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The Financial Benefits of Cats

By Keith Taxguy / August 10, 2020 /

Now that we are firmly in the dog days of summer (as I write and published this, not as you are probably reading it) it is time to turn our attention to how pets actually make us richer in so many ways, including financially. And since it is the dogs days of summer we will focus on cats. This isn’t to take anything away from dogs and dog lovers (we always had a dog on the farm growing up). Dogs are cash machines, same as cats. It’s just that your favorite accountant currently lives with two cats.

Now I can hear some folks out there taking exception to my premise that pets are a cash machine when pets actually cost money. Food, litter, toys and vet bills add up. A few years back a blogger in the FIRE community let the world know pets were a frivolous expense and in no way frugal. I disagreed then and now. Unless you have a herd of animals in your home, pets increase your health and wealth in many ways. And our furry family members do it in such a stealthy way.

Of course I’m biased. I enjoyed cats in the home since high school. We always had a dog or two around the farm when I was growing up. A farm dog is a great help when getting the cows in at milking time. They are also a great companion when working in the barn and fields. There is a wealth beyond financial that friendship brings. And cats take care of important business, too.

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Finding Celebrity Clients

By Keith Taxguy / July 27, 2020 /

It is the one thing that could put you on the fast track to the top. A-list actors, international rock bands, name-brand athletes, successful business people and the uber-wealthy are the kinds of clients that turn your business into something special. Selling an actor’s home, consulting with the wealthiest people in the world and business planning with an athlete automatically changes the nature of your business. You are now working with the elite and that takes a proper mindset.

Having a name on your client list from the zeitgeist gives you instant credibility. People will want to do business with you when they know you work for a famous individual. Better still, once you manage to add one superstar to your client list it has a habit of growing into a larger list of famous names.

And the income isn’t bad either. Someone pulling $28 million a year needs more tax and accounting advice (using the author as an example in this post) and they pay more for it because much more issues are involved. In a way, having famous people on your client list makes you famous, at least in a small group comprised mostly of other superstars.

There are two levels to the process of adding well-known names to your client list. In the last twenty years my tax practice has added names from the NFL and other professional sports, rock bands even non-listeners would recognize, actors on the big and small screen and high net worth clients. Prior to that I had few rock bands and wealthy business people and professionals visiting me. Then something changed and my business was never the same.

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Beating the SALT Deduction Limit

By Keith Taxguy / July 6, 2020 /

As you can see by the details of the programs from the states above that have some form of pass-through entity tax that the rules vary widely by state. Many use a credit to pass-through the benefit while others adjust income on the member level.

Many considerations need to be taken into account. Even if the SALT limit were eliminated there would still be instances where the pass-through entity tax would be beneficially to entity members. 

There are also reasons not to make the election (except in Connecticut where it is mandatory) as the pass-through entity tax can affect the Qualified Business Income Deduction, Earned Income Credit, Saver’s Credit, Premium Tax Credit and more.

The tax professional preparing the entity return and that of all the members will have an easier time determining the best course of action.

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Charitable Giving for Businesses

By Keith Taxguy / June 1, 2020 /

Sponsorships are technically not charitable giving; they are an advertising or promotional expense to the business. It requires only a modest amount of planning to gain full deductibility of monies paid to non-profit organizations and other social groups. 

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10 Ways to Earn an Extra $10,000 This Year

By Keith Taxguy / May 22, 2020 /

There are so many reasons to ask, How can I make an extra $10,000 this year? Maybe you want to retire early and a small extra income will do the trick coupled with your savings and investments. The economy might be bad, your hours cut or are unemployed. Maybe you are retired and just want something to do that adds value to the lives of others while providing extra income for bills.

Regardless your reasons for wanting to earn extra money, what you need is a list of ideas for accomplishing the goal. Below is a list of 10 ways to earn an extra $10,000 this year (unless you are reading this New Year’s Eve, then you can start next year). Each of these opportunities are used to earn extra money by family members or clients in my office. If you read to the end I have two bonuses.

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The CARES Act: Maximizing the Employee Retention Credit (ERC)

By Keith Taxguy / May 16, 2020 /

A large number of business owners have avoided the many benefits the government has offered in these trying times. The large number of choices has led to a perfect example of people’s behavior when confronted with too many choices. Even tax professionals are struggling to understanding all the different programs. Alvin Toffler’s overchoice is clearly hampering small business owners. Too many options reduces the number of businesses that will apply for any, even if they qualify. That is the biggest risk facing the American economy in 2020. If business owners shy away from programs designed to help them through these unique times more will fail, costing jobs and long-term damage to the economy and harming America’s competitiveness. 

I encourage you to discuss your situation with a competent tax professional. Yes, the IRS is still playing with the rules because they haven’t figured it all out yet themselves. But you can still plan accordingly. Whether a PPP loan or the Employee Retention Credit is best for you, you owe it to your employees, community and yourself to explore all the options.

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This is Not the Next Great Depression

By Keith Taxguy / May 6, 2020 /

The willingness of leaders in Washington to spend whatever is necessary, coupled with the Federal Reserve’s willingness to use unlimited resources to counter the economic dislocation, make it impossible for economic activity to descend into the chaos of the 1930s. Stimulus checks to individuals and forgivable loans to small businesses will limit the damage. Make no mistake, the damage will be acute and will linger. That lesson was taught us by The Great Depression. WWII spending proved the path necessary financially to beat the economic demon into submission. 

More proposals keep coming forward. Nearly $3 trillion in stimulus spending is already passed and working its way into the hands of individuals and businesses. It is not enough and will run short. Congress knows it and keeps pumping more stimulus measures at every whiff of a slowing economy. How much more stimulus spending will come is anyone’s guess. All I know is nobody seems to want to rein in the excesses at this time. And that is probably a good thing. The 26% of GDP deficit in 1943 is only the worst year of many with large fiscal deficits in the early 1940s. The spending was insane back then and America thrived afterwards. With the money going into the hands of Americans (back then and now) there is no doubt in this accountant’s mind the economy will pass this painful speed bump reasonably quickly with far fewer casualties than if belated measures similar to 2008-9 were used; or worse, the reluctant policies of 1929-1932.

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Now is the Time to Retire

By Keith Taxguy / April 25, 2020 /

Maybe today isn’t the ideal time to take the early retirement you planned. But the day is fast approaching. The pandemic will pass, economic activity will increase and the market will travel to new highs. Beginning retirement when the economy is at the beginning stages of a bull market allows for the longest period of growth before your budget is seriously challenged with declining asset prices.

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