Thanks to legislation passed in 2013, the federal income tax rates for individuals remain historically low for single taxpayers with taxable income below $400,000.The rates for C corporations, however, remain at the same levels that have been in place for years. As a Maine-based business owner, you may wonder if you should switch a C  Continue Reading »

Let’s say you’ve decided to sell your Maine-based business. There are two basic ways to sell an incorporated business: sell the assets or sell the stock. Sellers prefer stock sales because profits are generally taxed at a maximum federal rate of only 15 percent. Also, when selling C corporation stock, double taxation is avoided since  Continue Reading »

The tax rules for interest deductions depend on which category the expenses are in. Here are the categories that apply to expenses that individuals can incur: 1. Business Interest. This is fully deductible. You can deduct business interest on money spent for expenses or supplies and equipment, as long as you materially participate in the operations  Continue Reading »

Most business owners want a retirement plan that meets the following criteria: Current tax benefit on contributions. Ability to minimize or avoid contributions when cash flow is tight. Only cover full time, long term employees. High percentage (70 percent or more) of every dollar goes toward owner’s retirement. Maine-based small business owners have some new choices  Continue Reading »

Incentive stock options offer tax advantages to employees, but they come with a tax price for your Maine-based company. The plan must meet numerous strict requirements spelled out in the law, and the company gets no deduction at any time. To receive preferential capital gain treatment, option holders must retain the stock at least two  Continue Reading »

If your Maine-based small business doesn’t provide health insurance, or if you do provide coverage but your employees are faced with increasing deductibles, co-pays or out-of-pocket expenses, it’s the perfect time to take a look at flexible spending accounts (FSAs). A form of cafeteria plan under Section 125 of the Internal Revenue Code, a health care FSA allows  Continue Reading »

Slow-moving inventory is easy enough to discount or liquidate, but there’s another option that can give your Maine-based business more of a benefit: donate that stock or computer equipment to charity. In general, when you donate inventory or property used in your business, your write-off is limited to the cost of the items or property.  Continue Reading »

If you are thinking about converting your C-corporation into an S-corporation, you must plan ahead to avoid owing a substantial tax on gains recognized for 10 years following the conversion. The built-in gains (BIG) tax rate is the highest corporate tax rate, currently at 39.6 percent. If your company is liable, the tax is paid  Continue Reading »

A recent report from the New York Times makes it clear that aspiring business owners commonly use their retirement accounts to get their new ventures off the ground. But, as a recent tax court case illustrates, what may seem like a smart investment strategy can go awfully wrong when the budding investor disregards expert advice  Continue Reading »

In a previous article, we discussed the benefits of S-corporations for your Maine-based small business. Here we’ll delve further into the idea of S corporation conversion, as the federal self-employment (SE) tax doesn’t apply to earnings from an S corporation business. If you’ve reached the breaking point with high SE taxes, there may be a  Continue Reading »