Business Accountant Austin TX

How to Deduct Meals and Entertainment in 2024: What Every Business Owner Needs to Know

In 2024, businesses can still deduct 50% of the cost of business-related meals. The temporary 100% deduction that applied in 2021 and 2022 is no longer available, so it’s back to the usual rules. If you’re a business owner looking to cut down on business expenses, understanding these deductions is key.

To qualify for the deduction, the business owner or an employee must be present when the food or beverages are served. And keep in mind, the expense can’t be lavish or extravagant. The IRS defines a restaurant as a business that prepares and sells food or beverages to retail customers for immediate consumption, whether on or off the premises.

What's Excluded?

Meals bought at grocery stores, convenience stores, or any place that mainly sells pre-packaged goods don’t count. Even if your company operates an eating facility, it might not qualify as a restaurant, especially if it’s run by a third party under contract.

And remember, meals for personal reasons, even while traveling, aren’t deductible. However, if you’re on a business trip, most meal expenses can be classified as business costs, provided the trip is primarily for business purposes. If the trip is mainly personal, only those expenses directly related to the business activity are deductible.

How to Qualify?

Starting in 2024, your business can generally deduct 50% of the cost of business meals if:

✅ The business owner or employee is present.
✅ The meal cost isn’t “lavish or extravagant.”
✅ The meal involves a business contact, such as a customer, employee, vendor, or consultant.
✅ The meal has an “ordinary and necessary” business purpose.

Remember, entertainment expenses aren’t deductible, so if you’re at a sporting event, for instance, you can only deduct the meal costs if they’re billed separately, like a catered meal delivered to a skybox.

For more details on these rules, including recordkeeping requirements for business meals, check out IRS Publication 463, Travel, Gift, and Car Expenses.

Need Help?

Struggling to navigate the maze of meal and entertainment deductions for your business? Contact us today. We’re here to help you trim down your business costs and keep more money in your pocket—legally. Let’s make your 2024 tax season a breeze!

Combining a Vacation with a Foreign Business Trip? 2024 Guide in Maximizing Your Tax Deductions

When a self-employed individual embarks on a business trip outside the U.S., and the journey is entirely for business, all ordinary and necessary business travel expenses are deductible—just as if the trip were within the U.S. However, if the trip also includes a vacation, special rules dictate which travel expenses to and from the destination are deductible, when other business travel expenses like lodging, meals, local travel, and incidentals can be deducted, and when they must be allocated.

Note: The Tax Cuts and Jobs Act of 2017 temporarily suspended the deduction of miscellaneous itemized expenses, including employee business expenses like travel, through 2025. So, this guidance applies solely to self-employed individuals during the 2018-2025 period.

2024 Travel Tax Pointers 📌

Whether you’re visiting nearby countries or exploring more distant destinations in Europe or beyond, here are some essential travel tax pointers:

Primarily Vacation
If the trip is mostly for vacation with only a few hours spent on business activities like attending seminars or meeting foreign colleagues, the expenses for travel to and from the destination are not deductible. Other travel expenses need to be allocated on a day-by-day basis, with only the business portion being deductible.

Primarily Business
If the trip is primarily for business and meets one of the following conditions, the travel expenses to and from the destination are fully deductible (as they are for domestic travel):

✅ The travel outside the U.S. is for a week or less (seven consecutive days, excluding the departure day but including the day of return).
✅ Less than 25% of the total time outside the U.S. is spent on non-business activities. If 25% or more of the time is spent on non-business activities, a day-by-day allocation of all travel expenses between personal and business activities is necessary, with only the business portion being deductible.
✅ The individual can prove that a personal vacation was not a significant factor in planning the trip.
✅ The taxpayer did not have substantial control over arranging the trip. (This is unlikely to apply to self-employed individuals, who usually have substantial control over trip arrangements.)

When deciding what counts as business and non-business time, business days include days en route to or from the business destination by a reasonably direct route, days when actual business is conducted, weekends or standby days between business days, and days when business was scheduled but canceled due to unforeseen circumstances.

Non-business days include days spent on non-business activities, as well as weekends, holidays, and other standby days at the end of business activities if the taxpayer stays for personal reasons.

💡 Foreign Conventions, Seminars, or Meetings

For tax purposes, travel expenses to attend a convention, seminar, or similar meeting outside the North American area are not deductible unless:

1️⃣ The meeting is directly related to the taxpayer’s trade or business, and
2️⃣ It’s “as reasonable” to hold the meeting outside North America as it would be within it.

The IRS defines the “North American area” broadly, covering the U.S., Canada, Mexico, Bermuda, several Caribbean nations, U.S. territories like American Samoa, and some Central American countries.

🚢Cruise Ship Conventions

To deduct the cost of attending a business-related convention on a cruise ship, the ship must be U.S.-flagged, and all ports of call must be within U.S. territory. The maximum deduction is limited to $2,000 per attendee, with strict substantiation requirements, including signed statements from both the taxpayer and an officer of the convention sponsor.

💵 Spousal Travel Expenses

Generally, deductions are not allowed for travel expenses incurred by a spouse, dependent, or employee accompanying the taxpayer on a business trip unless:

1️⃣ The spouse is an employee of the taxpayer,
2️⃣ The travel serves a bona fide business purpose, and
3️⃣ The expenses would otherwise qualify as deductible business travel expenses for the spouse.

Because spousal travel expenses are not deductible between 2018 and 2025, the third condition cannot be met. However, lodging costs for an accompanying spouse can still be deductible at the single rate, especially when there’s no difference in room rates for single versus double occupancy. Additionally, if the spouse travels in the same vehicle, no allocation is needed, so the entire business-related transportation cost is deductible.

Tax Deductions for a Foreign Business Trip Can Be Tricky

As you can see, determining the tax deduction for a foreign business trip that includes a vacation can be complex. If you need personalized tax guidance or assistance planning such a trip in 2024, don’t hesitate to reach out to us. We’re here to help make your business travels more tax-efficient.

Call us today for a free consultation, and let’s ensure your next trip is both productive and tax-smart!

The Major Reasons a Virtual CFO Can Help Your Business

On a basic level, a virtual CFO (or vCFO for short) is exactly what it sounds like. This is someone who performs all the services normally associated with a chief financial officer, only in a third-party capacity. Instead of going to the trouble (and expense) of hiring, training, and bringing someone with these qualifications into your organization, you’re getting access to someone who can handle all of this remotely on a schedule that works best for all involved.

This is a role that barely existed a decade ago, but technology has advanced to the point where not only is it possible, but more businesses than ever are using on-demand or part-time CFOs to help their organizations soar in increasingly competitive marketplaces. This is true for a huge variety of reasons, all of which are certainly worth exploring.

The Power of a Virtual CFO

The major reason why smaller organizations, in particular, find vCFOs so helpful is that they’re a viable way to control costs almost immediately. Rather than paying the salary to hire your own CFO in a full-time capacity (which can easily balloon into the hundreds of thousands of dollars per year once experience and benefits are accounted for), you get the services you need, in an on-demand way, for a fraction of the cost. To that end, a vCFO is really no different than managed services or similar options you may already be using.

This bleeds directly into the next major reason why vCFOs can be so beneficial: They can customize their skills and services to better meet the needs of your unique organization. Instead of paying someone for a lifetime’s worth of education, you’re only paying for the skills needed to perform the tasks at hand. Even better, the services being offered can also be adjusted on a regular basis as your business continues to grow and evolve. All of this provides you with almost unprecedented access to a wealth of knowledge that used to be out of your budget.

Leveraging Someone Else’s Experience to Your Advantage

That expertise also creates a ripple effect across your enterprise in the best possible way. You’re bringing in someone who naturally has involvement in many different companies similar to your own. This means you’re in a unique position to avoid making the same mistakes they’ve previously encountered.

But maybe the biggest advantage that a virtual or gig-based CFO brings to a company has to do with the quality of the advice being offered. This is more than just an accounting setup. The focus goes beyond simply setting up a financial structure and putting a framework in place for you to effectively manage your books.

Consider the types of challenges you’re likely to experience over the next five years. Your business will naturally get more complex as you add not only more employees but also suppliers, vendors, and all the contracts that come with them. If you go through a period of rapid growth, it can quickly cause your financials to grow out of control … unless you’re prepared for it.

A straightforward accounting setup isn’t necessarily enough to offer that much-needed level of preparation, but a vCFO is. This is a professional who has arrived with the express purpose of putting the systems in place to not only better support the current phase of your business, but the next one as well.

✅ Being Better Prepared for What Comes Next

In the end, a vCFO won’t just explain the finer details of your business’s financial situation. They’ll work with you to make sure you’re better informed about not only your current status but the pros and cons of the options available to you in the future. That level of strategic advice — and the advanced decision-making made possible because of it — would be difficult to replicate through nearly any other means.

Armed with more actionable knowledge than ever, you’ll quickly find yourself in a better position to always make the right choice at exactly the right time moving forward. This, in turn, ensures that your business can maximize profitability as much as possible over the next few years, thus allowing you to run the type of organization you always dreamed you’d one day be a part of.

If you’re a large, national organization that can afford to bring on a full-time CFO, there really isn’t any reason NOT to do so. But for most other companies, using a vCFO isn’t just an effective way to fill the types of gaps that naturally exist in your skill set — it’s a way to help your business thrive for the next 5, 10, or even 20 years in the most efficient and cost-effective way possible.

Feeling overwhelmed by your financials?

Let’s chat about how a virtual CFO from our team can make your life easier. Connect with us today, and let’s start making those financial headaches a thing of the past!

10 Steps to Starting Your Business in 2024

Starting a new business is rarely a walk in the park. First-time entrepreneurs often underestimate the journey from a concept to a real-world business. The commitment needed, even before your business officially exists, can be overwhelming. But remember, “anything worth doing is worth doing right.”

There are several crucial steps to take before launching your dream business. Pay close attention as you move forward.

Let's dive into these 10 key steps for starting your new business:

1️⃣ Identify “Why” You Are Starting a Business

Before anything else, determine why you’re compelled to start this particular business now. Is it just because you think you have a great, sure-fire idea that will generate a lot of money? If so, you may want to take a step back… you’ll likely be disappointed. But if it’s because this will allow you to genuinely do something you love, and something that you think will make an impact on the lives of a lot of people, then, by all means, push ahead.

2️⃣ Identify the NEED

Ensure your idea addresses a genuine market need. DO NOT allow yourself to become “a solution in search of a problem.” Make sure that people are asking for a business like yours and that need is currently going unfulfilled.

3️⃣ Don't Quit Your Day Job Just Yet

Building a successful business is not something that happens overnight. This often takes years of planning and hard work, not to mention many mistakes along the way. All of this is to say that if your ability to quit your day job and focus on your new business full-time depends on instant success… don’t quit your day job just yet.

4️⃣ Don't Neglect Your Family

Yes, starting a business is something that requires a huge amount of your time. Yes, you need to devote every ounce of space in your brain and every free moment to this goal. But do not, under any circumstances, let that come at the expense of your loved ones and those around you. You’re going to need quite a bit of support to get your new business up and running. If you neglect your family now, you’re not going to have that support later.

5️⃣ Write a Business Plan

At this point, you can start working on making your vision a reality. This part of the journey always begins in the same basic way: writing a realistic, actionable business plan that will guide your every move in the future. With a business plan, you really do need to be as specific as humanly possible.

You know where you’re starting, and you know where you want to end up. The job of a business plan is to connect those dots by way of a series of smaller, logical, and achievable steps. It’s essentially the roadmap you’ll use to shine a light through the darkness, guaranteeing that you’re always moving in the right direction (and that this direction is forward).

6️⃣ The Entrepreneur’s Bet - How Much You Need to Invest

As you write your business plan, you’ll also have to make what is often referred to as “The Entrepreneur’s Bet.” Essentially, you need to figure out how much money a business like yours needs to make in order to become profitable.

You also need to acknowledge that, once again, your business is very unlikely to be successful enough right away to have this bet pay off in the short term. A lot of new businesses are operating at a loss at first — that’s okay. But this is yet another step that confirms the path you’re on is actually viable and it’s one that you absolutely do not want to skip.

7️⃣ The Myth of the “One Size Fits All” Approach

At this point, it’s also important to acknowledge that there really is no one “right way” to start a business. The choices you have to make will be influenced by a wide range of different factors, many of which are unique to your industry, your business plan, and even the vision that you’re starting with.

Case in point: You need to review all local, state, and federal regulations pertaining to what you’re trying to accomplish. Different places have different laws, and ignorance is not an excuse for breaking them. Factors like how to become compliant, what standards a product has to meet and more will all be influenced by these regulations, and they will impact a lot of the steps on your business plan as well.

8️⃣ It’s Time to Start Thinking About Technology

Once this foundation is all in place, it’s time to start thinking about the tools you’ll need to bring your new business into the world. These days, that involves a lot more technology than people often realize. This is another one of those steps that will obviously be impacted by the type of business you’re starting. A local brick-and-mortar retail store will obviously have different technological needs (point of sale systems, inventory management equipment, etc.) than an online marketing agency (graphic design software, collaboration tools, etc.).

But when built properly, your technology strategy and your business strategy are essentially one and the same. They feed into one another, and your IT helps generate the momentum you need to continue to grow and expand while remaining agile as well. It’s far too important to neglect.

9️⃣ Choosing the Right Business Entity

This is another important step you don’t want to skip because it dictates things like taxes, paperwork, liability, and other legal elements of your business. One of the most common types of business entities is the limited liability structure or LLC. This is because it provides you with the level of flexibility you need right now, coupled with the protection you’ll need from a personal liability standpoint. But that isn’t a guarantee that this is right for you. Other structures like sole proprietorships, partnerships, S corporations, and C corporations all have their fair share of advantages and disadvantages. You need to pick the right one today or you’ll open yourself up to a world of problems tomorrow.

1️⃣0️⃣ Finding the Help You Need (and You WILL Need It)

Finally, as your journey toward true entrepreneurship is about to begin in earnest, you need to understand two of the core pillars of successful business ownership:

✅ You do not know everything, even if you think you do.

✅ You cannot do it all alone, even if you think you can.

The difference between failed and successful business owners often come down to the acknowledgment of these two points.

Rather than do a poor job at a business task for which you don’t have the skills, don’t be afraid to hire someone who does have those skills. Rather than guess at answers to questions, find the right advisors and mentors to guide you. Reach out and find the people who are willing to assist you and don’t be afraid to share your vision with them. You WILL need help and there are people who are absolutely willing to stand by your side. You just have to want to look for them.

Ready to turn your business idea into reality?

Starting a new business is harder than you probably thought, especially when you consider the sheer amount of time you’ll need to devote to the steps outlined above. But provided that you have a realistic vision and a passion that cannot be extinguished, success is no longer a question of “if” but “when.” The stakes are high and the risk is higher, but the rewards are even greater if you persevere. Never let anyone tell you otherwise.

Contact us today, and let’s work through the details together to ensure your new business is set up for success. We’re here to help you every step of the way.

S Corporations: Operations and Filing Taxes

Business owners often wonder which business entity makes the most sense for their situation. An S Corporation (S Corp) is a popular choice because it offers both personal liability protection and certain tax benefits for corporate and personal income tax.

This article covers the basics of becoming an S Corporation, including the election process for business tax purposes.

1️⃣ How to Become an S Corporation

Two business entities can elect to file business taxes as an S Corporation: Inc and LLC. The election process is the same for both.

1.1) Complete IRS Form 2553 Within Two (2) Months and Fifteen (15) Days

The business must complete IRS Form 2553 (Election by a Small Business Corporation) within a certain timeframe.

For current businesses: no more than two months and 15 days after the beginning of the tax year when the election goes into effect. For new LLCs and C Corporations: two months and 15 days from the date of formation to choose the S Corporation election status.

1.2) What Happens If You Miss the Deadline for the S Corp Election

If you miss the deadline, you will follow these tax guidelines for the current tax year:

Corporations are taxed as C Corporations.
Single-member LLCs are taxed as sole proprietorships.
Multi-member LLCs are taxed as partnerships.

1.3) Requesting a Late Election from the IRS

If you miss the timeframe to file Form 2553, you can request a late election from the IRS.

2️⃣ S Corporation Business Operations

S Corporations operate a little differently from other business entities.

Here are the key differences to consider.

2.1) How to Pay Yourself as an S Corp Owner

One of the benefits of an S Corporation is the lack of double taxation. It’s important that owners pay themselves correctly to avoid triggering an audit from the IRS.

Any S Corporation owner who is active must pay themselves a reasonable salary. All employee-owners must take a reasonable salary via W-2. The remaining profits are then taxed on your 1040, saving you payroll tax on the owner-draw portion not paid as a W-2 salary.

2.2) Ongoing Compliance Requirements for S Corporations

Both LLCs and C Corporations may elect S Corporation status if they meet IRS requirements. However, the process can be complicated. The ongoing compliance requirements vary from state to state, but here are the basics:

LLC Requirements

✅ Initial Filing: File articles of organization to form an LLC. Pay filing fees.
✅ Initial Report: Some states require a statement of information with the initial filing.
✅ Publication Fees: Some states charge a publication fee.
✅ Annual Report: Most states require an annual report to maintain LLC status.
✅ Maintaining a Registered Agent: An LLC is required to record a Registered Agent with each state in which they do business. This person (or entity) is notified in the event of a lawsuit.

C Corporation Requirements

✅ Initial Filing: File articles of organization to form a C Corporation. Pay filing fees.
✅ Initial Report: Some states require an initial report.
✅ Publication Fees: Some states charge a publication fee.
✅ Annual Report: Most states require an annual report.
✅ Annual Meetings: C Corporations are required to hold annual meetings.
✅ Meeting Minutes: A written record of meetings is required.
✅ Maintaining a Registered Agent: A C Corporation is required to record a Registered Agent with each state in which they do business.

Get Help Filing Taxes and Ongoing Operations for Your S Corporation

We understand that navigating the complexities of S Corporation taxes and operations can be overwhelming. Let us lighten the load. We’ll help you determine a reasonable W2 salary and ensure you avoid overpaying unnecessary payroll taxes.

Reach out to us today for personalized assistance with your tax strategy—because your success is our priority. Let’s work together to make your financial journey as smooth as possible. Contact us now and let’s start saving you money!

Do I Need A CPA For My Business in 2024?

If you’ve been flying solo without the help of a Certified Public Accountant (CPA), you might be missing out on valuable tax deductions, business strategy insights, and profitability initiatives. Here are five reasons why you should consider adding a CPA to your business team in 2024.

Do you need help managing daily bookkeeping?

Hand over the reins to a professional bookkeeper to free up your time. For an added layer of expertise, consult with a licensed accounting firm for comprehensive bookkeeping services.

Do you need financial advice for your business?

A professional accountant or CPA can analyze your business finances and offer strategic advice to help you grow.

Do you need to prepare your taxes?

While a bookkeeper can help with payroll and sales taxes, only an accountant, CPA, or EA can file your tax returns.

Are you worried an employee might be stealing from you?

A forensic accountant can uncover potential fraud and provide peace of mind.

Are you a private or public corporation?

Public corporations must provide audit reports to investors, and only CPAs are qualified to prepare these reports.

Ready to take your business to the next level?

Avoid the D.I.Y. approach to your business finances. Partner with a licensed CPA to guide your business financially.

Give us a call and let’s chat about how we can help you achieve your financial goals and make your business life a little easier.