Piercing the Corporate Veil                                                                 May 2008
In this Issue: 
  • Your Rights as a Taxpayer
  • Use the 80-20 Rule to Increase Your Business Profits
It's Time For Midyear Business Planning

It's time to do a midyear review of your business tax planning. Here are six ideas to consider.

Establish a retirement plan if you don't already have one. Examining the choices now gives you time to select the best plan for your business and to get the paperwork completed. Then you'll be set to make contributions as your cash flow allows – and to take the deduction on your 2008 tax return. Another plus: You may be able to claim a credit on your 2008 tax return for the costs of establishing the plan.

Hire your kids. If your child is under age 18 and works for your unincorporated family business, there are no social security or Medicare taxes on the child's pay. Wages paid to the child are also deductible. Just make sure the compensation is reasonable for the work actually performed.

Track your business driving. For 2008, the rate for business-related mileage is 50.5 cents per mile, and you can deduct actual costs for parking fees and tolls in addition to mileage. Keep detailed records to substantiate your deduction.

Deduct equipment purchases. You can expense up to $250,000 of business equipment purchased this year. If you buy new equipment (not used),you may also qualify for 50% bonus depreciation in 2008.

Check your benefits. If you offer health benefits to your employees, look into tax-advantaged plans such as health savings accounts, flexible spending accounts, or health reimbursement arrangements. These plans can reduce your taxes and help control your benefit costs. Start a business. Planning to acquire or start a business this year? Keep good records of your costs to get the business off the ground, including advertising costs, legal fees, and accounting expenses. Up to $5,000 of these expenses could be deductible on your 2008 tax return.

To discuss the more ideas best suited for your business; give us a call at 1-877-834-8211.


It's Your Rights as a Taxpayer

No, I'm not being facetious; you have rights as a taxpayer, really. It's called the Taxpayer Bill of Rights. When you go to the IRS website, it won't be right out there in the open, as with most things worthwhile, you have to work for it. I have included a short list taken from this infamous document.

1.) IRS agents must always identify themselves.

2.) You have the right to request the examination take place at a reasonable time and place that is convenient for both you and the IRS.

3)     3.) You have the right to conduct examinations by mail.

4)     4.) You are responsible for paying only the correct amount of tax due under the law. If you owe money but cannot pay you may be able to make installment payments.

5)     5.) You have the right to say NO, to an IRS agent and ask to speak to their supervisor if you feel you are being treated unfairly.

6)      6.) If the IRS cannot show substantial justification, the taxpayer may then recover attorney's fees from the action.

These are just a few included on the 21 page report of the Taxpayer Bill of Rights supplied by the IRS. It is up to you, not your CPA, to understand your rights as a taxpayer. If you would like a copy of the Taxpayer Bill of Rights, please call 1-877-834-8211 and we will be more than happy to send you a copy.

Use the 80-20 Rule to Increase Your Business Profits

How well do you know your customers? Which ones are the most profitable? Which ones take most of your time? It's worth taking the time to find out. If your business is like most, the 80-20 rule applies. That is, 80% of your profits come from 20% of your customers.

If you can identify that top 20%, you can work extra hard to make sure this group remains satisfied customers. Sometimes all it takes is an appreciative phone call or a little special attention. Also, by understanding what makes this group profitable, you can work hard to bring other customers into that category.

Keep in mind that it's not always profits alone that make a good customer. Other factors, such as frequency of orders, reliability of the business, speed of payment, and joy to deal with are important too. Ask your accounting staff and your sales staff. You'll soon come up with a list of top customers.

There's another way in which the 80-20 rule applies to your business. Very likely, 80% of your problems and complaints come from 20% or fewer of your customers. If you identify those problem customers, you can change the way you do business with them to reduce the problems. Consider changing your pricing for those customers so that at least you're being paid for the extra time and effort they require. Sometimes the only solution is to tell these customers that you no longer wish to do business with them. The bottom line is that understanding your customers better can only help your business. Contact us if you need help analyzing your customer profitability.

Email: info@compassincorporated.com
Phone: 1-888-834-8211
Web: 
www.compassincorporated.com
 





 
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