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Reducing Tax Liabilities for High Income Earners

Posted on August 29th, 2018

Preparing for end-of-the-year taxes can be daunting, but understanding good tax-planning practices can help to increase your chances of receiving higher returns on your investments. Income from investments can be one of the best places to look when searching for places to cut costs and increase your revenue. Creating a proactive tax-plan can prevent you from paying thousands of dollars in unnecessary taxes.


Tax-saving Solutions
While high-income tax payers are required to pay the most income tax, there are a few practices these individuals can engage in to lower the amount they pay at the end of the year.


Purchasing stock for at least one year prevents you from paying additional costs from unnecessary taxes. Allowing your stock to become eligible for long-term treatment helps to reduce the amount you pay in taxes. Failing to hold stock for at least a year causes you to pay short-term capital gains on investments rather than just the 15 to 20 percent of normal capital gains tax, in short paying more.


Regular reviews of your taxable assets makes sure you’re aware of all the areas that may be costing you extra money. Routine checks develop good practices and habits that help to reduce what you pay.


Reduce the amount of taxable interest, which means reducing amount of money stored in low-profit areas. Banks give their clients close to nothing, while clients are still required to pay at least half of that interest in taxes. Utilizing high-profitable places to store you money will not only increase your dividends, but also reduce the amount of taxes you pay.


Give away assets, that is, giving or donating assets to charities and family members using appreciated stock, may reduce the amount of taxable income you own. Neither party associated in the exchange is required to pay capital-gains taxes when the stock is transferred. Additionally, family members may be qualify for a different tax bracket that are lower than your costs, in turn reducing the overall amount of gains lost through the process.


Small Business Tips: How to expand your business

Posted on June 16th, 2018

Congratulations on successfully starting your business! If you’re ready to take the next step, but don’t know exactly how to go about that, here are some ideas for thinking about growing your business. Depending on the industry your business is in, and the type of business you own, the available resources, time, and money on hand, will determine the proper idea or ideas that is right for you and your business.


Open another location – If you’re first business location is successful and under control, consider expanding by opening a new location. Look for specific areas in which your customer demographic prevalently frequents or is well known.


Collaborate with other businesses – By opening yourself up to another business that is similar or related to your own industry, take advantage of that network relationship and collaborate on a joint event. It’s a chance to market yourself to new customers that may have not known of your business.


Diversify your product – Look into seasonal voids, is there a product similar to your own that can be introduced? Diversifying is a great way to increase sales and profit margins. Seasonal or complimentary products or services, or offer to export other colleague’s products.


Turn your business into a franchise – If your business model is easily replicated, and you want to see your business grow quickly, think about franchising. As the owner, now referred to as a franchiser, of the name or trademark sells that right to a franchisee. However, be prepared to work through various regulatory and legal rules and obstacles when it comes to franchising your business. Look into the federal government rules, as well as state requirements, in order to sell your business.


Expand to the internet – In this digital age, it’s important to have a superior online presence to maximize your exposure to new and old customers. Look into creating a website so customer can discover your business through an online search engine.


Understand your limitations, resources available, and your capacity as a business owner before looking to grow your business. However, with a successful business plan, market savviness and dedication, there is always room to grow!


How A Controller’s Perspective Enhances Tax Planning

Posted on June 13th, 2018

Controllers act as the middleman for a number of departments in larger businesses, between smaller businesses and their banks, and often have a great deal of insight when it comes to the tax planning process. At C. Malcolm Smith & Company, PC, we provide clients with comprehensive business accounting services, including controllership assistance.

We have created this guide to explain the benefits of having a financial controller’s perspective when going through the tax planning process.

Knowing Your Business

One of the key benefits of having a controller’s perspective during the tax planning process is the knowledge they have of your business. If a controller already works with your company’s finances, they are aware of the purchases, debts, and tax liabilities that you are responsible for and can expedite the planning process. This will not only lead to increased planning speed but an attention to detail gained from understanding the ins and outs of your business. The closer a controller works with your business, the greater the understanding of your past and potential future liability.

Building Taxes into the Budget

Controllers are often in charge of budgeting for the business they work for. When planning for a business’ tax obligations, controllers are able to build tax payments into budgets on a quarterly or yearly basis. Planning a budget around estimated tax liability helps to prevent shortfalls that could limit a business from future growth opportunities. Budgeting for taxes allows business owners to create more accurate cash flow projections and to plan in a way that will lower tax liability.

Knowledge and Experience

The perspective of a controller is not limited to their practical experience of working with a unique business. Controllers are knowledgeable and experienced professionals in their field, allowing them to educate company owners and guide a business’s growth. These professionals also keep up to date with evolving tax regulations and filing procedures, assisting businesses with the latest information on how to maintain compliance with local, state, and federal tax requirements.

To learn more about the benefits of a controller’s perspective in the tax planning process, contact C. Malcolm Smith & Company, PC today. Our Wyomissing controllership services help business owners to plan for success and greater future growth.


Year Round Tax Planning for Reduced Liability

Posted on February 16th, 2018

 April 15 is a stressful day of the year, and especially when attempting to cram in months of tax preparation in a few days. If receipts and records are not well-organized, keeping track of deductible expenses grows increasingly difficult. This limits the size your return, or can even cause you to pay taxes incorrectly, which incurs liability that the IRS can penalize. A stressful tax season is entirely avoidable, but it requires time, effort, and planning.


Keeping Records for a Successful Tax Season
Detailed records, either physical or digital, is beneficial when it comes to successfully submitting your tax payments. Invest in organization for you receipts and records, either with a physical filing cabinet, or web-based resources. Online services such as QuickBooks are available to digitize all records and to make financial transactions accessible 24/7. Records are important for they keep individuals and small businesses aware of their cash flow and tax deductible items that will save money each April.


Stay Up-to-Date on Tax Code
Tax law changes frequently enough to affect how much an individual owes the state or federal government. It’s easy to stay on top of these changes by attending free classes in your community, doing online research, or speaking to a tax professional. Keep abreast of the changes to avoid surprising bumps in taxes owed, and doing so on a regular basis will ensure year-long tax prep success. Quarterly reviews of your taxes are recommended to make sure your information is accurate.


Hire Tax Professionals
The hardest part of preparing for taxes year-round is doing so while managing other areas of your life. Taking control of tax preparation ties up your time and energy that is needed elsewhere. Our affordable services will grant peace of mind, financial stability, and precise tax preparation for year-round success. The tax code is infamous for being complex and challenging for most individuals, but professional help can untangle your tax complexities and enable you to receive the return you deserve. This will keep your finances in check and ensure that the IRS doesn’t follow up with audits or penalties.


The Benefits of an IRS Representative

Posted on February 6th, 2018

Few events are as terrifying to taxpayers and business owners as receiving a notice of investigation from the IRS. However, there is no need to panic if you know to find an accountant who can represent you There are several benefits to hiring an IRS audit representative when you first get the notice.

Tax Rule Expertise

Only enrolled agents and certified public accountants can serve IRS representatives. Their expert knowledge of tax law is required to successfully investigate and explain every line item on a tax return.

As a result of this requirement, your IRS representative is going to have the tax expertise to get you through an audit successfully. If everything on your tax return is accurate and simply needs to be explained in detail, your representative provides that information to the auditing IRS agent. If an honest mistake was made that leads to additional fees, the representative can help minimize the impact of these new obligations.

Proper Preparation Services

One of the more common reasons for an IRS investigation is a missed or late tax return. Filing the delinquent return is going to be required for this type of audit, and making sure your future returns are filed on time will prevent this particular situation from recurring. An IRS audit representative helps you file the neglected returns and, if they offer it, ongoing tax support that prevents future IRS notifications.

Tax Payment Planning

Sometimes, the IRS audit will end with additional fee applied to you. These fees can seem daunting, especially in the case of high obligations, but the auditing agent still felt they were feasible.

However, a tax representative still helps you by planning out and negotiating a payment plan that accommodates your financial needs. If the IRS is receiving the full amount owed over time, they may be willing to agree to a smaller payment each month. Having an IRS representative on your side makes you more likely to get the longer, more manageable payment plan.

Contact Us for IRS Representation

Malcolm Smith & Company, PC offers IRS audit representation to Wyomissing, the greater Reading area, and all Berks County locations. Our goal is to help you get through difficult tax situations without having to put your personal assets or business at undue risk. For more information about this and other tax services we provide, call or email our firm and schedule a consultation today.


Why and How – Proactive Tax Planning

Posted on November 16th, 2017

Many business owners and taxpayers are accustomed to the idea of “reactive” taxes. In this style of filing, you make your various expenditures throughout the year, see your company’s sales and expenses, and determine how much you owe at the end of the year. However, this form of filing often leads to business owners owing more in taxes. As a result many accountants work with businesses to curb the amount you would owe during tax season.


Why engage in Proactive Planning?
Proactive tax planning allows a business owner to limit tax liability by working within the various state and federal tax laws. Not only does this approach save business owners money, but allows your accountant more time in finding the best deductions and tax credits each year.
The tax landscape is always changing, and implementing an effective tax plan can also help to ensure that your business’ books are kept up to date. This continuous knowledge of the state of your business and the developing tax laws can also help you find beneficial reductions to how much you need to pay.


Business owners looking to expand, incorporate, or otherwise change their business model during the year are especially well served by an adaptive tax plan. This way, you will be able to account for the change in your company and can have a strategy in place to mitigate the corresponding differences in the tax code.


How to start your Proactive Tax Plan
The first step in planning for the upcoming tax season is to find an experienced accountant or CPA. Hiring a professional will allow you to keep your attention on your business ventures, without needing to focus too much on current tax laws. Additionally when creating your tax plan, it is always beneficial to allow your tax professional to assess the current state of your company to strategize a savings plan.


If you have questions about tax planning or are looking for a strategy that is tailored to your specific income or business, contact our firm today.


How Can a Controller Help Me?

Posted on October 9th, 2017

Controllership is a financial management role that helps business owners and executives make decisions on how to save and spend corporate assets. As not every company has the means to support this position full-time, our firm provides controllership services on a regular schedule as an outside entity. Even if these responsibilities are fulfilled on a part-time basis, having a controller available can significantly aid you in operating your business effectively.

Planning ahead for Business Expenses

A challenge every business owner faces is how to best plan ahead for rising costs. Tax obligations, cash outflow, and inventory costs can all limit the resources at your disposal. If you don’t have an accurate estimate of how high these costs will be or, in the case of more variable expenses, how frequently you will incur them, you may be forced to make unnecessarily tough choices about where to invest your corporation’s money and time.

A controller helps you plan effectively for your business’ expenses. You will be well-equipped to manage all financial situations your company faces when you have a controller’s expert advice on hand.

Supervisory Assistance

As the owner or manager of your business, supervising employees is already one of your responsibilities. You might also have a structure in place that helps you keep better track over business operations. Even so, there may be opportunities to further improve the way you oversee how your employees use company resources.

A controller supervises resource distribution and management and analyzes your company’s system of internal controls for improvement. If there is evidence that assets are not being allocated properly or that the controls in place do not effectively track inventory supplies, then a controller will notify you and provide options for improvement.

Periodic Performance Reviews

One advantage a smaller business gains through hiring an outsourced controller is having their records examined on a periodic basis. Many medium-sized and larger enterprises have the resources at their disposal to handle this concern themselves, but a small enterprise does not have as much time or the personnel to spare on a thorough evaluation of their finances. With a CPA firm serving as an outside controller, a small company is able to see how they are performing and in what areas they have the most room for improvement by having their records looked at quarterly.

Contact Us for Controllership Services

Malcolm Smith & Company, PC provides outsourced controllership services to Wyomissing, the greater Reading area, and all Berks County communities. We can fulfill the controllership role until you are able to hire a full-time employee and benefit from that level of service. For more information about how we support your business’ operations, call our firm and schedule a consultation today.


Helpful Tips for Any Small Business Owner

Posted on September 6th, 2017

People looking to start small businesses face a daunting task. With the dominance of larger companies, global competition provided by the internet, and the increasing number of competitors within other small businesses, you may feel overwhelmed. However, these simple yet effective tips should help keep you ahead of the curve and competitive in the modern market.

1) Make Yourself Known: A great way to get your name out is through community outreach efforts, or even sponsorships of local sports teams. These efforts go beyond regular marketing efforts in that they allow local communities to know you, as well as your business, and make purchasing your goods and services personal.

2) Have a Plan: Before even starting your business, have a strong business plan that acknowledges your company’s niche, market potential, and values your current assets. This can help you in deciding a direction for your venture, and can cut back on unnecessary expenditures in the future.

3) Quality over Price: With the constant presence of corporations like Walmart and Amazon, trying to price match competitors can lead to a loss of profit, as well as confidence. Instead of trying to compete fiscally, focus on honing your service in a way that these companies cannot. Not only will your product benefit from your drive for excellence, but patrons will overlook price differences for superior quality products and service.

4) Acknowledge Missteps: Nobody likes to be wrong, but being able to accept flaws in your business’ model or your product are essential in setting yourself apart from your competitor. Accept criticisms as opportunities to improve. Adaptability is essential in the modern marketplace.

5) Use Technology: With the internet and technologies focused on the management of small businesses, the barrier for marketing and sales in greater regions has more or less been lifted. Be sure to use all of the resources at your disposal, whether this means creating a web-based storefront, or managing your accounts with programs like QuickBooks.

While these strategies are just the tip of the iceberg in terms of establishing a successful business, they are helpful in getting your business a leg up over the competition.


Audit Negotiations

Posted on July 26th, 2017

One of the most significant challenges you can face as a tax payer is an IRS audit. If your previous taxes were filed incorrectly or inconsistently for any reason, the IRS might launch an investigation to determine if you owe additional taxes. Levies and wage garnishments may follow for those who have underpaid.

However, not everyone is aware that the IRS is sometimes willing to work with taxpayers to pay off these debts. By hiring our accounting firm as your audit representative, negotiations with the IRS can include methods of debt payment to satisfy tax obligations while better meeting your financial needs.

Pay Plan Negotiation

With the assistance of our CPA, it is possible to negotiate the terms of a voluntary payment plan that fulfills your tax obligations without creating an insurmountable impact on your daily life. If the IRS signs off on this payment plan, you avoid wage garnishments and levies on assets. This negotiation process helps you secure a tax debt solution that is manageable and affordable.

Offers in Compromise

In the right circumstances, a tax debt might develop to the point that it may never be realistically paid in full. In the event that the IRS agrees the obligation is too large to fulfill, they may be willing to accept partial payment for the debt and forgive the remainder.

This unique payment option is known as an offer in compromise and can be established as with proper demonstration of inability to pay. Not everyone is eligible for this tax debt resolution, but for those in extreme circumstances, our CPA is able to negotiate a fair and reasonable amount with the IRS.

Wage Garnishments

When payment plan negotiations and offers in compromise are not available, the IRS may enforce wage garnishments to help repay the debt. This situation is a source of fear for our clients, as having money taken out of their paychecks is often considered to be the worst case scenario.

However, even the amount of wages garnished is negotiable. There are much stricter limits on this method of recuperating tax payments, but it may be the difference between managing your debt and being overwhelmed by it. Our firm works with the IRS to establish the amount garnished during payday, reducing the negative impact on your livelihood.

Contact Us Today

Malcolm Smith & Company, PC provides IRS audit representation in Wyomissing, the Reading area, and Berks County to help you survive the payment of your tax obligations. For more information, contact our firm today.


5 Budgeting Tips to Save Cash

Posted on June 6th, 2017

Saving money is a difficult commitment to make, but it provides benefits in the long run. Life throws unpredictable events at us, and preparing our budgets to account for accidents or emergencies grants peace of mind.

Saving is also one way to hold off on wanton spending that drains accounts rapidly. The following tips to save money can inspire balance in your daily financial habits. Stick to a 30 Percent or Less Rule It’s hard to save money without setting up a cap on your spending. When payday rolls around and there are new products or items grabbing our attention, it’s incredibly difficult. We recommend setting a limit of 30 percent of your paycheck to spend on entertainment and leisure. This reserves 70 percent use for essentials. Use 30 percent as a starting point and decrease the limit to save even more money as you become more confident in your saving strategy.

Establish Financial Goals Nothing helps curtail personal spending and establish a direction more than creating a strategy. By writing down financial goals, such as paying off your car by a certain date, you lay a foundation for future success. Knowing where your money flows is liberating and strengthens resolve in saying no to frivolous purchases.

Manage Personal Cash Flow Daily Dedicating one minute a day to looking over your bank account makes you aware of where you spend the most. This also promotes comfortability in managing one’s finances. Get cash out daily or weekly to keep to a specific spending amount, which is a research-proven technique that keeps your cash account stable. When swiping cards is the go-to, the convenience causes individuals to spend much more. Shop Realistically When new products appear on the market, whether a new gadget or guilty pleasure, it important to hold back the impulse to buy it. Impulsive shopping tends to influence purchasing habits and tricks us into buying items we don’t need.

Pay off Larger Debts First When paying off credit card debt or loans, it’s beneficial to chip away at a loan with a higher interest rate. If you wait to pay, amounts owed increases exponentially. Although paying off smaller amounts of debt with smaller interest rates seems more manageable, they won’t cost as much as high interest debt. By hedging larger loans and limiting the traction their high interest gains, the debt is more manageable over time.