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Accelerate Your Tax Savings: What Business Owners Need to Know About Bonus Depreciation

Tue, 01 Apr 2025 16:21:49 GMT

Buy it this year. Deduct it this year. Bonus depreciation can give your tax bill a serious haircut—if you use it wisely.

If you’ve made big purchases for your business—equipment, machinery, vehicles, furniture—you might be able to write off the entire cost right away instead of depreciating it over several years. That’s the power of bonus depreciation.

But before you go on a buying spree thinking the IRS is footing the bill, let’s walk through how it actually works—and when it doesn’t make sense to use.

What Bonus Depreciation Is (And Why It Exists)

In the usual world of depreciation, you deduct a little bit of an asset’s value every year based on how long it's expected to last. So if you buy a $50,000 machine that lasts five years, you'd deduct $10,000 per year.

Bonus depreciation lets you skip the slow-drip deduction and take 100% of the deduction in the first year.

This strategy was supercharged under the Tax Cuts and Jobs Act, which temporarily allowed businesses to claim full bonus depreciation on qualified property—that includes tangible business assets like machinery, furniture, tech equipment, and certain vehicles.

For assets placed in service during 2024, you can still get bonus depreciation, although the percentage is phasing down from its 100% peak. (It drops to 60% in 2024, then continues decreasing unless new legislation extends it.)

Why Bonus Depreciation Matters

When used strategically, bonus depreciation can:

Lower your taxable income substantially in the year of purchase
Improve cash flow by freeing up capital you’d otherwise send to the IRS
Make large capital investments more affordable when timed well

It’s especially useful in high-income years or when making investments in assets that you’ll use for years to come.

But—if your business isn’t generating a lot of income this year, or you expect to be in a higher tax bracket in the future, you might be better off using standard depreciation to spread out deductions over multiple years.

A Word on Vehicles (Because Everyone Asks)

Yes, you can use bonus depreciation on business vehicles—but there’s fine print. Here’s the quick breakdown:

Vehicles under 6,000 lbs. (like sedans or smaller SUVs) fall under Section 280F “luxury auto limits,” which cap your depreciation significantly.
Vehicles over 6,000 lbs.—think large SUVs or trucks—aren’t capped, which makes them bonus depreciation–friendly if they’re used more than 50% for business.

Just make sure you’re documenting business use properly. The IRS loves vehicle audits.

Don’t Guess. Get It Right.

Bonus depreciation sounds like a no-brainer, but it’s not one-size-fits-all. Timing, income levels, and future planning all factor into whether you should accelerate the deduction or spread it out.

Ready to Accelerate Your Tax Savings?

If you're considering a major business purchase—or already made one—we’ll help you decide whether bonus depreciation is the smart move. We'll walk you through the timing, phaseouts, and how to make it work within your broader tax strategy.

Schedule a consultation with Nth Degree today and let’s make sure your next business investment works for you at tax time.

Lower Taxes With the Self-Employed Health Insurance Deduction

subscriptions@nthdegreecpas.com (Nth Degree) — Mon, 31 Mar 2025 02:31:13 GMT

If you run your own business, health insurance is more than just a line item—it’s one of the few tax-deductible expenses that can provide real personal value. The self-employed health insurance deduction allows eligible business owners to deduct premiums paid for themselves, their spouses, and dependents. It's a simple but powerful way to reduce taxable income while ensuring comprehensive coverage for your household. Here’s how it works and what you need to know to use it correctly.

What Is the Self-Employed Health Insurance Deduction?

The self-employed health insurance deduction is an adjustment to income (not an itemized deduction) that lets eligible business owners write off the premiums they pay for medical, dental, and qualified long-term care insurance. Unlike other medical expenses, which must exceed a percentage of your AGI to qualify, this deduction is dollar-for-dollar—up to the total income you earned through self-employment.

Who Qualifies?

To be eligible, you must meet these criteria:

Have net self-employment income (reported on Schedule C, F, or through an S corporation)
Not be eligible for employer-subsidized health insurance (either through your job or your spouse’s)
Be paying for a qualified insurance plan in your name or your business’s name

S corporation owners who own more than 2% of the business can still qualify—but the premiums must be included in their W-2 income and deducted accordingly.

Why This Strategy Matters for Business Owners

1. Tax Savings You Can Feel

Every dollar you spend on eligible premiums reduces your adjusted gross income (AGI). That can lower your overall tax rate and increase your eligibility for other deductions or tax credits. For high-income earners, this could translate to thousands in savings annually.

2. Personal Coverage That’s Fully Deductible

Unlike most business deductions, this one benefits you directly. You’re not just covering business costs—you’re covering yourself and your family, and writing it off as a business expense.

3. Simple Setup, High Value

You don’t need to establish a group health plan or create complex reimbursement structures. If you meet the IRS’s eligibility requirements, you can take the deduction on your personal return without setting up a formal health plan for employees.

How to Make It Work for You

Structure Your Business Correctly

The rules vary slightly for sole proprietors, partnerships, and S corps. Make sure your business structure aligns with the way you plan to deduct the expense. If you’re a 2% S corp shareholder, be sure premiums are properly included in your W-2.

Keep Clean Documentation

Retain detailed records of premiums paid, policy documents, and how they were paid (personally or through your business). This becomes especially important during tax season or in the event of an audit.

Coordinate with Other Tax Strategies

This deduction often works in tandem with other strategies, like HSAs or Section 125 plans. A CPA can help you build a broader plan that minimizes total tax liability across your business and personal return.

The self-employed health insurance deduction is one of the most overlooked tools for lowering your personal and business tax burden. It’s straightforward, valuable, and applies to a wide range of business structures. With the right guidance, you can make sure your insurance dollars go further—both in terms of coverage and tax strategy.

Want to reduce your taxable income and get more value from your healthcare premiums? Schedule a consultation with Nth Degree CPAs today.

Why Small Business Owners Should Rethink the Traditional 401(k)

Sat, 29 Mar 2025 22:16:02 GMT

Most small business owners think of a 401(k) as something you offer employees because you’re supposed to. But what if your company’s 401(k) plan could be a powerful tool to lower your taxes, accelerate your personal wealth, and keep top talent longer—while giving you more flexibility than you think?

Let’s explore why the Traditional 401(k) deserves a second look, and how to maximize its benefits as part of your overall tax and financial strategy.

Why Business Owners Should Pay More Attention to the Traditional 401(k)

1. You’re Likely Missing Out on the Best Tax-Deferred Savings Option Available

Many small business owners focus on immediate reinvestment back into the company, and underfund their own retirement plans as a result. But the Traditional 401(k) offers a pre-tax contribution limit of $23,500 (plus $7,500 catch-up if you’re 50+), and total annual contributions—including employer matches—can go as high as $70,000.

That’s $70,000 a year you could be moving off your tax return, growing tax-deferred.

2. Profit-Sharing Adds Flexibility—and Bigger Contributions

Here’s where things get interesting: Profit-sharing allows you, as the owner, to increase your contributions beyond the basic salary deferral and match structure. Many business owners don’t realize they can use profit-sharing to contribute up to 25% of compensation, potentially hitting that $70,000 cap.

This can give you a bigger tax deduction and reduce your taxable income dramatically in a high-revenue year—something SEP IRAs or SIMPLE IRAs often can’t match.

3. It’s an Effective Retention Tool in a Tight Talent Market

Most small business owners struggle to keep great people. Offering a Traditional 401(k) with a strong employer match (or profit-sharing component) makes you more competitive. Combine that with vesting schedules that reward longevity, and you’re adding a meaningful retention strategy that aligns with long-term growth.

Pro Tips to Maximize Your 401(k) as a Business Owner

1. Combine With a Cash Balance Plan

If you’re already maxing out your 401(k), consider pairing it with a Cash Balance Plan, which can add another six-figure layer to your tax-deferred retirement savings.

2. Use Safe Harbor Provisions to Simplify Compliance

A Safe Harbor 401(k) helps avoid complex nondiscrimination testing, ensuring you can max out your contributions without worrying about whether your employees are participating at high enough rates.

3. Treat It as Part of Your Tax Strategy, Not Just a Benefit

Look at your 401(k) contributions as part of a larger strategy to lower taxable income, smooth out cash flow, and create long-term wealth. Timing contributions (or profit-sharing) strategically in high-income years can significantly impact your tax liabilities.

If you’re a small business owner and you’ve been thinking of a Traditional 401(k) as just a basic employee benefit, it’s time to take another look. When structured the right way, a 401(k) is a flexible, powerful tool that helps you reduce taxes, retain top talent, and build personal wealth faster.

Ready to Maximize the Strategic Power of Your 401(k)?

At Nth Degree CPAs, we help business owners design 401(k) strategies that go beyond retirement planning—they reduce taxes and create wealth. Schedule a consultation with us today and find out how to make your 401(k) work harder for you.

If you’re ready to learn more about setting up a Traditional 401(k), schedule an introductory call with us today.

The Simple IRA Explained: Simplifying Retirement Planning for Small Business Owners

subscriptions@nthdegreecpas.com (Nth Degree) — Fri, 28 Mar 2025 22:03:56 GMT

As a small business owner, planning for retirement is crucial to securing your financial future. However, navigating retirement plans can be complex. That's why we're here to simplify it for you. In this blog post, we'll explore the SIMPLE IRA, a retirement plan designed specifically for small businesses like yours. We'll break down the concept in easy-to-understand terms, highlight the benefits for small businesses, and provide practical insights to help you make informed decisions. Remember, while we strive to provide valuable information, it's important to consult with a certified public accountant (CPA) to fully understand the implications for your specific business. Feel free to reach out to us for personalized assistance. Let's get started!

Understanding the SIMPLE IRA

The SIMPLE IRA, or Savings Incentive Match Plans for Employees of Small Employers, is a retirement plan that offers simplicity and flexibility for small businesses like yours. It allows you to provide retirement benefits for yourself and your employees while keeping the setup and management process hassle-free. To be eligible for a SIMPLE IRA, your business must have fewer than 100 employees who earned at least $5,000 in the previous year. Additionally, employees must have earned at least $5,000 in each of the past two years and expect to earn the same in the current year. The best part? There are no age restrictions for employee participation. It's important to note that if you opt for a SIMPLE IRA, you cannot offer any other retirement plans concurrently.

Contributions to a SIMPLE IRA can be made in two ways

Elective Contributions: This refers to contributions made by employees on a pre-tax basis. As an employer, you are required to match a portion of these contributions. The match should range from 1% to 3% of each employee's personal contributions. However, it's worth noting that the match rate can be lower than 3% for two out of every five years, giving you some flexibility based on your business's financial situation.
Nonelective Contributions: Unlike elective contributions, nonelective contributions are solely made by the employer and do not require employees to contribute from their own salaries. As an employer, you are required to contribute an amount equal to 2% of each employee's compensation to their SIMPLE IRA account.

Setting Up a SIMPLE IRA

Setting up a SIMPLE IRA for your small business is relatively straightforward. You can choose between two IRS forms:

Form 5304-SIMPLE: This form allows your employees to select their preferred financial institution to receive their contributions. It offers flexibility and empowers employees to have control over their retirement savings.
Form 5305-SIMPLE: With this form, you, as the employer, designate a specific financial institution to receive contributions for all your employees. It simplifies the process by consolidating contributions into a single institution

The SIMPLE IRA is a retirement planning solution designed to meet the needs of small businesses, including yours. By offering a SIMPLE IRA, you can provide yourself and your employees with a streamlined and tax-advantaged retirement savings plan. Remember, consulting with a certified public accountant (CPA) is essential to fully understand the implications and tailor the plan to your small business's unique requirements.

If you’re ready to learn more about setting up a SIMPLE IRA, schedule an introductory call with us today.

How Entrepreneurs Can Optimize Taxes Before Loopholes Disappear

Wed, 26 Mar 2025 21:34:16 GMT

You know what’s more predictable than tax season? The IRS changing the rules right when you figure them out.

For years, savvy entrepreneurs have used legal tax strategies—like S Corporations, business deductions, and contractor-friendly hiring structures—to reduce their liability. But if you’re relying on the same tax-saving tricks year after year, you might be in for a surprise. The IRS and policymakers are tightening the rules, and some of the most common tax advantages for business owners may not be around much longer.

That doesn’t mean you’re out of options—it means you need a plan. Because the entrepreneurs who treat taxes like a strategy game, not a once-a-year scramble, will always come out ahead.

The S corp advantage: Is the IRS cracking down?

For small business owners making at least $75K–$100K in net profit, electing S Corporation (S Corp) status has long been a smart tax move. Instead of paying self-employment tax on your entire earnings like an LLC, S Corp owners pay themselves a “reasonable salary” and take the rest as distributions—free of self-employment tax.

But guess what? The IRS is paying attention.

One of the biggest issues? What’s a “reasonable salary”? If you take a $30K salary while pulling $300K in tax-free distributions, the IRS might have some questions. Some policymakers are pushing to tighten the rules, forcing more of your income into taxable wages.

What’s the move?

If you’re an S Corp owner, now is the time to review your salary structure and make sure it aligns with industry standards. And if the tax laws shift, you want to be working with a CPA who can pivot your strategy—before your tax bill catches you off guard.

Are your favorite write-offs under fire?

Business deductions have always been an entrepreneur’s best friend, but with increased IRS scrutiny, some tax breaks are getting more attention than others.

Here are three deductions the IRS is keeping a close eye on:

Home Office Deduction – If your “home office” doubles as a guest room or storage space, the IRS may challenge your claim. The space must be exclusively used for business.
Business Meals & Travel – The IRS is tightening up on meal deductions. That “working lunch” at a steakhouse? If you don’t have clear documentation on who you met with and why, you could be in trouble.
Education & Training Expenses – Online courses, coaching programs, and business books might be deductible—but only if they directly relate to improving your business. If it’s personal development disguised as a business expense, you could be flagged.

What’s the move?

If you claim deductions, document everything. Keep digital copies of receipts, categorize expenses correctly, and track business use. A well-documented deduction is still a legal deduction, but vague records invite IRS scrutiny.

The 1099 economy: Are you misclassifying contractors?

Hiring freelancers and contractors is how many small businesses scale without the burden of full-time payroll costs. But here’s the catch: If you misclassify a worker as a contractor when they should be an employee, the IRS could come knocking.

The IRS and Department of Labor are cracking down on independent contractor classification, and some states (hello, California) are already enforcing stricter rules. If your contractors:

Work exclusively for you
Follow a set schedule you control
Use your tools and resources

...they may legally be employees, even if you both prefer a 1099 setup. And if the IRS disagrees with your classification, you could owe back taxes, penalties, and benefits.

What’s the move?

If you use contractors, do a classification check now. The IRS uses an economic reality test to determine if someone is genuinely self-employed. Don’t wait for an audit to find out you got it wrong.

How to stay ahead of the tax game

Tax strategy isn’t about dodging taxes—it’s about playing offense instead of scrambling in April. Here’s how:

Work With a CPA Who Does More Than Just File
Tax software is great, but it won’t build a tax strategy. If you’re scaling a business, you need tax planning, not just compliance.
Rethink Your Business Structure
If the IRS changes S Corp rules, you might need a Plan B. Should you switch to a C Corp? Restructure ownership? Adjust your salary strategy? Know your options before you need them.
Keep Impeccable Records
The best audit defense? Flawless documentation. If you’re writing off business expenses, track them properly and ensure they’re legitimate.
Be Proactive, Not Reactive
Don’t wait for tax law changes to hit. Review your tax strategy now and get ahead before the IRS updates its playbook. Because the rules will always change in the tax game. The question is—will you be ready?

If you’re ready to stop dodging tax code changes and build a financial strategy for long-term results, schedule an introductory call with us today.

How Millennial and Gen Z Entrepreneurs Are Maximizing 2025 Tax Savings

Sat, 22 Mar 2025 17:51:14 GMT

In my years of advising entrepreneurs, I've noticed a significant shift among Millennials and Gen Z. Unlike previous generations who viewed taxes merely as a compliance obligation, these young business leaders are leveraging tax planning as a strategic tool to boost financial efficiency and secure their earnings. Let's explore how they're redefining tax strategies to maximize their income in 2025.

1. Proactive Tax Strategies: Playing Offense Instead of Defense

Traditional tax planning often involves a reactive approach—earning income, seeking deductions at year-end, and hoping for the best outcome. Millennial and Gen Z entrepreneurs are flipping this script by adopting proactive strategies that minimize tax liabilities before the IRS gets involved.

One such strategy is tax-loss harvesting, which involves strategically selling underperforming assets to offset gains, thereby reducing taxable income. With the advent of AI-driven portfolio management tools, even first-time entrepreneurs can automate this process, making tax optimization an ongoing effort rather than a last-minute scramble. However, while automation offers efficiency, consulting a tax professional ensures these strategies align with legal requirements and long-term financial goals. After all, technology can process data, but it doesn't understand your unique business objectives.

2. Leveraging Technology for Tax Management

Growing up in a digital age, Millennials and Gen Z are naturally inclined to integrate technology into their business operations, including tax management. They utilize AI-powered accounting software and digital banking integrations to automate record-keeping, expense tracking, and tax calculations. This technological shift isn't just about efficiency; it's about reducing avoidable mistakes. Accurate records lead to fewer surprises during tax season and let's face it, surprises and taxes rarely mix well.

Despite the rise of automation, the role of tax professionals remains crucial. While software can crunch numbers, it doesn't comprehend your business goals, cash flow nuances, or the intricacies of evolving tax laws. This is where a Certified Public Accountant (CPA) steps in—not just as a compliance officer but as a strategist who aligns tax planning with your broader business objectives.

3. Structuring Businesses for Tax Efficiency

The foundation of tax efficiency lies in how a business is structured. Many young entrepreneurs are moving beyond sole proprietorships, opting for structures like S-corporations or Limited Liability Companies (LLCs) taxed as S-corps. These structures offer benefits such as lower self-employment taxes and pass-through income advantages. There's a noticeable trend among CPAs observing new entrepreneurs who prioritize tax efficiency in their business structuring from the outset rather than defaulting to the simplest option.

4. Navigating Globalized Business Models and Tax Complexities

Today's entrepreneurs often operate beyond borders, managing global businesses that involve selling digital products, overseeing remote teams, or establishing international e-commerce platforms. This global reach introduces complex tax considerations, including multi-state tax filings, Value Added Tax (VAT) compliance in different countries, and the IRS's regulations on foreign income.

This complexity isn't just a compliance issue; it directly impacts cash flow. Unexpected tax obligations can reduce liquidity, leaving business owners playing financial catch-up. Successful entrepreneurs treat tax obligations like supply chain management—planned, predictable, and integrated into pricing models from the start.

5. Building a Tax Strategy That Works for Your Business

For young entrepreneurs aiming to stay ahead, tax strategy is about playing offense, not defense. Here are three ways to take control:

Automate Tax Management, But Stay in the Driver's Seat : AI and automation simplify tax planning, but delegating everything to machines is a mistake. Use these tools for tracking and forecasting, but remember that interpretation and strategy require human insight.

Choose the Right Business Structure from Day One : A sole proprietorship might be the easiest way to start a business, but it's rarely the most tax-efficient. Many young founders are structuring as S-Corporations or LLCs taxed as S-Corps to minimize self-employment taxes and increase tax flexibility.

Plan for Global Tax Implications : Entrepreneurs operating across state or national borders need to understand their tax obligations before the revenue rolls in. Working with a tax professional who specializes in international tax law ensures compliance and protects cash flow from unexpected hits.

At Nth Degree CPAs, we specialize in guiding Millennial and Gen Z entrepreneurs through tailored tax planning that aligns with their unique business models . Schedule a consultation with us today.

Strategies to Maximize Your 2025 Tax Savings

Fri, 21 Mar 2025 17:38:14 GMT

Tax season has a way of exposing cracks in even the most successful businesses’ financial systems. Over the years, I’ve worked with countless business owners and high-income earners who, despite their best intentions, find themselves scrambling to finalize last year’s numbers while trying to make smart decisions for this one. It’s a familiar cycle—but it doesn’t have to be inevitable.

The reality is the early months of the year present some of the best opportunities to adjust your tax strategy and avoid mistakes that cost you money. Here’s what I often see go wrong—and how you can sidestep those pitfalls to keep more of what you’ve worked hard to earn in 2025.

1. Miscalculating Your Q4 Tax Obligations

If you're self-employed or running a business, the IRS expects quarterly estimated tax payments. The final installment for the previous year is typically due mid-January. Missing this deadline doesn't just mean catching up; it could lead to penalties and an unexpected tax bill. Many business owners assume their estimated payments are spot-on, but if your revenue surged in Q4, you might owe more than anticipated.

The Fix: Before filing your return, assess any underpayments from the previous year and make necessary catch-up payments to minimize penalties. Collaborate with your CPA to adjust your estimated tax payments for 2025, ensuring they align with your income fluctuations.

2. Overlooking Valuable Deductions by Rushing Your Filing

Filing early can be tempting, especially to get taxes off your plate. However, hasty filings often result in missed deductions that could significantly lower your tax liability. Commonly overlooked deductions include:

Home Office Expenses: Many self-employed individuals don't claim the full amount they're entitled to.
Business Mileage: Especially relevant for those balancing time between home and office.
Depreciation on Assets: Items like equipment or vehicles purchased during the year often go unclaimed.

The Fix: Before submitting your return, meticulously review your expenses or, better yet, consult with a tax professional to ensure you're maximizing your deductions. While the IRS allows amended returns, it's preferable to get it right the first time.

3. Neglecting to Reevaluate Your Business Structure

Your business structure—be it a sole proprietorship, LLC, S-Corp, or C-Corp—significantly impacts your tax obligations. Yet, many entrepreneurs set it and forget it, even as their businesses evolve. For instance:

Remaining a sole proprietor might mean overpaying in self-employment taxes.
Hiring employees could make an S-Corp election beneficial by reducing payroll tax liability.
Expanding internationally may necessitate a different structure for compliance and tax efficiency.

The Fix: Review your business structure with a CPA to determine if restructuring could reduce your tax burden for 2025. Early in the year is ideal for making such changes to reap the benefits throughout the year.

4. Failing to Plan for Retirement Contributions

Retirement plans aren't just about future security; they offer immediate tax advantages. Contributions to plans like a SEP IRA or Solo 401(k) can reduce your taxable income for the year.

The Fix: Explore retirement plan options that suit your business model and make contributions before the tax filing deadline to capitalize on tax benefits for 2025.

5. Ignoring the Benefits of Health Savings Accounts (HSAs)

If you have a high-deductible health plan, contributing to an HSA offers triple tax advantages: contributions are tax-deductible, growth is tax-free, and withdrawals for qualified medical expenses aren't taxed.

The Fix: Maximize your HSA contributions for 2025 to lower your taxable income and build a tax-advantaged fund for future medical expenses.

6. Disorganized Record-Keeping

Disorganized records can lead to missed deductions and increased stress during tax season. Without proper documentation, claiming legitimate expenses becomes challenging.

The Fix: Implement a systematic approach to record-keeping. Utilize accounting software to track income and expenses and maintain digital copies of all receipts and pertinent documents.

7. Overlooking State-Specific Tax Benefits

Depending on your location, there may be state-specific tax breaks available to small business owners. For example, some states offer incentives for certain industries or for businesses that engage in specific activities.

The Fix: Research and consult with a tax professional familiar with your state's tax laws to ensure you're taking full advantage of available benefits.

8. Not Consulting a Tax Professional

Tax laws are complex and ever-changing. Attempting to navigate them without expert guidance can result in costly mistakes.

The Fix: Engage a qualified CPA who stays updated on tax law changes and can provide personalized advice tailored to your business's unique situation.

By proactively addressing these common tax pitfalls, you position your business for a financially healthier 2025. Remember, effective tax planning isn't just a yearly task but an ongoing strategy that evolves with your business.

Ready to make smarter moves with your 2025 tax strategy? Schedule your complimentary consultation today .

IRS Set to Audit 16.5% of Wealthy Taxpayers and Corporations by 2026

Wed, 26 Feb 2025 19:57:32 GMT

With new IRS enforcement underway, high-income individuals and large businesses need to rethink their compliance strategy. There’s a renewed energy at the IRS, and if you’re a business owner or high-income earner, you’re on their radar. The IRS has ramped up enforcement with a focus on high-net-worth individuals, complex partnerships, and large corporations. If you think this doesn’t apply to you, think again.

Over the years, I’ve seen smart business owners get caught off guard by audits—not because they did anything wrong, but because they didn’t plan ahead. Now, with $80 billion in new funding fueling the agency, it’s more important than ever to be proactive.

Here’s what’s happening—and what you should do about it.

Who’s Facing More IRS Scrutiny?

The IRS has made it clear: their focus is on taxpayers earning over $10 million and complex businesses, particularly partnerships and corporations with more than $250 million in assets. Audit rates for these groups are expected to increase significantly over the next few years.

For example:

High-net-worth individuals: Audit rates are projected to climb to over 16% by 2026.
Large corporations and complex partnerships: The IRS plans to triple audits on corporations and increase them tenfold for partnerships.

And they’re bringing in artificial intelligence to help them zero in on discrepancies faster. In short: if you’re running a successful business, you’ll want to make sure your financial house is in order.

Why This Isn’t About Small Businesses—For Now

The IRS has been clear they aren’t targeting middle-income earners or mom-and-pop businesses. If your income is under $400,000, or you’re a simple pass-through entity with straightforward filings, you’re not the focus of this initiative.

That said, if your business grows—or you have complex filings, multi-state operations, or foreign holdings—you could easily fall into the category of increased scrutiny.

What Business Owners Should Do Next

There are two types of businesses: those that get ahead of compliance and those that scramble when the audit letter arrives. Let’s aim for the first.

1. Audit-Proof Your Financial Records

Don’t wait until you’re asked. Get your house in order now:

Ensure you have clean, reconciled financials.
Document all income sources thoroughly.
Keep records of partnership agreements and any related-party transactions.

2. Review Complex Structures

If you’re in a complex partnership or have multiple entities, review your organizational chart and tax strategy. Make sure they align with current IRS regulations—and be prepared to explain them.

3. Stay Ahead on Offshore Reporting

If you have foreign accounts or holdings, don’t take chances. Ensure all your disclosures are up to date. This is a hot-button issue for the IRS, and penalties for non-compliance are steep.

4. Voluntary Disclosures and Amended Returns

If you think something might be off in your prior filings, address it now. Voluntary disclosure is almost always a better strategy than waiting for the IRS to find a problem.

The IRS isn’t coming after small business owners with simple tax returns. But if you’re in the high-income or complex partnership camp, now is the time to take action. An audit is disruptive. A well-prepared audit defense plan is smart business.

Want to make sure you’re audit-ready? Schedule a consultation with Nth Degree CPAs today. We’ll review your current strategy and make sure you’re prepared for what’s next.

How Business Owners Can Reduce Taxes Like the Top 1%

Fri, 21 Feb 2025 21:53:14 GMT

In a significant shift towards enhancing tax compliance, the IRS is gearing up to increase audits for wealthy individuals, large corporations, and complex partnerships, according to a strategic operating plan it released last week. This move, powered by a substantial $80 billion boost from the Inflation Reduction Act , aims to tackle tax evasion and improve overall revenue for the U.S. Treasury. The strategy not only focuses on compliance but also aims to enhance customer service and tackle existing processing delays, recover unpaid taxes by the billions, and shift the public perception of the agency as one of efficiency and fairness.

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Who’s Getting Audited?

The IRS is sharpening its focus on high-wealth individuals and major business entities, intensifying audit efforts, particularly for those earning more than $10 million annually. The audit rate for these taxpayers is projected to rise from 11% in 2019 to 16.5% by 2026. This group will see a significant uptick in scrutiny as the IRS leverages new technology, including artificial intelligence, to better identify and address high-dollar noncompliance issues. "It sets an important tone and message for complex filers, high-wealth filers, that this is our focus area," says IRS Commissioner Danny Werfel.

Similarly, large corporations with assets over $250 million and complex partnerships valued over $10 million are targeted for heightened audit activity. The IRS plans to triple the audit rates for these large corporations and increase tenfold for complex partnerships, aiming to close gaps created by sophisticated tax avoidance strategies. This move aligns with the IRS's broader goal to ensure these entities contribute their fair share toward tax liabilities.

‍Safeguards for Middle and Low-Income Earners and Small Businesses

The IRS reassures that the new wave of audits will not impact individuals earning less than $400,000 annually. "There is no new wave of audits coming from middle- and low-income [individuals], coming from mom and pops. That's not in our plans,” Werfel says.

Small businesses, particularly those not engaged in complex tax filings or high-value transactions, are also largely exempt from the increased audit focus. The IRS emphasizes that its new enforcement strategies are designed to target high-wealth filers and complex filers, not small mom-and-pop businesses, which often face disproportionate challenges during audits.

‍Impact of Funding on IRS Capabilities: From Cuts to Rejuvenation

Prior to the recent boosts in the budget through pandemic-related measures and the Inflation Reduction Act, the IRS had faced significant funding reductions over the past decade. This chronic underfunding had profound effects on the agency's capabilities, particularly in the realms of enforcement and audit activities. For example, audit rates for taxpayers earning $1 million or more dropped dramatically, from a rate of 7.2% in 2011 to just 0.7% in 2019. This decline in audit rates reflects broader enforcement challenges, including reduced oversight over employment taxes, excise taxes, and estate and gift taxes, which were also notably impacted by these cuts.

The $80 billion infusion from the Inflation Reduction Act is allocated over a 10-year period and aimed at enhancing the IRS's enforcement abilities and taxpayer services. The immediate effects of this funding have been substantial. For instance, the IRS reported enhancements in customer service capabilities, significantly reducing wait times and improving the quality of taxpayer interactions.

More significantly, the increased budget has empowered the IRS to bolster its enforcement capabilities. By the end of 2023, the IRS had already recovered $520 million from audits of wealthy taxpayers, indicating a robust return to rigorous tax law enforcement.

‍Future Outlook and Improved Reputation

This rejuvenation of resources and focus is also intended to reshape the public perception of the IRS. By proving its ability to effectively manage and enforce tax laws—and do so fairly—the IRS aims to rebuild trust and demonstrate its critical role in maintaining the integrity of the financial system.

Werfel said the funds allowed the agency to boost its workforce to about 90,000 full-time equivalent employees, with plans to expand this number to about 102,500 in the coming years.

"That number won't even be a record high for the IRS workforce; it's well below the numbers from the 1980s and early 1990s," Werfel says.

Addressing concerns raised after the passing of the Inflation Reduction Act, Werfel dispelled fears about an excessively expanded IRS. Some concerns , notably from Republican lawmakers in 2022, speculated about the hiring of "87,000 new IRS agents to audit Walmart shoppers." In response, Werfel clarified, "This should put to rest any misconception about us bringing on 87,000 agents," or creating a “supersized IRS.”

Conclusion

As the IRS embarks on a strategic overhaul to intensify tax compliance, fueled by the Inflation Reduction Act, targeted entities such as high-net-worth individuals and large corporations should prioritize consultations with their accountants. Key discussion topics should include strategies for maintaining accurate and complete tax records, ensuring proper documentation of income sources, and understanding the implications of offshore financial activities. Additionally, exploring options for voluntary disclosure and reviewing the potential need for amended returns could be crucial. For those operating within complex partnerships, it is essential to verify that all partnership agreements and related transactions are transparent and compliant with the latest tax regulations. This proactive engagement with tax advisors will help navigate the new enforcement landscape effectively, ensuring compliance and mitigating any potential issues well ahead of IRS audits.

Schedule a confidential consultation today and let’s make sure your business is prepared for what’s coming.

Why Most Small Business Owners Are Overpaying on Taxes

Thu, 20 Feb 2025 19:44:36 GMT

You’ve probably heard the story: Warren Buffett pays a lower tax rate than his own secretary. And while it’s easy to chalk that up to billionaire privilege, the truth is more nuanced—and more relevant to you as a business owner. What Buffett and his peers understand is how to leverage sophisticated tax strategies that minimize liability. The surprising part? These strategies aren’t just for the ultra-wealthy. They’re accessible. And if you’re not already using them, you’re likely leaving money on the table.

Why Wyoming (Yes, Wyoming) Has Become a Go-To Tax Strategy

When people think about tax havens, they picture the Cayman Islands. But you don’t have to go offshore to reap similar benefits. Wyoming (along with Nevada and a handful of other states) offers no state income tax and some of the strictest privacy protections in the country. That’s why high-net-worth individuals and large corporations set up holding companies there.

For small business owners, forming a holding company in a state like Wyoming isn’t just about privacy—it’s a way to create flexibility. You can add partners, sell equity, or restructure without exposing yourself to unnecessary taxes or administrative headaches. And yes, it’s completely legal.

Action Item:

If your business is generating serious revenue, consider whether a holding company structure in a tax-friendly state could lower your overall liability.

The LLC Misstep That Costs Business Owners Every Year

Most small business owners form an LLC because it’s easy. But where you form it—and how you use it—matters more than you think.

For example, setting up an LLC in your home state (say, California or New York) might subject you to hefty state income taxes and franchise fees. By contrast, forming in a state like Wyoming or Nevada can mean no state income tax and stronger asset protection.

Action Item:

Review where your LLC is formed and whether relocating it (or establishing a parent company in a more favorable state) makes strategic sense.

The Entity Structure Mistake That’s Costing You Thousands

Here’s the one I see all the time: business owners running successful companies as sole proprietors (or single-member LLCs taxed as such), when they should be operating as

S-corporations—or even C-corporations.

S-corp status allows you to split your income between a salary and distributions, minimizing self-employment tax. C-corps, while not ideal for everyone, offer opportunities for income shifting and potential access to lower corporate rates. Getting the structure right is fundamental to any effective tax strategy.

Action Item:

Reassess your current business entity. If you haven’t revisited your structure in the last couple of years, you’re overdue.

Advanced Structures: Not Just for Billionaires

When you’re thinking long-term wealth preservation, consider the strategies you’d typically associate with the ultra-wealthy. Private placement life insurance (PPLI), for example, can be an efficient way to shelter gains from taxes while protecting assets.

Now, these strategies aren’t entry-level. But they’re also not reserved for billionaires. If your net worth is steadily growing, it might be time to explore advanced planning.

Action Item:

Talk to an advisor about when (and if) strategies like PPLI or asset protection trusts make sense for your stage of business growth.

Minimizing taxes isn’t about loopholes or gimmicks. It’s about understanding the rules and using them to your advantage—just like the most sophisticated investors do. Whether it’s forming in the right state, choosing the right entity, or exploring advanced planning techniques, the opportunities are out there. The question is whether you’re ready to take them.

Want to see how these strategies could work for you? Schedule a consultation with Nth Degree CPAs today. We’ll help you build a tax strategy that fits your business—and your long-term goals.

Use a 1031 Exchange to Defer Taxes and Build Your Real Estate Portfolio

Wed, 12 Feb 2025 01:54:22 GMT

If your business owns investment property—and you're considering selling—it’s worth asking one key question: what will you do with the capital gains?

Rather than taking the tax hit now, a 1031 Exchange allows you to defer capital gains taxes by reinvesting proceeds into another qualifying property. It’s one of the smartest strategies for entrepreneurs looking to scale real estate holdings without triggering a major tax bill.

Let’s walk through how it works, what to watch out for, and why timing is everything.

What Is a 1031 Exchange?

A 1031 Exchange—also known as a like-kind exchange—lets you sell one investment property and reinvest the proceeds into another property of equal or greater value without paying capital gains taxes on the sale.

It’s a tax deferral strategy, not a tax elimination one. But done right, it keeps more money in play for the next investment—and positions you for long-term growth.

How It Works

To qualify for a 1031 Exchange, your transaction needs to meet three core requirements:

Like-Kind Properties
The properties must be similar in use or character—think commercial for commercial, or rental for rental. “Like-kind” is interpreted broadly by the IRS, giving you flexibility.
Qualified Intermediary
You can’t touch the funds from the sale. A qualified intermediary (QI) holds the proceeds and handles the exchange to keep you in compliance.
Strict Timelines
You have 45 days from the sale of the original property to identify potential replacements and 180 days to close. Miss those windows, and the deferral is lost.

Why It Matters for Business Owners

A 1031 Exchange offers major upside when used strategically:

Defer Capital Gains Taxes

Reinvesting 100% of sale proceeds means more capital for the next deal—and no immediate tax bill.

Expand or Diversify Your Portfolio

Move into higher-value or better-performing properties without eroding returns through taxes.

Support Business Growth

Use real estate investments to strengthen your business’s balance sheet or secure new income streams.

That said, partial reinvestments—like taking some cash out or reducing debt—can trigger “boot,” which may be partially taxable. Full reinvestment is key to maximizing the benefit.

When It Makes Sense

This strategy is especially relevant if you’re:

Selling a property that’s appreciated significantly
Looking to consolidate or upgrade investment real estate
Planning to reinvest in assets that better serve your current business goals
Wanting to avoid a large capital gains tax hit this year

Just don’t wait until the last minute—the 45-day clock starts ticking fast once your property sells.

Thinking about selling business property? Schedule a consultation with Nth Degree today to find out if a 1031 Exchange is the right move for your business, and how to structure it for maximum benefit.

What 2025 401(k) Contribution Limits Mean for Your Retirement | Nth Degree

Tue, 11 Feb 2025 17:31:10 GMT

As someone who has worked with hundreds of business owners and high earners over the years, I can tell you that saving for retirement isn’t just a nice-to-have—it’s a critical piece of your overall wealth strategy. But you can’t maximize what you don’t know. If you’re not keeping up with the IRS updates, you could be leaving serious money (and tax advantages) on the table.

The IRS has released its updated 401(k) contribution limits for 2025. If you’re serious about building tax-efficient wealth, here’s what you need to know—and, more importantly, how to take advantage of these changes right now.

The New 401(k) Contribution Limits for 2025

In 2025, employees can contribute up to $23,500 to their 401(k) plans. That’s an increase from last year’s limit, giving you an extra $500 to put toward tax-deferred growth. If your employer matches contributions, you could see even more of a benefit.

For those maximizing employer contributions and after-tax additions, the total limit (employee + employer) rises to $70,000. If you’re self-employed or running a solo 401(k), this is a golden opportunity to stash away more for retirement while reducing your taxable income.

Catch-Up Contributions: More Opportunities for Older Workers

If you’re 50 or older, you can still make catch-up contributions—up to $7,500 beyond the standard limit. But for those in the 60-63 age range, there’s a new wrinkle: the “super catch-up” contribution, allowing up to $11,250 extra. That’s a huge boost for anyone looking to make up ground or supercharge their retirement planning in their final working years.

This expanded window to ramp up contributions is part of the SECURE 2.0 Act, and it’s designed to give people closer to retirement a better shot at hitting their financial goals.

What’s Driving These Changes? Inflation, Legislation, and Opportunity

These contribution increases are primarily driven by inflation adjustments and the legislative push to encourage Americans to save more—especially later in life. With the cost of living rising and people living longer, these higher limits are meant to keep your retirement savings strategy relevant and effective.

But just because the IRS gives you the opportunity doesn’t mean you’re automatically taking advantage of it. That’s where proactive planning makes all the difference.

How to Maximize Your 401(k) Contributions in 2025

Max Out Contributions Early

If cash flow allows, aim to front-load your contributions instead of waiting until year-end. This gives your investments more time in the market, potentially compounding your returns.

Leverage Catch-Up Opportunities

If you’re in the qualifying age groups, don’t leave the extra contribution space unused. It’s a powerful way to boost your tax-deferred savings and reduce your taxable income.

Review Employer Matching Policies

Ensure you’re contributing enough to trigger the full employer match. If there’s room to negotiate a higher match (especially if you’re a key employee or owner), now’s the time.

Revisit Your Business’s Retirement Plan Strategy

For business owners, especially those with Solo 401(k)s or small plans, these higher contribution limits may warrant a review of your retirement offerings. More generous plans can help you retain talent and improve your own tax position.

Strategy Gets You Closer to Security

The 2025 401(k) updates aren’t just a numbers game—they’re a strategy opportunity. More contribution room means more flexibility, better tax management, and a stronger retirement portfolio. But to get the most from these changes, you need a plan tailored to your income, goals, and timeline.

At Nth Degree CPAs, we specialize in helping business owners and high earners develop personalized tax strategies that maximize contributions and minimize liabilities. Get your customized plan today.

The SEP IRA: A Flexible Retirement Strategy for Business Owners

Fri, 07 Feb 2025 02:40:05 GMT

For many entrepreneurs, retirement planning gets pushed down the priority list—until tax season rolls around. But with the Simplified Employee Pension (SEP) IRA, business owners have a tax-smart way to build retirement savings without the administrative drag of traditional plans.

If you're looking for a retirement option that lets you save more, stay flexible, and reduce your taxable income, the SEP IRA deserves a closer look.

What Is a SEP IRA?

A Simplified Employee Pension (SEP) is a retirement plan designed for self-employed individuals and small business owners. It allows employers to contribute to traditional IRAs set up for themselves and their employees.

What makes it stand out? It offers high contribution limits, tax-deductible funding, and minimal paperwork, making it ideal for businesses that want to offer retirement benefits without a complex setup.

Why It Works for Business Owners

A SEP IRA combines several key benefits in one streamlined plan:

Tax-Deductible Contributions
Contributions to a SEP IRA reduce your taxable income for the year—giving you a dual win: saving for retirement and lowering your current tax bill.
Tax-Deferred Growth
Like a traditional IRA, your investments grow tax-deferred. You won’t pay taxes until you withdraw the money in retirement—potentially at a lower tax rate.
Simple Administration
SEP IRAs require virtually no annual filing from the business owner. That means fewer headaches, no plan testing, and no need to file Form 5500.
Flexible Contribution Deadlines
You can fund your SEP IRA right up to the tax-filing deadline, including extensions. This gives you more time to assess your cash flow and decide how much to contribute.

Things to Keep in Mind

Equal Contributions for All Eligible Employees
If you contribute for yourself, you must contribute the same percentage for each eligible employee. That’s great if you have a lean team—or one that includes family members.
No Participant Loans
Unlike some 401(k) plans, SEP IRAs don’t allow loans. Funds are meant to stay put until retirement, encouraging long-term discipline.
Other Plans May Offer More Features
If your business is growing quickly or you want employee deferrals and Roth options, a SIMPLE IRA or 401(k) might make more sense. It’s worth comparing plans before committing.

When a SEP IRA Makes Sense

You’re self-employed or have only a few employees
You want a retirement plan with high contribution limits and low maintenance
You’re looking for a way to reduce taxable income while investing for the future
You want the flexibility to decide how much to contribute each year based on cash flow

Want a retirement plan that’s easy to manage and still packs a tax punch? Schedule a consultation with Nth Degree today.

Save Money with New Tax Breaks and Energy Incentives for Homeowners

Thu, 06 Feb 2025 19:50:06 GMT

As energy costs rise, many homeowners are looking for ways to make their homes more efficient and reduce expenses. Fortunately, recent tax breaks and energy incentives can help you save money on upgrades and lower your monthly bills. This article breaks down the latest government programs, tax credits, and incentives available for homeowners interested in making energy-efficient improvements.

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Tax Credits from the Inflation Reduction Act

One of the most significant sources of energy incentives for homeowners comes from the Inflation Reduction Act (IRA) passed in 2024. This legislation offers a range of tax credits aimed at encouraging homeowners to invest in energy-efficient home improvements. The IRA provides up to a 30% tax credit for energy-efficient upgrades, including installing solar panels, heat pumps, insulation, and energy-efficient windows and doors.

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The most substantial benefit is the Residential Clean Energy Credit, which allows homeowners to claim a tax credit of 30% on the cost of installing solar panels, wind turbines, geothermal heat pumps, and battery storage systems through 2032. This credit can significantly reduce the overall cost of these installations, making renewable energy more accessible. “The goal of this incentive is to encourage homeowners to adopt clean energy technologies that will not only lower their utility bills but also contribute to a reduction in carbon emissions,” explains Steve Nadel, Executive Director of the American Council for an Energy-Efficient Economy.

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In addition to solar panels, the IRA also includes the Energy Efficient Home Improvement Credit, which offers up to $1,200 annually in tax credits for other energy-saving upgrades like insulation, efficient HVAC systems, and smart thermostats. This means that homeowners can save money every year on projects that reduce their home's energy consumption.

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Mortgage Incentives for Energy Efficiency

Apart from direct tax credits, recent updates to mortgage rules now make it easier for homeowners to finance energy-efficient improvements. The Department of Housing and Urban Development (HUD) announced a new initiative called the Green Mortgage Insurance Premium Reduction program. This program offers reduced mortgage insurance premiums for homeowners who make energy-efficient upgrades to their properties, potentially saving them thousands of dollars over the life of their mortgage .

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According to HUD, eligible homeowners who upgrade their homes to meet energy efficiency standards, such as Energy Star or Home Energy Rating System (HERS) Index requirements, can qualify for these reduced premiums. “These mortgage incentives are designed to make energy-efficient upgrades more affordable for middle-income families, helping them save money on both their monthly energy bills and their mortgage payments,” says HUD Secretary Marcia L. Fudge.

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Additionally, the Federal Housing Administration (FHA) now allows borrowers to include the cost of energy-efficient improvements in their mortgage through the Energy Efficient Mortgage (EEM) program. This means homeowners can finance upgrades like new insulation, solar panels, or more efficient heating and cooling systems as part of their mortgage, making it easier to afford these long-term savings.

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How Homeowners Can Benefit from These Incentives

Taking advantage of these tax breaks and incentives can lead to substantial savings, but it's important to understand how to make the most of them. Here’s how homeowners can leverage these opportunities:

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Start with an Energy Audit: Before making any upgrades, consider having an energy audit performed on your home. An audit will identify the most cost-effective improvements, allowing you to prioritize projects that will maximize your savings. Many utility companies offer free or discounted energy audits to help homeowners get started.
Research Eligible Tax Credits and Rebates: The Inflation Reduction Act covers a wide range of home improvements, from solar panels to new HVAC systems. Visit the IRS website or consult with a tax professional to understand which credits apply to your projects and how to claim them. Don’t forget to save receipts and documentation for tax filing purposes.
Consider Financing Options: If you’re planning significant upgrades, explore the Green Mortgage Insurance Premium Reduction program or the Energy Efficient Mortgage program. These financing options can help reduce the upfront costs of energy-efficient improvements, making them more accessible.
Look for State and Local Incentives: In addition to federal programs, many states and municipalities offer their own incentives for energy-efficient home improvements. Check with your state energy office or local utility company for additional rebates and incentives that can help you save even more.

The latest tax breaks and energy incentives offer homeowners a valuable opportunity to make their homes more energy-efficient while saving money. From the Inflation Reduction Act’s generous tax credits to the mortgage incentives provided by HUD, there are numerous ways to reduce the costs of home improvements and lower your energy bills. By taking advantage of these programs, you can make a positive impact on both your wallet and the environment.

Now is the time to explore these options and start investing in a more energy-efficient future for your home. Book a call with Nth Degree CPAs now to explore how to build energy savings into your tax strategy.

Preserve Land, Reduce Taxes: What Business Owners Should Know About Conservation Easements

Tue, 04 Feb 2025 02:26:02 GMT

If you own land through your business, you might be sitting on an unexpected opportunity, not for development, but for a meaningful tax strategy that also contributes to environmental preservation.

Conservation easements are a powerful tool that allow business owners to permanently protect land from future development while receiving a significant charitable tax deduction in return. While not the right fit for everyone, for the right landowners, this strategy can create a win-win: long-term impact, and serious tax benefits.

What Is a Conservation Easement?

A conservation easement is a voluntary, legally binding agreement between a landowner and a qualified conservation organization. The agreement limits how the land can be used in the future, ensuring it remains protected for ecological, agricultural, or scenic purposes—even if ownership changes.

You still own the land, but you give up certain development rights to preserve its natural value.

Why This Matters for Business Owners

If your business owns land—whether for operations, investment, or long-term planning—a conservation easement could help you:

Reduce your taxable income with a charitable deduction
Support environmental sustainability and public interest
Retain ownership and use of your property while limiting future development

It’s a rare strategy that blends financial, environmental, and reputational benefits into one move.

Key Tax Benefits

Here’s where the numbers come into play:

Charitable Deduction: You can deduct the appraised value of the conservation easement—often a substantial amount—against your income. In many cases, this deduction can be up to 50% of your adjusted gross income (AGI), and unused amounts can often be carried forward for several years.
Qualified Third-Party Valuation: The deduction must be based on a professional valuation, typically handled by a third-party appraiser with conservation experience. They assess the reduction in market value caused by the easement restrictions.
IRS Compliance: Because conservation easements have been scrutinized in the past, documentation and compliance are key. This isn’t a DIY move—you need expert guidance to execute it properly and protect your deduction.

When It Makes Sense

A conservation easement may be worth considering if:

You own land with ecological, agricultural, or scenic value
You want to reduce your current or future tax burden
You’re interested in leaving a legacy of environmental stewardship
Your business or brand aligns with sustainability values

Considering a conservation easement for your business-owned land? Schedule a consultation with Nth Degree today to explore whether a conservation easement is the right fit for your financial and environmental goals.

Do You Actually Know the Value of Your Business?

Mon, 03 Feb 2025 19:31:41 GMT

If you’re like most business owners I talk to, your business isn’t just what you do; it’s where most of your wealth lives. Yet, surprisingly few owners know what that number really is. Imagine pouring all your money into a 401(k) and never checking the balance. That’s exactly what’s happening here.

Knowing the value of your business isn’t just for when you’re thinking about selling. It’s about clarity. It’s about making smart, strategic decisions that help you protect and grow your personal net worth.

Why Most Business Owners Are in the Dark About Valuation

Roughly 85% of small business owners have the majority of their personal wealth tied up in their business. But only 2% have had a formal valuation done. That’s not a typo. Most are flying blind.

Take the hypothetical case of “Tim,” a business owner who has 80% of his wealth tied up in his company. He knows diversification is important, but he’s never bothered to get his business valued. What happens if Tim needs to make a strategic exit, or raise capital? Without knowing his numbers, he’s gambling with his future.

Action Step:

If you haven’t done a professional valuation in the last 12-18 months, it’s time. Markets change. Your industry changes. Your value changes. You need updated numbers to make informed decisions.

Why Knowing Your Business’s Worth Matters. Even If You’re Not Selling

Understanding the value of your business isn’t just about a potential sale. It’s also about securing financing, attracting investors, and knowing how much leverage you actually have.

Small businesses, especially those with fewer than 20 employees, make up a huge piece of the U.S. economy. Yet, many owners have no idea what their company is worth today. That’s a risky spot to be in.

Action Step:

Use tools like the Value Builder Score for a preliminary assessment of your business’s worth. Then, work with a professional to get a more in-depth valuation.

What’s at Stake: Economic Uncertainty and Your Personal Net Worth

Recent economic shifts—rising inflation, supply chain headaches, and labor shortages—have made it harder than ever to predict what’s next. But businesses that have a clear understanding of their value are better positioned to weather uncertainty and seize opportunities when they come.

A clear valuation gives you clarity on when to reinvest, when to diversify, and when it might be time to think about an exit. Without it, you’re guessing—and that’s not a strategy.

Action Step:

Monitor economic trends that impact your industry. Pair that with regular valuations, so you’re never caught off guard. Build a financial strategy that evolves with your business.

Practical Next Steps to Nail Down Your Business Valuation

If you want to gain clarity on where you stand, here’s where to start:

1. Hire a Professional Valuation Expert

A third-party expert brings objectivity and proven methodologies to the process. You’ll get an accurate number, and insights on what’s driving your current valuation.

2. Conduct Regular Financial Reviews

Make reviewing your financials a regular part of your strategy. Clean books and clear data make valuations easier and more accurate.

3. Leverage Technology for Preliminary Valuations

Tools like the Value Builder Score can highlight strengths and weaknesses in your business, giving you areas to focus on for improvement before your next formal valuation.

For most business owners, your business is your largest asset. But if you don’t know what it’s worth, you’re missing a key piece of your financial strategy. Regular valuations aren’t just for people thinking about selling; they’re a fundamental part of protecting your wealth and building financial certainty.

Ready to understand your business’s true value? Schedule a consultation with Nth Degree CPAs today. We’ll help you uncover the real numbers, and build a strategy to protect and grow what you’ve built.

Save Up to $7,500 with the Vehicle Plug-In Credit for Business Owners

Tue, 28 Jan 2025 23:33:41 GMT

Electric and plug-in hybrid vehicles aren’t just good for the environment—they could also help you save thousands on your tax bill. If you’re considering adding a new vehicle to your business, the Vehicle Plug-In Credit could be a smart way to reduce your tax liability while modernizing your operations.

Let’s break down what this credit is, what qualifies, and how to make sure you’re getting the most out of it.

What Is the Vehicle Plug-In Credit?

The Vehicle Plug-In Credit is a nonrefundable federal tax credit for businesses and individuals who purchase qualifying electric or plug-in hybrid vehicles. The goal is to incentivize clean energy transportation—but for business owners, it’s also a legitimate, IRS-backed way to cut taxes and improve cash flow.

Depending on the make, model, and battery capacity of the vehicle, the credit can be worth up to $7,500 per eligible vehicle.

Who Qualifies?

To qualify for the credit, your business must meet a few key criteria:

The vehicle must be new, not used
It must be plug-in electric (not just a hybrid)
The battery must have at least 5 kWh of capacity
It must weigh under 14,000 pounds
It must be used more than 50% for business purposes

Important: Some popular manufacturers (like Tesla and GM) have already passed the 200,000-vehicle sales cap, which phases out the credit for their models. Always check the IRS website or speak to your CPA to verify current manufacturer eligibility.

How Much Is the Credit?

Starts at $2,500, with additional credits based on battery capacity
Maxes out at $7,500 for qualifying vehicles
Claimed on your federal tax return for the year you purchase the vehicle

If the vehicle is used partially for personal reasons, the credit will be reduced proportionally. Accurate tracking of business use is essential for claiming the full credit.

Strategic Considerations for Business Owners

This credit isn’t just for eco-conscious startups—it’s a real tax planning opportunity for established businesses, too. But you’ll want to time it wisely:

If you’re planning to purchase a new vehicle, check the phase-out status for your manufacturer.
If your business has higher-than-usual taxable income this year, the credit could offer immediate savings.
Keep solid documentation of vehicle use, especially mileage logs, to support your business-use percentage.

Thinking about going electric with your next business vehicle?The Vehicle Plug-In Credit could put up to $7,500 back in your pocket—but only if you structure it right.

Schedule a consultation with Nth Degree CPAs today to make sure your vehicle purchase qualifies and supports your broader tax strategy.

Closer Over More: Avoiding the Busy Trap

Sat, 25 Jan 2025 16:53:52 GMT

Being "busy" has become a badge of honor in today's fast-paced world. But being busy doesn't necessarily mean being productive as a business owner. The principle of Closer Over More reminds us that true progress comes not from doing more but from doing what brings us closer to our goals.

The Busy Trap

It's easy to fall into the busy trap—filling your days with endless tasks, meeting, and projects that feel important but don't move the needle. For entrepreneurs, this often looks like chasing every new client, saying "yes" to every opportunity, and juggling countless priorities.

But here's the reality: not all tasks are created equal. Some activities drive significant value and progress, while others are disguised distractions. The question isn't, "How much can I do?" but rather, "What will bring me closer to my Solvable Problem?"

Shifting from Quantity to Quality

The principle of Closer Over More challenges business owners to shift their mindset. Instead of chasing arbitrary metrics like revenue growth or the number of clients, focus on actions that align with your long-term goals.

For example, imagine a business owner with a Solvable Problem of achieving $500,000 in annual income while maintaining a 30-hour workweek. Taking on dozens of small, low-margin clients might increase revenue but won't bring them closer to their goal. Instead, focusing on a few high-value clients allows them to work smarter, not harder.

This concept extends beyond clients. Think about internal operations—how often does your team spend time on tasks that seem urgent but aren't truly important? You free up resources for what truly matters by eliminating inefficiencies and prioritizing high-impact activities.

How to Apply Closer Over More

Identify High-Impact Activities: Review your daily tasks and identify which ones directly contribute to your goals. Delegate or eliminate the rest.
Focus on the 20% that Drives 80% of Results: Use the Pareto Principle to prioritize the most impactful clients, projects, and opportunities.
Set Boundaries: Learn to say "no" to distractions, even if they seem appealing. Saying "yes" to everything often means saying "no" to what truly matters.
Regularly Reevaluate Priorities: Business goals and challenges evolve. Make it a habit to reassess where your efforts are going to ensure they remain aligned with your Solvable Problem.

A Real-Life Example

One of our clients, a marketing agency owner, felt overwhelmed by the sheer volume of work. By applying Closer Over More, they realized that many of their clients were low-margin, high-maintenance accounts. After restructuring their client base to focus on a handful of high-value partnerships, they increased profitability and freed up time to focus on strategic growth.

This change didn't happen overnight, but it delivered transformational results. Their business became less stressful, more lucrative, and better aligned with their personal goals.

Breaking Free from the Busy Trap

The path to success isn't about doing more—it's about doing better. You can achieve meaningful progress without burnout by prioritizing actions that bring you closer to your goals. Imagine what you could accomplish if every decision and every effort brought you closer to the life you envision.

Take Action

Are you ready to shift from busy to productive? At Nth Degree CPAs, we specialize in helping business owners focus on what truly matters. Let's create a strategy that works for you— schedule a consultation today .

Infinite Trade-Offs: Choosing What Matters Most

Fri, 24 Jan 2025 16:49:42 GMT

Every decision you make as a business owner has trade-offs. When you say "yes" to one opportunity, you're inherently saying "no" to countless others. This reality, known as the principle of Infinite Trade-Offs, is one of the most critical yet overlooked aspects of entrepreneurial decision-making.

The Challenge of Infinite Trade-Offs

Entrepreneurs often feel pressured to say "yes" to everything: every client, project, and idea. After all, more is better. Wrong. Spreading yourself too thin dilutes your focus and diverts resources away from what truly matters.

When everything feels urgent and vital, losing sight of what drives growth and value is easy. The allure of "more" can lead to over-commitment, inefficiency, and burnout—common pitfalls that successful entrepreneurs learn to avoid.

Instead of trying to do everything, the key lies in choosing wisely. You can't control every opportunity that comes your way, but you can control what you prioritize.

A Framework for Smarter Choices

How do you navigate these infinite trade-offs? At Nth Degree CPAs, we use a simple yet powerful framework to help clients evaluate opportunities:

Define the Goal: What are you solving for? Decisions aligned with your Solvable Problem are inherently more valuable.
Assess Impact vs. Effort: Use a decision matrix to categorize opportunities. High-impact, low-effort options should take precedence, while low-impact, high-effort activities can be delegated or eliminated.
Consider Opportunity Cost: For every "yes", ask yourself, "What am I giving up by saying yes to this?

This framework empowers business owners to focus their energy on actions that move the needle rather than being pulled in every direction.

A Practical Example

One of our clients, a small manufacturing business, had to decide whether to invest in a new product line. This was an exciting opportunity that required significant time, capital, and focus. By applying the Infinite Trade-Offs principle, they clarified their Solvable Problem: improving profit margins on existing products before expanding their portfolio. This clarity helped them realize that saying "yes" to the new product line would mean saying "no" to optimizing their current operations—a trade-off that didn't align with their goals.

Instead, they focused their efforts on streamlining production and reducing costs, ultimately increasing profitability by 20% within six months.

The Key to Long-Term Success

Navigating infinite trade-offs is not about doing more; it's about doing what matters most. This principle requires discipline, clarity, and the courage to say "no" when necessary.

Your Next Step

Are your decisions aligned with what truly matters? At Nth Degree CPAs, we help business owners evaluate trade-offs and prioritize high-impact actions. Let's work together to make every "yes" count—schedule a consultation today.

Save Up to $2,500 per Student with The American Opportunity Credit

Thu, 23 Jan 2025 02:36:54 GMT

Most business owners we talk to don’t realize there’s a tax strategy sitting right in front of them when it comes to their child’s education. It’s called the American Opportunity Credit, and if you’re paying college tuition out of pocket, this can be a direct hit to your tax liability—in a good way.

Let’s break it down so you know exactly what it is, why it matters, and how to make it work.

What is the American Opportunity Credit?

The American Opportunity Credit is a tax credit—not a deduction. That means it directly reduces your income tax, dollar-for-dollar. You can claim up to $2,500 per student, per year, for things like tuition, fees, books, and required materials.

Even better? Up to $1,000 of it is refundable, which means you could get money back even if your tax liability is zero. That’s free money if you qualify.

Why It Matters for Business Owners

You’re likely paying for college with after-tax dollars—especially if you’re not leveraging a 529 plan or your income is too high to qualify for other deductions.

The American Opportunity Credit can:

Reduce your tax bill by up to $2,500 per eligible student
Put real money back in your pocket if part of it is refundable
Help fund college without adding unnecessary tax friction

And unlike many deductions, you don’t have to itemize to claim it.

So if you’re already cutting checks for tuition or helping cover education costs, this strategy helps ensure you’re not overpaying Uncle Sam while doing it.

How to Qualify (and Maximize It)

Here’s what you need to know:

The student must be in their first four years of post-secondary education
They must be enrolled at least half-time in a degree or credential program
You (or the student) must receive a Form 1098-T from the school
The student cannot have claimed the credit for more than four tax years
The student cannot have a felony drug conviction
You’ll also need to file a Form 1040 or 1040-SR to claim it—no married filing separately, 1040-NR, or dual-status returns allowed.
As the taxpayer, you must have paid qualified education expenses out of pocket. These can include tuition, required books, supplies, and equipment. Room and board don’t count.
You can claim the credit for multiple students if they each meet the criteria.
Heads-up on income limits: The credit begins to phase out if your modified adjusted gross income is over $80,000 (single) or $160,000 (married filing jointly), and is completely phased out at $90,000 / $180,000.

A Quick Note on Double-Dipping

You can’t use the same expenses for both the American Opportunity Credit and a tax-free distribution from a 529 plan. So if you’re using multiple strategies to pay for college (good on you), be sure to coordinate your expenses accordingly—or get help from someone who will.

The Bottom Line

If you're already paying for college, the American Opportunity Credit is a clean way to offset the cost and lower your tax bill at the same time. It’s not going to make college cheap—but it can keep you from overpaying the IRS while doing a good thing for your family.

Schedule a consultation with Nth Degree today to make sure you’re claiming what you’ve earned and not leaving money on the table.

How Small Business Owners Can Maximize Retirement With a Defined Benefit Plan

subscriptions@nthdegreecpas.com (Nth Degree) — Wed, 22 Jan 2025 23:20:11 GMT

As a small business owner, you have a unique opportunity to take control of your financial future. One of the most powerful tools for maximizing retirement savings—while reducing taxable income—is the Defined Benefit Plan. If you’re looking for a strategy to make significant, tax-deductible contributions and build predictable retirement income, this plan deserves a closer look.

Here’s how it works and why it could be a game-changer for your business.

What Is a Defined Benefit Plan?

A Defined Benefit Plan is a qualified retirement plan that guarantees a specific benefit amount to participants at retirement. Unlike other plans that rely on individual investment returns (like 401(k)s), a Defined Benefit Plan promises a predetermined payout—often based on salary history, years of service, and age.

As the employer, you’re responsible for funding the plan, and contribution amounts are calculated to ensure that future benefits are covered. Contributions are typically higher than other retirement plans, which makes this an ideal option for small business owners who want to accelerate their retirement savings—particularly if they’re catching up later in their careers.

Why Defined Benefit Plans Matter for Small Business Owners

For successful entrepreneurs and small business owners with consistent cash flow, a Defined Benefit Plan offers several key advantages.

1. Higher Contribution Limits—and Bigger Tax Deductions

One of the standout benefits of a Defined Benefit Plan is the ability to contribute significantly more than you could with a SIMPLE IRA or even a Solo 401(k). Depending on your age and income, annual contributions can exceed $100,000 or more.

Since contributions are tax-deductible as a business expense, this can lower your taxable income dramatically—freeing up more capital for reinvestment or personal savings.

2. Predictable Retirement Income

If you value certainty, this plan delivers. The benefit amount is calculated in advance and paid out as a pension in retirement. For business owners who have spent years managing market risks, a Defined Benefit Plan provides peace of mind with guaranteed income.

3. Attract and Retain Key Employees

Offering a Defined Benefit Plan can make your compensation package more competitive, helping you attract and retain top talent—especially if you’re competing with larger companies for key positions.

Important Plan Requirements and Considerations

IRS Oversight: These plans must meet strict IRS rules regarding contributions, funding levels, and plan administration.
Actuarial Calculations: Contributions are determined annually by an actuary, based on funding needs and future benefit obligations.
Funding Commitment: Business owners should be prepared for an ongoing funding obligation. If cash flow is unpredictable, this plan may require careful consideration.

Action Steps for Business Owners Considering a Defined Benefit Plan

Implementing a Defined Benefit Plan is a significant decision, but it can be a powerful strategy when used correctly. Here’s how to get started:

Assess Your Cash Flow: This plan works best for businesses with stable and predictable profits.
Meet with a CPA or Retirement Plan Specialist: You’ll need an expert to guide you through the setup, regulatory compliance, and funding requirements.
Align with Your Retirement Goals: Ensure the plan structure fits your long-term financial objectives—whether it’s maximizing deductions now or securing a specific income in retirement.

A Defined Benefit Plan isn’t for everyone, but for the right small business owner, it can be one of the most effective strategies to maximize retirement contributions and minimize taxes. If you’re looking to make large, tax-deductible contributions and create guaranteed retirement income, this plan could be the solution.

Ready to Explore a Defined Benefit Plan for Your Business?

At Nth Degree CPAs, we help small business owners implement retirement strategies that optimize tax savings and build long-term wealth. If you want to explore whether a Defined Benefit Plan fits your goals, schedule a consultation with us today. We’ll guide you through every step.

Schedule your personalized retirement strategy consultation with Nth Degree CPAs today. Let’s build a plan that works for you.

Preference vs. Binary: Rethinking Business Decisions

Tue, 21 Jan 2025 16:45:14 GMT

In business, decisions are rarely black and white.

Entrepreneurs often fall into the trap of binary thinking, seeing choices as either/or instead of a spectrum of possibilities. This rigid mindset can lead to missed opportunities, unnecessary risks, and decision fatigue. At Nth Degree CPAs, we challenge this way of thinking with the principle of Preference vs. Binary.

What Is Preference vs. Binary?

The Preference vs. Binary principle teaches that most decisions aren't as limited as they appear. Instead of asking, "Should I do this or not?" entrepreneurs should consider, "How can I do this in a way that aligns with my goals?" This principle involves re-framing decisions to uncover creative, flexible solutions that minimize risk and maximize value.

A Practical Example

Imagine you're considering expanding your business into a new market. A binary mindset might present the decision as:

Expand and risk overextending resources.
Stay put and risk missing growth opportunities

But when you apply the Preference vs. Binary principle, the decision evolves. Instead of an all-or-nothing choice, you might ask:

Can I pilot the expansion in one region before committing fully?
Can I collaborate with a local partner to reduce overhead?
What metrics will determine if this expansion aligns with my Solvable Problem?

This shift in perspective transform a high-stakes decision into a manageable, strategic exploration.

How Nth Degree Applies This Principle

At Nth Degree, we use the Preference vs. Binary principle to guide clients through complex decisions. Whether managing cash flow, optimizing tax strategies, or evaluating investment opportunities, we help clients uncover options that align with their goals and minimize downside risk.

For example, one client, a manufacturing company, was torn between investing in new equipment or scaling back operations to preserve cash flow. Instead of framing the choice as a binary one, we worked with them to identify a preference: leasing the equipment temporarily to test its impact on efficiency before making a full purchase. This approach allowed them to preserve cash while exploring growth opportunities.

Breaking Free from Binary Thinking

Binary thinking limits possibilities and increases stress. By re-framing decisions as preferences, business owners gain:

Flexibility: Exploring a range of options reduces the pressure of all-or-nothing choices.
Confidence: Decisions rooted in clarity and alignment with the Solvable Problem feel intentional and empowering.
Resilience: A preference-based approach allows for adjustments, reducing the impact of unforeseen challenges.

Embracing a New Mindset

Every decision you make shapes the future of your business. Adopting the Preference vs. Binary principle allows you to approach choices with creativity, flexibility, and confidence.

Let Nth Degree CPAs help you rethink decisions and unlock new possibilities for your business. Schedule a consultation today and discover the power of preferences.

Why Goal Setting Needs to Be Intentional

subscriptions@nthdegreecpas.com (Nth Degree) — Mon, 20 Jan 2025 16:29:45 GMT

A Goal Without Purpose is Just Another Distraction

As a CEO, setting goals is second nature. But how often do those goals reflect what matters most to you and your business? Too often, we chase shiny metrics-revenue targets, market share, or team size- without asking the most critical question: " Why does this goal matter? "

At Nth Degree CPAs, we believe intentional goal setting is the foundation of success. It's not about setting goals for the sake of it; it's about aligning those goals with your Solvable Problem.

Why Traditional Goal Setting Fails

Most goals fail not because of lack of effort but because they lack focus. For example, setting a "double revenue" goal might seem ambitious. Still, if it doesn't align with your business or personal life needs, it can lead to wasted resources, stress, and even burnout.

We've seen it happen: a business owner chasing revenue growth at the expense of profitability, only to find themselves overworked and overwhelmed. The result? A business that grows on paper but delivers no real progress toward what truly matters.

The Intentional Goal-Setting Process

Define Your Solvable Problem

Your Solvable Problem is the compass that guides your decisions. Start by asking, "What do I truly want from my business?" This clarity is critical whether it's financial stability, more time with family, or launching a new product.

Focus on Impact, Not Volume

Don't chase multiple goals at once. Focus on the ones that will have the most significant impact. For example, instead of "launching three new services", prioritize the one that best aligns with your Solvable Problem and delivers the most value.

Break Down Your Goals

Big goals can be intimidating. Break them into smaller, actionable steps. For instance, if your goal is to secure five new high-value clients, start with identifying potential leads, refining your pitch, and scheduling introductory calls.

Evaluate Trade-Offs

Every goal requires trade-offs. If you're prioritizing one area, what are you sacrificing? This intentionality ensures that your steps toward your goal don't derail other essential aspects of your business or personal life.

A Practical Example

One of our clients-a business owner in the tech industry- wanted to "scale their company". But after defining their Solvable Problem, they realized their true goal was to increase profitability without adding more team members. By optimizing existing client relationships instead of chasing new ones, they exceeded their profitability target by 15% in less than a year.

Another client-a CEO of a manufacturing firm- set a goal to improve work-life balance while maintaining business growth. By delegating operational tasks and focusing on strategic planning, they created a system allowing professional success and personal fulfillment.

The Nth Degree Difference

At Nth Degree CPAs, we help business owners set intentional goals that align with their values and drive meaningful results. Our approach is rooted in actionable strategies that focus on what truly matters to you-achieving financial freedom, gaining more time, or expanding your business on your terms.

It's time to set goals that truly matter. Contact us today to start building a plan for intentional success.

Accountability in Action: Building Trust Through Results

subscriptions@nthdegreecpas.com (Nth Degree) — Fri, 17 Jan 2025 16:41:54 GMT

Accountability isn't just a buzzword in business—it's the foundation of success.

Trust in financial advisors is hard-earned and easily lost for many business owners. Too often, traditional CPA firms offer value promises without delivering measurable results, leaving clients to wonder where their money—and effort— went. At Nth Degree CPAs, accountability is not just a talking point; it's the core of our approach to client relationships and results.

Why Accountability Matters

Accountability is about ensuring that plans don't just exist on paper but are executed effectively. It's the difference between wishful thinking and measurable impact. A financial strategy without accountability is like a GPS without a map—it's full of potential, but it doesn't get you where you need to go.

At Nth Degree CPAs, we build accountability into every process step. Whether through regular check-ins, measurable benchmarks, or proactive adjustments, we ensure our clients see tangible outcomes.

A Success Story: From Stress to Strategy

Take, for example, the story of a regional healthcare provider struggling to manage cash flow and scale operations. They had worked with a traditional CPA firm for years, receiving little more than reactive advice and a stack of financial reports at the end of each quarter.

When they partnered with Nth Degree, the first step was to define their Solvable Problem: achieving consistent cash flow while funding an expansion into two new markets. We mapped out a proactive strategy that included:

Implementing automated cash flow forecasting tools.
Identifying tax credits tied to their community healthcare initiatives.
Establishing accountability checkpoints to track progress and adjust tactics in real time.

Within 12 months, they had stabilized their cash flow and secured $350,000 in tax savings, which helped fund their market expansion. More importantly, they had a clear, actionable roadmap for continued growth.

How Accountability Builds Trust

When clients see results, trust grows. But accountability isn't just about showing results—it's about transparency and communication. Here's how we build trust with out clients:

Proactive Checkpoints: Regular updates ensure strategies remain on track and allow timely adjustments.
Data-Driven Insights: We provide clear metrics and reporting to show progress toward goals.
Collaborative Partnership: We view our clients as partners, involving them in decisions and aligning strategies with their unique vision.

Transforming Financial Strategy

At Nth Degree, accountability means delivering on the promises we make. It means ensuring every financial strategy aligns with what truly matters to the client. And most importantly, it means results you can see, measure, and trust.

Ready to work with a CPA firm that delivers more than promises? Schedule an introductory call today and discover how accountability drives results.

The Power of Asymmetric Opportunities

subscriptions@nthdegreecpas.com (Nth Degree) — Sun, 12 Jan 2025 16:35:37 GMT

Big Wins Don't Require Big Risks

Opportunities are everywhere in business, but not all are created equal. Some carry significant risks with minimal reward, while others offer massive upside with limited downside. These are called asymmetric opportunities, and they're the secret weapon for savvy entrepreneurs who want to maximize returns while minimizing risks.

At Nth Degree CPAs, we identify and leverage these opportunities to create lasting value for our clients.

What are Asymmetric Opportunities?

An asymmetric opportunity is one where the potential reward far outweighs the risk. Think of it as the business equivalent of investing a dollar with the possibility of earning ten. These opportunities often come from creative strategies, innovative thinking, or taking calculated steps others might overlook.

Why They Matter

For business owners, asymmetric opportunities mean doing more with less. Instead of stretching your resources thin or gambling on high-risk ventures, your focus on initiatives that deliver maximum impact with minimal exposure.

For example:

Tax Strategies: By proactively planning deductions and credits, you can significantly reduce your tax liability without increasing operational costs.
Smart Investments: Allocating resources to scalable, low-cost solutions like automation tools can yield substantial long-term savings.
Strategic Partnerships: Building relationships with key referral partners can unlock new revenue streams with minimal upfront effort.

Real-Life Example

One of our clients, a regional construction company, faced the challenge of maintaining profitability during a slow season. Rather than taking on high-risk projects to generate quick cash flow, we helped them identify a tax-saving opportunity through energy-efficient upgrades to their properties. The result? They saved $250,000 in taxes while enhancing their operational infrastructure-a classic asymmetric win.

How to Spot Asymmetric Opportunities

Evaluate the Upside
Consider the opportunity's potential benefits. Will it significantly increase revenue, reduce costs, or create lasting value?
Assess the Risk
Identify what's at stake. If the downside is minimal or manageable, the opportunity is worth exploring.
Start Small
Test the waters with a pilot program or small-scale implementation. This allows you to gauge the results before fully committing.
Leverage Expertise
Asymmetric opportunities often require creative thinking and deep expertise-partner with advisors who can help you uncover and execute these strategies.

Your Competitive Advantage

At Nth Degree CPAs, we help business owners unlock asymmetric opportunities that drive growth, improve efficiency, and reduce risk. Our approach combines strategic foresight with practical execution, ensuring you stay ahead of the curve.

Discover how asymmetric opportunities can transform your business. Schedule a call today, and let's uncover your next big win.

The Solvable Problem: Your North Star for 2025

Fri, 10 Jan 2025 16:32:40 GMT

Every great business decision starts with clarity.

As a business owner, you're no stranger to setting goals. But do those goals reflect what you truly want from your business and life? Or are external pressures like industry norms, competitive benchmarks, or societal expectations shaping them? Enter the Solvable Problem-a simple yet transformative concept that acts as your compass, ensuring every decision brings you closer to your desired life and business.

What Is the Solvable Problem?

As its core, the Solvable Problem defines what success looks like for you. It's not a vague ambition or a list of arbitrary targets. It's a measurable outcome that aligns with your values, priorities, and vision. For example, your Solvable Problem might be:

Generating a $500,000 annual income while maintaining a 25-hour workweek.
Expanding your business to five new markets without sacrificing quality of service or your well-being.
Building a business that provides long-term financial security for your family.

By defining your Solvable Problem, you establish a framework that simplifies decision-making and eliminates distractions. It's the ultimate antidote to the chaos of "more".

Why Every Business Needs a North Star

Without a clear, Solvable Problem, you risk chasing what everyone else is chasing-revenue growth, market share, or accolades that may not serve your long-term goals. This leads to burnout, frustration, and a sense of unfulfilled potential.

Consider this analogy: If your business were a ship, the Solvable Problem would be the destination on your map. Without it, you might sail aimlessly, burning through resources and time without reaching a meaningful port.

Defining Your Solvable Problem

Start with the End in Mind
Ask yourself, "What do I truly want from my business?" Think about the lifestyle you want to lead, the legacy you want to leave, and the impact you want to make.
Make it Measurable
Your Solvable Problem should be specific and quantifiable. For example, "Achieving financial freedom" is too broad, but "Paying off $1M in debt by 2027 while maintaining a profit margin of 20%" is actionable.
Align with Your Values
Your business should serve your life-not the other way around. Ensure your Solvable Problem reflects your priorities, whether spending more time with family, pursuing a passion project, or supporting your community.
Revisit and Refine
Your Solvable Problem isn't set in stone. As your circumstances and goals evolve, revisit and adjust it to align with your vision.

Real-World Application

A thriving retail business owner, one of our clients, felt trapped in a cycle of endless growth without a clear purpose. After defining their Solvable Problem-to generate $2M in revenue annually while scaling back to 30-hour workweeks-they restructured operations, streamlined product lines, and focused on high-margin items. The result? A more profitable and sustainable business aligned with their lifestyle goals.

Start Your Journey

At Nth Degree CPAs, we specialize in helping business owners define their Solvable Problem and engineer strategies to achieve it. Our approach ensures every decision is intentional, focused, and impactful.

Are you ready to define your North Star for 2025? Let's chart the course together. Schedule a consultation today.

How to Maximize Your Business Travel Deductions Without Crossing IRS Lines

subscriptions@nthdegreecpas.com (Nth Degree) — Thu, 09 Jan 2025 00:53:39 GMT

As a small business owner, travel often plays a key role in how you grow—meeting new partners, exploring expansion opportunities, or investing in your professional development. But here’s the part many overlook: much of that travel could be tax-deductible. When done right, deducting business travel expenses can help reduce your taxable income and free up cash for reinvestment. But “done right” is the key phrase.

Here’s how to know what qualifies, what’s off-limits, and how to structure your records to stay compliant and maximize your deductions.

What Counts as Deductible Business Travel?

The IRS allows you to deduct “ordinary and necessary” expenses incurred while traveling for business. That includes things like airfare, hotel stays, rental cars, ride shares, and meals. But those deductions must tie clearly to a business purpose.

Common examples that qualify:

Scouting new business opportunities such as expanding to another location, meeting with vendors, or exploring potential partnerships.
Attending conferences, workshops, or seminars to stay current in your industry.
Participating in strategic offsites or board meetings, even if held at a resort or out-of-town venue, as long as there’s a documented business agenda.

What doesn’t qualify: tacking a few vacation days onto the trip and trying to deduct the whole thing. The IRS draws a hard line between personal and business expenses.

Yes, There Are Rules—Here’s What You Need to Track

Getting the deduction is one thing. Keeping it in the event of an audit? That’s all about documentation. Here’s what you’ll want to hold onto:

Receipts for flights, hotels, meals, and transportation.
A clear business purpose for the trip (include notes in your calendar or a brief summary).
Meeting agendas or event registrations that support why you traveled.

If others are traveling with you—like a spouse or child—you’ll need to prove they were actively involved in the business purpose of the trip to deduct their costs. Most of the time, personal travel companions’ expenses are not deductible.

Pro Tip: Meals Are Still Deductible—With a Catch

Recent changes to IRS rules allow 50% of most business meals to be deducted again. (There was a temporary 100% window during COVID-era relief.) Just make sure they meet the criteria: a legitimate business discussion, with a client or team member, and ideally, at a restaurant.

How to Make Business Travel Work Smarter for Your Taxes

It’s easy to miss out on deductions when you’re moving fast. Here are a few ways to make business travel a tax-saving strategy:

Plan in advance: If you're already attending an event, build in additional meetings or research that tie back to your business.
Keep personal and business expenses separate: Don’t use one receipt for multiple purposes.
Work with a CPA: Travel deductions are nuanced. A tax advisor can help you take what’s fair—and steer clear of what’s not.

If travel plays a role in how you grow your business, it should play a role in how you reduce your tax bill. By understanding what counts, documenting properly, and working with a CPA, you can legally deduct travel expenses and keep more of your money working for you.

Schedule a consultation with Nth Degree CPAs today and get a tax strategy that covers every mile. Let’s make your next business trip a smart financial move.

Use Qualified Charitable Distributions to Cut Taxes and Give Back

subscriptions@nthdegreecpas.com (Nth Degree) — Wed, 08 Jan 2025 00:46:06 GMT

If you're a business owner nearing or over retirement age, you've likely encountered Required Minimum Distributions (RMDs)—and the tax bill that comes with them. But what if there were a way to fulfill those obligations while supporting a cause you care about—and reduce your taxable income in the process?

Qualified Charitable Distributions (QCDs) offer exactly that. At Nth Degree CPAs, we help business owners use tax-efficient giving strategies like QCDs to reduce liability while aligning finances with their values.

What Is a Qualified Charitable Distribution?

A Qualified Charitable Distribution is a direct transfer of funds from your IRA to a qualifying charitable organization. It’s available to individuals aged 70½ or older and can count toward your RMD—without counting toward your adjusted gross income (AGI).

That last part is important: Unlike regular IRA withdrawals, QCDs don’t increase your AGI, which means you could avoid moving into a higher tax bracket or losing other tax credits.

Why Small Business Owners Should Care

Reduces Taxable Income Without Itemizing
Even if you take the standard deduction and don’t itemize, you can still benefit from QCDs—something not true for most other charitable contributions.
Fulfills RMDs Efficiently
QCDs satisfy all or part of your annual RMD. If you’re over 73 and don’t need the cash, this is a smarter way to handle distributions.
Supports the Causes That Matter to You
Many business owners already donate to causes they care about. A QCD lets you do it with pre-tax dollars, maximizing the impact of your giving.

How to Use QCDs Strategically

Eligible Accounts: Only traditional IRAs qualify—not 401(k)s or other retirement accounts.
Direct Transfers Only: The funds must be transferred directly from your IRA custodian to the charity. If you withdraw the funds yourself first, it won’t qualify.
Annual Limit: You can donate up to $100,000 per year via QCDs, or $200,000 for married couples with separate IRAs.
Qualified Charities Only: The recipient must be a 501(c)(3) public charity. Private foundations and donor-advised funds do not qualify.
No Quid Pro Quo: You can’t receive goods or services in exchange for your donation—no event tickets, meals, or other perks.

Don’t Leave Tax Strategy to Chance

QCDs aren’t just about philanthropy—they’re a powerful tax planning tool. But timing, documentation, and IRS rules matter

Working with a CPA who understands your business and retirement goals ensures that your QCDs are executed properly and integrated into a broader financial strategy. At Nth Degree CPAs, we specialize in helping business owners make strategic financial decisions that create long-term impact.

If you’re a small business owner aged 70½ or older, Qualified Charitable Distributions could offer a smarter way to give—reducing your tax burden while supporting the causes that matter to you. It’s a rare win-win in the tax code, but only if you use it correctly.

Interested in using QCDs to reduce taxes and maximize your giving strategy? Schedule a consultation with Nth Degree CPAs today and get a custom plan tailored to your retirement and philanthropic goals.

How Medical Reimbursement Plans Help Small Business Owners Save on Taxes

subscriptions@nthdegreecpas.com (Nth Degree) — Tue, 07 Jan 2025 00:36:16 GMT

If you're a small business owner, finding ways to improve your financial strategy while offering competitive benefits can feel like a balancing act. But one often-overlooked strategy does both: medical reimbursement plans. These plans allow you to reimburse employees for healthcare costs—while gaining meaningful tax advantages for your business.

In this article, we’ll explore how medical reimbursement plans work, the different options available, and how they can reduce your tax burden while improving employee satisfaction and retention.

Understanding Medical Reimbursement Plans

Medical reimbursement plans are employer-funded benefits that reimburse employees for qualified healthcare expenses. These plans are structured to offer flexibility and tax efficiency, making them especially attractive for small businesses that want to offer meaningful benefits without committing to high-cost group health insurance.

Types of Medical Reimbursement Plans

1. Qualified Small Employer HRA (QSEHRA)

Ideal for businesses with fewer than 50 employees, QSEHRA allows you to reimburse staff for qualified medical expenses and insurance premiums. These reimbursements are tax-free for employees and tax-deductible for you.

2. Individual Coverage HRA (ICHRA)

ICHRA gives employees a fixed allowance to purchase their own individual health insurance coverage. It offers flexibility for businesses of any size and helps employees find the coverage that fits their needs.

3. Group Coverage HRA (GCHRA)

GCHRA works alongside a traditional group insurance plan, helping employees cover out-of-pocket expenses. This can be a cost-effective way to boost coverage without dramatically increasing premiums.

4. Standard Health Reimbursement Arrangement (HRA

This option allows employers to reimburse employees for qualified medical expenses. It offers broad flexibility in how much and what types of expenses are reimbursed.

Key Benefits for Business Owners

1. Tax Advantages

Reimbursements made through these plans are typically tax-deductible for the business and non-taxable to employees—offering a rare double benefit.

2. Recruitment and Retention

Providing flexible, tax-advantaged health benefits can help you attract and retain top talent—especially in a tight labor market where benefits matter more than ever

3. Customization and Control

You set the budget and define eligible expenses, giving you more control over costs and allowing you to tailor the benefit to fit your financial and hiring goals.

What to Know Before You Launch a Plan

Eligibility and Ownership Rules Depending on your business structure (like an S Corporation), certain ownership rules may affect whether you, as the owner, can participate in the plan. It’s essential to understand these nuances to stay compliant and maximize your benefits.

Section 125 (Cafeteria) Plans

Want to give employees even more flexibility? A Section 125 plan lets them pay for certain benefits (like health insurance premiums, vision, or dental) with pre-tax dollars, further reducing their taxable income.

Consult a CPA to Get It Right

Choosing the right medical reimbursement plan—and setting it up correctly—requires careful planning. A CPA who specializes in small business tax strategy can help you evaluate your options, ensure compliance with IRS guidelines, and align your reimbursement strategy with your business goals.

Medical reimbursement plans offer an efficient, flexible way to reduce tax liabilities and improve your employee benefits. Whether you’re running a creative agency, a consulting firm, or a small retail operation, these plans can be a powerful tool to enhance financial strategy and team wellbeing.

Want to create a tax-efficient benefit strategy that works for your business and your team? Schedule a consultation with Nth Degree CPAs today and let’s find the right medical reimbursement plan for your goals.

How to Leverage a Traditional 401(k) Business Plan to Lower Taxes and Build Wealth

subscriptions@nthdegreecpas.com (Nth Degree) — Mon, 06 Jan 2025 23:40:43 GMT

If you're a business owner juggling tax planning, employee retention, and retirement goals, the traditional 401(k) plan might be the overlooked solution that ties it all together. Unlike other retirement plans, a 401(k) offers flexibility, scalability, and significant tax advantages—for both you and your team. Let’s break down how it works and why it could be one of the smartest moves for your business’s long-term financial strategy.

What Is a Traditional 401(k) Business Plan—and How Does It Work?

A traditional 401(k) business plan allows both employers and employees to contribute pre-tax dollars into a retirement account, lowering taxable income in the current year while building long-term savings. Contributions grow tax-deferred until retirement withdrawals begin, usually after age 59½.

Here’s why it’s an appealing option for small business owners:

Tax-deferred growth: Your contributions lower taxable income now, and your investments grow without immediate tax.
Employee contributions: Team members can defer a portion of their salary, helping them build their own nest egg.
Optional employer match: You can match employee contributions, providing an incentive that supports retention and workplace satisfaction.

Why the Traditional 401(k) Business Plan Deserves a Closer Look

Most business owners think of the 401(k) as a corporate benefit. But it can also be one of the most effective tax and wealth strategies available to small enterprises.

Tax Efficiency for Business Owners

As the business owner, your contributions are deductible, reducing your company’s taxable income. You can also contribute as an employee and employer, potentially doubling your tax-saving opportunities. Contribution limits are higher than most retirement plans, with the ability to contribute over $70,000 annually when combining employee deferrals, employer match, and profit-sharing.

Attract and Retain Talent

Today’s workforce values retirement benefits—and so do potential hires. Offering a 401(k) plan helps you compete with larger firms and retain top performers, especially when paired with a generous employer match or a vesting schedule that rewards loyalty.

Scalability for Growing Businesses

A traditional 401(k) business plan grows with your business. As revenue increases, you can enhance benefits, add profit-sharing, or even pair it with a cash balance plan for higher contribution potential.

Smart Moves to Maximize Your 401(k) Strategy

Setting up a plan is just the start—here’s how to make it work harder for your business.

Use a Safe Harbor Provision: Avoid complicated IRS testing and ensure you can maximize contributions without running into nondiscrimination issues.
Pair with a Profit-Sharing Option: Contribute beyond the basic match when cash flow allows, giving yourself and key employees a meaningful boost.
Stay Compliant: Work with a CPA or retirement plan administrator to meet reporting, disclosure, and filing requirements.

Build a Smarter Financial Future with Strategic Retirement Planning

A traditional 401(k) business plan isn’t just about helping your employees save—it’s a foundational piece of your tax and wealth strategy. If you’re ready to turn this underused benefit into a high-leverage asset for your business and your retirement, we’re here to help.

Get your customized 401(k) strategy today. Schedule a consultation with Nth Degree CPAs , and let’s build a plan that aligns with your goals.

Reclaiming Time: Prioritizing What Matters in Q1

subscriptions@nthdegreecpas.com (Nth Degree) — Sun, 05 Jan 2025 16:25:03 GMT

Time is your most valuable resource-yet it's often the most wasted.

As the new year begins, CEOs and business owners everywhere are bombarded with demands: end-of-year reports, employee reviews, planning meetings, tax prep-you name it. The pressure to "do more" quickly builds. But doing more isn't the answer. The key to success lies in focusing your time on what truly matters-high impact activities that drive your business forward and align with your Solvable Problem.

At Nth Degree CPAs, we've seen it repeatedly: business owners bogged down by tasks that consume time but add no real value. They're caught in the weeds, managing rather than leading. So, how do you reclaim your time and focus on strategic growth?

1.- Audit Your Time

Start by taking a hard look at how you spend your day. Are you stuck in meetings that could've been emails? Are you handling tasks that could be delegated? Create a list of everything you do in a week and assign each activity a category: high-value, necessary but delegable, or wasteful. This will give you a clear picture of where your time is going.

2.- Prioritize High-Impact Activities

Not all tasks are created equal. Focus on what moves you closer to your Solvable Problem. For example, if your goal is financial stability, evaluate cash flow and explore new revenue opportunities. If your goal is a better work-life balance, carve out time for systems that improve operational efficiency.

3.- Time Block Your Schedule

Block specific hours for strategic work-the activities that align with your goals. Protect these blocks like sacred ground. This practice reduces decision fatigue and ensures that time is spent on what matters most every day.

A Real-Life Example

One of our clients-the CEO of a mid-sized e-commerce business- was overwhelmed by managing day-to-day operations. By auditing their time, they realized they spent 60% of their week on tasks their team could handle. We helped them implement a delegation system, freeing up to 15 hours weekly. That time was reinvested in planning a product expansion, which increased revenue by 20% in six months.

The Nth Degree Difference

Reclaiming your time isn't just about productivity hacks-it's about aligning your efforts with your bigger picture. That's where we come in. At Nth Degree CPAs, we help business owners engineer strategies focusing on Closer Over More-prioritizing meaningful progress over aimless activity.

Ready to make Q1 your most productive quarter yet? Let's build a plan that prioritizes what matters. Schedule an introduction call today.

Why Small and Mid-Sized Businesses Deserve Big-Company Strategies

subscriptions@nthdegreecpas.com (Nth Degree) — Sat, 04 Jan 2025 16:22:54 GMT

The SMB Disadvantage

It's no secret that Fortune 500 companies leverage advanced financial strategies to minimize taxes, optimize cash flow, and drive growth. But what about small and mid-sized businesses (SMBs)? Too often, they're told these tools are out of reach. Instead, they're handed basic tax filings and generic advice that fails to address their unique challenges.

The Real Cost of Settling for Less

Missed Opportunities: Many SMBs overpay in taxes because their CPA doesn't explore advanced deductions or credits.
Cash Flow Challenges: SMBs struggle to fund growth or reinvest in their operations without strategic planning.
Competitive Disadvantage: While large companies reinvest tax savings into R&D or expansion, SMBs are left playing catch-up.

How Nth Degree Levels the Playing Field

At Nth Degree, we bring the same strategies used by big corporations to SMBs, including:

Advanced Tax Strategies: We identify and implement tools, such as cost segregation studies, R&D credits, and entity restructuring, to minimize tax burdens.
Cash Flow Optimization: By analyzing spending and leveraging tax savings, we ensure SMBs have the liquidity to scale without unnecessary debt.
Tailored Guidance: Our strategies are customized for SMBs, aligning with their industry, revenue, and growth goals.

Real-World Example

A $6M retail business worked with us to identify $150K in annual tax savings. These funds were reinvested into upgrading their supply chain, improving profitability by 20% within two years. The owner noted, "For the first time, I feel like I'm playing the same game as the big guys-and winning."

Key Takeaway

SMBs shouldn't have to settle for less. With the right financial partner, they can access world-class strategies that empower them to grow, compete, and thrive.

The Purpose-Driven Entrepreneur: Building a Business That Serves Your Life

subscriptions@nthdegreecpas.com (Nth Degree) — Fri, 03 Jan 2025 16:18:04 GMT

What Makes a Purpose-Driven Entrepreneur?

Purpose-driven entrepreneurs see their business as a means to an end, not the end itself. Unlike those chasing endless growth or ego-driven accolades, these individuals build businesses to support the life they want. Their goals are personal-financial freedom, time with family, and giving back to their community-not tied to arbitrary benchmarks like "10x growth."

Common Challenges They Face

Balancing Growth and Clarity: Purpose-driven entrepreneurs often struggle with scaling while maintaining clarity on what they really want from their life.
Misaligned Financial Advice: Traditional CPAs focus on compliance and short-term tactics, leaving purpose-driven entrepreneurs needing a cohesive strategy that reflects their unique goals.
Cash Flow Constraints: Despite substantial revenue, they may need more liquidity to fund the life or causes they value most.

How Financial Strategies Align with Purpose

At Nth Degree, we specialize in:

Aligned Finances: Strategies that bridge the gap between business success and personal fulfillment.
Cash Flow Freedom: Ensuring your business generates liquidity for investments that matter to you-whether scaling, retiring early or giving back.
Tax Savings: Keeping more of what you earn to fund your vision.

A Real Impact Story

A $9M business owner worked with Nth Degree to reduce their annual tax liability by $200K, which they used to retire early and establish a family foundation. For them, financial success meant creating a legacy, not chasing arbitrary growth goals.

Key Takeaway

Your business should serve your life-not the other way around. Purpose-driven entrepreneurs need advisors who understand this and can align financial strategies with deeply personal goals.

Maximize Tax Deductions With a 412(e)(3) Retirement Plan for Business Owners

subscriptions@nthdegreecpas.com (Nth Degree) — Thu, 02 Jan 2025 23:14:49 GMT

If you’re a business owner focused on building a reliable retirement strategy (and lowering taxes along the way), the Section 412(e)(3) Plan deserves your attention. While it may sound like alphabet soup, this plan offers one of the most predictable, high-contribution retirement options available. And when you're juggling business growth and long-term planning, predictability and tax efficiency can be worth their weight in gold.

At Nth Degree CPAs, we work with small business owners—whether you’re running a medical practice, a marketing agency, or a consulting firm—who want to use every tool available to build tax-advantaged wealth. The Section 412(e)(3) Plan is one of those tools.

What Is a Section 412(e)(3) Plan?

The Section 412(e)(3) Plan is a fully insured, defined benefit retirement plan funded exclusively by fixed annuities or a combination of life insurance and annuity contracts. Unlike traditional defined benefit plans, a 412(e)(3) doesn’t rely on investment performance. Instead, it guarantees retirement benefits, providing certainty in both contributions and distributions.

It’s a conservative option—ideal for business owners who want to maximize contributions and lock in a guaranteed benefit at retirement without the market risk.

Why Business Owners Should Consider a 412(e)(3) Plan

1. Higher Contribution Limits Than Other Retirement Plans

Most small business retirement plans—like SEP IRAs or SIMPLE 401(k)s—have contribution caps. A 412(e)(3) Plan allows you to contribute significantly more, making it an ideal strategy for business owners looking to catch up on retirement savings or shelter more taxable income.
Pro tip: Larger contributions can lead to substantial current-year tax deductions.

2. Guaranteed Benefits at Retirement

Because the plan is funded with insurance products (annuities and life insurance), you aren’t exposed to the ups and downs of the market. You’ll know exactly what you’ll get at retirement, which makes financial planning much simpler.

3. Accelerated Retirement Funding

If you’re a business owner who wants to make up for lost time—whether you started saving later or your income has recently jumped—a 412(e)(3) Plan lets you accelerate your contributions. That’s why it’s popular with owners in their 40s and 50s who want to fund retirement aggressively in a relatively short time frame.

4. Tax Efficiency

Contributions to the plan are generally tax-deductible for the business. This can lower your taxable income substantially—particularly valuable for high-income entrepreneurs seeking ways to reduce tax liability in a given year.

Is a Section 412(e)(3) Plan Right for Your Business?

This plan works best for small businesses with consistent cash flow that can support high contributions. It’s particularly effective for owners who:

Are highly compensated
Have few or no employees (or those with employees looking to offer strong retirement benefits)
Want a conservative, guaranteed strategy that offers significant tax deductions

It’s not ideal if you prefer flexible contributions from year to year or if you expect highly variable cash flow.

Actions You Can Take Today

1. Consult with a CPA who understands advanced retirement strategies. Not all plans are created equal, and the rules around 412(e)(3) Plans can be complex. At Nth Degree CPAs, we’ll walk you through how it could fit into your bigger tax strategy.
2. Review your current retirement plan contributions. If you’re maxing out other plans and looking for more tax-deferred space, this could be your next step.
3. Start early. These plans require setup and administration, so don’t wait until year-end.

Ready to See If a 412(e)(3) Plan Fits Your Business? Schedule a consultation today.

How to Use a Simple 401(k) to Lower Taxes and Retain Employees

Wed, 01 Jan 2025 23:06:05 GMT

If you’re like most small business owners or entrepreneurs, retirement planning tends to take a backseat to daily operations. But offering a retirement plan—without adding complexity or significant cost—can make a big difference for both you and your team. Enter the Simple 401(k): a tax-advantaged, straightforward retirement plan designed specifically for small businesses.

At Nth Degree CPAs, we help business owners take advantage of strategies that reduce taxes and build wealth. The Simple 401(k) is one of the easiest tools to implement when you’re ready to provide a competitive benefit to employees while securing your own financial future.

What Is a Simple 401(k)?

A Simple 401(k)—not to be confused with a traditional 401(k)—is a retirement savings plan designed for small businesses with 100 or fewer employees. “SIMPLE” stands for Savings Incentive Match Plan for Employees, and it offers a streamlined way for business owners to provide retirement benefits without dealing with the administrative burdens or high costs often associated with traditional plans.

For many small businesses, it strikes the right balance between ease of use, affordability, and tax advantages.

Key Benefits of a Simple 401(k)

1. Tax Advantages for Employers and Employees

Contributions made by employees are pre-tax, reducing their taxable income for the year. As the business owner, you can also make contributions that are tax-deductible, lowering your company’s overall taxable income.

2. Attract and Retain Employees

Offering a retirement plan can make your business more competitive in hiring. Many employees—especially those in competitive industries—consider retirement benefits a deciding factor when choosing an employer.

3. Lower Administrative Costs and Less Complexity

Unlike traditional 401(k) plans, a Simple 401(k) requires minimal paperwork, has no annual IRS filing requirement (Form 5500), and avoids nondiscrimination testing. This makes it a much simpler option for time-strapped entrepreneurs.

How Contributions Work

As the employer, you have two contribution options for the Simple 401(k):

1. Matching Contributions

You can match each employee’s salary deferral contribution dollar-for-dollar up to 3% of their compensation.
Example: If an employee earns $50,000 and contributes 3% ($1,500), you match $1,500.

2. Nonelective Contributions

Alternatively, you can contribute 2% of each eligible employee’s compensation, whether they participate in the plan or not.
Example: For an employee earning $50,000, you’d contribute $1,000 automatically.

Both options help reduce your taxable income while supporting your team’s retirement goals.

Who’s Eligible?

Employees are eligible if they earned at least $5,000 in compensation during any two prior calendar years and are expected to earn $5,000 in the current year.

There’s no age requirement, and eligibility criteria are minimal, making it an accessible benefit for most teams.

Considerations Before You Start

You can’t offer any other retirement plans alongside a Simple 401(k).
Contribution limits for 2025 are lower than traditional 401(k)s—$16,000 for employee deferrals, plus a $3,500 catch-up contribution for those 50 and older.
Withdrawals are subject to early withdrawal penalties if taken before age 59½, and a 25% penalty may apply if funds are withdrawn within the first two years of participation.

Actions to Take Now

Review Your Business Goals: A Simple 401(k) works best if you want to offer retirement benefits with minimal complexity and cost.
Compare with Other Retirement Plans: If you’re planning rapid growth, you might consider whether a traditional 401(k) or SEP IRA fits better long-term.
Get Professional Guidance: Setting up the right retirement plan requires understanding both the tax advantages and the administrative obligations.

Ready to explore whether a Simple 401(k) is right for your business? Schedule a consultation with us today . Let’s build a strategy that works for you.

In Their Own Words: What Clients Say About Nth Degree CPAs | Nth Degree CPAs

subscriptions@nthdegreecpas.com (Nth Degree) — Fri, 27 Dec 2024 16:16:17 GMT

Client Experiences Speak Louder Than Words

When it comes to financial planning and tax strategy, results are everything. At Nth Degree CPAs, our client's success stories aren't just anecdotes-they're proof of how proactive strategy, accountability, and tailored solutions can transform a business.

Here's what some of our clients have shared:

"Our CPA never showed us the possibilities-Nth Degree not only identified them but made them happen."
Case in Point: A $12M service-based business consistently overpays taxes due to missed deductions. Their previous CPA dismissed opportunities for tax credits, leaving them with stagnant cash flow. Within a year, Nth Degree implemented strategies that saved the business $300K annually, allowing the owner to invest in new equipment and expand into a lucrative market.
"I've saved hundreds of thousands in taxes while improving cash flow. For the first time, I feel financially confident."
Case in Point: A $7M construction company struggled with liquidity due to tight cash flow and poor tax planning. By restructuring their compensation strategy and leveraging overlooked credits, we helped them reduce tax liability and free up $250K in cash flow. The owner reinvested those funds into new projects, which doubled annual revenue in two years.

Why These Stories Matter

Proven Results: These are not hypothetical scenarios-they represent real businesses and measurable outcomes achieved through proactive financial strategies.
Tailored Strategies: Every business is unique, and so are the solutions. Whether it's restructuring payroll, leveraging credits, or long-term growth planning, our clients receive customized advice that aligns with their goals.
Long-Term Impact: These are not one-time wins. Each strategy sets the foundation for sustained financial health and growth.

Takeaway

The right CPA doesn't just minimize tax bills-they change the trajectory of your business. Behind every success story is a business owner who demanded more-and got it.

Client Success and Accountability

subscriptions@nthdegreecpas.com (Nth Degree) — Fri, 27 Dec 2024 16:14:05 GMT

Why Accountability Is the Missing Piece in Financial Strategy

The Challenge Of Accountability

Financial plans are only as good as their execution. Many CPAs hand over strategies but fail to ensure they're implemented effectively, leaving business owners feeling unsupported.

How Accountability Drives Results

At Nth Degree, we prioritize follow-through. For example:

Implementation Support: We coordinate with your team, bookkeepers, and legal advisors to ensure every recommendation is executed.
Regular Reviews: Quarterly check-ins identify new opportunities and keep plans on track.
Impact Measurement: We provide clear metrics to show how strategies are improving your financial position.

Real-World Example

A $7M business owner saved $180K in taxes by implementing overlooked credits and deductions. These savings funded a new product launch, increasing revenue by 30%. Regular accountability meetings ensured every piece of the plan was executed flawlessly.

Take Action

Ask your CPA:

How will you ensure this plan is implemented?
What follow-up will you provide to measure results?

Accountability transforms strategies from ideas into outcomes.

Introducing  Rigging the Game  and Key Principles

subscriptions@nthdegreecpas.com (Nth Degree) — Sat, 21 Dec 2024 16:11:58 GMT

What Is the Solvable Problem™️, and Why Does It Matter?

The Concept of the Solvable Problem™️

Dan Nicholson's Rigging the Game challenges the idea of chasing generic goals like "grow the business" or "make more money". Instead, it introduces the Solvable Problem™, a tailored financial goal that accounts for your unique constraints, values, and desired outcomes.

Why It's Essential

Business owners often need a clear definition of success to pursue conflicting objectives, leaving them overworked and financially frustrated. The Solvable Problem™ gives you a compass, ensuring every decision brings you closer to your specific vision of financial certainty.

How It Works

Clarify Your Values: Define what truly matters-time with family, financial security, freedom from stress.
Account for Constraints: Consider risks, cash flow needs, and industry challenges.
Build a Path: Align your financial strategies with this clear goal.

A Real Example

One business owner came to Nth Degree feeling cash-strapped despite strong revenue. By defining their Solvable Problem™, we identified how to restructure their compensation, unlock hidden tax savings, and create a 3-year roadmap to build liquidity. Within 12 months, they doubled their take-home pay.

Take Action

Ask yourself:

What does financial success look like for me?
Am I making decisions that align with that vision?

A Solvable Problem™ isn't just a goal-it's your roadmap to sustainable success.

The Certainty Commandments: Building a System That Works for You

subscriptions@nthdegreecpas.com (Nth Degree) — Sat, 21 Dec 2024 16:08:49 GMT

Rethinking Financial Success

The Certainty Commandments outlined in Rigging the Game offer a blueprint for achieving financial clarity. These principles guide business owners to make decisions rooted in confidence, not guesswork.

Key Principles

Closer Over More:  Prioritize actions that bring you closer to your goal, rather than chasing endless growth for its own sake.

Example : Instead of expanding into new markets, one business focused on improving its operations' profitability, saving $200K annually in tax liabilities.

Preference vs Binary: A pathway to solving problems faster is understanding if the “problem” is a preference or if there is a true right or wrong answer.

Example : The question, “how much should I grow my business” is a preference-based question. No one can answer that but you as it depends on your goals .

Asymmetric Upside:  Seek opportunities with significant benefits and minimal risks.

Example : A client reinvested tax savings into software that streamlined operations, yielding a 5x return within a year.

Infinite Trade-Offs:  Recognize every decision impacts other opportunities.

Example : Delaying an acquisition allowed one client to stabilize cash flow, ensuring long-term growth.

Actionable Steps for Implementation

Create a decision-making framework based on your Solvable Problem™.
Regularly evaluate whether your financial decisions align with long-term goals.

By following these principles, you can build a system that minimizes risk, maximizes opportunities, and delivers consistent progress.

2025 Tax Brackets: New Opportunities for Business Owners

Wed, 18 Dec 2024 19:25:05 GMT

Most business owners I work with aren’t losing sleep over tax brackets—until they realize they should be. And by then, it’s usually too late to make adjustments. The 2025 tax bracket updates are more than just a government inflation adjustment; they’re an opportunity to fine-tune your financial strategy and keep more of what you earn. Here’s how smart entrepreneurs are turning these changes into cash flow wins.

What the 2025 Tax Bracket Changes Mean for Business Owners

This year’s federal tax bracket adjustments offer business owners a chance to reduce their taxable income’s exposure to higher rates. The IRS increased income thresholds across all brackets, which means more of your earnings stay in lower tax bands.

For example:

The 24% bracket now applies to single filers earning up to $203,850 (up from $182,100) and joint filers up to $407,700.
The 32% bracket doesn’t kick in until after these amounts, providing breathing room for growing businesses that have seen income rise alongside inflation.
The top bracket (37%) starts at $609,350 for individuals and $731,000 for joint filers.

This isn’t just about paying less tax. It’s about avoiding “bracket creep,” where inflation pushes earnings into higher tax rates without an increase in purchasing power. If you’re not factoring these thresholds into your estimated payments and cash flow projections, you’re flying blind.

The Higher Standard Deduction: A Simple, Effective Tool

For business owners who don’t itemize deductions (and many don’t), the standard deduction offers a straightforward way to reduce taxable income.

For 2025, the standard deduction increases to $14,400 for single filers and $28,800 for married couples filing jointly.

This is an easy win if your business expenses are streamlined and you don’t have a laundry list of personal deductions. It simplifies filing and often results in less taxable income hitting those higher brackets.

Other Key Tax Breaks to Leverage in 2025

Qualified Business Income (QBI) Deduction

If you own an LLC, S-Corp, or sole proprietorship, you can deduct up to 20% of your QBI. With higher income limits in 2025, more owners can take advantage of this deduction before phase-outs apply.

Section 179 Deduction for Equipment and Asset Purchases

Planning to upgrade tech or buy equipment? Section 179 allows you to fully deduct the cost (within the IRS limits), reducing taxable income and freeing up cash flow for future investments.

Research & Development (R&D) Tax Credit

If your business is developing new products, services, or technology, you could qualify for this credit. It reduces your tax liability dollar-for-dollar and supports innovation spending.

How to Put These 2025 Updates to Work for You

Tax changes are only as useful as the strategy you build around them. Here’s how to take action:

1. Reassess Estimated Tax Payments

If your income fluctuates (as most entrepreneurs’ does), use the new brackets to better estimate your quarterly tax payments. Avoid penalties while keeping cash flow steady.

2. Make Smart, Deductible Investments

Consider timing major purchases—whether equipment, technology, or professional development—so they qualify for deductions under Section 179 and maximize tax savings.

3. Boost Retirement Contributions

Contribute to SEP IRAs or Solo 401(k)s to reduce taxable income. In 2025, contribution limits remain generous, making this a tax-efficient strategy for long-term savings.

The 2025 tax bracket adjustments give business owners an edge—but only if they take advantage of them. Higher thresholds, increased deductions, and proven credits all point to one thing: opportunity. The entrepreneurs who plan ahead will keep more of their earnings working for them.

Schedule a consultation with Nth Degree CPAs today. Let’s create a customized plan to reduce your tax burden and improve cash flow.

Proactive Strategies vs. Traditional CPAs

subscriptions@nthdegreecpas.com (Nth Degree) — Tue, 17 Dec 2024 16:05:13 GMT

How Proactive Financial Planning Drives Business Growth

What Does Proactive Financial Planning Mean?

Proactive planning is not just about minimizing taxes-it's about using your financial strategy as a tool for growth. Traditional CPAs focus on historical data, but proactive financial planning looks ahead to align every dollar with your goals.

Real-World Impact

Imagine a $10M business struggling with tight cash flow. Their traditional CPA provided basic tax filing, but no guidance on reinvesting cash or improving liquidity. By working with Nth Degree, this business implemented quarterly cash flow projections, adjusted salary structures, and identified overlooked deductions. Within 18 months, their take-home pay increased by $300K, which they reinvested in scaling operations.

Key Components of Proactive Planning

Quarterly Tax Projections: Know what's coming and avoid surprises.
Cash Flow Optimization: Redirect funds to opportunities with the highest return.
Customized Growth Strategies: Plan for equipment purchases, expansions, or acquisitions with confidence.

Actionable Tips for Business Owners

Schedule quarterly reviews to ensure your financial plan stays aligned with business changes.
Work with advisors who challenge you to think beyond compliance and ask, "What's next?"

Proactive financial planning empowers you to make decisions with clarity and confidence, creating momentum for sustainable growth.

How Proactive Financial Planning Drives Business Growth

subscriptions@nthdegreecpas.com (Nth Degree) — Tue, 17 Dec 2024 16:02:46 GMT

Why Proactivity Matters

Imagine driving a car using only the rear view mirror-you'd miss every turn and obstacle ahead. That's precisely how traditional accounting works: it uses past data to file taxes and balance books.

Proactive financial planning flips the script, using real-time data, forecasts, and strategy to make future-focused decisions. It's not just about compliance; it's about creating a roadmap to achieve your business goals.

The Benefits of Proactive Planning

Optimized Cash Flow:

Proactive planning helps you identify where your money is going and ensures every dollar works toward growth. Reallocating unnecessary expenses can create liquidity for expansion, debt repayment, or reinvestment.

Tax Efficiency:

Proactive planning isn't about scrambling for deductions at year-end. It's about leveraging tax strategies throughout the year, like restructuring your entity or capturing tax credits, to reduce your liability to align with your growth objectives.

Growth-Ready Financials:

Strong financial reporting isn't just a box to check; it's a tool that positions you for success. Investors and lenders are far more likely to approve funding for businesses with detailed, forward-looking financial statements.

A Real-World Example

A $10M manufacturing company came to us with tight cash flow and no clear plan for growth. By implementing a 3-year financial strategy, they aligned cash flow with operational needs, structured payroll to reduce tax liability and reinvested savings into expanding their operations.

The result?

$300K in annual tax savings.
Funding secured for a second facility.
A doubled business valuation within three years.

Actionable Tips for Business Owners

Schedule quarterly reviews with your CPA to identify risks and opportunities early.
Align every financial decision with a long-term goal-whether it's expansion, liquidity, or personal financial freedom.
Ask your CPA to proactively suggest strategies that reduce taxes while fueling growth.

Key Takeaway

Proactive financial planning isn't just a luxury for Fortune 500 companies. For businesses of all sizes, it's the foundation for achieving sustainable growth, making informed decisions, and staying ahead of the competition.

2025 Energy Tax Credits: How Homeowners Can Maximize Savings

Mon, 16 Dec 2024 16:45:55 GMT

Energy-efficient upgrades aren’t just good for the environment—they’re great for your wallet. But if you’re like many homeowners I’ve worked with over the years, you’re probably wondering if the numbers really add up. The short answer? They do—especially when you factor in the new tax breaks and incentives available for 2025. The key is knowing which programs apply to you and how to use them to maximize savings. Let’s break it down.

How the 2025 Energy Tax Credits Can Reduce Your Costs

Thanks to updates tied to the Inflation Reduction Act (IRA), homeowners now have access to expanded federal tax credits aimed at reducing the cost of energy-efficient improvements.

The biggest opportunity? The Residential Clean Energy Credit. Homeowners can now claim a 30% federal tax credit on the installation of renewable energy systems—think solar panels, geothermal heat pumps, battery storage, and wind turbines. This credit applies through 2032, making it a long-term opportunity for those ready to commit to clean energy solutions.

Additionally, the Energy Efficient Home Improvement Credit offers up to $1,200 annually for upgrades like energy-efficient windows, insulation, HVAC systems, and smart thermostats. These credits directly reduce your federal tax bill, putting money back into your pocket for upgrades you may have already been planning.

Mortgage Incentives That Lower the Cost of Going Green

Beyond tax credits, 2025 has brought new mortgage-related programs designed to make energy-efficient improvements more affordable from day one.

For example:

The Green Mortgage Insurance Premium Reduction Program lowers mortgage insurance premiums for homes that meet energy efficiency standards like Energy Star or the HERS Index.
The FHA Energy Efficient Mortgage (EEM) Program allows homeowners to roll the cost of energy upgrades into their home financing—reducing out-of-pocket expenses and simplifying the payment process.

These incentives not only make upgrades easier to afford but also improve long-term cash flow by reducing both energy costs and mortgage-related expenses.

Practical Steps Homeowners Should Take Now

If you’re considering energy-efficient improvements, here’s how to maximize these new incentives and tax breaks:

1. Start with an Energy Audit

An audit identifies where your home is losing energy and highlights the upgrades that will provide the most savings. Many utility companies offer free or discounted audits, so it’s a low-cost first step.

2. Understand Which Tax Credits Apply to Your Projects

Review your planned upgrades alongside IRS guidelines (or better yet, sit down with a tax professional). Ensure you’re eligible for the Residential Clean Energy Credit or the Energy Efficient Home Improvement Credit, and gather receipts and documentation to simplify your filing.

3. Explore Green Financing Options

If you’re planning major upgrades, like solar panels or a heat pump system, investigate programs like the Green Mortgage Insurance Premium Reduction or the EEM Program. These can significantly reduce upfront costs and improve your long-term return on investment.

4. Look Into Local and State Incentives

Many state governments and utility companies offer additional rebates and tax credits on top of federal incentives. These programs can help you stack savings and offset the total investment required.

For homeowners looking to reduce costs and make energy-efficient upgrades, 2025 brings some of the best opportunities we’ve seen in years. Whether it’s federal tax credits, mortgage incentives, or local rebates, there are plenty of ways to keep more money in your pocket while improving your home.

Ready to build a tax strategy that includes energy credits? Schedule a consultation with Nth Degree CPAs today. We’ll help you integrate energy incentives into your broader tax plan—so you can maximize savings and minimize stress.

The Compliance Trap

subscriptions@nthdegreecpas.com (Nth Degree) — Mon, 09 Dec 2024 15:59:45 GMT

The Compliance Trap: Why It's Holding Your Business Back?

What is the Compliance Trap?

The compliance trap is a cycle in which CPAs focus solely on tax filing and record-keeping. While these tasks are important, they don't stimulate business growth. For many business owners, this reactive approach leads to stagnant growth, tight cash flow, and frustration.

How It Stifies Growth?

Consider this: A business owner generates $5M in annual revenue but needs help to take home consistent profits. Their CPA needs to discuss optimizing their salary, leveraging deductions, or improving cash flow. Without strategic planning, the business is left spinning its wheels, unable to invest in new opportunities or scale operations.

Breaking Free with Proactive Strategies

A proactive financial partner does more than file taxes. They help you:

Minimize Taxes: Identify credits, deductions, and strategies tailored to your business structure.
Maximize Cash Flow: Ensuring your money works harder for you, funding growth initiatives and investments.
Avoid Surprises: With quarterly planning and projections to stay ahead of tax obligations.

A Real-World Scenario

One Nth Degree client transitioned from a compliance-focused CPA to a strategic partner. By restructuring their operations and leveraging overlooked credits, they saved $400K in taxes in their first year. These savings funded a new product line, doubling revenue within two years.

Key Takeaway

If your CPA isn't helping you build a financial roadmap, it's time to reconsider the relationship. Break free from the compliance trap and start building future-focused strategy.

Breaking the Compliance Cycle

subscriptions@nthdegreecpas.com (Nth Degree) — Mon, 09 Dec 2024 15:57:49 GMT

Why Business Owners Deserve More Than Compliance-Only Accounting

The Problem with Compliance-Only Accounting

Picture this: A million-dollar business owner receives their annual meeting invite from their CPA. They’re told what they owe, but there’s no discussion of strategies to lower next year’s tax bill or optimize their cash flow. Instead, the advice ends with, “Max out your retirement account.”

This isn’t rare—it’s the norm for most traditional CPAs. Their focus is compliance: ensuring the numbers add up, the deadlines are met, and the IRS is satisfied. While compliance is necessary, it’s not sufficient to drive business growth.

Why It’s Not Enough

Business owners deserve more. They need financial advisors who understand their goals and actively work to help achieve them. Compliance-only accounting overlooks opportunities like tax credits, reinvestment strategies, and cash flow optimization. The result? You pay more taxes than necessary and miss chances to scale your business.

What You Should Demand From Your CPA

The best advisors offer forward-looking insights:

Strategic Tax Planning: Identifying opportunities to reduce your tax burden legally.
Cash Flow Optimization: Ensuring liquidity to reinvest in growth or pay down debt.
Proactive Guidance: Regularly review your financial position and adjust plans based on your goals.

Key Takeaway

A great financial partner helps you prepare for the future, not just reconcile the past. Ask your CPA:

What tax-saving strategies will we implement over the next three years?
How will you help me align my business finances with my personal goals?

The answers will tell you whether it’s time to raise the bar.

Boost Cash Flow and Reduce Taxes with Bonus Depreciation

Mon, 11 Nov 2024 23:16:09 GMT

If you’ve bought equipment, technology, furniture, or even a vehicle for your business this year, there’s a good chance you can deduct the full cost right away. That’s the power of bonus depreciation—a tax strategy that lets you take the entire deduction in year one instead of spreading it out over time.

This isn't a loophole. It’s a smart, IRS-approved method for improving cash flow when it's needed most. And with the bonus depreciation percentage phasing down from 100%, the timing matters more than ever.

What Bonus Depreciation Is

Let’s start with the basics. Normally, when you buy a business asset (like a piece of equipment), you depreciate it over its “useful life”—maybe 5 or 7 years. Bonus depreciation flips that model by allowing you to deduct 100% of the asset’s cost in the year you place it into service (as long as it qualifies).

This was supercharged under the Tax Cuts and Jobs Act, but that benefit is currently phasing out:

2023: 80% deduction
2024: 60%
2025: 40%

So if you’re planning capital investments, the sooner you act, the better the tax savings.

Why It Matters

Here’s what bonus depreciation can do for your business:

Reduce taxable income significantly in the year of purchase
Improve short-term cash flow to reinvest in growth
Offset high-revenue years with large deductions

It’s especially powerful for growing businesses making strategic investments—but it isn’t always the best move if your income is low this year and expected to rise. In that case, you may want to use standard depreciation to spread the deduction across higher tax brackets.

What Qualifies for Bonus Depreciation?

Equipment and machinery
Furniture and fixtures
Computers and technology
Certain vehicles
Leasehold improvements (under specific conditions)

The key is that the property must be new to you, used predominantly for business (over 50%), and placed in service during the tax year.

Vehicle Considerations

Yes, you can use bonus depreciation for business vehicles—but it depends on the weight:

Vehicles under 6,000 lbs. are capped under IRS luxury limits (Section 280F)
Vehicles over 6,000 lbs. (like large SUVs or trucks) are not subject to those caps

Just remember, bonus depreciation for vehicles is prorated based on business use. You’ll need to show it’s used at least 50% of the time for business purposes—and you’ll want clean records to back that up.

Make the Strategy Work for You

Bonus depreciation is simple in theory but strategic in practice. The trick is knowing when to use it, what qualifies, and how to align it with your broader tax plan. Thinking about buying equipment or a business vehicle this year? We’ll help you decide whether bonus depreciation is the right move—and how to make it part of a smart, cash-conscious tax strategy.

Schedule a consultation with Nth Degree CPAs today and get a customized bonus depreciation plan built around your business goals.

How Kamala Harris’s 2025 Tax Plan Could Impact Small Business Owners

Mon, 21 Oct 2024 19:43:55 GMT

Election season brings plenty of promises. Some matter more than others—especially when they directly impact your cash flow. Kamala Harris’s proposed tax plan focuses on small business relief, with the kind of credits and incentives that could put real money back in your pocket. But, as with all things tax-related, the key isn’t in waiting to see what happens. It’s in planning for what could.

Let’s unpack the highlights of Harris’s proposal and how smart business owners can get ahead of the curve.

What’s on the Table: Harris’s Small Business Tax Plan

Harris’s platform leans heavily into small business support, with policies designed to reduce tax burdens, simplify filing, and increase access to capital.

$50,000 Small Business Tax Credit

At the heart of her proposal is a potential $50,000 tax credit for small businesses. If implemented, this could offset rising operational costs, from payroll to equipment upgrades, and free up capital for growth initiatives.

Simplified Tax Filing

Harris also proposes streamlining the filing process, making compliance less of a burden—especially for business owners who don’t have the luxury of a full-time finance team. Less time spent on paperwork means more time focusing on the things that actually move the needle.

Access to Capital Incentives

Her plan includes tax incentives for financial institutions that lend to small businesses, particularly in underserved communities. If you’ve struggled to access affordable financing, this could be a game-changer.

The Upside—and the Questions

If you’re running a lean operation, a $50,000 tax credit and simplified compliance could be a welcome relief. Add the possibility of expanded funding opportunities, and there’s real potential here for businesses looking to scale or stabilize.

That said, no tax plan is without its critics. Some argue the credit doesn’t go far enough to address systemic challenges—like inflation and labor shortages—that many business owners are facing right now.

At Nth Degree CPAs, we tend to agree with one key takeaway: the tax code is always evolving. Whether it’s Harris’s plan or a variation that eventually becomes law, you’ll want a strategy in place that helps you pivot quickly.

What Business Owners Should Do Next

Rather than speculating on outcomes, start thinking through how your business can leverage these opportunities. Here’s where to focus:

1. Prepare to Maximize Any Available Credits

If Harris’s $50,000 tax credit comes through, you’ll want to ensure your business is eligible and prepared to claim it. That starts with proactive documentation and working closely with your CPA (hi, that’s us).

2. Simplify Your Compliance Processes Now

Even if filing does become easier, laying the groundwork now—streamlining expense tracking, organizing your books—means you’ll benefit sooner. Think of it as spring cleaning for your financials.

3. Explore New Financing Channels

With potential incentives driving more capital into small business lending, this is the time to strengthen your financial profile. Get ahead of the game by reviewing your balance sheet and preparing for conversations with lenders.

Harris’s tax plan presents opportunities for small business owners willing to think ahead. Whether it’s in the form of meaningful tax credits or easier access to capital, there’s potential here to lower your tax burden and improve your bottom line.

Want to get ahead of potential tax changes? Schedule a consultation with Nth Degree CPAs today.

2025 Election Tax Proposals: What Small Business Owners Need to Know

Fri, 04 Oct 2024 16:32:37 GMT

Elections bring a lot of noise. But as a business owner, you care less about political rhetoric and more about one thing: how it impacts your bottom line. Whether it’s Trump or Harris leading the next administration, both candidates have laid out tax proposals that could shape your cash flow, investment strategy, and long-term planning.

Let’s cut through the headlines and get into what these plans actually mean for small business owners—and how to position yourself for success, no matter who wins.

Trump’s Tax Plan: More of the Same, With a Few Twists

If you liked the Tax Cuts and Jobs Act (TCJA), you’ll find Trump’s latest proposal familiar. The plan focuses on making the TCJA’s temporary cuts permanent, particularly for individuals and pass-through entities.

Key Takeaways:

Lower Rates on Pass-Through Income: S-corporations, LLCs, and sole proprietorships could continue benefiting from lower tax rates, meaning more profit stays in your pocket.
Section 199A Deduction Stays: The 20% qualified business income (QBI) deduction is a significant break for many entrepreneurs. Making it permanent would offer predictability for pass-through entities.
Simplified Filing (In Theory): Streamlining tax brackets and reducing complexity could save time on compliance, although how much remains to be seen.

What This Means for You:

If you’re structured as a pass-through entity, Trump’s plan could free up more capital for reinvestment, expansion, or simply bolstering cash reserves. However, there’s concern about how these tax cuts will be funded, which could lead to long-term economic challenges (inflation, anyone?).

Harris’s Tax Plan: Higher Rates, Targeted Credits, and Green Incentives

Harris’s proposal takes a different angle: raising corporate tax rates and introducing credits aimed at supporting lower- and middle-income households. There’s also a clear focus on incentivizing green energy initiatives.

Key Takeaways:

Higher Corporate Tax Rates: C-corporations could see their rates jump from 21% to 28%, which could reduce net profits and cash available for reinvestment.
Surtax on High Earners: If your business income flows through to your personal return and exceeds $400,000, expect an additional surtax.
New Credits for Small Businesses: On the plus side, Harris’s plan offers tax credits for businesses investing in employee benefits, training, and green energy initiatives.

What This Means for You:

If you’re running a C-corp or considering incorporation, the higher tax rates could impact your after-tax profit. However, if your business aligns with Harris’s policy goals—like sustainability or employee support—you could leverage new credits to offset some of those costs.

How Business Owners Can Prepare—Regardless of Who Wins

Rather than betting on an election outcome, the smart move is to build flexibility into your tax strategy now. Here’s where to start:

Evaluate Your Business Structure: Your current setup—LLC, S-corp, C-corp—will determine how much these tax changes affect you. If you’re not already reviewing this with your CPA, you’re leaving money on the table.
Plan for Strategic Investments: If Trump’s plan passes, lower taxes may create extra cash flow. Consider how you’ll use it: expansion, technology upgrades, or retirement contributions. If Harris’s plan moves forward, explore credits for green initiatives or employee benefits that align with her proposals.
Forecast and Model Both Scenarios: Create financial projections for each potential policy outcome. Know how increased corporate taxes or surtaxes could impact your net income—and how to pivot.

Both Trump and Harris offer small business owners a mix of opportunities and challenges in their tax proposals. Trump leans toward lower rates and simplicity, Harris toward increased taxes with targeted credits. Either way, waiting to see what happens isn’t a strategy.

Want to future-proof your tax strategy? Schedule a consultation with Nth Degree CPAs today.

The Tax Consequences of Transferring Property to LLC

Fri, 02 Aug 2019 15:55:45 GMT

Last Updated: April 1, 2025

Imagine one of your employees is out on a job, driving a company vehicle, and falls asleep at the wheel. The accident is serious… multiple cars are damaged, injuries are involved, and the lawsuits start stacking up. It’s the kind of nightmare scenario every business owner hopes to avoid.

Now, here’s the question: who’s liable?

If your business owns the vehicle directly, your company is on the hook. But if you're operating without any legal separation between your business and personal life, your home, retirement accounts, and other personal assets could be at risk too.

That’s where limited liability comes in. It’s why so many business owners move property, like vehicles or real estate, into an LLC. On the surface, it seems like a smart way to protect what you’ve built by rethinking how you manage liability, cash flow, and even your business’s tax and accounting services altogether.

But what seems smart legally can carry hidden tax consequences. And if you’re not looking at the full picture, that protection could come at a much higher cost than you expect.

Why Business Owners Form LLCs for Their Property

On the surface, putting property into an LLC looks like a smart move. For many business owners, it feels like you're taking steps to protect what you've built. In reality, the decision comes with trade-offs that most people don’t fully explore. To make the right move, you need to understand what you're gaining and what you might be giving up.

Why Everyone Says 'Put It in an LLC

Limited Liability Protection

This is often the headline benefit. If someone slips on your commercial property or there’s a serious accident involving a company-owned asset, the LLC acts as a shield between the liability and your personal finances. It limits exposure, keeping claims within the boundaries of the business. For property owners, this separation can provide peace of mind—especially when the stakes are high.

Tax Benefits

Some business owners also expect tax flexibility. An LLC can be taxed as a sole proprietorship, partnership, or even an S corp, depending on how it's set up . This opens the door to strategic income allocations, expense tracking, and potential deductions. But those benefits depend heavily on the rest of your financial structure. Without alignment, the LLC might create complexity instead of savings.

The Hidden Costs & Complications No One Tells You About

Here’s where things often go sideways: transferring property into an LLC might look like a smart move, but without a broader financial strategy behind it, it can quietly chip away at your equity and cash flow. Why? Because what seems protective on the surface can trigger a cascade of tax consequences, lender issues, and compliance costs most business owners never see coming.

The risks usually hide in the fine print. Lenders might object to the transfer. Filing fees and compliance requirements start stacking up. And long-term tax benefits you assumed were in place, like a stepped-up basis for your heirs, may disappear.

None of this shows up on a basic “how to form an LLC” checklist. These landmines are buried in contract clauses, tax code, and lending terms, and they often get triggered because the move wasn’t part of a bigger financial plan.

However, this isn’t a warning against forming an LLC.

It’s a reminder to make a strategic decision, one that protects your wealth instead of quietly undermining it.

How Transferring Property to an LLC Could Impact Your Cash Flow

Moving property into an LLC seems simple…until the tax bill shows up. What many business owners don’t realize is that the transfer can trigger unexpected tax consequences that hit your cash flow, long-term strategy, and legacy planning.

Capital Gains & Transfer Taxes

In many cases, the IRS views a property transfer into an LLC as a sale, especially if there’s a mortgage involved. That means you could be taxed on the gain, even if you didn’t sell the property to anyone else. Local governments may also impose transfer taxes, treating it like a change in ownership. That tax adds up quickly, especially on high-value assets.

The ‘Due-on-Sale’ Clause

If your property is still under a mortgage, the lender has a say in how ownership is handled. Many loan agreements include a due-on-sale clause, which gives the lender the right to call the loan if the property changes hands. Transferring into an LLC can trigger that clause and put you in a high-stakes conversation about refinancing or paying the balance early.

Property Tax Reassessment

Some states automatically reassess property values when ownership changes—even if you’re just transferring it into your own LLC. That can lead to higher property taxes year over year. What was once a manageable expense can start creeping up and eroding your margins.

Recording Fees & Compliance Costs

Each state has different requirements for recording property transfers. You may face title-recording fees, additional administrative costs, and ongoing reporting requirements. These might seem minor individually, but they compound over time.

Loss of Stepped-Up Basis

If the property stays in your name, your heirs typically receive a stepped-up basis, which reduces their capital gains tax when they sell. Moving the property into an LLC can eliminate that benefit, increasing the future tax burden on your family.

Structuring an LLC the Right Way

While the mechanics of setting up an LLC are straightforward, the strategy behind how it’s built, managed, and integrated into your broader financial picture is where most business owners fall short.

Too often, property gets dropped into an LLC without thinking through ownership structure, tax implications, or long-term goals. Decisions get made in isolation , disconnected from estate planning, lending terms, or how income should flow through the business.

When structured thoughtfully, an LLC can protect assets, simplify decision-making, and create more financial control. It gives you flexibility, protection, and control, but only if it’s built with intention. That means thinking about how profits are distributed, how the en tity aligns with your tax strategy , and what impact it may have on succession or exit planning.

Get the Tax Strategy Your Business Deserves with Nth Degree

However, this isn’t a warning against forming an LLC.

It’s a reminder to make a strategic decision, one that protects your wealth instead of quietly undermining it.

How Transferring Property to an LLC Could Impact Your Cash Flow

Capital Gains & Transfer Taxes

The ‘Due-on-Sale’ Clause

Property Tax Reassessment

Recording Fees & Compliance Costs

Loss of Stepped-Up Basis

Structuring an LLC the Right Way

Too often, property gets dropped into an LLC without thinking through ownership structure, tax implications, or long-term goals. Decisions getmade in isolation , disconnected from estate planning, lending terms, or how income should flow through the business.

When structured thoughtfully, an LLC can protect assets, simplify decision-making, and create more financial control. It gives you flexibility, protection, and control, but only if it’s built with intention. That means thinking about how profits are distributed, how the entity aligns with your tax strategy , and what impact it may have on succession or exit planning.

Get the Tax Strategy Your Business Deserves with Nth Degree

LLCs can be powerful tools, but only when they’re part of a bigger strategy. Moving property into an LLC might protect your business on paper, but if it opens the door to tax liabilities, financing complications, or legacy planning mistakes, you’re not protecting much at all.

That’s why structure matters. That’s why timing matters. And that’s why business owners work with Nth Degree . We look beyond checkboxes and compliance . Our team helps growth-minded entrepreneurs build tax strategies that actually support their goals. Strategies that consider how your assets are held, how your income flows, and how your decisions impact the bigger financial picture.

If you're thinking about putting property into an LLC, or already have and want to make sure it's set up to serve you long-term, we’re here to help.

Schedule a call with our team to make sure your structure supports your strategy, not the other way around.

If you're thinking about putting property into an LLC, or already have and want to make sure it's set up to serve you long-term, we’re here to help.

Schedule a call with our team to make sure your structure supports your strategy, not the other way around.

What Your Cash Position Means

subscriptions@nthdegreecpas.com (Nth Degree) — Wed, 17 Jul 2019 15:52:40 GMT

In a cash flow statement, the cash position at the end of the month represents the amount of cash that the company has on hand, at that moment in time. This cash position is a sign of financial strength and liquidity of the company, representing the ability of the company to meet their current liabilities. A strong cash position is considered favorable. However, a company that holds an overly strong cash position (too much cash) could be displaying signs of wastage. In this case, the cash position of the company should be analyzed appropriately.

The cash position of a company is impacted by both the balance sheet and the income statement, with the ending balance in the cash flow statement matching the cash amount present in the balance sheet. This relationship is made more transparent by the preparation of the statement of cash flows, illustrating how a business’ cash position is affected by these two financial statements.

The cash position of a business is analyzed by both internal and external stakeholders to gain insight around various liquidity ratios. Some examples of liquidity ratios include the cash ratio and current ratio.

If you’re looking for more financial help, visit https://www.nthdegreecpas.com

The Tax Burden of Transferring Property

subscriptions@nthdegreecpas.com (Nth Degree) — Wed, 24 Apr 2019 15:50:07 GMT

“Is there a tax burden when moving a property from your name to an LLC/entity?”

The answer to this question will depend on a number of factors, including local jurisdiction and the tax entity of the LLC (Partnership, S Corp, C Corp, etc.). Generally speaking, there is not an initial tax for the act of transferring a property from your name into an LLC. However, there exists the potential of additional tax burden after the fact that all partners or shareholders should be aware of.

Some negative tax consequences could be:

A reappraisal is triggered. If after the reappraisal the asset is deemed to have a higher property value, you can expect to pay higher property taxes
Taxes on the sale of the asset. The partners/shareholders of the LLC will be responsible for these taxes
Income taxes. If the property transferred to produce income, the members of the LLC will pay income tax on that revenue.

Contributing assets to a business can have substantial tax consequences to the contributor and the other individuals involved in the business. We always recommend consulting a professional when making significant contributions to a business.

If you’re looking for more financial help, visit https://www.nthdegreecpas.com/

Employment Tax and Contractor Taxes

subscriptions@nthdegreecpas.com (Nth Degree) — Wed, 17 Apr 2019 15:47:09 GMT

It’s important to draw a distinction between “Income Tax” and “Employment Tax”. Employees and Contractors are subject to the same income tax rates. However, employees pay half of their overall employment tax liability (7.65%), while their employer pays the other half, for a total of 15.3%. Self-employed individuals, or contractors, are both the “employee” and the “employer,” accordingly, they are liable for the entire 15.3% of employment taxes. For this reason, contractors generally have a higher overall tax burden than employees.

If you’re looking for more financial help, visit https://www.nthdegreecpas.com

Professional Skills and Tax Expenses

subscriptions@nthdegreecpas.com (Nth Degree) — Wed, 17 Apr 2019 15:44:47 GMT

Professional skills certification expenses are only deductible if they maintain or improve your skills or meet legal or employer requirements for you to maintain your current employment status or pay level. Accordingly, if you are pursuing your CFA or certifications in other professional skills in order to begin a new career or position, the costs will generally not be deductible.

Like most tax issues, there are several factors to consider. We highly encourage people to schedule time with a licensed professional to have all your tax-related questions answered. For more information regarding deductible educational expenses visit he re and here . And for digestible information and practical tools to better understand the tax landscape contact us.

If you’re looking for more financial help, visit https://www.nthdegreecpas.com/

What is Form 1099 C?

subscriptions@nthdegreecpas.com (Nth Degree) — Wed, 10 Apr 2019 15:43:01 GMT

Let’s say you owe $10,000 in school loans. You’ve paid $6, 000 dollars to the lender towards the balance, and the lender decides they are going to forgive the rest of the debt. Woohoo! However, the IRS says that forgiven debt is income. Accordingly, you indirectly received $4,000 of taxable income. You need form 1099 C.

When debt is forgiven, the lender is required to issue you a 1099 C, disclosing the forgiven debt. A copy of the form also goes to the IRS.

When you file your tax return, the IRS is going to look to match the copy of form 1099 C they received from the lender, against the income reported on your return. If things don’t match, they’ll be getting in touch with you.

A 1099 C is issued when a debt of more than $600 is forgiven by lender. Some common instances when you might experience debt forgiveness are in a home foreclosure and sale or in the event of a bankruptcy. It’s important to note that in certain cases, when the recipient of the “income” is insolvent, there may be exclusions from being taxed on the income.

More information regarding the 1099 C can be found here .

If you’re looking for more financial help, visit https://www.nthdegreecpas.com/

Converting Your Business and the Tax Year

subscriptions@nthdegreecpas.com (Nth Degree) — Wed, 03 Apr 2019 15:39:40 GMT

Filing for an S Corp or C Corp election is less about “How long?” and more about “Do I meet the requirements?” If filed correctly, you can convert your LLC to an S Corp or C Corp within the same tax year. Technically, you have two months and fifteen days from the first day of the LLC’s tax year to request S-Corporation status. The IRS does offer relief for late elections. A statement must be made expressing “reasonable cause” as to why the election is being filed late. To answer your question regarding time, if filed correctly, under most circumstances you can anticipate a response from the IRS within 60 days of the filing.

With regards to cost, there is no cost for filing for the elections. However, the IRS posted a recent survey showing the average costs of having a professional prepare an income tax return (Form 1120S) for a corporation to be approximately $761 for an S Corp and $806 for a C Corp (See here) . These costs may be higher than you have traditionally paid for the preparation of an LLC’s tax return.

Understanding the tax landscape, and when to file an S or C Corp election can be complex. More information regarding Corporation filings can be found here and here . And for assistance regarding these matters and more, visit Nth Degree CPAs for digestible information and practical tools.

Self Employment Taxes - S Corps and LLC's

subscriptions@nthdegreecpas.com (Nth Degree) — Wed, 20 Mar 2019 15:36:40 GMT

The biggest difference between S Corporations and LLCs (partnerships) is the ability to minimize self-employment taxes as an S Corp. In an S Corp you are considered a shareholder and an employee, and therefore must include yourself on payroll. As an employee, you must pay yourself a “reasonable wage.” All wages paid in an S Corporation are subject to both federal and employment tax. However, your taxable revenue does not include wages paid. For instance, say you made $100,000 in profits and paid yourself $100,000 in wages. You’d end up in the same tax situation as a partnership or corporation as everything would be subject to federal and self-employment tax. However, if you paid yourself only $40,000, the remaining $60,000 would not be subject to self-employment tax. Given the current rate of 15.3%, that’s $9,180 in tax savings.

There are many factors to be aware of when considering an S Corp election. The key element to determine when to make the conversion, is if you have sufficient profits in excess of a reasonable salary. If so, the strategic move to an S-Corp could yield significant tax savings.

For more information regarding S-Corporations and making strategic decisions for your business visit Financial .

If you’re looking for more financial help, visit https://www.nthdegreecpas.com

Financial Reports and Your Employees

subscriptions@nthdegreecpas.com (Nth Degree) — Tue, 19 Mar 2019 15:33:09 GMT

It should go without saying that your financials are an important indicator of how your business is performing. But they are more than a record of where you’ve been. These reports should be a compass for where you’d like to go. At a glance, the numbers in the spreadsheets tell the financial story of your business. They contain actionable insights for everyone you employ. Essentially, your financial reports have useful information for every person on your team. So why aren’t you sharing them?

At my accounting firm, Nth Degree CPAs , we advocate for creating and sharing more than just financial reports. Specifically, we look for reporting that covers performance for employees, culture, and operations. As a whole, this collection gives a clear picture of how the business is performing.

Sharing Your Information

Like goals, reports don’t do anyone any good hidden on your computer. They need to be shared across your organization, in and out of every department. Also, they should span from your senior staff to your newest hire. Why? Knowledge is power, and a powerful business has powerful people. Therefore, with reporting in hand, management can make better decisions. Rank and file can see how their efforts impact the bottom line. Overall, everyone can feel the empowerment that comes from being a trusted part of the team.

Keep it Simple

Analysis isn’t for everyone, and the more your team supports the effort the better. So, consider distilling your financial reports into something a little more digestible. But be sure to preserve transparency with key information. To start, tailor a report for individual teams or departments. This will ground the numbers and make them relevant for the audience. Notice how the department impacts the numbers and offer insights on how to change it. This can have a lasting effect on performance. Reporting is more than a historical account of where your company has been. Ultimately, it can serve as a map to your goals and assess the performance of specific efforts.

Committing to widespread reporting communication and education can be daunting. It can tax your resources and make you feel uncomfortable. However, for the boots on the ground, knowing what’s going on can result in lasting improvements. You’ll see upward growth in efficiency, decision making, and focus. The numbers tell a story. Thus, by understanding its beats, rhythms, and message, you can get everyone excited about staring at spreadsheets, and marching ahead.

The Gist:

+ First, clean up your financial reports — aim for clarity.

+ Consider expanding your data collection to create reports on culture and operations.

+ Next, boil ’em down and root out the important stories. Share them across the organization.

+ Unify teams across departments with increased transparency.

+ Finally, watch goals get attacked with new sophistication and vigor.

Financial Certainty: What Are You Measuring?

subscriptions@nthdegreecpas.com (Nth Degree) — Wed, 13 Mar 2019 15:30:37 GMT

As an accountant and owner of Nth Degree CPAs , I often have the honor of startling many of my clients by suggesting they shouldn’t only pay attention to the bottom line. When it comes to a company’s financial certainty, most companies make measuring profits job #1. And 2, 3, and 4. You get the point. If you want your company to be truly financially stable, there’s a lot more you should be measuring. The bottom line matters a lot. The lines in between need your attention too.

It’s easy to slip into all-or-nothing thinking — and when it comes to measuring performance, you just can’t do that.

Depending on your company, structure, products, and services, there’s an endless array of possibilities for what you can measure. But let’s start with a few ideas you may not think about, but have important roles in predicting your overall financial health.

Customer Profiling

Sure, total sales are a great indicator of performance. Only a bad business would ignore sales data. But dig a bit deeper, and ask yourself: who are the customers? Are they repeat buyers? Friends of customers? Make sure you measure and have a clear sense of customer loyalty and lifespan as well how many new customers you’re attracting vs. how many current customers you’re losing. This will go a long way toward predicting your current ratio — or, whether you’ll be able to pay the bills in the future.

Debt-to-Equity

It may seem a bit obvious, but your company’s solvency is pretty dang important. So, while your head’s down on the day-to-day, be sure to come up for air now and then to check in on your debt-to-equity ratio. For long-term stability, you’ll need to see trend lines of equity outpacing debt. Even better, look for debt heading downhill while equity heads up.

Investment Trends

Are you spending a bigger percentage of your budget on marketing than you did last year? Using less of your facilities budget than you planned for? Maybe corporate travel costs are getting out of control?

Making clear, marked baselines and closely following your investments and where you’re spending your money all year long vs. just at the annual budgeting meetings can save your company money. Not to mention helping you use your money better.

Pay Attention to the Forest

The ideas I’ve offered here are just some of the things that may contribute to a company’s financial certainty. For your specific business, you’ll need to dig in and find the most appropriate things to monitor. But at the very least, hold onto this idea: don’t lose sight of the forest by looking only at the trees. For example, if you run a service-based business, the only metrics that really move the needle for financial certainty are realization, utilization, and revenue to compensation. If you get stuck focused too much on any one of those, you may lose sight of the rest of your business. And that’s never good for your bottom line.

Your Business Goals Made Clear

subscriptions@nthdegreecpas.com (Nth Degree) — Wed, 13 Mar 2019 15:28:26 GMT

You didn’t get here without having a goal in mind. Whether it was world domination, a platform for your ideas, or a chance to connect with others, bringing your business to life was the realization of a pretty big goal. But now that you’re here, what do your business goals look like? Do you write them down, and do they connect with each other? Do you share them with your team?

I’m not just talking money here. Financial goals are important, but we have to look past the numbers and set markers for growth that go beyond the spreadsheet.

+ Financial goals: revenue, taxes, profitability

+ Cultural goals: benefits packages, work/life balance, engagement

+ Operational goals: efficiency, process, technology, physical and human resources

+ Organizational goals: clients, products/services, public awareness

In the race of life and work, getting our thoughts crystal clear, out of our heads, and recorded somewhere can tumble down the priority chain, especially when you’re putting out fires. But without taking a little quiet time to sort out what you’re feeling, where you’d like to be, and even how you might get there, putting out fires is all you’ll ever do. Stating goals, making them clear, and sharing them with the world gives us something to work toward.

It’s likely that as you lead your organization, everyone is impacted by where you’d like to go. So, by sharing, we can check our ideas against important perspectives. You can make them better with additional voices and ease the ambiguity and uncertainty that stifles group growth. Remember, none of us is as smart as all of us.

The goals you set, no matter the specific area of impact, should intersect with and support each other. So, we advocate for breaking down those walls that traditionally partition one part of the business from the other. That way, everything connects to everything else. Aligning goals across your business will focus your efforts and get you there more efficiently.

And no, clarifying your business goals isn’t as simple as writing them down. You have to share them with your organization and get everyone on board. Communicate where you want to go and what you want to do with the people that will help you along the way. Basically, give your goals a chance by taking everyone with you.

Now that you have a clear list of goals that span all facets of your business, let’s break them up by effort and time. Next, ask yourself what’s it going to take and when do we want to be there? Then, split up the short and long term. Separate further by least to most effort (resources, planning, etc.). You’ll give your team a chance to grab the lowest hanging fruit quickly. Ultimately, you’ll be turning success into momentum for the mid- to long-term goal-smashing efforts.

Cheat Sheet:

+ Write ’em down

+ Push beyond financial goals and build a comprehensive wish list for your entire organization — from culture to operations

+ Make sure that you define the connections between financial, cultural, operational, and organizational goals

+ Organize your goals by short- and long-term, least to most effort

+ Work backwards from your goals to see what’s required to get there

+ Make sure the team knows and understands where they’re going and how they’ll get there

Bookkeeping Is Not Always The Answer

subscriptions@nthdegreecpas.com (Nth Degree) — Wed, 13 Mar 2019 15:25:49 GMT

Crunching numbers and solid bookkeeping is part of the game when you’re running a business. When you’re reviewing your financial records — whether it’s reviewing the latest report or double-checking your accountant — it can be easy to see financial problems and start looking around the rest of the spreadsheet to see if you can crunch things together to make it all better. But the numbers don’t lie: your margins really are that small, because the parts really do cost that much. Your facilities costs really are that high, and you can’t go back on your promise to your employees. Whatever the financial challenge, it may be that there’s not another way to move the numbers around on the page to make it all fit the way you’d like. When your cash flow is tight, the quick fix seems to be “cut expenses.” But that might be a myopic mindset, and sometimes cuts just aren’t viable. You have to think more holistically.

In other words: sometimes the solution isn’t in the books.

At Nth Degree CPAs, we counsel our clients to think holistically about their finances. With the goal of long-term financial certainty, we challenge business leaders to look at their profits and losses through a wider lens — one that requires a bigger point of view about how all of the business values, philosophies, and operations contribute to the bottom line.

With that in mind, here are a few notes for you to ponder the next time you take a look at your bookkeeping and start wondering if there’s a way to increase your profits by squeezing those numbers.

Install accountability to ensure your financial goals

Whatever your financial goals are, if you’re not hitting them, it’s time to take a look at how you’re delegating, communicating, and holding everyone accountable. While “more sales”may be the need, it’s not always the best explanation for your employees, when sometimes what’s needed is a way to optimize production to increase margins.

Be sure your policies and procedures are up to snuff

You can’t just assume your employees will take your unwritten goals and unspoken procedures and turn it all into a moneymaking machine. As tedious as it may seem to create standardized processes, clarity goes a long way to ensure that everyone on the team is on the same page and approaching decisions with the same framework. A clear sense of how you work will have an immediate impact on the profitability of your business.

Build a communications framework for timely, digestible reporting

We advocate for short, digestible weekly metrics for the leadership team that provides info on the operational and financial health of the business. Follow that up with full financial statements 5-7 business days after month’s end, and a full report out on all company-wide goals quarterly.

We also advocate for providing digestible information across the business on a weekly and monthly basis. If you want your team to win, they need to know the game plan and how they’re performing in each game. Without reporting, how can they really improve?

Set up standardized response times to address issues

We’re big fans of company-wide financial reporting, and making your bookkeeping accessible. But in the end, it’s really only valuable if you support it with clear pathways to respond to financial issues that arise in those reports. This is really about having a game plan for when things don’t work. In business, we all want to win but most days we face setbacks. So, having a game plan to address when issues arise and then how we’ll act allows the business to not spend money chasing problems. You go into a game with the plays you want to run but also the contingency plans if things go sideways.

You’re not making trades for new players during the game. While it’s important to know the best practices and also define who can or should own the solution, you likely won’t see the benefit from any solution if you don’t have an automatic deadline anytime an issue pops up.

I get it: hearing from your accountant is about as fun as going to the dentist. No one likes bookkeeping all that much. But it doesn’t always have to be cavities and flossing guilt. In the Nth Degree CPAs world, we think it’s more effective and better for your bottom line if you hear from us more often for fine-tuning things than stepping in for that big fix. Achieving financial certainty is faster and more effective when you have the right policies and procedures in place to make sure you and the entire team knows how to respond to a money problem with the big picture in mind. If your accountant isn’t helping you do that, I know some people who can.

The Financial Security Roadmap

subscriptions@nthdegreecpas.com (Nth Degree) — Wed, 13 Mar 2019 15:23:18 GMT

I like to think of myself as an anti-accountant. Instead of just dutifully checking boxes on tax to-do lists, I’m constantly peeking into the rest of my clients’ processes and actions and offering plenty of advice for how to achieve real financial certainty. For most of my clients, early on it can be a challenge to think more holistically about their finances. But as they begin working through the issues, they discover it makes for a stronger and more clear path to financial security.

A good rule of thumb for companies is to spend 2-5% of revenues on your tax and accounting support. (My company, Nth Degree CPAs , is always looking for efficient ways to keep costs down.) One of the biggest financial challenges growing companies face is making the leap that spending more money, when done strategically, can result in a long-term increase in cash flow.

But most companies remain stuck thinking of accounting in the simplest of terms: let’s do basic bookkeeping and call an accountant once a year… sometime in early April (thanks for that, by the way). At best, they’re spotting financial hiccups or issues with their finances throughout the year and thinking they’ll fix them later, maybe at tax time or at year-end. And worse yet: some companies, when they do see issues with their accounting, often think pushing through and working harder will net more profits and your financial security will work out okay.

We recently started working with an e-commerce platform about six months ago. At the time, they were grossing around $600,000/month in revenues and seeing 8% profit margins — and their main goal was to be in compliance with various taxing jurisdictions. When we dug into our Roadmap process with them, we realized what they really meant was that they didn’t want tax/accounting/finance to distract them from their business. Our Roadmap takes a holistic view of the entire organization, not just financial security, to give everybody a clear picture of where an organization’s strengths and opportunities lie — and establishes a plan for hitting goals, staying healthy, and growing efficiently. We completed our process and discovered a ton of opportunities to optimize processes and systems, as well as their tax structure and accounting methods. Today, they’re hitting $1,500,000/month in revenues and 33% margins.

See, when you know you don’t know something it can become a distraction that takes your energies away from what you really want to do. This client could have trucked along and been okay with weaker processes and profits. But, ultimately, by bringing in an accounting partner that really paid attention to their whole business, they were able to improve not only their accounting, but also see ways to improve everything from how they were pricing products to how they ran social media campaigns — ultimately, allowing them to drive more traffic and sell higher margin products.

Here’s the thing: when it comes to flaws in your accounting processes, you can’t afford to ignore them. You can’t afford to settle for just being compliant when what you really need is streamlining.

So when you meet with your accountant next time, be sure to ask them the bigger questions, beyond tax issues. Ask them about your processes. Ask them to find the flaws before they become real problems. And task them with making sure you don’t ignore any of them. At Nth Degree, my team is constantly looking out for the financial security and the long-term holistic health of a company — making sure they’re not ignoring big problems that can turn into even bigger ones. It’s not your traditional accounting approach, but we — and our clients — like it that way.

Demonstration Video Post

Fri, 21 Sep 2018 16:57:18 GMT

We’re tax nerds. There, I said it. Do you really want a bunch of dudes who peaked in high school helping you, or professional team if intelligent, best-in-the-business professional who handle your accounting needs as if they are our own? Yeah, I thought so.

Dan Nicholson aka Rudy the Redhawk

subscriptions@nthdegreecpas.com (Nth Degree) — Thu, 22 Jan 2015 15:19:50 GMT

As you may know, our CEO, Dan Nicholson, is a SeattleU graduate and the current President of the Alumni Board of Governors. Additionally, one of his passions is basketball and thus you’ll often find him at SeattleU men’s basketball games yelling and “KaKah’ing” (the sound of a Redhawk).

Recently, he purchased at an auction to opportunity to dress as the school’s mascot, Rudy the Redhawk, for an entire men’s basketball game on January 17th. Why? We still don’t know but as results we secured some seats for friends of Nth Degree CPAs and it sounds like he had a blast judging from the pictures and video below.

Nth Degree End of 2014-15 Tax Year Newsletter

subscriptions@nthdegreecpas.com (Nth Degree) — Thu, 20 Nov 2014 15:11:22 GMT

Firm Updates

We have moved offices!
We have moved out of Pioneer Square and are now across from Pacific Place at 1809 7th Avenue, Suite 303, Seattle WA 98101. We are excited about this move as it allows us to continue growing. Feel free to stop by any time, we love to show the new space off.

We have added new skills to the team
Jason Hedlund has joined the team as a Tax Director and Rachal Beckman as Office Manager. We are thrilled to expand the Company to include these valuable new employees.

Tax Associate, Chet Syverson, and Accounting Senior, Mandy Rubeor, both passed the CPA exam.

The Nicholson family also added a new member to their team, Noella Nicholson, born in January of this year.

Congressional Activity

Year-end planning is especially difficult this year because Congress has yet to act on a variety of tax items that expired at the end of 2013. Some may be retroactively reinstated and extended while others may not see light again.

For Individuals:

• The option to deduct state and local sales taxes instead of state and local income taxes;

• The above the line deduction for qualified higher education expenses;

• Tax-free IRA distributions for charitable purposes by those aged 70-1/2 and older;

• The exclusion of up to $2 million of mortgage debt forgiveness on a principal residence.

• Mortgage Forgiveness Debt Relief Act

For Businesses:

• 50% bonus depreciation during the first year of service;

• The $500,000 annual expensing limitation on fixed assets (the Section 179 limit)

• The 15-year life for qualified leasehold improvements, qualified restaurant property and qualified retail improvement property.

High Income Earners

As it applies to higher income earners, there are additional concerns when considering year-end plans. You have probably heard of the additional 3.8% tax on certain “unearned” income and the additional 0.9% Medicare tax on wages in excess of $200,000 ($250,000 for married couples).

Employers may have additional year-end responsibilities; specifically,employers must withhold the additional Medicare tax from wages in excess of $200,000 regardless of filing status or other income.

Self-employed people must take this additional tax into account for estimated tax purposes.

Individual Tax Plan Suggestions

Consider, realizing losses on stock while substantially preserving your investment positions. You can buy back the same security and claim the loss so long as you wait 31 days. We would recommend consulting with your investment advisor if this is a strategy you wish to employ.

If possible, postpone income until 2015 by accelerating deductions into 2014. This may be done by requesting from your employer that any bonuses be deferred until 2015, for example. It may be possible to take additional deductions and credits that may be phased out due to higher income. Some of the credits and deductions we would want to consider include child tax credits, higher education tax credits, and deduction for student loan interest. If you are considering a significant reduction in income in 2015, accelerating deductions into 2014 may result in overall tax savings. Given the impact of the itemized deduction phase-outs, we would want to model the impact before making any such decisions.

You may consider converting your traditional IRA to a Roth IRA. One thing to note, by converting, you will be increasing your gross income for the year. Conversely, if you converted a traditional IRA to a Roth IRA but your Roth IRA has declined in value, we may consider recharacterizing that conversion by transferring the converted amounts (plus earnings less losses) from the Roth IRA to the traditional IRA. You can later convert back to a ROTH when doing so proves advantageous.

You may benefit from a bunching strategy – such as paying additional medical expenses and itemized deductions in one year when your income is lower to take advantage of the phase-out considerations. Another option may be to pre-pay state income taxes in 2014 for taxes owed in 2015. One thing to keep in mind is the impact of Alternative Minimum Tax (“AMT”) would have on such a strategy. That being said, we would want to consider the effect of any year-end planning moves on AMT for 2014. (Briefly, AMT eliminates many deductions when computing income from AMT purposes. Some of the deductions that are eliminated include: property, state income, and sales taxes, miscellaneous itemized deductions, personal exemptions, home mortgage interest used for certain purposes. Further, certain deductions, like medical expenses, are computed differently for AMT purposes than they are for regular tax purposes.)

If you suffered a casualty loss during 2014, it may make sense to consider settling your suit in a year when your income is lower to take advantage of a lower phaseout.

You may consider maxing out your 401(k) program at your place of employment if you haven’t already.

Tax Planning Meetings

Within this Newsletter we describe tips and suggestions that may be useful to the average client. As we all know, a “one-size fits all” is never the remedy for tax planning. As such, we want to note the importance of meeting with a professional on our team to ensure that you are taking advantage of any and all tax benefits available to you.

Business Tax Plan Suggestions

Purchase any business machinery and equipment before the end of the year to take advantage of the bonus depreciation that still exists.

If you have not already reviewed your expensing policy, you may be able to expense “de minimis” supplies and equipment that might otherwise need to be capitalized.

Explore a bunching strategy or an acceleration or deferral strategy to take advantage of current year tax brackets.

If your company is expecting a loss in 2014 but income in 2015, you may wish to accelerate some of the income into 2014 to take advantage of the loss in 2014.

If you company is producing products it may be beneficial to consider whether you qualify for the Domestic Production Activities Deduction.

Estate Planning

If you haven’t done so yet, now is as good a time as any to start thinking about your estate plan. Further, there are some common strategies that have been mentioned in the President’s budget that may be negatively impacted in the coming year. Some of the strategies mentioned include sales to IDITs, the use of “dynasty” trusts and the use of short term GRATs. More immediately, you may wish to consider making annual exclusion gifts ($14,000 to an unlimited number of people), funding 529 plans or setting up IRAs for the next generation.

We want to hear from you!

Taxes, being what they are, can be complicated. We are here to help you! Please, let us plan a time to get together and go over your specific situation.

We very much appreciate the opportunity to work with you!

3 Tips to Reduce October 15th Tax-Filing Deadline Stress

subscriptions@nthdegreecpas.com (Nth Degree) — Tue, 07 Oct 2014 15:06:21 GMT

The October 15th Individual Income Tax-Filing Deadline is upon us and we at Nth Degree CPAs thought it appropriate to outline a better understanding of what happens on and around the deadline and also provide some tips to avoid any stress that may accompany tax-filing time for tax-filers.

As most already know, the IRS individual tax-filing deadline is April 15th (or the next business day if the 15th falls on a weekend) of each year. There is an optional 6-month extension to file that can be filed in the days up to and including April 15th in order to help those that could use a little more time to complete their filing. One thing to keep in mind though: this is an extension of time to file, not pay. Your tax bill is still due in full on April 15.

It’s important to emphasize that the failure-to-file penalty is different from the failure-to-pay penalty – taxes owed are still due by April 15th with few exceptions. The IRS also states that “a failure-to-file penalty is generally more than a failure-to-pay penalty,” which makes filing on October 15th your last chance before running into fines and penalty territory. Here is a link to Eight Facts on Filing Late and Late Payment Penalties from the IRS, if you’d like to learn more.

If you haven’t yet filed and are in need of an accountant to complete your work, you may be in a tough position. The days leading up to the deadline are filled with a variety of tasks and issues and unfortunately for you and your accountant, there is only so much time in the day – so capacity issues may impact how quickly your accountant can complete your work.

While there may be few options to filing this year’s return with minimal stress by the October 15th deadline, here are some tips to filing your 2014 return (due April 15, 2015) without feeling the pressure:

1. Talk to your tax advisor or CPA before the end of the year to get an idea of the types of documentation you’ll be required to submit to them during tax filing season . Most accounting firms will have a ‘tax organizer’ or document of some type that will outline the different pieces of information required to complete your return – ask for one and review it.

2. Ask your accountant when the earliest possible submission date of that tax documentation can take place and mark in your calendar for a time to get them everything once you’ve collected all of your documents. Your tax professional loves not being crammed up against an IRS deadline to complete your work. The limited pressure on your accountant also increases the odds of quality work being done.

3. Make a list of all of the companies/organizations that should be sending you documentation and mark your calendar to contact them in February if you haven’t received anything. Most tax-related paperwork is to be delivered by the second week of February. Build a checklist of organizations you should be receiving documents from and cross-reference to make sure you’ve received the documentation you’re owed. Contact those organizations if you haven’t received anything by mid-February to be proactive.

The best way to not worry about the October 15th deadline is to file early. With a little planning and a few small action steps, you can all but wipe out any stress around your individual tax-filing requirements.

Nth Degree CPAs is a high-value tax and accounting firm in Seattle, WA that provides integrated tax planning and preparation services as well as accounting and controller-level financial guidance for the small business community.

Two Nth Degree CPAs Team Members Pass CPA Exam

subscriptions@nthdegreecpas.com (Nth Degree) — Wed, 24 Sep 2014 15:01:54 GMT

Nth Degree CPAs is proud to announce that team members Mandy Rubeor and Chet Syverson have both passed the CPA Exam.

“I’m very proud of Chet and Mandy for their tireless work on the CPA exam. Passing the CPA exam is the culmination of years of hard work. It starts with 5 years’ worth of college credits and ends with an average of 450-600 hours of exam preparation. So, needless to say, it’s not for the faint of heart. They committed to and worked until they passed all 4 sections of the exam and the hard work they put in is really reflective of their personal commitment to excellence and continual self improvement.”

-Dan Nicholson, CEO, Nth Degree CPAs

Mandy Rubeor is an Accounting Senior and former KPMG audit associate who received her Undergrad at Cal Poly San Luis Obispo and Graduate at Seattle University. Mandy’s efforts are on accounting services for the firm’s small business clients.

“Mandy embodies the Nth Degree mentality: She goes out of her way to make herself available to our clients and genuinely always has their best interests at heart.”

-Nolan Bradbury, Director of Accounting Services

Chet Syverson focuses on small business and personal taxation and is currently pursuing a Master’s in Taxation at Golden Gate University.

“I am very fortunate to work with Chet every day. His dedication to client service is second to none. Clients are in excellent hands with Chet on their accounts.”

-Jason Hedlund, Director of Tax Services

We are incredibly proud of both Mandy and Chet and look forward to their continued success as members of the Nth Degree CPAs team.

Nth Degree CPAs is a boutique, high-value accounting firm in Seattle, WA that provides integrated tax planning and preparation services as well as accounting and controller-level financial guidance for the small business community. Online at www.nthdegreecpas.com

Nth Degree CPAs Moves Offices to Downtown Seattle's Tower Building

subscriptions@nthdegreecpas.com (Nth Degree) — Thu, 04 Sep 2014 14:57:55 GMT

As you may or may not have known, Nth Degree CPAs has moved offices from our beloved Pioneer Square address to the heart of the downtown corridor in the Tower Building on 7th Ave, just one block north of Pacific Place and only a few blocks from the Seattle Convention Center.

“We loved being in Pioneer Square – it was an up-and-coming neighborhood that was matched by the up-and-coming businesses located there. But our new office location allows us to be more centrally located, surrounded by a multitude of references and connections.”

– Nolan Bradbury, Partner, Nth Degree CPAs

Our new space offers us all of the conveniences of a downtown location, as well as easy access to I-5 via Stewart Street (accessible via Express Lanes) and Olive Way.

Nth Degree CPAs is now located at 1809 7th Ave Suite 303 Seattle, WA 98101

We look forward to seeing you soon.

4 Accounting Items Seattle Small Businesses Should Watch For in the $15 Minimum Wage Initiative

subscriptions@nthdegreecpas.com (Nth Degree) — Thu, 26 Jun 2014 14:55:19 GMT

Does your Seattle small business have employees currently earning less than $15 an hour? Then you may be struggling to understand the cost increases you’ll likely incur under the Seattle Minimum Wage Initiative.

Here are 4 Accounting & Bookkeeping Items you can look at in your Seattle small business to help better understand and prepare for your increasing costs.

Item 1: A Raise For Some…or For All?

Your payroll reports should help you gather a solid understanding of the wage rates your hourly employees are earning. The employee making $10 an hour is getting a raise to $15 by law, but what about the employee next to him who was already making $15 an hour – does she get a raise as well?

Having a good understanding of employee pay will help you formulate a crucial conversation plan. A situation where some employees receive raises while others don’t could seriously impact morale internally and lead to turnover – which can be more costly than a raise for all would have been.

Tip: Whether you’re giving additional raises to employees earning $15+ per hour or not, be prepared to have a conversation. You can be assured your employees will be ready.

Item 2: Employer Payroll Taxes (Part I)

Remember, not only is the wage of the employee increasing but so are your employer taxes [particularly your FICA Taxes (Social Security and Medicare) and your Employment Security Taxes (WA State Unemployment)].

Here’s what an employer’s share of FICA taxes (remember, this is in addition to the hourly wage paid to the employee) look like when comparing a $10 per hour wage to a $15 per hour wage.

7.65% (FICA) x $10 = Approx. $.77

7.65% (FICA) x $15 = Approx. $1.15

$1.15-$.77 = $.38 increase in FICA taxes per hour for this employee, in this situation

Tip: Sit down and do some math, or work with your accountant. Get a grip on your numbers so you can better understand how to financially adjust to this increase and not be surprised by it.

Item 3: Employer Payroll Taxes (Part II)

Employment Securities Tax (otherwise known as State Unemployment Tax):

The taxable wage base (how much you pay ES Tax on) per employee is $41,300 for 2014 – which means you pay an assigned percentage tax (assigned rates can differ by business) on wages up to $41,300 for each employee.

An employee earning $15 an hour working 40 hours a week for 50 weeks a year earns $30,000, meaning the entirety of their wages are subject to this tax.

We’ll use an average rate of 4% for an Employment Securities tax rate in this example (rates can range from .17% to 7.85%) and 50 weeks (52 weeks – 2 weeks unpaid vacation):

$10 X 40 hours X 50 weeks = $20,000 annually X (4%) = $800

$15 X 40 hours X 50 weeks = $30,000 annually X (4%) = $1200

That’s an annual increase of $400 for this employee, in this instance.

Item 4: Cash Flow

You’re not on an island with this initiative – it applies to all businesses in Seattle. As such, some businesses are going to be experiencing rising internal costs as well, which may force your Seattle vendors to increase their prices. All of these rising costs can impact your cash flow, and make certain times during the month (like payroll week) more difficult to pay the bills.

Tip: Review with your vendors to see if there’s an option to adjust your payment date if necessary. Some vendors are flexible for those clients and customers who pay their bills. So perhaps instead of payment due on the 5th, a payment date for you on the 15th may work better for your cash flow.

Over the course of time small businesses are impacted by many major events: the gain or loss of a big client, economic factors, government initiatives, and more. With the proper planning and strong bookkeeping and accounting, you can prepare your business and your team for success through times of change.

Nth Degree CPAs is a boutique, high-value accounting firm in Seattle, WA that provides integrated tax planning and preparation with accounting and controller-level financial guidance for the small business community. Online at www.nthdegreecpas.com

5 Small Business Bookkeeping System Setup "Must Dos"

subscriptions@nthdegreecpas.com (Nth Degree) — Thu, 05 Jun 2014 14:51:36 GMT

1. When Setting Up Your Chart Of Accounts, Less Is More

Your chart of accounts is the complete list of all of the items you need to categorize your business activities and is there to help you understand where your company’s money goes and where it comes from. You can get very detailed when setting up the chart of accounts, but remember, the more time you spend in your accounting software, the less time you’re spending on revenue generating business activities.

Furthermore, information overload happens . And while it is important to have a level of detail that provides meaning to the users of the financial statements, having too many accounts can also lead to inconsistency in reporting (which leads to inaccuracy), as similar in nature transactions can be recorded to different accounts when too many options exist.

Your chart of accounts setup should be able to help you quickly categorize your transactions and, when financial reports are produced, be able to help you understand what’s happening with your business – so keep it simple. You can always run more detailed reports if you need to.

Ask yourself these questions:

What information do I need to see on my financial reports?

What information would help me quickly analyze my company’s numbers and tell me the status of my business?

Wiki – Chart of Accounts

2. Use The Online Banking Synch Functionality Offered By Your Bank & Accounting Software

You can spend time keying in data from one screen to another (or one spreadsheet to another), or you can do something that will save time. Today, most banking institutions offer an online accounting integration feature that gives banking customers the ability to direct download transactions into the customer’s accounting software. Leveraging technology like this can help you reduce data entry errors and missed transactions, as well as speed up the transaction recording process.

Below are just a few links to some of the major banking institutions’ accounting integration service pages:

Chase – Key Bank – Us Bank – Wells Fa rgo

Many other banking institutions offer such a service, including regional and local banks, so reach out to your banking specialist today to find out what options are available to you.

3. Establish Repeatable Procedures For The Accounting and Finance Functions

Establishing clear, detailed procedures produces a money trail and a system of checks and balances to prevent money from being unaccounted for. Make it clear, make it repeatable, make it predictable. This will help highlight any anomalies you should be aware of, as well as help identify ways to make your process more efficient.

There is always the risk that the person in charge of accounting for your company is gone in an instant. In that situation, whoever takes over those duties may need to figure out what was going on with only the data to guide them. Give them a chance, and save your business, by having all accounting and finance functions follow a predefined process.

4. Know Your Business Entity Type (Sole Prop, Partnership, S-Corp, etc.…) and Make Sure You Understand How That Impacts Your Accounting

The government allows certain tax advantages for business owners taking on the risk of opening and operating a business. Each entity structure carries its own advantages. Make sure you’re grabbing all of your rewards and not inadvertently causing errors because your accounting records aren’t setup to match your entity structure.

Payroll is a wonderful example of this. A sole-proprietor putting himself or herself on payroll, or a corporate officer of an S-Corp not being on payroll are examples of accounting being impacted by business entity type and conceivably causing unintended and unnecessary tax implications. Make sure your accounting structure matches your entity type and maximize all of your rewards.

Here’s a breakdown of Business Entity Types with resource links from the SBA

5. Meet With a CPA To Get Any Questions Answered

How much money do you want to pay your CPA at year-end to file your taxes? If the answer is “More,” then don’t consult him or her on how to set up the accounting operations for your business. Every year, countless small businesses structure their accounting and bookkeeping system incorrectly, leading to entry mistakes, potential government fines and penalties, and errors that require fixing before taxes can be filed. As with all things in life: Do it once. Do it right.

For many small business owners, this is their first time doing any of this . Get things set up correctly from the outset, and seek some professional help if you have questions. The small expense will save you time, money, and stress in the long run.

Nth Degree CPAs in Seattle Announces Small Business Part-Time Controller and Bookkeeping Service

subscriptions@nthdegreecpas.com (Nth Degree) — Mon, 13 May 2013 14:46:44 GMT

Seattle, WA, – May 9th 2014 – Nth Degree CPAs, located in Seattle, WA has announced a high-value part-time controller and bookkeeping services option for small businesses.

The firm announced that they are offering the service because they listened to a consistent need expressed by a number of current small business clients.

“We had a number of clients who needed bookkeeping services, but at a higher level than their in-house resources could support. They may have had an administrator who could key data into a piece of accounting software, like Quickbooks, but as far as the experience to correctly enter each of those transactions, produce the proper financial reports that provide business insight that’s relevant and digestible, or consult with the management team on those financials to drive business decisions, the companies lacked the resources,” said Dan Nicholson, Founder and CEO of Nth Degree CPAs. “We found there were a plethora of small businesses whose accounting and bookkeeping needs totaled 10, 20, or 30 hours a month, “ he continued, “not enough to justify hiring a full-time, in-house accountant – but the ownership or executive team still wanted someone with high level accounting skills to do the work and help with strategic guidance, like a controller at a larger company would.”

The addition of recently announced firm partner, Nolan Bradbury, who joined the firm as Accounting Services Director in early 2013, allowed for the offering of this service to become possible. “

As a firm we are very relationship driven, and we needed to have that mindset in order to partner with businesses on this type of controller-level work. We don’t just dive into a relationship with a potential client without knowing if or how we’ll be able to make a positive impact,” said Nolan.

He iterated that they developed a process unique to Nth Degree CPAs that serves their clients looking to outsource these bookkeeping functions.

“We begin each relationship with what we call an Accounting Diagnostic. In the Accounting Diagnostic phase we do a sit down Q&A analysis with the ownership team on where the business has been, where they want to go, and what they perceive is prohibiting them from getting there. Then we do a deep dive into the data as they grant us access to their existing books, so we can garner a complete understanding of the accounting health of the business.

The culmination of this phase is the preparation and presentation of an Accounting Roadmap report in which we outline our findings and provide a list of accounting recommendations for the ownership team. From there we give them options as to how best to proceed and how we can help them achieve their desired results, whether it be a full outsourcing of accounting functions to us, or a collaboration of their existing people resources and ours. In some instances we make a recommendation that the company hire on a full-time in-house bookkeeper, because the need is there.

It’s a process that has served us well in working with both existing businesses and startups alike, as it removes some of the mystery surrounding their financial position. It’s important that a company’s management team understand what their accountant/CPA is doing and why they are doing it.”

As for industries this service is a best fit for, Nth Degree CPAs says they have a host of different clients already utilizing this small business controller and bookkeeping service that span an abundance of different industries, though they have noticed professional service practices, high-skilled consulting firms, ecommerce and marketing practices, as well as tech industry companies reaching out more frequently to inquire about the service. Nth Degree CPAs is a boutique high-value accounting firm in Seattle, WA that provides integrated tax planning and preparation with accounting and controller-level financial guidance for the small business community.

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