When thinking of buying vs. leasing we usually think of cars, but did you know that you can lease just about anything? Personal computers, apartments and houses, business equipment, and even employees can all be leased. Which is the best way?
First, there is no best way because each decision should be made on an individual basis. I know that we want to know an exact answer, but there really is none. Let’s look at buying vs. leasing a car for a business owner.
If you lease a car for your business you are generally able to deduct your lease payments as expenses. When financing or buying the same car you will generally be able to deduct your interest payments and a portion of the purchase price as depreciation, which may be an amount that is lower than your loan payments.
It sounds like leasing may be a better deal, right? In many cases it is for tax purposes, but did you know that you may be eligible to take an extra $8,000 in depreciation expense during 2009? For this year financing or purchasing a car is usually more beneficial from a tax standpoint. But are taxes the only factor to consider?
Other factors to consider are how long you intend to keep your car, how many miles you drive, how well the car maintains its value, or just personal preference (meaning that you may want to drive a newer car every two to three years). The decision should be thought out carefully, and similar questions should be asked when purchasing or leasing other items, such as computers, equipment, or furniture.
Friday, October 30, 2009
Monday, October 26, 2009
Estate Planning Basics
No one wants to think of the inevitable, but there are some basic points regarding estate planning we should all know. There are complex trusts and gifting strategies that can be incorporated, but let’s talk about first things first. Do you have a will? How do you own your assets? Are your beneficiaries updated in your insurance policies or retirement plans?
A will is your last will and testament, which spells out your wishes when you become deceased. With a properly set-up will, your assets will transfer to the beneficiaries you desire. Without a will your assets will be distributed according to state law, and your spouse or children may not receive all of your assets. Additionally, if you have children you will need to appoint a guardian to take care of them. It is important to see a qualified attorney to handle this for you. Do not attempt this yourself. We can refer you to an attorney that best fits your needs.
The way you own assets also affects the way assets are distributed upon death, such as your house. The two ways are tenants in common and joint tenancy. As tenants in common, your share of the house is passed to your heirs designated in your will. With joint tenancy, your share is passed to the surviving joint tenant, regardless of what your will states. It is important to make sure your assets are owned in the way that best suits your needs.
Life insurance is separate from your will. You will need to designate a beneficiary when purchasing a policy, and the same applies to your retirement accounts. Upon death the proceeds will be automatically transferred to your beneficiaries. This is why it is critical to update your beneficiaries periodically. Can you imagine if you are divorced and never changed your life insurance beneficiary who is now your ex-spouse? The answer is obvious – your ex-spouse will be very happy!
Many people tend to think that estate planning is only for the wealthy or they don’t need an estate plan. It can be a costly mistake to feel this way, especially since simple wills are not very expensive, and it doesn’t cost money to change your beneficiaries of your life insurance or retirement plans.
A will is your last will and testament, which spells out your wishes when you become deceased. With a properly set-up will, your assets will transfer to the beneficiaries you desire. Without a will your assets will be distributed according to state law, and your spouse or children may not receive all of your assets. Additionally, if you have children you will need to appoint a guardian to take care of them. It is important to see a qualified attorney to handle this for you. Do not attempt this yourself. We can refer you to an attorney that best fits your needs.
The way you own assets also affects the way assets are distributed upon death, such as your house. The two ways are tenants in common and joint tenancy. As tenants in common, your share of the house is passed to your heirs designated in your will. With joint tenancy, your share is passed to the surviving joint tenant, regardless of what your will states. It is important to make sure your assets are owned in the way that best suits your needs.
Life insurance is separate from your will. You will need to designate a beneficiary when purchasing a policy, and the same applies to your retirement accounts. Upon death the proceeds will be automatically transferred to your beneficiaries. This is why it is critical to update your beneficiaries periodically. Can you imagine if you are divorced and never changed your life insurance beneficiary who is now your ex-spouse? The answer is obvious – your ex-spouse will be very happy!
Many people tend to think that estate planning is only for the wealthy or they don’t need an estate plan. It can be a costly mistake to feel this way, especially since simple wills are not very expensive, and it doesn’t cost money to change your beneficiaries of your life insurance or retirement plans.
Wednesday, October 21, 2009
Are You Forgetting About Your Old Corporation?
You have a great idea for a new business, so you naturally take the next step to move your idea forward. You incorporate your business. This may be a wise choice to make, but what happens if your new company never becomes active and you ignore it? Or what about a corporation you have that was once active and is now dormant? Should you really care anymore?
When you own an inactive corporation that you have been ignoring, this can create an ever-enlarging tax liability. Even though the corporation is inactive, you are still required to file federal and state income tax returns and possibly sales tax returns.
A New Jersey corporation still continues to be liable for minimum corporate taxes, even if it doesn’t have any income or assets. The minimum tax is currently $520, which can easily double after several years go by due to interest and penalties. Between late filing penalties, late payment penalties, and interest assessments, there is no escape. If your corporation was registered to collect sales taxes and has no longer been submitting sales tax returns, the problem becomes worse. Additionally, the IRS assesses monthly late fees for unfiled corporate and partnership returns.
I think that I am making my point that you need to take action. I have been coming across this situation more and more. If you have an old corporation or partnership, please contact our office so that we can advise you on the proper course of action.
When you own an inactive corporation that you have been ignoring, this can create an ever-enlarging tax liability. Even though the corporation is inactive, you are still required to file federal and state income tax returns and possibly sales tax returns.
A New Jersey corporation still continues to be liable for minimum corporate taxes, even if it doesn’t have any income or assets. The minimum tax is currently $520, which can easily double after several years go by due to interest and penalties. Between late filing penalties, late payment penalties, and interest assessments, there is no escape. If your corporation was registered to collect sales taxes and has no longer been submitting sales tax returns, the problem becomes worse. Additionally, the IRS assesses monthly late fees for unfiled corporate and partnership returns.
I think that I am making my point that you need to take action. I have been coming across this situation more and more. If you have an old corporation or partnership, please contact our office so that we can advise you on the proper course of action.
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