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Mastery Circle Doctors’ Meeting

Mastery Circle Doctors’ Meeting. Debbie Corrington, CPA, PFS Nicole Urbanski , CPA. Accounting and Tax Update. Evaluating Your Business Performance How to Structure Your Profit & Loss Statement Where Does the Net Profit Go? Options for Excess Funds

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Mastery Circle Doctors’ Meeting

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  1. Mastery Circle Doctors’ Meeting Debbie Corrington, CPA, PFS Nicole Urbanski, CPA

  2. Accounting and Tax Update Evaluating Your Business Performance How to Structure Your Profit & Loss Statement Where Does the Net Profit Go? Options for Excess Funds The New Tax Law and How it Impacts You General Observations & Planning Questions Agenda

  3. Business Performance Do you know where you spend your business dollars? Do you know how your performance compares to your Peers? Do you know how much you really take home from your business?

  4. Business Performance – Know Your Practice Expenses A review of your financial statements can answer these questions for you and give you the tools to make informed business decisions

  5. Business Performance – How do you compare?

  6. How to Structure Your P&L for Business Performance Review • P&L Balance Sheet

  7. Where Does the Net Profit Go? • Doctor Net Pay and Benefits • Doctor Federal & State Income Tax Payments • Loan Payments • New Equipment • Cash Transfers to Personal Accounts • Personal Expenses Paid by Corporation

  8. Options for Excess Funds

  9. Defined Benefit Plans Pension & Profit Sharing Plans SIMPLE Plans SEP Business Pension Plan Choices • Employer • & • Employee • 401(k) Safe Harbor • Roth 401(k) • Tiered Allocation 100% Employer Funded Can be combined with 401(k) 100% Employer Funded Can be Combined with 401(k) 100% Employer Funded 25% of Compensation Employer & Employee Lower Contribution Amounts

  10. New Tax Law Changes - Individuals • Income Tax Rates Reduced • Standard Deduction Increased $12,000 single $24,000 married filing joint • Elimination of Personal Exemptions • Increased Child Tax Credit Helps offset loss of personal exemptions Higher threshold $2k credit per child

  11. New Tax Law Changes - Individuals • State Income, Sales & Property Taxes Limited to $10k annual deduction • Mortgage Interest Limitations $1 million mortgage debt grandfathered $750k mortgage debt limit on new loans Home equity interest not deductible May be deductible depending on use of proceeds • Miscellaneous Deductions Eliminated • Itemized Deductions Phaseout Eliminated

  12. New Tax Law Changes - Business • Corporate tax rate reduced to 21% • Personal Service Corporation tax rates no longer apply • Entertainment deduction eliminated • 20% deduction for qualified business income Applicable to ordinary business income Applicable to rental income Subject to income phase-outs Limitations apply to specific service businesses Tax planning opportunities

  13. General Observations • Most taxpayers will see reduced income tax • Effect of State & local tax limitation offset by reduced rates • Child Tax Credit offsets elimination of personal exemptions • 20% Deduction Planning important • Alternative Minimum Tax will affect fewer taxpayers • Elimination of miscellaneous itemized deductions will hurt some taxpayers • Watch out on Independent Contractors e.g. California

  14. Tax SavingStrategies • Pay Spouse, But Not Too Much • Qualify for benefits • Reimburse for mileage, meals and trips together • 401(k) plan contributions • Receiving Social Security credits towards retirement • Consider Vehicle Deductions • Mileage deductions-consider reimbursement plans • Commuting/home office • Documentation • Day Calendar • Mileage book • Apps for IPhones and Androids

  15. Tax Saving Strategies • Deduct year end charges on credit cards • Prepay expenses at year end including: Rent Insurance • Consider Home Office Must be regular and exclusive use May validate deductible commuting Deduct office furnishings, phone and more Home office reimbursement if incorporated Audit risk not as high as you might think

  16. Tax Saving Strategies • Consider 100% Meals Deduction Onsite staff meals with 50% or more of your employees Occasional after hours/overtime meals Staff parties Qualifying company retreats • Consider Depreciation Section 179 deduction is $500,000 $2,500 supply expensing rule Rental real estate improvements – 50% bonus

  17. Tax Saving Strategies • Cell Phone Reimbursement Policy Tax free fringe benefit Can be provided even if no business use Must have written policy in place • Tax Free Rental Income Rent home to Corporation Christmas Parties, summer BBQs, company retreats 14 days or less

  18. Tax SavingStrategies –Personal Considerations • Section 529 contributions eligible for private school tuition. State income tax deduction may apply • Consider bunching charitable deductions every other year • Charitable IRA planning • Paying your children tax free increased to $12k • Consider paying off rental mortgage to increase 20% deduction

  19. BENCHMARKED A new way to view your financial data. Compare YOUR KPI’s with your peers in your franchise, including sales, margins, and expenses. MOBILE Monitor your business from anywhere with insightful reporting using our app.

  20. Questions? Debbie Corrington, CPA, PFS Email: dcorrington@sbabcpa.com Phone: 360-876-4491 Website: www.sbabcpa.com

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