orange county business attorney

Posts Tagged ‘orange county business attorney’

Orange County Business Attorney Says, “Ready…Set…File Your Taxes!”

Monday, February 28th, 2011

By: Darlynn Morgan, Orange County Business Attorney

It’s that time of year again…

Time to get all your ducks in a row to report your income to Uncle Sam…

When you’re trying to take care of a family and run a business, the last thing you want to think about is getting all the paperwork together to deal with the Internal Revenue Service.

But if you get yourself and your paperwork organized early on, it will make tax time a little less frantic.

Here are a few tips to make getting organized a little easier:

1. Keep Up With Your Income AND Your Expenses

When was the last time you balanced your checkbook? Chances are, if you’re banking online, you haven’t done it in a long time. And that makes it much easier to lose track of what’s coming in and going out. Invest in a software package now, like Quicken, that will help you keep an eye on your finances, run reports as you need them so you can see what’s going on with your money, and pull everything together painlessly when you have to turn it over to your accountant for tax time.

2. Organize Your Expenses by Category

Yes, this can be time consuming in the beginning but it will pay huge dividends in the long run. And be specific. If you use your car for business, categorizing gas and maintenance as Vehicle Expenses (including mileage) will be much easier to prove up (with the proper receipts) than just lumping them all together under a Miscellaneous category. If you’re not sure how to categorize all your expenses, talk to a tax professional for guidance. It’s better to start your system the right way.

3. Have a Home Office?

If you’re working from the dining room table and the dining room is not used exclusively for your business, it will be hard to take a portion of your mortgage as a deduction for office space. Set up your home office so that the space you use is used only for your business. Keep track of all purchases made for business, from computers and accessories to office supplies. Again, ask a tax professional how to do this so that you maximize your possible deduction.

And, just in case you didn’t know, any business related phone calls you make from home are deductible. When you get your bill each month, go through it and highlight the business calls. At the end of the year, add up all the calls and there’s your deduction.

4. Pay Your Estimated Taxes On Time

You should be paying your estimated taxes quarterly. If you don’t pay them quarterly, you could be looking at a penalty of 4% of the amount you actually owe. While it may be hard to calculate this amount accurately, an easy way to estimate is to pay 25% of the amount you owed last year. Try to be as accurate as possible to avoid overpayment.

5. Watch Your Profit and Loss

Do you have a profit and loss statement for last year? If so, take a look at it. Did you control expenses? Did you get credit for every possible deduction? Did you go out of your way to keep your paying customers happy? Keeping an eye on where your money is coming from and where it’s going is vital to running a successful business. See where you fell down last year and make sure you don’t repeat the same mistakes this year.

Having this data in hand when you see your accountant to prepare your taxes (and plan for the next year) will make both your lives easier.

If you’ve done these five things, you should be well on your way to a relatively painless tax season.

Still not sure you have everything together for tax time?

Want to make sure you’re maximizing your deductions and doing everything you can to control your expenses?

Talk to us. We can help.

Call us today to schedule your comprehensive LIFT™ (legal, insurance, financial and tax) Foundation Audit to make sure you’re taking advantage of every tax break and staying on top of all legislation that affects your business. Normally, this session is $1250, but if you mention this article and we still have room on our calendar this month, we will waive that fee.

Tags: orange county business attorney, tax planning
Posted in California Business Planning | No Comments »

Orange County Business Attorney Discusses What You Need To Know About The New Tax Law

Tuesday, January 11th, 2011

By Darlynn Morgan, Orange County Business Attorney

After much twisting of arms and gnashing of teeth, Congress took action on the tax issue…

On December 16, 2010, the Tax Relief, Unemployment Insurance Reauthorization and Job Creation Act of 2010 was passed.

As with any legislation there are hundreds of pages and thousands of words but, in a nutshell, this is how the legislation will affect you and your business:

Tax Rates

· The current tax rates of 10, 25, 28, 33 and 35 percent are extended through 2012.

· The 0 or 15 percent tax rate on capital gains and dividends is extended for two years.

· The Personal Exemption Phaseout and itemized deduction limitation is repealed for another two years.

Alternative Minimum Tax

· The AMT exemption amounts for 2010 and 2011 are increased to $47,450 in 2010 ($72,450 if married and filing jointly) and $48,450 in 2011 ($74,450 if married and filing jointly).

· Non-refundable personal credits against the AMT are allowed.

Extensions of Tax Incentives and Deductions are Continued in 2010 and 2011

· You can make tax free distributions of up to $100,000 from individual retirement plans to charities.

· There is an above-the-line deduction for qualified tuition and other related expenses.

· Under the American Opportunity Tax Credit, you can claim tuition expenses of up to $2,500.

· You can again deduct state and local general sales tax.

· You’re eligible for a thirty percent (30%) credit for improvements to the energy efficiency of your home.

· Qualified small business capital gains are excluded.

· There are deductions for contributions of capital gain real property for conservation purposes.

· If you own a qualified residence (under the Tax Code), your mortgage insurance premiums will continue to be deductible

Temporary Employee Payroll Tax Cut

· In 2011, a payroll tax “holiday” will allow employees to pay only a 4.2% Social Security tax on wages and self-employed individuals will pay only 10.4% on self-employment income up to $106,800.

Temporary Extension of Investment Incentives

· Bonus depreciation is extended for taxable years 2011 and 2012, and the Year 1 amount is raised to a 100% depreciation allowance.

· The maximum amount and phase-out threshold under Section 179 of the Tax Code for Small Business Expensing is set at $125,000 and $500,000, respectively. Both amounts will be indexed for inflation.

Some Expiring Business Provisions Are Extended Through 2011

· You will receive enhanced charitable deductions for corporate contributions of computer equipment for educational purposes.

· C corporations are eligible for enhanced charitable deductions for contributions to food inventory.

· Another enhanced charitable deduction for C corporations is for contributions to book inventories in public schools.

· A special rule was included for S corporations making charitable contributions of property.

· You’re eligible for a 15 year straight line cost recovery for qualified leasehold improvements.

· There is an employer wage credit for activated military reservists.

· There are special tax benefits for certain real estate developments.

· There is an extension of expensing of environmental remediation costs.

· There is a new formula for treatment of interest-related dividends and short term capital gain dividends of Regulated Investment Companies.

· There is now a work opportunity tax credit.

· There is a 100% exclusion of qualified small business capital gains held for more than 5 years.

· You’re eligible for research credit.

Unemployment Insurance is Extended

· The unemployment insurance proposal provides a one year reauthorization of federal UI benefits.

This is a brief, no fuss, no fancy language breakdown of how the recent changes to the tax laws will affect you and your business. For a more in-depth analysis of your current situation and how to best take advantage of these changes, call me, your Orange County business attorney today to schedule your comprehensive LIFT™ (legal, insurance, financial and tax) Foundation Audit. Normally, this session is $1250, but if you mention this article and we still have room on our calendar this month, we will waive that fee.

Tags: alternative minimum tax, orange county business attorney, tax relief
Posted in California Business Planning, California Estate Tax Lawyer | No Comments »

Orange County Business Attorney Reveals Seven Things You Need to Know About Health Care Reform

Tuesday, September 21st, 2010

By Darlynn Morgan, Orange County Business Attorney

Health care reform was signed into law on March 30, 2010.

While many of the changes won’t take effect until 2013, as your Orange County business attorney, I’d say the time to start planning for these and other changes is now.

We’ve compiled a list of seven things you need to know about health care reform as a small business owner. Call us to find out how to prepare for these changes before they happen and make sure that you minimize the downside and optimize any benefits:

1. Tax Credits As Incentives To Provide Health Care Coverage

Beginning with this tax year, if you have 10 or fewer employees and average annual wages of less than $25,000 per year, you can get a credit of up to 35% of your health insurance premium costs each year through the year 2013. The tax credit will be phased out for larger companies. It will not exist at all for companies with more than 25 employees or average annual wages of $50,000 or more.

In 2014, each state will be required to establish a “health insurance exchange”. This exchange will be a marketplace where individuals, the self-employed and small businesses can buy health insurance. The exchanges will be regulated by the government and will offer policies with a wide range of coverage options and price tags to match. If your small business signs up with one of the health insurance exchanges you can receive a credit of up to 50% of your costs. However, this program will also be subject to the same work force size and annual income restrictions as the one mentioned above. And the tax credit will disappear after the year 2015.

2. Value of Health Care Benefits To Be Listed on W-2’s

Starting in 2011, businesses must list the value of health care benefits they provide to employees on the employees’ W-2’s. The value, however, is not treated as taxable income.

3. Effects On Medicare Part D Prescription Drug Coverage

If your business is getting a tax deduction for providing Medicare Part D prescription drug coverage to your retirees, and the federal government subsidizes that coverage, your deduction will be eliminated in 2013.

4. Health Care Flexible Spending Accounts

Effective in 2013, employees can contribute no more than $2,500 per year to a health care flexible spending account. Make sure your employees are made aware of the change and plan accordingly.

5. Medicare Tax

If you or any of your employees will earn $200,000 or more beginning in 2013, a 0.9% Medicare surtax will be applied to any money you earn over $200,000 (or $250,000 for a married couple). And a Medicare tax of 3.8% will be applied to the investment income of those earning above these income levels. The tax will be applied to their unearned income or the amount that their income exceeds the $200,000 or $250,000 thresholds. For purposes of this tax, unearned income is defined as interest, dividends, capital gains, annuities, royalties and rents. Any interest that is legally tax exempt or income from retirement accounts will not be included.

6. Tax On “Premium” Health Care Plans

Starting in 2018, high-cost or so-called “premium” health care plans will be subject to a 40% excise tax. The tax will be applied to the portion that is over $10,200 for individuals and $27,500 for families. This tax can be applied to not only employer provided plans but individual plans as well.

7. Fees For Failure To Offer Coverage

If your business has 50 or more employees and you fail to offer health care coverage, you will be subject to a non-deductible fee equal to $2,000 multiplied by the number of employees (less the first 30 employees).

The new health care reform law contains many new taxes and tax increases that could be landmines waiting for your small business. Don’t let an oversight cost you even more.

Call me, your neighborhood Orange County business attorney for a comprehensive LIFT™ (legal, insurance, financial and tax) Foundation Audit today so we can identify the best course of action for you. Normally, this session is $1250, but if you mention this article and we still have room on our calendar this month, we will waive that fee.

Tags: health care insurance exchange, medicare part d, orange county business attorney
Posted in California Business Planning | 2 Comments »

The Entrepreneur and Their Personal Orange County Business Attorney– It’s Not Just About Lawsuits Anymore

Thursday, August 19th, 2010

By Darlynn Morgan, Orange County Business Attorney

Starting and running your own business requires you to be something of a gambler.

Regardless of how much you plan, nothing is certain except that at least some of the million and one things you think can go wrong, will.

To balance your penchant for taking a few risks with the need to ensure the success of your business, you need to plan, get and follow good advice and, above all, don’t give up at the first sign of trouble.

These few steps will help you reduce or control at least some of your risk:

1. Plan For The Worst-Possible Scenario

Most entrepreneurs are optimists. They have to be or they would never think of going out on their own. You go into business to succeed, not to fail. But knowing that there is that small, ever so slight possibility that you could fail will prevent you from being complacent and making poor decisions. A little fear will keep you sharp. Plan exactly what you would do if the worst happened and you’ll know what to do if it does.

2. Don’t Do It Alone

If a carpenter measures twice and cuts once, make sure you think about your business decisions at least twice before jumping into anything. Avoid being impulsive and analyze before you act. If you’re not the analytical sort, find a trusted Orange County Business Attorney who is. Remember, a system of checks and balances isn’t just for the government. Run your ideas or decisions by that trusted advisor and get another perspective. Sometimes you’re just too close to the decision to make a good one.

3. Decide On and Develop Your Niche

In your heart of hearts you know what you’re good at, what you really care about and why you started this business to begin with. Play to those strengths. Don’t take every project that walks through the door just to have the work. You’ll be much more successful and happier if you stick with what you know.

4. Increased Revenue Gets You There Every Time

If you are struggling, focus all your energy on increasing revenue and making sales instead of focusing tremendous energy on cutting costs. Increasing revenue will allow you to hire the right team members to support your growth and keep you headed in a forward momentum. If you focus heavily on cutting costs, it’s very easy to get stuck.

5. Get the Right Kind of Business Insurance

While there is a school of thought out there that says insurance is for pessimists, do yourself a favor and get insurance. And get the right kind of insurance for your business. It will reduce your personal risk and protect you from claims from the people you have to deal with on a daily basis. Lawsuits can come from anywhere so keep that in mind when considering the type of insurance you need.

Reduce both your risk of sleepless nights and making costly mistakes by finding the right advisor to help you with the decisions you need to make your business a profitable one. Hire a personal legal advisor. Each of these 5 steps will be much easier and you will feel better about them if you talk them over with someone who can guide you in the right direction. And remember, your legal advisor is a business person, too. They can speak to your problems not only from a legal viewpoint but from experience. They understand exactly what you need to do to be a success.

If you’re an independent entrepreneur or you’re considering taking the leap to business ownership, call us today to schedule your comprehensive LIFT™ (legal, insurance, financial and tax) Foundation Audit. As your personal Orange County business attorneys we will identify any holes in the foundation of your business and what you need to do to fix them. Normally, this session is $1250, but if you mention this article and we still have room on our calendar this month, we will waive that fee. Simply call (949) 260-1400 to reserve your spot.

Tags: orange county business attorney
Posted in California Business Planning | 1 Comment »

Orange County Business Attorney Reveals That In Forming a Business Entity, An Ounce of Prevention Can Be Worth Pounds of Cure

Thursday, July 8th, 2010

From the desk of Darlynn Morgan, Orange County Business Attorney

Your years of hard work have finally paid off. The long hours, the networking, the devotion to your clients have all put you in prime position to open your own shop.

But not so fast…

Curb your enthusiasm for just a few minutes and think about how you should structure your business from a legal standpoint. While starting out as a sole proprietorship and postponing any formal corporate structure may sound like a fiscally sound move to save initial start up costs, if you have a business that could be sued for any reason (and who doesn’t?), you may want to spend a little up front to save yourself from financial ruin in the event of a problem.

Incorporating your business can greatly reduce the effects of a potential loss to you personally in the event of a lawsuit. Unfortunately, according to BizStats.com, only 22% of all the small businesses in America are a limited liability corporation, S corporation, or C corporation. Over 72% of businesses are operated as a sole proprietorship and exposed to liability risk and a 5-6 times greater risk of tax audit.

Here are just a few reasons you should consider incorporating:

Liability Issues: A corporation is a separate legal entity from you personally. Any debts incurred or lawsuits brought are against the company, not the owner. Forming a business entity separate from you adds a layer of protection between your personal assets and potential lawsuits.

Raising Capital: Trying to get financing for a small business as a sole proprietorship or partnership difficulties almost impossible, especially in the current economic climate. If you are going to seek out a line of credit or a business loan of any type, you are going to need to have a separate business entity established.

Taxes: Another considerable benefit to establishing a separate business entity is the taxation of the company. Less risk of audit and tax savings make incorporation a good bet.

Growing the Business: Here’s the reality – if your business is not incorporated as an entity separate from you, it’s very likely you are not treating it like a real business. That means you are very likely not growing the business as well as you could – less clients, less income, less impact. When you treat your business like a real business (and incorporating it is the first step), you will see your income grow.

Selling the Business: If or when you decide to sell your business, it will have to be valued in order to arrive at a selling price. You can’t just pull a number out of thin air. If the business is not separate from you, it will be extremely difficult to sell. While starting your own business entity may be a bit more costly and time consuming in the beginning than just putting up a sign and opening up shop, it’s the key first step to having a real business instead of just creating another job for yourself –one that doesn’t provide any vacation days or sick time.

And as with any other process with serious potential for legal issues down the line, always consult with an Orange County business attorney to determine what’s best for your business. Call to schedule your comprehensive LIFT™ (legal, insurance, financial and tax) Foundation Audit today so we can identify the best course of action for you. Normally, this session is $1250, but if you mention this article and we still have room on our calendar this month for new client audits, we will waive that fee.

Tags: c corporation, limited liability corporation, orange county business attorney, s corporation
Posted in California Business Planning | No Comments »

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