by H2R CPA Team

Because qualified retirement plan contributions lower the taxable income of business owners of passthrough entities (sole proprietorships, partnerships, S corporations, and LLCs), increasing contributions can qualify business owners for additional tax deductions under the Tax Cuts and Jobs Act that they would not otherwise have been eligible to receive, such as the new qualified business income (QBI) deduction (Sec. 199A).

​See article below from the AICPA website for details and contact H2R CPA at 412-391-2920 or team@h2rcpa.com with any questions you may have.

Why small business owners should have a qualified retirement plan

by H2R CPA Team

The Tax Cuts and Jobs Act changed the way tax is calculated. As a result, the IRS encourages everyone to perform a “paycheck checkup” to see if you have the right amount of tax withheld for your personal situation.

People who are especially encouraged to check their withholding using the IRS Withholding Calculator are those who:

• Belong to a two-income family
• Work two or more jobs or only work for part of the year
• Have children and claim credits such as the Child Tax Credit
• Have older dependents, including children age 17 or older
• Itemized deductions on their 2017 tax returns
• Earn high incomes and have more complex tax returns
• Received large tax refunds or had large tax bills for 2017

See article below from the IRS website for details and contact H2R CPA at 412-391-2920 or team@h2rcpa.com with any questions you may have.

IRS urges 'Paycheck Checkup' for key groups; tax withholding may need adjustment

by H2R CPA Team

There’s an old saying regarding family-owned businesses: “Shirtsleeves to shirtsleeves in three generations.” It means the first-generation owner started in shirtsleeves and built the company up from nothing but, by the third generation, the would-be owner is back in shirtsleeves with nothing because the business failed or was sold.

Although you can’t guarantee your company will buck this trend, you can take extra care when choosing a successor to give your family business a fighting chance. Here are seven steps to consider:

1. Make no assumptions. Many business owners assume their son or daughter wants to run the company or that a particular child is right for the role. But such an assumption can doom the company.

2. Decide which family members are viable candidates, if any. External parties such as professional advisors or an advisory board can provide invaluable input. Outsiders are more likely to be impartial and have no vested interest in your decision. They might help you realize that someone who’s not in your family is the best choice.

3. Look at skills and temperament. Once you’ve settled on a few candidates, hold private meetings with each to discuss the leadership role. Get a feel for whether anyone you’re considering may lack the skills or temperament to run the business.

4. If there are multiple candidates, give each a fair shot. This is no different from what happens in publicly held companies and larger private businesses. Allow each qualified candidate to fill a position at the company and move up the management ladder.

5. Rotate the jobs each candidate performs, if possible. Let them gain experience in many areas of the business, gradually increasing their responsibilities and setting more rigorous goals. You’ll not only groom a better leader, but also potentially create a deeper management team.

6. Clearly communicate your decision. After a reasonable period of time, pick your successor. Meet with the chosen candidate to discuss a transition time line, compensation and other important issues. Also sit down with those not selected and explain your choice. Ideally, these individuals can stay on to provide the aforementioned management depth. Some, however, may choose to leave or be better off working elsewhere. Be forewarned: This can be a difficult, emotional time for family members.

7. Work with your successor on a well-communicated transition of power. Once you’ve picked a successor, he or she effectively becomes a business partner. It’s up to the two of you to gradually shift power from one generation to the next (assuming the business is staying in the family). Don’t underestimate the human element and how much time and effort will be required to make the succession work.

Contact H2R CPA at 412-391-2920  or team@h2rcpa.com ​if you have questions regarding Succession Planning for your business. Our team would be pleased to provide a complimentary consultation.