4Thought Blog

4thought graphic - blog 2020

C Corp, S Corp or Partnership? Which Entity is Right for Your Business?

Posted by Randy Schwartzman on Thu, May 27, 2021

The choice of entity is among the most important decisions facing taxpayers when starting a business or investment activity.

The choice of tax entity generally includes a C corporation, S corporation or partnership, each having its own advantages and disadvantages that must be evaluated in terms of how the entity’s tax and legal characteristics align with the goals of the business and its investors.

Existing businesses should also evaluate their choice of entity—especially now, in light of President Biden’s proposals to increase the tax burden on corporations and high-wealth individuals. Depending on the circumstances, it may make sense to consider converting an existing entity to a different type of tax entity or structure in order for businesses and their owners to better manage their overall tax obligations.

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Topics: Business tax planning

5 Tax Accounting Method Changes That Can Generate Savings and Cash Flow

Posted by Yuan Chou on Tue, May 25, 2021

Cash flow preservation remains an important focus for many companies as the COVID-19 pandemic continues to create uncertainty for businesses.

Accounting method changes provide a valuable opportunity for taxpayers to reduce their current tax expense and increase cash flow by accelerating deductions and/or deferring income.

Changing to an optimal method of accounting often results in a taxpayer claiming a favorable “catch-up” adjustment on the federal tax return for the year of the change, which can significantly reduce taxable income or generate a net operating loss that can be carried back to higher tax rate years.

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Topics: Business tax planning

7 Last-Minute Tax Strategies to Lower Your 2020 Business Taxes

Posted by Concannon Miller on Thu, Feb 25, 2021

Good news - business taxpayers may still be able to take actions to lower their federal income tax liabilities for 2020, as well as for future years.

Consider these ideas before you file last year's return.

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Topics: Business tax planning

PA Provides PPP Tax Relief, COVID Business Grants

Posted by Concannon Miller on Mon, Feb 8, 2021

Pennsylvania has approved legislation clarifying tax rules on PPP loans and also providing $912 million in COVID relief aid.

The legislation, approved Friday, clarifies that Paycheck Protection Program loans that are forgiven are not taxable in Pennsylvania and that businesses may deduct eligible expenses paid with PPP loan proceeds. This aligns Pennsylvania’s PPP rules with federal rules approved in December and is very beneficial to businesses and individuals with PPP loans.

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Topics: Business tax planning, 2020 Coronavirus

Business Meals: How to Use the Reinstated Tax Deduction for 2021

Posted by Concannon Miller on Thu, Jan 28, 2021

Restaurants have struggled mightily during the COVID-19 pandemic.

Thankfully, they're specifically targeted for a new tax relief measure found in the massive Consolidated Appropriations Act (CAA), which became law on December 27, 2020. The new provision creates a temporary but meaningful tax incentive to spend more on business-related food and beverage costs.

Preexisting tax breaks for certain food and beverage and entertainment costs are available in other limited circumstances. Here are the details.  

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Topics: Business tax planning

Many More Businesses Now Eligible for COVID Employee Retention Tax Credits

Posted by Angel Chiariello on Wed, Jan 13, 2021

The Employee Retention Tax Credit (ERTC) provision of the 2020 CARES Act was overshadowed by the PPP loan program, primarily because the original ERTC provisions prohibited an employer with a PPP loan from claiming ERTCs.

The 2021 Consolidated Appropriations Act, passed just weeks ago and most known for allowing businesses a tax deduction for the expenses paid with tax-free PPP funds, made sweeping changes to the ERTC rules as well. Most notably, lawmakers removed the provision disallowing businesses with PPP loans to participate in the ERTC program.

As a result, these valuable credits are now available to more business owners for wages paid in Q1 & Q2, 2021 (and possibly for wages paid in 2020). For more information about the original provisions of this program, see our article here.

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Topics: Business tax planning, 2020 Coronavirus

Second Stimulus Offers More Business Benefits, Tax Credits

Posted by Concannon Miller on Tue, Dec 29, 2020

With its $900 billion price tag, the second federal stimulus bill includes a multitude of benefits for businesses – so many we couldn’t fit them in one article.

Our first article on the bill focused on the new Paycheck Protection Programs rules and additional allocation (you can read it here if you missed it) but there are other provisions businesses should learn about, including the extension and expansion of the Employee Retention Credit and Families First Coronavirus Response Credit.

Read on below for more details on both credits along with other new and extended tax provisions:

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Topics: Business tax planning, 2020 Coronavirus

New Federal Stimulus Deal Includes New PPP, Other Business Benefits

Posted by Concannon Miller on Wed, Dec 23, 2020

Congress has approved a second COVID-19 stimulus deal with both business and individual benefits. 

Top on the list may be the deductibility of businesses expenses paid with Paycheck Protection Program loans. This was Congress’s original intention and the new stimulus deal remedies the problem. It’s great news for anyone with a current PPP loan.

Each state would now have to act to allow these expenses to be deductible on your state income taxes, as well. We’ll be following the situation in all the many states where our clients are located and will keep you up to date.

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Topics: Business tax planning, 2020 Coronavirus

Act Now on These Expiring Business, Individual Tax Benefits

Posted by Concannon Miller on Tue, Nov 24, 2020

The CARES Act granted several valuable federal tax breaks for individuals and businesses. But most will expire at the end of 2020 or at the end of tax years that begin in 2020.

Here's a roundup of tax breaks scheduled to go off the books soon, unless Congress extends them.

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Topics: Business tax planning, Individual tax planning

Biden’s Tax Plans: The Key Changes for Businesses, Individuals

Posted by Concannon Miller on Thu, Nov 12, 2020

President-Elect Joe Biden has expressed support for major changes to the current federal tax laws, though with control of the Senate still up in the air, it’s unknown which of his plans may come to fruition.

But it’s still wise to educate yourself on his plans, especially as you start working on year-end tax planning. Biden’s plans may mean rollbacks or revisions of several Tax Cuts and Jobs Act provisions.

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Topics: Business tax planning, Individual tax planning

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