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The Financial Flipside Podcast, Episode 17: Shut ‘Em Down

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A weathered blue sign reading, "Sorry, We're Closed" hangs in a shop window. The sign is blue with cream-colored lettering edged in red

On December 22, 2018, the US government entered what was to become the longest shutdown in the country’s history, when the  President refused to sign off on a Congressional budget that didn’t include a requested $5 billion in funding for a border wall. The government temporarily reopened 35 days later, but not before damaging the economy and pushing many federal employees and people who rely on government funding social programs to the edge of their own fiscal cliffs.

 

How and why do shutdowns happen? What, if anything, did we learn from this experience? What can we do to prepare if the temporary funding lapses on February 15th without a budget in place? In this episode: “savings crises,” conference committees, grocery store negotiations, and only slightly less ire about borders than in our economics of immigration episode.

 

Speaking of which, if you’ve missed any of our previous episodes, you can find them on Apple Podcasts , Google Play, Stitcher., or on our website. Questions? Comments? You can email us at info@financialflipside.com or find us @financeflipside on Twitter, Facebook, or Instagram.

As always, relevant links are located under the cut.
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Heyward CPA Merges with A-OH Business

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Father & son unite to expand their top-notch east coast accounting practice


DURHAM, N.C. – Feb. 2, 2019 — James Heyward, Principal: of Heyward CPA PLLC is proud to announce a merger with A OH Business Services, NYC, effective January 2019.  Heyward CPA PLLC, is a prestigious Durham, North Carolina based firm that provides tax, accounting, and advisory services to businesses and their owners.  A-OH Business Services was established in Queens, New York, by Oscar Heyward in 1982 and provides similar services to individuals, businesses, and tax-exempt organizations, with a specialization in pre-k & afterschool, child care centers.

The decision to merge was based on the belief that a more expansive and comprehensive operation will allow the company to provide a wider array of services, faster turnaround time and better client experience. The merger is designed to facilitate a wide range of new financial services in areas of accounting expertise in the future. The firm has attracted high-quality, committed professionals, invested in tools and resources to streamline their processes in order to become more efficient and provide a better client experience. With an exceptional track record in the accounting industry, the father and son teamed up to expand their wealth of experience, skills, and talent, throughout the east coast.

At an early age, emulating his father’s, acumen and professionalism, James developed his knowledge of and love for financial management, while working for his dad’s practice. The lessons he learned while working with his father, coupled with his love for financial management, led to other successful business ventures; ultimately leading him to establish the recent merger of “HEYWARD CPA, PLLC & A-OH Business Services.”

James E Heyward will remain Principal owner, while Oscar Heyward will operate an Executive Associate.

Heyward CPA PLLC is a Durham, North Carolina based firm on a mission to increase the success of small and mid-size companies, with a specialty in minority-owned firms, as a means of strengthening the economy and developing wealth. 

The Financial Flipside Podcast, Episode 16: Year-End Money Moves

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a hand writes a list with check boxes in a graph-ruled notebook

As the year draws to a close, a lot of us carving out time between holiday parties and wrapping up projects to make a few New Year’s resolutions. After writing or typing out our lists, we roar into the new year with the best of intentions, armed with gym memberships, apps, and new gadgets. Yet, by the end of 2019, more than 90% of us will have abandoned our resolutio until December, when the whole cycle starts again. In this habit-forming episode, we talk about goal setting: why we succeed, why we fail, and some strategies for making your 2019 resolutions ones we’ll keep. Because we’re a money and finance podcast, and because financial resolutions are incredibly common (one poll taken at the beginning of the year found that saving money was tied with diet and exercise changes for the most popular resolution), we also discuss some things to do to get your finances ready for 2019.

Not subscribed yet? You can do so on Apple Podcasts, Google Play, and Stitcher. Our previous episodes can be found here. If you want to talk to us about habits,  resolutions, or your financial goals for 2019. we’re @financialflipside on Facebook, Twitter, and Instagram.

 

Mentioned on the show:

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An S Corporation Loss Equals a Personal Tax Deduction

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Business owners aren’t in business to lose money. So there’s not much to like about a nonprofitable year. For a shareholder in an S corporation, however, a down year can have an upside — the corporate loss may give rise to a personal tax deduction.

Standing between an S shareholder and the loss deduction is a tricky tax computation known as “adjusted basis.” Under the tax law, a shareholder’s loss deduction is limited to the shareholder’s adjusted basis in his/her corporate stock and in any debt the company owes the shareholder.

What is adjusted basis, anyway? Essentially, it’s a figure that tracks the shareholder’s investment in the company for tax purposes. The basis number changes every year to account for any money flowing between the company and the shareholder — distributions, capital contributions, loans, and loan repayments — as well as for the shareholder’s allocated share of corporate income or loss.

If a net operating loss is anticipated for the year, S shareholders should find out whether they will have enough basis to benefit from the projected loss deduction. If not, it may be possible to increase basis by making a contribution to capital or by loaning the company money before year-end. When you give us a call today, our tax professionals can offer guidance so that the transaction will pass IRS muster.

The Financial Flipside Podcast, Episode 15: Flat Hierarchy and Luxury Couches: Startups and Startup Culture

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Facebook, Twitter, Airbnb, and Lyft all began life as startups, and their success has meant that the romance of rapid growth and multi-million dollar exits has permeated not only the world of business but almost every aspect of our daily lives. Popular business magazines draw readers in with breathless company profiles and promises that the morning routine or management style of this or that founder could transform your business too. Away from the office, television shows like Silicon Valley and Shark Tank have turned coding marathons and venture capital pitches into appointment viewing.

Where does our collective fascination leave businesses that don’t follow the startup model? Is there any real difference between startups and small businesses? What can startups and small business learn from each other? These are just some of the questions we tackle in this episode. Enjoy!

As always, we want to hear from you: tell us about your startup dreams, adventures in building a strong business culture, or even your favorite (or least favorite) entrepreneurship-entertainment. We’re on Instagram, Twitter, and Facebook @financeflipside, or you can email us at info@financeflipside.com

Mentioned on the show:

Growly.io’s history of startups
Are you running a startup or a small business? What’s the difference?
When does a business stop being a startup?
Homogeneity and diversity in tech startups
Flat vs. hierarchical business structures
5 startup founders discuss company culture
The myth of flat hierarchy in startups (opinion)
Do You Know Where Your Money Is? 3 Tips to Get Your Startup’s Finances in Order
Accounting 101 for Startups
5 reasons why small business owners shouldn’t ignore marketing
101 ways to market your small business and 40 more ideas for small businesses on a budget.
Startup writer and entrepreneur John Westerberg argues that most entrepreneurs should focus on building small businesses instead of startups

Have an S Corporation? Be sure to Give Yourself a Paycheck

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If your company is organized as an S corporation, you may wonder whether it is better to take income from the company as salary or as cash distributions. Of the two options, distributions carry the least tax cost because they are not subject to employment taxes. But that doesn’t mean you shouldn’t take a paycheck from your firm.

IRS Warning

Over the years, the IRS has made a point of warning S corporations not to attempt to avoid federal employment taxes by having corporate officer/shareholders treat their compensation as cash distributions, payments of personal expenses, or loans instead of as wages. According to the IRS, distributions must be treated as wages to the extent the amounts are reasonable compensation for services rendered to the corporation.

What Is a “Reasonable” Salary?

To avoid problems with the IRS, you should be sure to take a reasonable amount of salary if you receive any direct or indirect payments from your company. However, the tax law has no hard-and-fast guidelines regarding what is considered “reasonable.” When the issue has come up in court, the determination has been based on the facts and circumstances of the particular case. Various factors have come into play, including:

* Duties and responsibilities
* Time and effort devoted to the business
* Training and experience
* What comparable businesses pay for similar services
* Timing and manner of paying bonuses to key people
* Payments to employees who are not shareholders
* The corporation’s dividend-paying history
* Compensation agreements
* The use of a formula to determine compensation

An Exception

What about an S corporation officer who doesn’t perform any services for the corporation — or whose services are very minor? In this relatively unusual situation, assuming the officer receives no direct or indirect pay, he or she would not be considered an employee.

For more help with individual or business taxes, connect with us today. Our team can help you with all your tax issues, large and small.