Summer Time Tax Tips

It’s getting hot outside, and you probably don’t want to think about tax planning.  But we have put together some summer tax tips so that you can get the most out of your 2015 return.31741510_s

Before you head off to the beach, please take a look below at what we have prepared.

  • Take a credit for summer day care. If you have one or more children under the age of 13, your costs of in-home childcare, a day care facility, or sending the kids to day camp may qualify for the Child and Dependent Care Tax Credit. The costs must be incurred to enable you (and your spouse, if you file jointly) to work or look for work and you generally must report some earned income. Payments to your spouse, your dependent, or your child who is under age 19 at the end of the year aren’t eligible. Overnight camps and summer school tutoring won’t qualify either.

The credit can equal up to 35% of qualifying expenses, depending on your income. Total expenses are limited to $3,000 for one child and $6,000 for two or more.

  • Combine business with pleasure. Add vacation days to your summer business trip, and bring the family along. You can deduct most of your own (but not your family’s) unreimbursed costs, such as airfare, meals and lodging during the business portion of your trip.
  • Put your kids to work. If you own a business, give your children a summer job. You can deduct their wages, and if you’re a sole proprietor, you don’t have to withhold social security or Medicare taxes as long as your kids are under 18. They can even use their earnings to set up an IRA.
  • Clean out your garage and take a deduction. Donate your unwanted property to a qualifying charity and deduct the fair market value. Make sure to get a receipt and check the documentation rules for high-value items.

Understanding the Breakeven Point

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The breakeven point in your business is where all direct and indirect costs have been met. You are neither making nor losing any money. The breakeven point can be measured in number of units sold, dollars of total sales, or possibly hours billed out.break-even-point

The calculation of the breakeven point is an iatrical component of the cost volume profit analysis for any business.  We’ll explain more about this below.

  • To calculate your breakeven point, you must first determine your direct (variable) and your indirect (fixed) costs. Direct costs vary with the number of units sold. For every unit you sell, you must buy another set of the components. Your indirect costs don’t normally vary for a given volume of business. Your gross profit per unit (sales less direct costs, known as the contribution margin) goes toward paying for these indirect costs. Once the indirect costs have been paid, you have reached the breakeven point. The gross profit from every unit sold over the breakeven point goes to the bottom line as profit.

Please check out our guide under the “Services” tab of our website, and give us a call if you have any questions about Understanding the Breakeven Point.

Preventing Employee Fraud

As an entrepreneur, you work hard for your money. There is almost nothing worse than experiencing pilferage, embezzlement, and other types of misappropriation. Internal controls are extremely important to the entrepreneurial company.fraud image

We have put together a guide that contains 10 steps to help you protect the earnings and assets of your company such as:

  • Using Cash Wisely
  • Managing Cash Outflows
  • Practicing Cost Control
  • Analyzing and Planning
  • Monitoring Inventory

Please check out our guide under the “Services” tab of our website, and give us a call if you have any questions about Preventing Employee Fraud.