WWW.MEDOWSCPA.COM Business & Tax Blog | A Blog for the Self-Employed & Small Business Owners

23.07.2010

Acquisition Cost Analysis For NYC Small Businesses

Congratulations on your recent acquisition of your new small business in New York. Acquiring a small business is often an emotionally exhausting, confusing and exhilarating experience. Further, acquiring a business can put a strain on the new company’s cash flow. As Manhattan CPAs experienced in working with S-corps, C-corps and LLCs in NYC, we can advise you on ways to improve your cash flow.
One way to improve cash flow is to reduce the amount of New York income taxes your small business is currently paying. One possible way to reduce NYC income taxes is to accelerate the deduction of costs currently capitalized as acquisition related costs. Generally, professional fees and other costs associated with the purchase of a business are “capitalized” in the stock or assets that are purchased. For income tax purposes, deduction of these costs may be over 15 years, on sale of the business, or the costs may never be deducted. Because invoices often do not clearly allocate fees among all the services performed by professionals, or costs associated with travel and other miscellaneous expenses, costs that are not associated with the purchase can be capitalized as acquisition costs.

If costs unrelated to the acquisition have inadvertently been capitalized, then properly re-characterizing these costs can permit them to be deducted in the year they were incurred. Further, in certain instances, costs incurred to expand your business can be deducted over 5 years, rather than 15 years. A thorough analysis of capitalized acquisition costs often results in a significant New York tax refund and/or a decrease in the Manhattan income tax paid in the years immediately following the acquisition.

Our CPAs would like to talk to you about the potential for accelerating the deduction of some of the costs you currently have capitalized, to better help your New York City LLC, S-corp, C-corp or other small business. Please contact one of our NYC LLC CPAs at our office to arrange a convenient meeting time.

Sincerely yours,
Jonathan Medows, CPA

About us: MEDOWS CPA, PLLC is a boutique New York CPA NY Firm serving the needs of Individuals & Small Businesses in New York City and throughout the nation. We work with the self-employed, freelancers, LLC, C-Corporations and S-Corporations to help them with their accounting and tax needs.

Jonathan Medows, CPA

MEDOWS CPA, PLLC

http://www.medowscpa.com

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A Unique, Boutique New York CPA Firm Serving the Needs of Individuals & Small Businesses

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29.01.2010

Obama to Propose $5,000 New Hire Tax Credit

category: Uncategorized
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Courtesy of http://www.foxbusiness.com/:

President Obama will propose Friday in Baltimore a new business tax credit worth up to $5,000 for every new worker hired this year.

Under the president’s plan, a business could claim a tax credit of up to $5,000 for every net new employee it adds to its workforce this year. If that business hires a worker and fires another, it would be ineligible for this credit.

Senior administration officials said they capped the total credits a business can claim at $500,000 to ensure their proposal mostly helps small businesses.

“The focus is really on small businesses,” said a senior administration official.

The president is also proposing the federal government reimburse businesses for the Social Security taxes they owe on increases in their payrolls this year.

If a small business with 50 employees raises wages by $1,000 for each employee, either through increased pay or hours, the business would receive a tax credit of $3,100 to cover higher Social Security payroll taxes, according to an administration fact sheet.

“It isn’t just about net new jobs, it’s about wages also,” said the official, who added the administration projects these credits will benefit a million businesses.

Provided congressional approval, businesses will be able to claim this credit on their 2010 taxes for any new hire they make during this year.

The tax credits will cost the government $33 billion dollars, according to the White House, citing a Treasury Department estimate.

The president and Congressional Democrats are wrestling with an economy struggling to create jobs, while trying to confront a massive federal deficit.

In this week alone, President Obama called for Congress to temporarily freeze some federal spending to save $250 billion over the next ten years, the Congressional Budget Office forecasted a $1.35-trillion federal deficit for this fiscal year and a $75-billion increase in the stimulus plan’s cost estimate, the Senate approved a measure to raise the debt ceiling by $1.9 trillion, and Democrats have been negotiating billions in new spending to try to catalyze a dormant job market.

While in Baltimore Friday, the president will also address House Republicans who are holding their retreat there.

A tax credit plan may be one of the president’s few economic proposals Republicans may support.

“The only bright spot in President Obama’s latest jobs plan is that his Administration finally acknowledges that lowering the tax burden on small businesses is the most effective way to reduce our nation’s unemployment,” said Rep. Scott Garrett, a New Jersey Republican. “Unfortunately, while this temporary wage subsidy may create a spike in employment, Americans need permanent relief through sustained growth.”

Strongly opposed to the president’s economic agenda, congressional Republicans have been blasting Democrats for their efforts to spend billions more on highway and rail projects.

“We’ve had enough,” said House Republican Whip Eric Cantor. “The $800-plus billion stimulus bill didn’t produce any jobs. Then the president says we’ve got to freeze domestic discretionary spending. But oh, by the way, let me go and propose $150 billion more before our freeze. None of that makes sense,” he said.

Meanwhile, Senate Democrats are moving ahead with negotiating the details of their latest economic bill. They say it will, along with the stimulus plan, jump-start hiring and upgrade aging transportation infrastructure.

“I think it’ll give the Republicans an opportunity to – to work with us,” said Senate Majority Leader Harry Reid. “It’ll be so glaringly apparent to the American people if we don’t get a few Republican votes to support us that they are not interested in any success to the American if they are continually going to say no.”