Table of Contents
Cover Story:
Only Time Will Tell
A look ahead at what 2007 will mean for Rockland
Feature Story:
How Will He Do That?
Hector May has big plans for the RBA
DEPARTMENTS:
Economics Roundup
• The Smart Investor
Try a financial diet in 2007
• Economic
Viewpoint
Coming to America or conundrum continued
Business Roundup
• Office Efficiency
Streamlining office operations through lean processes
• Marketing By Design
Branding your image - it's not just for the "big" guys
Ask The Experts
• Business Start-ups
Getting your basics together
• Is It Tax Season Yet?
Your tax questions answered
Retail Round-Up
• Feast or Famine
Taking the pulse of the local restaurant biz
• In The News
Invest in Your Community
• Heart of a Lyon
Former Jet delivers an inspirational message
• Family Shelter Honors
First-ever program recognizes community contributions
Odds & Ends
• From The Publishers
• PR Patter
Dedicated Section:
Rockland Business Association:
The President’s Desk
All in all, it was a very good year
Handing Over The Torch
Annual membership luncheon introduces new RBA board
RBA Happenings
• Committee and Council Info
• Calendar of Events
• New Members
Ask The Expert
Start-up Businesses -
by Davin Herman
Tax Issues - by Kevin Francis
Start-up Businesses
By David Herman
Q: With layoffs, early retirements, companies closing and companies relocating, I’m thinking of starting my own business. How do I get going?
A: Starting a business is a tremendous commitment of time, money and other resources. Although it may seem sexy to be in business for yourself, you need to ask yourself if you are prepared to put in the appropriate time. Very often people who are self employed don’t work Monday thru Friday 9-5. There are many, many hours of additional time that you need to commit. Are you prepared for that? Do you have a skill or talent that would lend itself to being self-employed? Can you make money and support yourself or your family?
Q: Okay, I’m going for it. I’ve decided to go ahead and get started. What is my next step?
A: Your next step is to figure out how much money you will need to start up. Service businesses usually require less start up money, whereas businesses that require a product typically have to purchase inventory and tie up money on the shelf. Some businesses need equipment and machinery. That also requires a capital commitment. Define exactly what you think you need and approximately how much you think it will cost. Make sure you have enough capital available.
Q: Alright, I have the money I need and I want to get started. What should I do next?
A: Seek advice. Talk to other people in business that you know. If possible, speak to someone in the business you are thinking of starting. Talk to professionals. That includes attorneys and CPA’s. Accumulate as much information as you can and then go through it all with a qualified advisor. My office helps people get started all the time. Many professionals offer free consultations. These are just some of the soul-searching questions you need to ask yourself BEFORE you get started.Take your time and be thorough. There are a lot of additional steps to consider.
David R. Herman is a CPA in New City, and is the Past President of Rockland Chapter of the Society of CPA’s. For any questions feel free to contact him at 845-708-0500.
Q: I am self employed and sometimes have my child work for me. Can I deduct the money I pay her?
A: Yes, you can. Furthermore, if your child is under 18, they are exempt from FICA tax, which saves you 15.3%. Also, a dependent child’s standard deduction may be up to $5,000. As a result, you could pay the child up to $5,000 tax free.
Q: I would like to transfer some of my assets to my children. How much can I give to them tax free?
A: Giving money or assets to another individual is termed “gifting”. Gifting can be a very effective estate planning tool. Each individual can “gift” up to $12,000 annually. If you want to gift to your married children you would be able to gift $12,000 to your child and $12,000 to their spouse. Your spouse would also be able to gift $12,000 to each of them. As a result, you would be able to effectively transfer $48,000 to your child tax-free. If your child also has children, you would also be able to gift to your grandchildren, which could significantly increase the amount you are able to gift. Gifting can also be used to transfer ownership in a business to your children. These transfers would follow the rules as previously outlined.
Q: I inherited a house. Will I have to pay tax on the proceeds when I sell it?
A: The proceeds from the sale are not taxable in whole. The difference between what it was valued at when you received it less any expenses of the sale is the taxable amount. If you sell the home within a reasonable time frame and can justify that it has not appreciated in value you will not have a taxable gain. You may even have a loss for tax purposes if you sell it in an “arm’s length” transaction, and the net proceeds after expenses are less than its value when you inherited it. The most prudent move is to get an appraisal when you inherit the property.
Q: Are meals and lodging for an employee or shareholder-employee deductible?
A: If the expenses are for the “convenience of the employer” they are deductible. For example, the meals need to be provided on the business premises. The lodging would have to be a condition of employment, such as, if the employee must stay at the business for security or emergency situations that may occur day or night. An example of this could be a farm or a motel.
Kevin R. Francis, CPA is a senior partner with Rifkin & Company, LLP in Bardonia, NY. Mr. Francis specializes in closely held and family owned businesses as well as individual tax preparation. He may be reached at 845-623-3884.
