2010 Last Minute Tax Savings
December 27, 2010 | 
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Business owners, there are still a few things you can do before the end of the year to impact your 2010 tax bill. Check out the links below- you might qualify for some substantial savings.
Research and Development Credits
Single Member LLCs taxed as S Corporations
2010 Tax Tips Series- Small Business Jobs Act
December 22, 2010 | Subscribe to our RSS Feed
Tax Tips and Planning for 2010 finishes with its fourth installment. Tax Partner Steve Albert discusses the new Small Business Jobs Act, highlights some of the key provisions and identifies ways you and your business could benefit.
The purpose of the Small Business Jobs Act is to help employers save tax dollars to invest back in their business. Some of the provisions are complex, and the video below will explain a few of them. Click here for a detailed breakdown of the SBJA from the IRS.
Questions?
steven.albert@glassjacobson.com
Make the Switch?
December 21, 2010 | Subscribe to our RSS Feed
I wrote, earlier this year, about pending legislation that would have taxed the net income of dental practices, set up as S Corporation’s, as self employment income. If passed the new law would have added self employment tax to that income as well as regular income tax. With the Republicans gaining control of the House after the recent mid-term elections it looks like all you S Corporation dental practices should be safe for awhile. This is certainly good news heading into 2011 and the future.
What this lack of change also means is that it is a good time to revisit having sole proprietorships or single member LLCs taxed as S Corporations. For those entities the tax savings from such a switch can be considerable and who wouldn’t like to put a few thousand dollars in their pocket instead of Uncle Sam’s.
Just be advised that you will now have to take a “reasonable” salary as an S Corporation shareholder, which will include some Social Security and Medicare tax that is analogous to the SE tax. Your accountant can help you set your salary at the proper level. Keep in mind you have to take a salary as the IRS is well aware of the tactic of S Corporation shareholders taking all compensation as distributions. Remember “Pigs get fat, hogs get slaughtered”.
Possible downsides to making this change would be
- Reduced capacity to make deductible contributions to retirement accounts
- Needing to prepare separate tax returns for the S Corporation
The switch to be taxed as an S Corporation can easily be made by your accountant. This is a great opportunity for all you sole proprietor and single member LLC dentists to put some extra money in your pockets in coming years. Talk to your accountant to see if this switch is right for you.
Questions for Larry the Accountodontist?
larry.goldberg@glassjacobson.com
Up, Up and Away
December 15, 2010 | Subscribe to our RSS Feed
With a nod to the Fifth Dimension (for those of you old enough to remember the Fifth Dimension) things seem to be picking up recently for a majority of my dental clients. In the process of preparing year-end tax projections an encouraging trend was noticed: the past five to six months showed increased collections and increased profits. Mind you this was not every practice, but it was the case for over 50% of my dental clients.
Now I am not an economist and I don’t think the economy is anywhere near the level it was two years ago before the bottom fell out. In fact I think it will be quite some time before the economy returns to those heady levels, but it certainly is positive to see an uptick in many of the practices we at Glass Jacobson do work for.
While year to year collections and net income may be below 2009 figures at the end of October and November the gap I saw between the same figures in May and June has shrunk in many cases.
Is this a trend that will continue? I don’t think anyone can say that is the case, for certain, but with the new tax law on the horizon, which will not include a tax increase, one can only hope that when we look back at the end of 2010 we can pin point that as the time that things started looking up for the economy in general and dental practices more specifically.
Questions for Larry?
larry.goldberg@glassjacobson.com
2011 Standard Mileage Rates
December 13, 2010 | Subscribe to our RSS Feed
The IRS recently announced standard mileage rates beginning January 1, 2011. The rates apply to cars, vans, pickups or panel trucks.
- 51 cents per mile for business miles driven
- 19 cents per mile driven for medical or moving purposes
- 14 cents per mile driven in service of charitable organizations
The standard mileage rate for business is based on an annual study of the fixed and variable costs of operating an automobile. The rate for medical and moving purposes is based on the variable costs as determined by the same study. Independent contractor Runzheimer International conducted the study.
Taxpayers always have the option of calculating the actual costs of using their vehicle rather than using the standard mileage rates.
Questions?