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Archives for November 2018

An S Corporation Loss Equals a Personal Tax Deduction

November 29, 2018 by Heyward CPA

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.

Filed Under: Uncategorized Tagged With: s corporation, small business, taxes

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

November 8, 2018 by Heyward CPA

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 [email protected]

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

Filed Under: Uncategorized Tagged With: entrepreneurship, innovation, small business

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