What Is An LLC And How Does It Work?

There are now over 32 million businesses across the United States.

Due to the benefits owners get through asset protection, a good chunk of these businesses exist as Limited Liability Companies. While there are several other options on the legal structure you can pick for your business, what you settle on depends on your objectives.

If you are asking yourself, “What is an LLC and how does it work?” then here is a guide to help you understand this legal business structure better.


What Is an LLC and How Does It Work?

A Limited liability company is a business structure created by state law that exists as a legal entity that is distinct from its owners.

An LLC combines aspects of a sole proprietorship, a corporation, and partnership to create a structure that ensures the owners are not personally liable for its liabilities.

You can form an LLC to own certain assets (for example, real estate, houses, boats, vehicles, etc.) or use it to run a business.

The owners of an LLC are known as members. You can have a Single-Member LLC that’s owned by one person or a Multi-Member LLC owned by two or more people.

Once you pay a filing fee and successfully file the LLC formation documents with your state, you can become a member.

An LLC exists as a separate entity from its owners. As such, in the eyes of the law, you as the owner are not the same as the LLC. That is essential because it helps manage asset protection and is arguably one of the most significant benefits of an LLC.

For example, let's say you are a member of an LLC and happen to accrue a business line of credit worth $50,000,000 that goes unpaid beyond its tenor. When the lender decides to take legal action to recover their money, they will not come for your personal assets.

Instead, they will file a case against the LLC, and the entity will have to use its assets to repay the loan. In that sense, what you own as an individual remains safe.

When you own place assets or a business under an LLC, the ownership moves from you to the entity. Therefore, all legal documentation will show that the owner of the asset or business is the LLC.


How Do You Form an LLC?

When forming an LLC, you begin by selecting a business name for it. Don't forget that the name you choose must be in line with your state’s rules.

Once you have the name, you must prepare the Articles of Organization (known as Certificate of Formation or Organization in some states). You can file the documentation with the Secretary of State by mail or through some of the best online LLC formation service providers.

If you plan to conduct business in another state other than the one the LLC’s registered in, you will need to register in the state of interest. Just like when registering with your state, you will also need to appoint a registered agent for your LLC in the state you plan to operate in.

There are several regulatory and tax requirements you need to be aware of when forming an LLC. These are:

Employer Identification Number: The EIN is mandatory for Multi-Member LLCs, even if you don't plan on hiring any employees. In the case of a Single-Member LLC, an EIN only becomes necessary when you want to hire employees or choose to be taxed as a corporation.

Sales and Employer Taxes: There are cases where you will need to pay sales and/or employer taxes in LLCs. It is wise to consult a tax professional during the registration stage to discover what obligation you’ll be responsible for.

Business Licenses: Depending on your area of operation, there are licenses you may need to acquire from the state or local authorities. Consult the necessary state agencies to confirm all the licenses you need to get, so your LLC becomes compliant.

In many states, once your LLC is operational, you will need to file annual reports along with a filing fee.


How Do LLC Owners Get Paid?

When forming an LLC, every owner puts in something of value that will help run the organization. Typically, this is money or other assets.

Every member's contribution goes to their capital account and is a part of the total capital available. The capital account will show any changes in the LLC’s ownership.

Your capital account begins with your capital contribution, grows with your potion of the business income, and decreases due to withdrawals or business losses.

When the LLC makes a profit, your share goes into your capital account (as do any losses). You get paid out of your share of the profits through a business check, which reduces the amount in your capital account. That is referred to as a draw or distribution.


Do LLC Owners Get Taxed?

Since you are an owner and not an employee, you don't receive a salary. As such, what you get paid isn't directly taxed like a salary would be. The tax you pay is tied directly to your share of the profits or losses that the LLC makes.

However, this tax applies to your entire profit or loss portion, whether you withdraw it or not. Let's say you earn $10,000 in profits and only withdraw $2,000 from your capital account. You will still need to pay tax on the entire $10,000.

If you are a Single-Member LLC owner, taxation happens slightly differently. The Internal Revenue Service (IRS) treats all Single-Member LLCs as sole proprietorships. Thus, any losses or profits the LLC makes pass on to you.

Consequently, you won’t need to file a separate tax return for the LLC, as in the case of Multi-Member LLCs. That is because all the LLC's income or losses will be reported on your personal federal tax return.


Protect Yourself From Personal Liability With an LLC

Many business owners are partial to forming an LLC because it protects their personal assets from any liabilities the business incurs. An LLC comes with other requirements you also have to pay attention to for it to succeed. Before forming one, ask yourself, “What is an LLC and how does it work?” To get a more in-depth understanding of how to operate under such a legal structure.

Are you looking for more ideas on how to start and run a business? Check out more of our company content for top tips that can make you a better entrepreneur.

3 LLC Tax Benefits Businesses Must Know About

Paying taxes is one of the largest expenses that a business faces every year. How would you like to lower your company tax liabilities? Small businesses pay on average 19.8% in taxes. You may be able to lower the amount you pay in taxes by forming an LLC (limited liability company) instead of remaining a sole proprietor or independent contractor.

There are tax and legal advantages of forming an LLC that can easily be overlooked. Are you ready to learn all of the LLC tax benefits?

Let’s get started on 3 top LLC tax benefits for your business!


1. Employee Benefits

Employee overhead is often the largest expenditure for small businesses and LLCs. In order to be competitive and attract the best and brightest, you have to have a great benefits package.

Benefits like healthcare are expected, but that can be a huge burden for employers because healthcare keeps increasing.

You can deduct those expenses you use for LLC employee benefits, which can help you lower your tax bill.


2. Pass-Through Tax Deduction

LLCs can take advantage of a 20% pass-through tax deduction, which was included in the Tax Cuts and Jobs Act.

What this means for business owners is that you can deduct 20% of your business profit from your income taxes. While the LLC setup itself costs money and may have annual maintenance fees, in 2025 you will end up saving a lot more money than you spend with a limited liability company formation.


3. Capital Expenses

LLCs that have to invest in buildings and equipment can benefit from this tax deduction. Capital expenses are often related to real estate, and here is how they impact your taxes.

You can deduct large purchases over a period of years, instead of taking a massive taxation deduction in a single year.


How Much Can You Deduct?

How much you can deduct from your business taxes depends on what type of LLC or corporation you form. How can you compare an LLC vs corporation? Let’s take a look at how the IRS treats LLCs and corporations.

An LLC is a limited liability corporation. It can have one member, such as a sole proprietor, or several members or partners.

In the case of a single-member LLC, the IRS views the member’s finances and business finances as one and the same. Business owners report their income and business deductions on Form Schedule C and pay federal income and self-employment taxes on the net profits of the business.

For an LLC with multiple members, each member will pay taxes on their share of the profits of the business.

Corporations are treated differently by the IRS because the business and owner’s finances are completely separate. The owner usually receives a salary from the business, which they pay income taxes on.

The business is taxed as a separate entity, the business reports its profits and losses and is taxed on profits.

LLCs are often seen as more flexible because you can choose to be taxed as a corporation. For example, a single-member LLC can elect to be taxed as an S-Corp.


The Top LLC Tax Benefits

It is smart to register your business as an LLC because there are legal protections in place and there are LLC tax benefits to consider, too.

You can take advantage of limited liability company or ltd tax benefits like writing off capital expenses, employee benefits, and the pass-through deduction.

If you want more great business tips and taxation tidbits, be sure to visit this site often. For more accounting advice like top LLC tax benefits and ways to save on personal taxes, visit the Frugal Finances section of our site.

Why Get A Tax Planning Accountant For Fiscal Strategies

It is almost the end of the fiscal year, and you might have probably submitted your tax returns a few months ago. When everything is said and done, many business owners don't want to think about taxes when they have finished everything. 

However, it is best if you could plan for the tax season before it arrives so you won't be panicking. A little preparation for your future can make a significant impact, but most business owners may not be doing this. They can be too caught up with their businesses' daily operations (and nothing's wrong with that), but it is still best to give a little thought about the taxes for the following year. 

Contrary to what other people may be thinking, you don't necessarily have to be a big corporation or a Fortune 500 company to plan for your taxes. You may be a small business owner who wants to pay a significant reduction in taxes and ensure that the money is going to where it matters the most, which is to the other more important aspects of your business. 

About Tax Planning 

This process is more than just coming up with an estimate of your liabilities for the end of the year and knowing the tax amount. This is often the process of looking at your current financial health, ensuring that the figures work cohesively, as well as paying the least possible amount when it's time for filing. 

This is a process that may include various considerations like credit opportunities, legitimate deductions, expense planning, timing and size of the purchases, etc. This will help you select the most optimal investment out there that will complement your filing status and current strategy. 

Know that you may need to get help from a certified accountant to do all of these things. With experienced CPA services you will be able to reach your goals, raise more funds, deliver a positive ROI, and minimize cash tax liabilities. All of these are done in the right way, so you wouldn't have to worry even if the IRS contacts you. 

The Role Of Accountants 

For many business owners, the laws and regulations are simply complex and hard to understand. As an individual or a company owner, professional accountants will ensure that you're complying with the federal and state income tax returns so you can pass an audit with flying colors. There are also planning advice services that help individuals and businesses save money in general. Other services include: 

Preparations Of Tax Returns 

Self-employed accountants or those who are currently working for firms may specialize in assisting their clients with preparations of their returns. They meet with the business owners, assess their books, go through their records, and help them prepare. 

In a meeting, there is a need to gather the necessary documentation, get copies of investment income statements, have pay stubs, and check various documents that will be included in the paperwork. Most of these experts are familiar with the law, and they will usually look for credits and deductions for their clients to minimize their payments. 

Helps With The Planning Phase 

Every decision made in a corporate setting may involve tax changes and ramifications. These are very complicated, especially if the company does business internationally. This can result in the growing need for tax planner professionals. 

Some accountants may choose to specialize in the planning phase, where their primary objective is to minimize income taxes. This is a strategy that's often common in corporations where they develop long- term plans to save money for a period of time. 

Planning For Your Retirement 

Know that accountants can also help individuals aside from business owners. Those people who are saving their hard-earned money through a retirement plan can effectively reduce their taxes. This is when you contribute money into a traditional individual retirement account, which is deducted from your gross income. 

For 2021, if an individual meets all the qualifications, the maximum they can contribute under the age of 50 is $64,000. If they are 50 years old or older, the most will be $7,000 a year. For example, if a 51-year-old female has an income of $60,000 annually and has made $7,000 in contribution to their IRA, the adjusted $53,000 will be taxed, but the contribution will be deferred until she retires. 

Many other retirement plans are out there, and they are available for many people who want to reduce their liabilities. For larger companies with many employees, there is the 401k plan where a participant can defer his income from their paycheck, which goes directly to the company's strategy. The differences between a 401k and a traditional IRA are their contribution limits. 

Gain-Loss Harvesting 

The process gain-loss harvesting can be another kind of management and planning that's often associated with investments. This is very beneficial since can help capital gains offset and your accountant can help you with this. The Internal Revenue Service has a long-term and short-term capital loss that should be used to offset a capital gain of similar types of investments. In the year 2025, here are the taxation for long-term capital gains: 

• A payee who has an income of less than $78,750 is taxed at 0%. 

• For those who are single that has more than $78,750 but they are earning $434,550, the rate will be 15% (Married couples who are filing jointly will be included in this percentage if they have a combined income of $488,850, $244,425 for married people filing separately, and $461,700 for the head of the house.) 

• 20% of the tax for people who have an income that is higher than the 15% bracket. 

According to the IRS, if the capital losses exceed the capital gains, the total max you can claim to lower your income tax is $3,000. If you are married, the amount will be $1,500, but you are filing separately from your spouse. This is also the case if the overall net loss is included on the list shown on Form 1040, line 21 of Schedule D. Have an experienced CPA assist you with these calculations or advise you before making any finalized estimates and payments.

How To Find A Top Rated Tax Attorney

An attorney is a learned professional who is well trained and knowledgeable in the law. He acts as a representative to his client in every legal dealing end court case. He is a recognized legal practitioner. Generally, before someone gets to this level, he/she must have gone through law school. Such a person must also have been called to bar. Still, some attorneys may choose not to practice in court. 

Who Is A Tax Attorney? 

A tax attorney is e legal practitioner who specializes in tax law. The main focus of such counsel’s practice is tax and revenue law. The lawyer will help you handle your tax issues. He majorly gives you advice on how to organize your finances. 

Why Do You Need A Tax Attorney? 

Getting yourself a tax attorney may not look necessary to some. However, if you want your finances arranged properly to settle your tax issues, you will need one. In cases where you also have issues with the IRS, you will also need one. Below are several other reasons why you will need such a lawyer. 

Good Professional Representation 

Handling your tax issues may be time-consuming for you. You may also not have the professional knowledge to do so. This is why you need professional representation. It will be your guide in all your tax dealings. Oftentimes, the IRS may need to communicate with somebody. If you have such an attorney, you will be ably represented if you are unable to go by yourself. 

Of course, you may not want to postpone your work or allow anything to hinder your business. So, getting an able representation will come helpful. 

They Give Professional Advice 

Since these legal practitioners are professionals and well learned in the field, they can help you with the best advice. This advice will be very helpful for arranging your finances in other to swiftly pay your tax obligation. When it comes to IRS issues, you will also need a bit of good advice from a professional on the steps to take. Also, small-end big business owners will need this kind of lawyer to help advise on how to move the business financially. 

This is because apart from being tax specialists, some of them also have experience in business law, giving businesses related advice. This will be helpful to a business owner. Also, young workers or entrepreneurs require this kind of service to enlighten them on issues of tax payment. They also need this kind of service to educate them on some business opportunities and ways to manage finances. You can find suggestions on this website about ways to manage your finances. 

They Are Highly Knowledgeable 

Getting yourself connected with a tax lawyer will no doubt increase your knowledge corning this subject matter. You definitely may not have the requisite knowledge concerning this subject matter. But, when you have a lawyer around you, he/she will help enlighten you. Getting yourself abreast with this knowledge will save you from having issues with the IRS. It will also save you finical loss. 

The importance of knowledge in every field cannot be over-emphasized. The more you are aware of a particular matter, the less vulnerable you are. So, it is better to arm yourself with the right knowledge concerning tax payment and its policies. 

They Ensure Utmost Secrecy Of Privileged Communications 

One of the benefits you enjoy from hiring a lawyer is that you enjoy what is known as solicitor-client privilege. This privilege means that communications made to your lawyer in the course of his duty are kept secret. This information and communication cannot be uttered in public without your consent. It is privileged because it enjoys secrecy. 

You wouldn’t be scared of being hunted for what you said to your attorney. Once you hire one, be rest assured that your secrets are safe. In short, it is important to state that the professional ethics of the profession prohibits lawyers from leaking such information. In that case, you can be free with your counsel. You can tell and disclose whatever you want without fear. One thing you must know is that he/she has your interest at heart. And, he/she cannot do anything to jeopardize your interest. 

They Help Save Cost 

By hiring a tax attorney, you will help save costs. When you run into issues with the IRS, your money and property may not be safe. Especially where you run into debt, your properties may be seized to offset your debt. However, when you have such a lawyer, you do not have to worry about that. They will help you save costs by meeting with the IRS and entering into discussions on your behalf. In this case, sometimes your punishment is mitigated. 

The amount you would have paid will also be reduced. This is one of the benefits you get from having such a counsel by your side. You can imagine your bill if you were to settle matters yourself. You can find a reliable and experienced Los Angeles tax attorney that is affordable to work with. 

They Make Fewer Errors 

Since you may not have the requisite knowledge to handle tax-related matters, it is possible to make certain errors. However, hiring a trained counsel or solicitor to do the work for you will limit your errors. This is because such errors can be detrimental to the success of your case with the IRS. You must limit the errors you make. This is something you may not be able to do on your own. 

You will need the services of someone who is trained and skilled to do so to avoid errors. Therefore, the less error there is, the more chances you have of reaching an amicable settlement with the IRS. The absence of errors in itself can even save you the stress of having any issue with them. You will benefit from having such a counsel who is skilled in this field. You shouldn’t want to miss out on this benefit. 

They Help In Securing Relief From IRS Actions 

The tax attorneys also know how best to maneuver their way through the system. This is something they can do because they’re skilled in the field. On your own, you may be unable to do it. But, with the support from these professionals, you will get relieved from IRS actions. This is one very important reason you need a solicitor by your side. 

This is because a lot can go wrong if you attempt to do it on your own. But with external support and aid, you are sure to get it right. They can do this by reaching an amicable resolution with the IRS. 

What To Look Out For When Hiring The Best Rated Los Angeles Solicitor 

Some of the things to look out for when looking for legal counsel to help you with any legal-related issue include. 

Years of Legal Practice 

You must take into consideration the solicitor or lawyers’ years of legal practice. This is because their years of practice will culminate into his experience and wealth of knowledge. Well-experienced attorneys will be able to do exceedingly well while doing their job. Their performance will be highly noticeable. Of course, the reason this will not be far-fetched is because of their wealth of experience in the field. Therefore, always pay attention to their number of years in business. 

Proximity 

Another thing you will have to look out for is the distance between you and your lawyer. It is always advisable to be closer to your lawyer. This is in case of any emergencies in the future. 

Cost 

You should also put the cost of hiring the lawyer in mind. This is because most of the best-rated lawyers will charge highly for their services. Therefore, you will have to weigh your options to reach the best decision on hiring the right tax law firm. 

Final Note On Top Tax Attorneys

Tax attorneys are professionals whom you will find very important if you are a worker or business owner. Their benefits are quite numerous that you should certainly not brush off the idea of hiring one to handle your taxes.

Considerations Before Applying For Tax Relief

Before applying for tax relief, it is essential to thoroughly evaluate your financial situation and understand the implications of seeking tax relief options. While tax relief programs can provide significant benefits, it is crucial to consider several factors to ensure that you make informed decisions with regards to the Internal Revenue Service (IRS). This article highlights seven key considerations to keep in mind before applying for tax relief services in the USA. 

7 Tax Relief Key Points 

1. Eligibility Criteria

Different tax relief programs have specific eligibility criteria. Before applying, carefully review the requirements and determine if you meet the qualifications. For example, some tax credits are income-based, while others may have restrictions based on factors such as age, education, or employment. Understanding the eligibility criteria will help you assess whether you are eligible for the relief program you are considering. 

2. Financial Impact

While tax relief can reduce your tax burden, it is important to evaluate the overall financial impact of seeking relief. Consider the potential short-term and long-term consequences of the relief option. For instance, some relief programs may require you to repay a portion of the relief in the future, which can affect your financial stability. Assess how the relief will impact your current cash flow, financial goals, and potential tax savings to make an informed decision. 

3. Documentation And Compliance

Tax relief programs often require documentation to support your eligibility. Before applying, gather all the necessary documentation and ensure that you meet the compliance requirements. Failure to provide accurate and complete documentation may result in your application being rejected or delayed. Additionally, be aware of any reporting obligations or ongoing requirements associated with the relief program to avoid penalties or loss of benefits. 

4. Future Tax Implications

Consider the potential impact on your future tax returns when applying for tax relief. Certain relief options may affect your future tax liabilities, deductions, or credits. For example, if you choose to claim a tax credit for energy-efficient home improvements, it may limit your ability to claim the same credit in future years. Assess how the relief option may influence your future tax planning and consult with a tax professional if necessary. 

5. Alternative Strategies

Before pursuing tax relief, explore alternative strategies that may achieve similar or better results. For example, if you are considering applying for an installment payment plan with the IRS, evaluate whether it would be more beneficial to secure a low-interest loan from a financial institution. Comparing different approaches can help you identify the most cost-effective and advantageous option for your specific circumstances. 

6. Impact On Credit Score

Certain tax relief options, such as offers in compromise or settlements, may have implications for your credit score. These programs may require negotiation with the IRS or other entities, potentially impacting your creditworthiness. Understand the potential consequences for your credit score and consider whether the relief option outweighs any negative impact on your creditworthiness. When you are taxed, it could hurt your credit or even cause you to consider bankruptcy. 

7. Professional Advice

Seeking professional advice from a tax attorney, certified public accountant (CPA), or tax professional is highly recommended before applying for tax relief. Accountants can provide expert guidance based on your specific situation, help you understand the implications, and navigate the application process. A tax professional can also provide insights into alternative strategies or additional relief options that you may not be aware of. 

Tax Relief Considerations Conclusion 

Before applying for tax relief in the USA, carefully consider factors such as eligibility criteria, financial impact, documentation requirements, future tax implications, alternative strategies, and the potential impact on your credit score. Making informed decisions about tax relief options requires a thorough evaluation of your financial circumstances and objectives. 

Seeking professional advice can provide valuable insights and help you navigate the complex tax landscape, ensuring that you choose the most suitable relief option for your needs. Don't try to go it alone when you are seeking reduced taxes or other financial assistance! It is time to say goodbye to excess taxation.

How To Do Accounting For Small Businesses

Do you know the biggest challenges for small businesses in terms of finance? 

Not having a diversified client base is one. If you mostly rely on a single client to keep your business running, you are more of an independent contractor than a business owner. 

Another huge challenge is maintaining quality while trying to scale. Especially for some entrepreneurs, it is quite hard to let go of some tasks when they're so used to wearing different hats.

Then there is money management. With overseeing day-to-day operations, some businesses tend to not prioritize bookkeeping and accounting as much as they should. If you however recognize the need for accounting help, then you are in luck. 

Here, we will be sharing some basic accounting tips to help your small business get on track financially.


Think About Automation

No matter how good you are at numbers, you can't be spending all your time making sure your accounting books are balanced. Remember, you have other duties and responsibilities to take care of. If you can't quite justify hiring an accountant, your next best bet is to use a tool that can automate accounting tasks.

The good news is there are tons of accounting software to choose from. If you do your homework, you should be able to pick the best one that fits your needs and budget.

Before you pay for one though, make sure the software you choose can grow with you. You don't want the hassle of learning how to use another software just because you didn't plan properly for the features you need as your company scales.


Identify What Type of Accounting Help You Need

You don't have to hire a CPA or an accountant full-time. There are small business accountants who can work on an as-needed basis to keep you in good standing with the Internal Revenue Service (IRS). 

For example, if you are thinking of starting a new business, an accountant can provide invaluable advice about your business structure. He or she can also help with obtaining the necessary licenses and permits, writing a business plan, etc. 

The same applies to nonprofit organizations. If you are running one, this article can give you insights on the basics of nonprofit accounting. 

Other accounting partners who can help are CPAs if you need audited financial statements and bookkeepers for managing day-to-day records. You can also hire tax preparers for filling out and filing tax forms on your behalf, as well as tax planners for finding ways to lower your tax obligations.


Optimize Your Accounting Methods

Whether you choose to use accounting software or hire an accountant, don't forget to track their performance. If you don't know how much time and effort you're spending on your books, it will be hard to improve your accounting processes. 

Also, when evaluating your accounting methods, always think about the future. Solid accounting is a powerful forecasting tool. It can help you identify upcoming costs, plan for company expansion, new investments, and so on. 


Need More Accounting Tips?

Now that you know some basic accounting tips and where to get accounting help, don't stop there. There are other aspects of financial management you have to master if you want to keep your small business or NPO growing.

For more accounting advice and financial assistance, check out our other articles. For additional accounting help and bookkeeping tips, visit the Frugal Finances section of our blog right now!

7 Instances When You Must Hire A Tax Attorney

Getting behind on your taxes is never pleasant, but it is incredibly common. More than 15 million taxpayers owe the IRS back taxes. 

When this happens, taxpayers face scrutiny from the IRS, audits, fines, and sometimes even criminal charges from a judge. 

A tax lawyer can help represent your case and interact with the Internal Revenue Service (IRS) for you. However, understanding when it is time to get legal help can be more complicated than you might have thought. 

Here are 7 major instances where getting legal help for your taxes is in your best financial interest. 

7 Times You Need To Hire A Tax Lawyer

1. You Are Getting Audited By The IRS

No matter how many times you have filed taxes in the past, it never gets easier. Even the simplest return can be incredibly complicated. 

This leads hundreds of people to make mistakes on their returns every year. While some of those mistakes are minor, others can be large enough that the IRS audits your finances. 

Dealing with an IRS audit is something no one should try to do on their own. 

If you have received notice that the IRS is auditing your accounts, hire a tax attorney as soon as possible. They will be able to communicate with the IRS on your behalf and will do everything they can to reduce any fines or penalties the IRS may assess. 

2. You Own Your A Company 

If your personal tax return seems complicated, just think how difficult it will be to file your business’s taxes!

For business owners, a tax attorney will be able to make sure you’re filing everything correctly and receive the deductions you qualify for. They’ll also be able to double-check your hiring paperwork so your payroll and employee tax documents get issued on-time and correctly. 

They won’t be able to help you file your returns. You’ll still need to hire an accountant and get them to help you claim deductions, fill out tax documents, and stay on top of quarterly payments. 

3. You Are In Major Debt 

Getting behind on your taxes isn’t something to feel ashamed of. It is, however, something you’ll want to get help dealing with. 

The IRS will pursue you for taxes that you owe. If you only owe a few hundred dollars, they’ll likely be flexible. If you owe a lot, you can expect the IRS to come knocking. 

Hiring tax relief attorneys can help you negotiate the amount that you owe the IRS and can represent your interests in court if needed. Experienced attorneys may be able to get the IRS to forgive a large portion of your debt. 

Keep in mind that all situations are unique and what your attorney may be able to do for you may not be what others have experienced. The best thing you can do is schedule a consultation. 

4. You Did Some Hiding Of Income In Past Years 

No one likes paying taxes. The more money you make, the more money you owe the IRS at tax time. 

It makes it tempting to lie about how much income you generate or to fail to report a good portion of your income. 

Unfortunately, the IRS has a way of finding out that you hid income in the past. If they do, you could face criminal charges and even be sent to a white collar federal prison like countless others for tax evasion. 

A tax lawyer will be able to represent your case and argue on your behalf. Keep in mind that they may not be able to get the tax evasion charges against you dropped completely. Every situation is unique though when it comes to tax evasion. 

5. You Are Self-Employed 

When you’re self-employed, there are all sorts of challenges you’ll face. Taxes are some of the biggest ones. 

A tax attorney will be able to make sure you’re on the right track and are submitting things correctly. Even better, they’ll be able to make sure you’ve formed your business in such a way that you’ll be able to enjoy tax savings every year. 

If you haven’t, they’ll be able to recommend a simple restructuring process that will let you take advantage of tax savings for years to come. 

6. You’ve Planned Your Own Estate 

Most people want to set aside money for their loved ones or set up funds to support their favorite causes when they pass away. While a clear will is always an absolute must, there’s more to leaving money to those you care about than you might think. 

You need to understand the tax risks associated with your accounts. You will also have to work to find a way to reduce the amount of taxes your loved ones will pay when they receive the money. 

Hiring a tax lawyer will help you figure out the best way to set up funds to reduce the amount of taxes your loved ones will owe. They’ll also be able to double-check the way your accounts are set up currently so you can maximize your contributions and save on your personal taxes. 

7. You Have Assets You Do Not Want Seized By The IRS

If you’re facing a tax levy, the IRS can seize assets to settle your debts. Without the help of an experienced income tax attorney, you may lose assets that you would rather the IRS not know about in the first place. 

When you hire an attorney, they will be able to review your assets and potentially find ways to keep them out of the IRS’s hands. 

They will also be able to review the ways you store those assets to find better and more tax-secure options. 

Don’t Wait Any Longer If You Need To Hire A Tax Attorney 

If you are getting audited or just have questions about the amount of money you owe the IRS this year, don’t wait. Schedule a consultation with a tax attorney immediately. 

The sooner you do, the sooner they will be able to review your legal tax case and find a positive solution. 

Just make sure that the attorney you work with has experience representing cases like yours. This way, you will get the best legal representation possible. 

Conclusion

Interested in finding more tips to help you save money on your taxes year after year? Check out our latest posts in the Frugal Finances section of the Frugal Finance Blog. Also visit the Legal section of our business site for additional insights on corporate law and compliance.

Simple Guide to Small Business Tax Credits

Tax season is upon us, and it's time to work our brains around what applies to us and what doesn't. The tax code can look like a labyrinth, and we are here to decode its mysteries. 

There are certain things you need to know when it comes to small business tax credits. Check out our guide to learn more about SMB taxes.


What are Business Tax Credits? 

When businesses file their annual tax return to the IRS, they are eligible for credits that alleviate their financial obligations to the federal government. 


Demystifying Business Tax Credits

Tax language can seem like hieroglyphics at times. We are here to translate. There are many forms of business tax credits. A few examples to check include investment, work opportunity, welfare-to-work, alcohol fuels, r&d tax relief eligibility, low-income housing, and enhanced oil recovery.

Each of these credits requires a specific form that you can find on the IRS's website. You can also consult an accountant or a licensed tax professional if you want to make the process easier. Business tax credits, as well as their specific forms, are subject to change year to year. To avoid misfiling, refer to the IRS website.

Business tax credits eliminate certain tax obligations for businesses that apply. These credits reduce the amount of money the company owes to the federal government.

Businesses may exceed their tax credits for the current year and still be able to apply those credits to return years they already filed. Companies may also carry over tax credits they can't apply to the current year, and use them for a future year. This process is known as a carryforward. 


Small Business Tax Credits vs. Tax Deductions

Small business tax credits apply to businesses engaging in activities that benefit the economy or society. Small business tax credits are not to be confused with tax deductions. 

Tax deductions refer to claims made by companies for ordinary business expenditures. These are known as "write-offs" and have nothing to do with the benefit of society. 

Specialized deductions apply to specific businesses, such as home-based businesses. Deductions minimize your taxable income and affect which tax bracket you report.


How to Claim Small Business Tax Credits

If you are planning on applying more than one tax credit to your return, you must submit an IRS Form 3800 with your tax return. This form lists all of your desired small business tax credits. You can calculate your General Business Tax Credit by then adding the total credits.

To calculate your limit of small business tax credits, use the following 2 step process.

1. Add your net income tax and alternative minimum tax.

2. Subtract the greater of either your tentative minimum tax for the tax year or 25% of the amount of your regular tax liability that is greater than $25,000.

Consult With a Tax Professional Today 

Consult a tax professional before filing a return to figure out which business tax credits apply best to your company. Tax credits often expire and interchange, so it is essential to have a professional guide you on your business tax credit journey.

How to Use Excel for Accounting

Did you know that over 750 million people still use Microsoft Excel? It is a great program that is easy to use and can help you and your business do several tasks, such as data analysis and accounting.

If you want to improve your business then keep reading to find out how to use Excel for accounting.


How to Use Excel for Accounting, Successfully

Using a program like Microsoft Office Excel for your accounting spreadsheets can help save your business time and money. Once you and your employees are familiar with MS Excel and the formulas you need to use, the process becomes very easy.


1. Use Excel for Cash Basis Accounting

Small businesses often use and rely on cash basis accounting. Accounting in Excel using cash basis accounting is easy to do and can help keep your finances in order. All you have to do is open a new worksheet and create column headers for the following: date, transaction, description, and transaction number. You should also include columns for income, expense, and account balance.

It might be useful to make monthly cash basis accounting sheets, so you can find specific costs easier.


2. Make Use of Formatting

Excel bookkeeping helps you keep track of your business's finances but it can also save you time. Using formatting features ensures you and your team can quickly input data and highlight any important expenses or invoices.

There is a whole range of formatting features available that are designed to speed up the process of data input. You can also use these features to segregate your columns so they are easier to read and analyze.


3. Display Data With Sparklines

Sparklines is an Excel feature that will help make your data presentations easier. Sparklines allows you to display small charts in individual Excel cells, such as line charts or bar charts. To do this, select the range of numbers you want to be included and select the 'Insert' menu to choose one of the chart options and then select a location range.


4. Excel Templates

If you don't have time to learn the ins and outs of Microsoft Excel, why not rely on the trusted templates provided? There are plenty to choose from and you can edit them to suit your business's needs. 

Alternatively, you can save your own templates in Excel and use them in the future.


5. Create Tables Quickly

In a rush but really need to input the finances of the day? Whether it is the end of the day or you only have a few seconds before a meeting, you can quickly create a table by selecting the cells you want to be included and pressing Ctrl+T. How convenient!


Follow Our Guide on Using Excel Accounting

As you can see, Microsoft Excel can help you create effective accounting spreadsheets that are accurate and detailed. If you want to improve your business, implement our tips on how to use Microsoft Excel sheets for accounting.

Read some of our other blog posts to find out more about how you can improve your business and finances with frugal hacks. Visit the Frugal Finance and Investing sections of our site right now for more financial insights or software use!

Finding A Top Financial Advisor In Gold Coast

It is never too late to start saving for your future, and even more so if you have a family to take care of. So many people put this simple step off for years and when the time comes the investment is either too large to catch up, or they put a sum away that they ‘can’ comfortably afford but in the end, the payout was not worth it. 

Don’t leave it to the last minute, the sooner the better as they say, and even if it is just small, to begin with, it is better than nothing. A boss I used to work for always used to quote to us, ‘a small percentage of something is far greater than 100% of nothing,’ and it is so true. This could explain why he was financially secure and well off come to think of it. 

If you are like me who knew nothing about how or where to invest then fear not, with a few basics under your belt and some organized research you will be well on your way to making a future that is financially sound and secure for you and your loved ones. 

Choosing An Investment Company

This is where people get overwhelmed and feel daunted by the vast options available and with every firm offering you a special that either seems too good to be true or that is out of your price range, we don’t know where to turn. 

Ticking off a few essential features to consider before making the final decision will make the process less stressful and you will be aware of what to look for when something doesn’t seem right and you can be cautious. 

Be sure that when you do invest your money with a company that you feel comfortable with your consultant and how he handles your policy, the customer service levels are a good indicator of the quality of care you are likely to receive once you have ‘signed on the dotted line.’ 

4 Factors To Look For In An Investment Company And Financial Advisor 

• Reputation

Most big brand companies have names that speak for themselves and that are well known, if you are looking to go with a more ‘boutique’ firm then reading their client comments on their website can show you how they treat their customers and the experience they had when the firm dealt not only with their inquiries but after joining. 

• Experience

A firm that’s been in business for several years gives peace of mind and shows they have a working formula with return or life-long clients. You ideally want a firm that has seen and handled all situations and financial scenarios, whether you are a big or small fish the client care should remain the priority. 

• Communicative

You want to be involved in all aspects and areas of the process, and a good company will understand this and keep you informed every step of the way. No question or query is too tricky to answer and if everyone is honest, open, and on the same page there will be no surprises down the line.  

• Services

Do they offer flexible plans and payment values, are they able to tailor packages to your needs and adjust as needed? What are the features they bring to the table that will not only benefit you but ensure the security of your arrangement in the long run?

These are simple yet essential features and companies who are worth working with will tick these boxes effortlessly, to find out more visit www.coastfinancialplanning.com.au and find a business that will advise and guide you on your investment journey. 

This is an exciting chapter in your life and the fact that you have taken the initial step to plan is an achievement in itself. The main objective is to become aware of your financial goals and utilizing the resources you have available to reach them. 

There are a lot of considerations and features to account for, take your time, if it feels right you’ll know. A rushed decision so as not to be left behind on the ‘investment train’ can lead to (preventable) issues in the future. 

Planning

So what is investment planning? In simple terms, so as not to get too technical, it is the plan of action and decision to take a look at your finances and see where you have the means and flexibility to put a small (or large) sum of money away into an account that grows through interest over several years. 

For a more in-depth explanation and insight into the term and management of investments, you can click here to read about it and when it comes to going ahead with the decision you will be well-versed in the jargon and less anxious if this is the first time you are investing. 

The Advantages Of Investing Through A Financial Advisor

There are a lot of perks when you have someone you can communicate with easily and often that makes this financial adjustment worth it, for starters you can define and write out clear goals of what you are looking to achieve with this investment. 

As you become more comfortable with them the lines of communication will be more open and flow easier, this way regular reviews and sit-downs over coffee and cake (which is always a must in my book) allow for flexibility of the plan and you can make tweaks and adjustments as your financial situation changes. 

The list is extensive and you can read some of the more popular opinions here on the benefits of working with a financial advisor and conclude from there. Then the big plus is that where you may have limited knowledge of what you are capable of they will be able to point these out having studied many years on the subject and honing their skills. 

Lastly, and certainly not the least important, investment is a great way to be as efficient and effective with your finances with regards to taxes as possible, and that is a win-win situation for everyone, am I right?

How To Look For The Right Financial Advisor

A financial advisor can help you achieve your goals in the soonest possible time. They will often look at your balance sheets, income, lifestyle, and other factors that will affect how you're going to become financially free in the future. Although many professionals are offering their services out there, know that not all of them are advising equally. 

It would be best if you had an advisor whom you feel comfortable with, and they should be able to help you become successful in money matters. They will help manage your money, assist in financial vehicles that you should invest in, guide you in estate planning, budgeting, and more. 

Picking the right person who can give you helpful tips and bring you results should be what you are aiming for. There are many professionals out there from which you can learn more on this site, but it's essential to get one to fit your needs best. Here are some tips on how to choose the right advisor for you. 

What You Should Know About Advisors 

1. Know the Different Types 

Robo-Advisors 

Some Robo-advisors will offer you investment management services. They're called Robo-advisors that will answer the questions that you have automatically. They will base their answers on the preprogrammed computer algorithms that were recorded in them and the state of your investment portfolio. 

These Robo-advisors offer low-cost services, and you can access them easily. It's important to remember that they are not actual people, but they are digital platforms that offer investment services based on algorithms. Some of these can handle complicated tasks like retirement planning, tax-loss harvests, and selection of investments. 

The fee will start at about 0.20 to 0.25% of your current balance. Others require no minimums, and you can start your investment journey even if you currently have a small amount to spare. The Robos are great for people who have goals for retirement, but they may not be able to afford a financial plan today. You can know more about Robo when you click this link: https://www.thebalance.com/what-is-a-robo-advisor-and-how-do-they-work-4097134/. 

Online Advisors 

The next level from the Robo is the planning service offered by human FAs. This service can offer automated investing options that are like what you can get with Robos. However, the difference is that there's a team that you can consult when you have a lot of questions. A dedicated human FA will create a holistic plan that fits your lifestyle. 

The costs will be in the medium range, and there may be minimums required before you can enter. The planning services that you can find online may cost less than an actual advisor, but you can gain a lot of helpful information without leaving your home. This is great for people who want to have budget- constrained options on their road to financial freedom. 

Traditional FAs 

The traditional financial advisors are the ones who are certified in offering services. They can be stockbrokers, consultants, planners, and wealth managers. Usually, a single person can be an accountant, but they can also be a registered investment advisor. You may typically need to meet them in an office setting. 

They cost more, and they also require substantial minimum balances. Some may require you to have at least $250,000 in assets, but the services are specialized and tailor-made for your needs. If you want to have solutions for complex problems, then they are the right people that you should go to. 

2. Choose Your Services 

If you want help with investment management, then the Robo-advisors may be more than enough for you. However, if you want holistic and complete advice about complex topics, you may be better off getting traditional expert services. 

If you don't mind meeting your advisor online, then you can save a lot of money, effort, energy, and time. If you are interested in ethical investing, you may want to ensure that your advisor is an expert in this field, and they should be able to provide you with valuable help that can help you succeed. You can start with the Robo platforms, and as your investments become complicated, then that's the time to consider getting the services of traditional experts. 

3. The Affordability Factor 

Before you call the first financial advisor that shows up on your internet search, you need to consider your budget first. These people have a reputation for being costly since they can generate a lot of income for you in the long run and help you with your finances. If you are starting out, you may need to set aside some money for their fees without touching your savings. 

Robo platforms may charge subscription fees. Others may start by getting a percentage of your balance, which is about $100 per year or less, depending on the numbers of your balance sheet. Others who are into financial planning services online may cost you over a thousand a year, and this can include fees for financial planning and portfolio management. The human advisors may charge a median cost of about 1%, and there's also an hourly rate that you need to consider. 

4. Vetting Their Backgrounds 

You need to check the reputation, feedback, and records of the company or person that you're considering hiring. You may want to look up their Form ADV that will show you how they charge their fees and if they've encountered disciplinary actions from sects and governments in the past. A clean record means that you may be in good hands, and they will give you the results that you need. 

If they have a reputation for managing their clients' money while growing them year after year, then these are the people that you should contact. They will generally help you pay all your debts, mortgage, cut down on expenses, and prioritize your dreams. 

Others will offer you a proof of their licenses and certifications. Their expertise includes getting you an insurance policy that you need, planning for the estate, preparing your taxes, and growing your investments. The best ones will also review your portfolio annually to see if your investments are performing well. With these benefits, there's no wonder why so many people are getting their services and products.