Do You Have a Small Business? Don’t Overlook These Opportunities

Do You Have a Small Business? Don’t Overlook These Opportunities

September 22-26, 2020 was officially designated “National Small Business Week,” but if you have a small business, you know that every week is small business week!

As we said goodbye to an unprecedented and somewhat chaotic 2020, it seems that more and more individuals, whether by choice or by circumstances, found themselves self-employed, working as independent contractors or participating in the “gig economy” for the first time. With that in mind, I’d like to touch on 2 topics of interest to the small-business person: The home office deduction, and small business retirement plans.

The Home Office Deduction

The home office deduction is available to qualifying self-employed taxpayers or independent contractors, but not to employees; if you receive a paycheck or a W-2 from an employer, you are not eligible for the deduction even if you are currently working from home. There are two basic requirements to qualify for the deduction:

  1. You must use a portion of your home exclusively for conducting business on a regular basis.
  2. The home must be your principal place of business.

There are two options for figuring the deduction: The regular method and the simplified method.

Under the simplified method, a prescribed rate of $5 per square foot of business-use area, up to a maximum of 300 square feet, is used to calculate the deduction amount.

Under the regular method, the business portion of real estate taxes, mortgage interest, rent, casualty losses, utilities, insurance, depreciation, maintenance, and repairs are calculated to figure the deduction; the business portion is calculated based on the ratio of business-use square footage to total square footage of the home.

For more details, contact us. Our team at Montgomery Taylor Wealth Management can provide you with a worksheet that will help you compile the necessary information.

 

Have questions? Contact Montgomery Taylor Wealth Management to see how we can help.

 

Small Business Retirement Plans

Many small business owners and self-employed individuals are so busy running their business that they neglect to plan for their eventual retirement! There are a number of types of plans available to the small business owner, but not all plans are suitable for all businesses. Three of the most commonly used plans are the Simplified Employee Pension Plan (SEP) IRA, the Savings Investment Match Plan for Employees (SIMPLE) IRA and the Self Employed 401(k). Each of these plans can help you save money for retirement while also potentially providing tax advantages, but each has its own set of rules and requirements, and contribution limits vary as well.

Here are a just a few of the questions that will help you and your advisor determine what kind of plan is appropriate for your business:

  • Do you have, or anticipate having, employees besides yourself and your spouse, and if so, how many?
  • Do you want employees to be able to make contributions?
  • Do you wish to make employer contributions as well?
  • Do you want or need to be able to decide whether to make employer contributions on a year-to-year basis?
  • How much do you want or need to save for retirement each year?

Armed with the answers to these questions, contact the financial advisory team at Montgomery Taylor Wealth Management for further details about how each plan works, what is required to set up a plan, and which plan makes sense for your business.

Montgomery Taylor Realistic Financial Planning