Understanding the difference between an LLC and an S-Corporation can be challenging for many entrepreneurs. In today’s post, I’ll give you the information you need to make an informed decision about whether your business should be an LLC or an S-Corporation. You might even find that neither or both options could be the best choice for your business! What is the difference between an LLC and an S-Corporation? I get asked this question a lot, so I will break this down as simply as I can. Basically, any differences in the way these businesses are run and taxed stems from the fact that an LLC is a ..read more

When you’re starting a business and getting your ducks in a row with your state, you’ll likely be asked to appoint a registered agent. But who is a registered agent? In today’s post, I’ll explain the duties of a registered agent and help you decide who to choose for this role. What is a registered agent? A registered agent, also known in some states as a resident agent, agent of process, or statutory agent, is an individual or business appointed to receive important legal documents, tax documents, and other official government communications on behalf of a registered business entity. States re ..read more

Some companies offer their employees restricted stock units (RSUs) in addition to their typical salary. But how do restricted stock units affect your taxes? In today’s post, I’ll explain everything you need to know about RSUs and your taxes. What are restricted stock units (RSUs)? First of all, let’s make sure we’re on the same page about what RSUs actually are. Imagine you’re a hardworking employee at a company that appreciates your efforts. Rather than just giving you a pat on the back or a free lunch, they give you RSUs. These RSUs are actually promises that you will receive company stock i ..read more

In order to finalize an IRS payment plan or to set up direct debit payments, you’ll likely need to complete IRS Form 433-D. In today’s post, I’m providing step-by-step instructions for completing and submitting this form. I’m also outlining why it’s advantageous to make your IRS installment payments by direct debit from your bank account. If you’ve requested a payment plan, which the IRS refers to as an “installment agreement,” then you’ve likely used IRS Form 9465 to make that request. If you now need to finalize your agreement or provide the IRS with banking information and authorization for ..read more

Is donating stocks to charity a tax-saving strategy that’s right for you? In today’s post, I’ll explain how a stock donation to your favorite charity can lower your tax bill while also maximizing the amount you can give. Why is donating stocks better than donating cash? To support a cause or charity you care about, any type of donation will obviously give you that sense of fulfillment that you can only get from helping others. But when we’re talking about tax advantages, donating stocks to charity can actually save you tax money. Here’s how this double tax-advantaged strategy works: When you ..read more

Clients often ask me about how much money they’ll have to pay in taxes if they give or receive money from family. The IRS guidelines are a little misleading, so in today’s post, I’ll break down the tax rules related to family gift-giving. What is gift tax? What is a gift? In the United States, we have gift tax that applies to amounts over a certain limit (more on that in a bit). The IRS defines a gift as any transfer of money or tangible items from one person to another without getting “money or money’s worth” in return. The IRS has rules explaining when and how much gift tax will be collected ..read more

Whether or not your business must collect and remit state sales tax is directly tied to where your business “lives” and where you’re selling your products or services. What makes state sales tax ridiculously confusing is that states are allowed to come up with their own rules. This means that the sales tax rate varies by state. It also means that some states have local sales tax and state sales tax, and in some cases, you’re required to charge both of those. Additionally, there are currently four states that don’t collect sales tax at all! On top of all that, there are several different factor ..read more

Nonqualified deferred compensation (NQDC) plans are used by business owners, executives, and highly-compensated employees as a way to save for retirement while reducing their income tax liability. IRS code 409A is the tax law that regulates NQDC plans. In today’s post, I’ll outline the important requirements in 409A and help you decide if a NQDC plan is a smart option for you. What is a nonqualified deferred compensation (NQDC) plan? NQDC plans allow employees and contractors to defer some of their compensation to a later date, which is usually retirement. Typical NQDC plans include: Salary R ..read more

One of the most litigated tax issues every year is business expense deductions related to tax code 162(a). In today’s post, I’m breaking down everything you need to know about code 162(a) so that you can follow the letter of the law and keep on deducting those business expenses like the boss that you are. What is IRS Code 162? The Internal Revenue Code (IRC) are the laws the Internal Revenue Service (IRS) applies when collecting federal taxes. IRC section 162(a) is the law that deals with business deductions for expenses that are deemed ordinary and necessary in a trade or business. Specifical ..read more

Living solely off income generated by money you already have is an exciting and attractive idea. But can it really be done? Yep! In today’s post, I’ll explain the steps you can take to live off dividends. What are dividends? Before we get to how you can live off dividends, we need to address what dividends are. Basically, when you buy stock in a publicly-traded company, you become a shareholder in that company. If that company has profits or earnings, it can choose to distribute those earnings to its shareholders. When the money is distributed to you, the shareholder, those are called dividend ..read more