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Accounting Business

3 Tips for Getting an Accurate Business Valuation

If you’re conscientious about financial reporting, you may already have a sense of your company’s worth, but in some instances you might need a formal business valuation, such as:

  • For certain transactions. Selling your business? Planning an IPO? Need financing?
  • For tax purposes. Includes estate planning, stock option distribution, and S Corporation conversions.
  • For litigation. Needed in cases like bankruptcy, divorce, and damage determinations.

There isn’t a single formula for valuing a business, but there are generally-accepted measures that will give you a valid assessment of your company’s worth. Here are some tips that will help you get a more accurate business valuation.

  1. Take a close look at how your business operates. Does it incorporate the most tax-efficient structure? Have sales been lagging or are you selling most of your merchandise to only a few customers? If so, then consider jump-starting your sales effort by bringing in a seasoned consultant.Do you have several products that are not selling well? Maybe it’s time to remove them from your inventory. Redesign your catalog to give it a fresh new look and make a point of discussing any new and exciting product lines with your existing customer base.

    It might also be time to give your physical properties a spring cleaning. Even minor upgrades such as a new coat of paint will increase your business valuation.

  2. Keep in mind that business valuation is not just an exercise in numbers where you subtract your liabilities from your assets, it’s also based on the value of your intangible assets.It’s easy to figure out the numbers for the value of your real estate and fixtures, but what is your intellectual property worth? Do you hold any patents or trademarks? And what about your business relationships or the reputation you’ve established with existing clients and in the community? Don’t forget about key long-term employees whose in-depth knowledge about your business also adds value to its net worth.
  3. Choose your appraisal team carefully. Don’t try to do it yourself by turning to the Internet or reading a few books. You may eventually need to bring in experts like a business broker and an attorney, but your first step should be to contact us. We have the expertise you need to arrive a fair valuation of your business.If you need a business valuation for whatever reason, give us a call today.
Tax

5 Tips If You Changed Your Name This Year

If you changed your name this year as a result of a recent marriage or divorce, you’ll want to take the necessary steps to ensure the name on your tax return matches the name registered with the Social Security Administration. A mismatch between the name shown on your tax return and the SSA records can cause problems in the processing of your tax return and may even delay your refund.

Here are 5 tips for recently married or divorced taxpayers who have made a name change.

  1. If you took your spouse’s last name or if both spouses hyphenate their last names, you may run into complications if you don’t notify the SSA. When newlyweds file a tax return using their new last names, IRS computers can’t match the new name with their Social Security Number.
  2. If you were recently divorced and changed back to your previous last name, you’ll also need to notify the SSA of this name change.
  3. It’s easy to inform the SSA of a name change. You just need to file Form SS-5, Application for a Social Security Card, at your local SSA office and provide a recently issued document as proof of your legal name change.
  4. Form SS-5 is available on SSA’s website at www.socialsecurity.gov, by calling 800-772-1213, or at local offices. Your new card will have the same number as your previous card, but it will show your new name.
  5. If you adopted your spouse’s children after getting married, you’ll want to make sure the children have an SSN. Taxpayers must provide an SSN for each dependent claimed on a tax return. For adopted children without SSNs, the parents can apply for an Adoption Taxpayer Identification Number, or ATIN, by filing Form W-7A, Application for Taxpayer Identification Number for Pending U.S. Adoptions with the IRS. The ATIN is a temporary number used in place of an SSN on the tax return. Form W-7A is available on the IRS website at www.irs.gov, or by calling 800-TAX-FORM (800-829-3676).
Tax

Using a Car for Business? Grab These Deductions

If you use a car for business, you get the benefit of tax deductions.

There are two choices for claiming deductions:

  1. Deduct the actual business-related costs of gas, oil, lubrication, repairs, tires, supplies, parking, tolls, drivers’ salaries, and depreciation.
  2. Use the standard mileage deduction and simply multiply 51 cents for 2011 travel (2010’s rate was 50 cents) by the number of business miles traveled during the year. Your actual parking fees and tolls are separately deductible under this method.

Which Method Is Better?

For some taxpayers, the standard mileage rate produces a larger deduction. Others fare better tax-wise by deducting actual expenses.

Tip: The actual cost method allows you to claim accelerated depreciation on your car, subject to limits and restrictions not discussed here.

The standard mileage amount includes an allowance for depreciation. If we opt for the standard mileage method, it allows you to bypass the limits and restrictions and it’s simpler – but it’s often less advantageous in dollar terms.

Caution: The standard rate may understate your costs, especially if you use the car 100% for business, or close to that percentage.

Generally, the standard mileage method benefits taxpayers who have less expensive cars or who travel a large number of business miles.

How to Make Tax Time Easier

Keep careful records of your travel expenses. We won’t be able to determine which of the two options is better for you if you don’t know the number of miles driven and the total amount you spent on the car.

Furthermore, the tax law requires that you keep travel expense records and that you give information on your return showing business versus personal use. If we use the actual cost method for your auto deductions, you must keep receipts.

Tip: Consider using a separate credit card for business, to simplify your recordkeeping.

Tip: You can also deduct the interest you pay to finance a business-use car if you’re self-employed.

Note: Self-employeds and employees who use their cars for business can deduct auto expenses if they either (1) don’t get reimbursed, or (2) are reimbursed under an employer’s “non-accountable” reimbursement plan. In the case of employees, expenses are deductible to the extent that auto expenses (together with other “miscellaneous itemized deductions”) exceed 2% of adjusted gross income.

We will help you determine the best deduction method for your business-use car. Let us know if you have any questions about which records to keep

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