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Cofounder Conflict Could Be One of the Biggest Threats to Your New Business

If you asked brand-new entrepreneurs to make a list of everything they think might one day pose a threat to their startup, you’d probably hear a variety of answers with similar themes.

Some might be (rightfully) worried about ultimately developing a product in search of a marketplace. Others may be worried about how they’re going to overcome the cash flow issues they’ll likely face. Others still might be worried about getting “taken for a ride” by the venture capital people they’re putting so much of their faith in.While all of these are understandable concerns, none of them should be at the top of that list. The fact of the matter is, the number-one threat to your business isn’t an external factor at all. It’s the people you’ve cofounded that business with.

Holiday Gifting with a Tax Twist

Here are some examples of holiday gifts you provide to members of your family, employees and others that may also yield tax benefits.

 Gifts for Employees – It is common practice this time of year for employers to give employees gifts. Although gifts are generally excluded from the recipient’s gross income, an employee cannot exclude gifts from his or her employer as a gift.

Tax Credit or a Deduction – Which is Better?

People often say that an expense is “a tax write-off” and most everyone interprets this to mean that the expense will have a tax benefit. Generally, such a benefit takes the form of either a deduction or a credit; these benefits’ effects are quite different, however, and each type has various categories. As a result, the tax implications may not be as expected. This is especially true when the write-off claim comes from a salesperson who is touting the tax benefits of a product or service, as such individuals often leave out key details. In general, a deduction reduces taxable income, whereas a credit reduces the tax itself.

Essential Small Business Tax Credits

At their core, tax credits are a very particular type of benefit designed to offset the actual tax liability associated with SMBs around the country. This isn’t the same thing as a tax deduction, which lowers that business’s actual income. Tax credits are typically offered to incentivize everything from hiring more workers in order to stimulate the economy to making meaningful contributions to specific industries.

Watch Out for Those Fake IRS Letters

Every year, the vast majority of taxpayers file their returns with the IRS between the end of January and the April due date.  However, the IRS does not just take taxpayers’ word regarding the information on their returns. For this reason, tax season is followed by “matching season,” when the IRS attempts to match the information on each taxpayer’s return with the information from the various returns that other entities (employers, financial firms, educational institutions, the insurance marketplace, etc.) have filed.  The goal is to identify possible accidental oversights and intentional omissions.

The IRS Has Cryptocurrency on Its Radar

If you own cryptocurrency, you need to know that the IRS has owners of cryptocurrency in its sights because many cryptocurrency owners are not reporting or paying taxes on their cryptocurrency transactions.  In fact, the IRS is so focused on this issue that it recently issued warning letters to over 10,000 taxpayers it suspects might have an under-reporting problem. 

What Are My Chances of Being Audited and How Can I Reduce Them?

Although audits are relatively rare, as fewer than 1% of taxpayers grouped by income level will get that dreaded notice on IRS letterhead.   But don’t panic!

Per the linked statistics, for the average American who earned $50‒70K per year, only about half a percent of those tax returns got audited.  If you made between $25‒50K or between $75‒100K, less than half a percent of those returns were under audit.  Only 6.66% of tax returns reporting an eight-figure adjusted gross income were audited as well.  Additionally, the IRS has less funding and about one-third fewer agents on board compared to less than a decade ago, so this keeps audit figures down.