Many contractors prioritize business financial management over personal wealth management. It’s an easy trap to fall into given how competitive the construction industry can be. Let’s discuss some ways to manage your wealth while you run your business. Separate the two Owning a construction company and managing personal wealth should be two separate but equal priorities. This strategy goes beyond using different bank and credit card accounts. Here are twoRead More »Manage your construction business … and your wealth
Do you own a successful small business with no employees and want to set up a retirement plan? Or do you want to upgrade from a SIMPLE IRA or Simplified Employee Pension (SEP) plan? Consider a solo 401(k) if you have healthy self-employment income and want to contribute substantial amounts to a retirement nest egg. This strategy is geared toward self-employed individuals including sole proprietors, owners of single-member limited liabilityRead More »Self-employed? Build a nest egg with a solo 401(k) plan
If you’re a business owner working from home or an entrepreneur with a home-based side gig, you may qualify for valuable home office deductions. But not everyone who works from home gets the tax break. Employees who work remotely can’t deduct home office expenses under current federal tax law. To qualify for a deduction, you must use at least part of your home regularly and exclusively as either: Your principalRead More »Home sweet home: Do you qualify for office deductions?
The business entity you choose can affect your taxes, your personal liability and other issues. A limited liability company (LLC) is somewhat of a hybrid entity in that it can be structured to resemble a corporation for owner liability purposes and a partnership for federal tax purposes. This duality may provide you with the best of both worlds. Like the shareholders of a corporation, the owners of an LLC (calledRead More »Why an LLC might be the best choice of entity for your business
When a married couple files a joint tax return, each spouse is “jointly and severally” liable for the full amount of tax on the couple’s combined income. Therefore, the IRS can come after either spouse to collect the entire tax — not just the part that’s attributed to one spouse or the other. This includes any tax deficiency that the IRS assesses after an audit, as well as any penaltiesRead More »An “innocent spouse” may be able to escape tax liability
Many construction businesses are structured as C corporations. If that’s the case for your company, you’re probably aware that C corporations usually prefer to classify payments to owners as tax-deductible wages because it lowers corporate taxes. However, as you’re likely also aware, if the IRS believes that an owner’s compensation is excessive and unreasonable, it may claim that payments are disguised dividends — and deny deductions for them. Earlier thisRead More »Is your construction company a C corporation? Beware of “unreasonable” compensation
As you’re aware, certain employers are required to report information related to their employees’ health coverage. Does your business have to comply, and if so, what must be done? Basic rules Certain employers with 50 or more full-time employees (called “applicable large employers” or ALEs) must use Forms 1094-C and 1095-C to report the information about offers of health coverage and enrollment in health coverage for their employees. Specifically, anRead More »Is your business required to report employee health coverage?
If you don’t have enough federal tax withheld from your paychecks and other payments, you may have to make estimated tax payments. This is the case if you receive interest, dividends, self-employment income, capital gains or other income. Here are the applicable rules for paying estimated tax without triggering the penalty for underpayment. When are the payments due? Individuals must pay 25% of a “required annual payment” by April 15,Read More »Estimated tax payments: Who owes them and when is the next one due?
Your neighborhood ice cream shoppe no doubt operates under a simple fixed price, point-of-sale billing method. Construction companies don’t have it so easy. Because of the project-based, decentralized nature of construction work, contractors need to use various billing methods. Let’s review the five most common in case you might be overlooking an approach that could better suit your business needs. 1. Lump sum Sometimes known as fixed price, lump sumRead More »5 common billing methods in the construction industry
These days, most businesses have websites. But surprisingly, the IRS hasn’t issued formal guidance on when website costs can be deducted. Fortunately, established rules that generally apply to the deductibility of business costs provide business taxpayers launching a website with some guidance as to the proper treatment of the costs. Plus, businesses can turn to IRS guidance that applies to software costs. Hardware versus software Let’s start with the hardwareRead More »How to treat business website costs for tax purposes
When you filed your federal tax return this year, were you surprised to find you owed money? You might want to change your withholding so that this doesn’t happen again next year. You might even want to adjust your withholding if you got a big refund. Receiving a tax refund essentially means you’re giving the government an interest-free loan. Adjust if necessary Taxpayers should periodically review their tax situations andRead More »Is your withholding adequate? Here’s how to check
Sometimes, bigger isn’t better: Your small- or medium-sized business may be eligible for some tax breaks that aren’t available to larger businesses. Here are some examples. 1. QBI deduction For 2018 through 2025, the qualified business income (QBI) deduction is available to eligible individuals, trusts and estates. But it’s not available to C corporations or their shareholders. The QBI deduction can be up to 20% of: QBI earned from aRead More »Three tax breaks for small businesses