Stewart & Associates, Inc.

Many taxpayers have heard of an LLC (Limited Liability Company) or even have one themselves but some aren’t sure what it actually is and what it can do for you. Here is a snapshot of what you need to know about an LLC: -Legal Protection: The main reason why anyone should form an LLC is to protect you and your assets legally in the event of litigation. When you have an LLC in place, a party can only legally attack your assets in that LLC. For example, John owns a business unde...r an LLC. Bob falls and injures himself and tries to sue John. Legally, he can only go after the business assets (bank accounts, equipment, etc.) but cannot go after John’s personal assets (home, car, etc.) -Single vs Multi Member: An LLC can either be single member (just one individual who would file a sole proprietorship Schedule C) or a multi member (numerous owners who would file a separate tax return). In the case of a multi member, you would either file a Form 1065 partnership return or elect to file as a corporation. -Tax Election & Savings: A multi member LLC is always a partnership, unless you make a tax election to be treated as an corporation. Under this election, you can file as a C Corporation or elect to be an S Corporation. So, you can get the legal protection of an LLC with the tax benefits of an S Corporation. This will save you thousands of tax dollars and protect your personal assets. For more information on LLCs or guidance on which entity structure is best for you, contact our office today.

Today is the day! The IRS has now opened their electronic filing system and is now accepting individual income tax returns. Remember, the sooner you file the faster you can expect your refund (estimated time 2-3 weeks) so contact our office today to schedule your appointment. Note: we are taking appointments via email, zoom, and in person (face masks required).

Did you receive a 1099-NEC or start/run a business in 2020? If you did, you have made what the IRS deems as Self-Employment Income. This means that you are basically your own boss and employing yourself to make money. Many individuals are self employed (ranging from just small contractors to small business owners), but many clients do not know the benefits and consequences of being self employed. Below are a couple key ones that we like to expand on: - Reporting on Tax Return...: When a taxpayer makes SEI (Self Employment Income), they need to report all of the income they receive on a Form Schedule C. This form is apart of your personal tax return and will detail the income you made and the information required by the IRS (such as address of business, Tax ID, and general information). - Tax Deductions: When making SEI, individuals incur necessary expenses along the way, such as a candlemaker needing to buy wax and wicks to make the candles. Some expenses are directly related to your business while some may be indirect, which is where most taxpayers overlook more tax deductions. These include your cell phone, internet, general supplies, meals, travel, business use of your personal vehicle, home office expense, and the list goes on. - Self Employment Tax: A major drawback of being self employed is the associated tax you have to pay. This tax is 15.3% of your net self employment income (income minus expenses) and is added to your regular federal income tax. For example, John is a W-2 employee and makes $40,000 a year and pays $4,500 in federal income tax. Last year, he decided to start a woodworking business and made, after expenses, $10,000. He now has taxable income of $55,000 and owes federal income tax of $6,700 plus self employment tax of $1,530, bringing his tax bill up almost $4,000. Many taxpayers are unaware of this and fail to properly save to pay this tax. If you want to know more regarding self employment income or have general questions on how to better your business from a tax/financial perspective, contact our office today.

Going live today at 11 AM to discuss these topics from a tax and insurance perspective, tune in if you are interested!

Did you know that California has its own set of tax laws that differ from the federal tax code put out by the Internet Revenue Service? California has the Franchise Tax Board (FTB) that set and monitor California specific tax law and regulations. That is why many taxpayers see a California Adjustments page when they file their state tax return. These adjustments vary from individual to business but here a a few key ones: - PPP Expense Deductibility: With the IRS passing of ...the deductibility of forgivable PPP expenses, many taxpayers were relieved that they wouldn’t have to pay income tax on their PPP forgiveness. However, the FTB has stated that they will not follow the IRS and tax individuals/businesses on PPP forgiveness, meaning you’ll see a higher state income tax. - Health Insurance Penalty: The TJCA tax change in 2017 got rid of the Individual Mandate for health insurance and the associated penalties for not having it. However, the FTB has re-enacted this mandate for California and made the penalties $750 per adult and $375 per child. This was done as a means to fund Covered California and make health insurance more affordable for families. - Depreciation: Many CPAs and accountants always advise to purchase more equipment or vehicles to get the full tax deduction in the current year. The federal allows 100% deductibility of new equipment but California will only allow a $25,000 maximum deduction, along with regular depreciation. If you want to more California differences or have any questions regarding your tax returns, please visit our website and contact us.

Clients are asking how the PPP loan is calculated and what it can be used for. Here is a sample of how to calculate it and what you can use it for. Also it can be forgiven tax free!

We are essential! CPAs and accountants are considered essential during this time so we can assist you with the government programs. Please email or contact us by phone!

Paycheck Protection Program (PPP) Many clients and businesses are asking about the payroll/rent loans the SBA is offering and here is a sneak peek at what the application will look like. The government says that the application process should be live this Friday, so please contact to get the necessary docs ready! @ Stewart & Associates, Inc.

Check out this video on where to find the SBA Corona relief loan for businesses

SBA is offering historical low rate-long term loans for businesses affected by the COVID-19 virus. If you have any questions or need assistance applying, do not hesitate to contact us!

TRREASURY ANNOUNCEMENT The IRS has just announced that they are extending the tax filing and payment deadline from April 15th to July 15th. No penalties and interest will accrue. We are still working with clients remotely.

What makes our services unique is that we develop a custom financial plan for each client to achieve their business and personal goals

Why choose a CPA? Not only are we held to a higher ethical and educational standard, we provide the best possible financial planning for you. A CPA is the best investment for you and your business.

Side Hustles! Many clients ask us about them and we finally give our opinion in our newest blog post. Click the link in the bio and go to the Blog tab to check it out!

Ever wonder if you are missing out on tax savings? We strive to capitalize on tax benefits specific to each client to ensure the best savings!

IRS ANNOUNCEMENT IRS just announced this week that the official opening day of the 2020 tax season is JAN 27th. Contact us today to schedule your appointment!

Check out our new blog post for the 2019 tax changes and updates! Click the link in our bio and go to our Blog page and subscribe!

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