Tax Planning

Starting Your New Business

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Are you starting a new business but need some direction? Many potential and new business owners aren’t sure what questions to even ask!

Starting a new business can be exciting adventure or a wide awake nightmare. Think of it as a journey to a place you’ve never been before, while getting there in a borrowed car.

You can try to wing it, maybe jump in the car and just drive. But where do you end up when you don’t have a map to follow? Taking the wrong turn can be painful. Do you really understand the tax consequences of some of the new business choices you are thinking of making?

You may have driven a car before, or even owned another business, but learning and getting answers to questions you should ask before you start, or even while you are on your way, help make any journey (or business) more fun and productive.

There are many frequently asked questions potential and new business owners ask, such as “What business should I choose?” and “What is a business plan and why do I need one?” with plenty of standard answers and advice.

But what about the questions new business owners should ask when they are just starting out? “How much should I pay myself” is a frequently asked question, but the question you should ask is “How should I pay myself?” Or even “Should I pay myself?” How you compensate yourself can have tax ramifications that may be delayed, avoided or eliminated if the propershould askquestions are asked beforehand.

Choosing the right entity during the development stage of your new business can have huge tax implications in the future. A CPA can help you determine the best choice for your business and situation. At Evans Nelson, we have several members of our staff with the business background you need to help inform you of the choices and alternatives. We know what the should ask questions are; determining those answers can help save you valuable time and money!

Get a map for your next adventure. Talk to a Reno CPA with small business consulting experience before starting your new business, ask those frequently asked questions, and be open to the should ask questions–they can help you from getting lost!

Starting Your New Business2016-09-22T15:46:16-07:00

The Mortgage Debt Forgiveness Act

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Are you “upside down” with your mortgage? Do you know how the tax implications of walking away from your home or having short sale can affect you? How can a Reno CPA help you with these types of mortgage issues? What are the tax implications of a short sale, foreclosure and other options? The Mortgage Debt Forgiveness Act ends this year. Do you understand what the benefits can be for you?

Millions of homeowners around the country are “upside down” with their mortgages. Being “upside down” means you owe more on the mortgage than the house is worth. Real estate values have fallen dramatically, especially in Nevada.

So, many people are asking “What are the tax implications of getting rid of my house? Should I short sell it? Foreclose it? Should I stay or just walk away?”

Here’s an example. A house is worth $200,000 but the mortgage is for $400,000. The Bank will usually send a 1099 or 1099C (cancelation of debt) form for that difference of $200,000.

The IRS will normally require you to pay on the tax owed for that $200,000. But you didn’t “receive” that money, the house is still the same house, and you got rid of it. It isn’t worth $400,000 anymore, you can’t sell it for $400,000 but the mortgage is still for that amount.

The Mortgage Debt Forgiveness Act, which runs through the end of 2012 (December 31, 2012) says you don’t have to pay tax on that $200,000.

Many people are worried about that huge tax liability. They are not sure if it would be better to try to short sell or foreclose on their house before the end of 2012 to be able to use the Mortgage Debt Forgiveness Act before it expires and avoid that tax.

Nevada has had its fair share of foreclosures and other mortgage issues. It is very important to sit down with a Reno CPA to discuss the options and tax implications of walking away from the house, vs. short selling, foreclosing or simply keeping it.

A Reno CPA can help you determine the best course of action, based on the many factors of your personal situation, and can help save you thousands of dollars (along with saving you time and frustration) by helping you determine the best choice for you.

Contact Evans Nelson & Company, CPAs for more information today.

The Mortgage Debt Forgiveness Act2016-09-22T15:44:22-07:00