individuals and business owners to start over financially and build a better financial future. Known as an automatic stay, creditors cannot file lawsuits against you or enter liens against your estate and income. It can prevent things like eviction as well.
Filing for Bankruptcy
You must seek the counsel of a lawyer and accountant to assist in compiling all financial records of debts, assets, income, and expenses. You must receive credit counseling 180 days before filing your cases with the courts. This will ensure you’ve done all you can to handle your financial debt before seeking bankruptcy. Completion of this courses must be shown with any paperwork needed to declare bankruptcy.
When your petition is accepted, your case is assigned to a court trustee who meets with your creditors. This allows them to ask you about your case and can affect the outcome of your case.
Types of Bankruptcy
The most common types of bankruptcy for individuals or married couples is Chapter 7 and 13. Chapter 7 allows you to keep cash, bank accounts, stock investments, a second car or second home. Any non-exempt items will be liquidated to repay any creditors or lenders. Chapter 13 allows you to design a three to five-year repayment plan to your creditors, once you complete this plan all remaining debts are erased.
For businesses Chapter 11, also known as reorganization bankruptcy, allows business to stay open while they manage their business’ debts and assets to pay back creditors. As court proceedings continue, the business operates and accrues sales and income.
If you are looking to file for bankruptcy, contact our firm today.
Building a Company? Understand the Ins and Outs of Corporate TaxationPosted on July 30th, 2018
When forming a corporation, knowing its tax advantages can be crucial to maximizing profits. A corporation is a common entity many businesses occupy. Corporations are allotted a corporate tax that is due on March 15 instead of the April 15 deadline for regular income tax returns. Here is a break down on corporate tax and what to expect if you occupy this entity.
What is Corporate Tax
Corporate taxes take account of the operating earnings, deducts expenses, and applies a tax rate that is owed to the IRS. This calculation includes the costs of goods sold as well as depreciation of revenues. For the U.S., the corporate tax rate is at 21-35 percent under the Tax Cuts and Jobs Act of 2018. However, business owners should take into account corporate tax levied at the state and local levels.
Corporate taxes are due in March, but corporations may request an extension to have the tax returns due in September. Installment payments are expected in the middle of April, June, September, and December. For corporations that amount $10 million in assets, they should file their Form 1120 online.
Corporate Double Tax and Deductions
The main issue with corporate tax is the double tax. Corporations are taxed on the taxable income of their company as well as when earnings are distributed to shareholders. When the latter occurs, shareholders pay individual income taxes on the amounts received.
Deductions are available to reduce taxable income. Necessary and ordinary business expenditures required for the business to operate are part of these deductions. Investment and real estate bought to expand the company, health benefits, tuition reimbursements, and bonuses are a few deductions available for corporations.
Working with an accountant to review the expenses of a company can allow you to make the most of these necessary deductions. Their help, especially with tax preparation, bookkeeping, and advertising costs, can help reduce a business’s taxable income.
The Main Advantage
With all of these available deductions, business owners benefit more from paying corporate taxes than paying additional individual income tax. Corporations can deduct losses easily compared to other entities such as a sole proprietor.
If you are still in the process of developing your business or working to change the entity, consider becoming a corporation. Contact our firm today to learn how.
Not Sure Which Type of Valuation You Need? We Got You Covered!Posted on June 30th, 2018
Business owners and non-profit organizations need valuations to understand the financial standing of their company. When an experienced CPA conducts a valuation, it provides a non-biased perspective that shows potential investors or buyers details about that business.
Here are some reasons why you may need a valuation and the benefits that come with seeking the assistance of an experienced professional.
Expansion and Timelines
Valuations are needed whenever a business is in need of expansion or in transition of ownership. Expanding an enterprise requires the backing of banks and investors, and a valuation can help identify your business financial well-being and worth within your industry. Valuations give an overview of a business’s financial details, such its assets, income, and market traction.
If you’re looking to sell your business, valuations show how much a company is worth and allows company owners to see hidden assets that may increase the sale price during a merger.
Types of Valuations
Major valuations are offered for business professionals evaluating their company’s worth and for those looking into the next steps in the future of their company. There are a variety of valuations that review the financial statements and reports.
For individuals who may not own a business, valuation are given for Estate Tax Discount Appraisals and Divorce Financial Services. This can help ensure both parties, the beneficiary and the estate owner, receives their estate and gifts without a major tax cut. Divorces require a review and clear account of assets and income to determine the right price for spousal support and what is allotted to each party. Appraisers and CPA’s providing the valuation may work on cases with lawyers providing litigation support appraisals.
If you are transitioning into a new entity, shareholder agreement analysis can ensure all individuals are allotted their amount within the company based on the net worth of your venture.
Valuations are a flexible, necessary process that determines the accurate value of your estate and business. Contact our firm today to learn more about our valuation services.