With our nation celebrating its 245th birthday this past Sunday, and all of this talk about “independence” flying around, I have a question for you — one that I think you should think hard about:
Are you achieving the independence you wanted in your business?
As you know, it’s hard — and it’s LONELY — to be a Indianapolis business owner in this environment. Achieving business solvency can seem like a formidable task as you see the constant barrage of chaos and fear the media throws at your customers (and maybe even trickling into your own consciousness as well).
Which is why it’s so important for you to have a clear handle on the bottom line for your business — and on ALL of the tax implications you’ll be facing under the new tax code, and how to get ahead of them.
In short, how to achieve business solvency.
For instance, are you taking every deduction possible for this year … and, if so, are you properly accounting for them?
For example, one of the big last-minute tax strategies a lot of my clients like is the “heavy vehicle” write-off. When you purchase a heavy vehicle (defined as a vehicle with GVWR of over 6,000 lbs.) that is used 100% for business — well, then you can write off 100% of it.
To do this, we use Section 179 in conjunction with bonus depreciation. And, if your vehicle is used 70% for business, then you can write off 70%.
But this only works with a “heavy vehicle.” If you don’t have a heavy vehicle but use your vehicle for business purposes, you can still get a deduction, it just won’t be as much. You don’t even need to pay cash for it. You can finance it and still get that write-off.
But here’s something that can cause a little problem: What happens when you sell the vehicle?
Well, I’ll tell you: Before you sell, you have to calculate how much of a “gain” you’ll have.
Estimated sales price: xx,xxx
Less: Cost of sales ( x,xxx)
Less: Basis ( 000)
Gain is taxable. In the past, it was possible to trade in your vehicle for a new vehicle. It was a “like-kind” exchange for vehicles. Effective 1/1/2018, like-kind exchanges only worked for “real property.”
If you “trade in” a vehicle, the value given to the old vehicle is taxable.
Another strategy is to distribute out the vehicle at fair market value. It’s distributed to a business owner.
Of course, this only works if you have a pass-through entity.
If the vehicle got hard use and/or a lot of miles, the vehicle’s fair market value will be lower. Look up the value using the Kelley Blue Book. The FMV could be taxable to the shareholder or could be treated as a payment against a shareholder loan.
These are the kinds of analyses that we can make for you — and help you to plan for so that you can get on the path to business solvency.
And look … I write about many things in these notes — from adding to your revenue line (sales, marketing, etc.) to all of the many other items that matter to you and other Indianapolis small business owners.
But one of the BEST ways to grow your bottom line is to avoid all of the unnecessary expenses and taxes, which so many Marion County businesses end up paying, simply because they didn’t plan ahead of time.
This is our passion here at J.R. Helms & Associates, P.C..
When I meet with a business owner, I often wear many hats — CFO, Marketing Advisor, COO, etc. — truly whatever fits the need of my client most precisely.
Because business owners can make rash decisions in times of perceived crisis (like during “tax season”) — they often have unforeseen complications down the road. All of which gets in the way of achieving business solvency.
Let’s get ahead of the process for you, helmscpa.com/book-an-appointment/.
John R. “Rusty” Helms, C.P.A., CGMA
J.R. Helms & Associates, P.C.