The Nth Degree Blog

limited liability
Written Aug 2, 2019 by Dan Nicholson

Limited Liability (and an Example)

Imagine one of your employees falls asleep at the wheel while driving a company vehicle. He causes a serious accident in a populated area. Not only are vehicles and property damaged, but there were several serious injuries. Yikes! As a Limited Liability Corporation (LLC), your entire business is at risk and can be held responsible

cash flow statement
Written Jul 17, 2019 by Dan Nicholson

What Your Cash Position Means

In a cash flow statement, the cash position at the end of the month represents the amount of cash that the company has on hand, at that moment in time. This cash position is a sign of financial strength and liquidity of the company, representing the ability of the company to meet their current liabilities.

tax burden
Written Apr 24, 2019 by Dan Nicholson

The Tax Burden of Transferring Property

“Is there a tax burden when moving a property from your name to an LLC/entity?” The answer to this question will depend on a number of factors, including local jurisdiction and the tax entity of the LLC (Partnership, S Corp, C Corp, etc.). Generally speaking, there is not an initial tax for the act of

professional skills
Written Apr 17, 2019 by Dan Nicholson

Professional Skills and Tax Expenses

Professional skills certification expenses are only deductible if they maintain or improve your skills or meet legal or employer requirements for you to maintain your current employment status or pay level. Accordingly, if you are pursuing your CFA or certifications in other professional skills in order to begin a new career or position, the costs will generally not

employment tax
Written Apr 17, 2019 by Dan Nicholson

Employment Tax and Contractor Taxes

It’s important to draw a distinction between “Income Tax” and “Employment Tax”. Employees and Contractors are subject to the same income tax rates. However, employees pay half of their overall employment tax liability (7.65%), while their employer pays the other half, for a total of 15.3%. Self-employed individuals, or contractors, are both the “employee” and

form 1099 c
Written Apr 10, 2019 by Dan Nicholson

What is Form 1099 C?

Let’s say you owe $10,000 in school loans. You’ve paid $6, 000 dollars to the lender towards the balance, and the lender decides they are going to forgive the rest of the debt. Woohoo! However, the IRS says that forgiven debt is income. Accordingly, you indirectly received $4,000 of taxable income. You need form 1099

tax year
Written Apr 3, 2019 by Dan Nicholson

Converting Your Business and the Tax Year

Filing for an S Corp or C Corp election is less about “How long?” and more about “Do I meet the requirements?” If filed correctly, you can convert your LLC to an S Corp or C Corp within the same tax year. Technically, you have two months and fifteen days from the first day of

self employment
Written Mar 27, 2019 by Dan Nicholson

Self Employment Taxes – S Corps and LLC’s

The biggest difference between S Corporations and LLCs (partnerships) is the ability to minimize self-employment taxes as an S Corp. In an S Corp you are considered a shareholder and an employee, and therefore must include yourself on payroll. As an employee, you must pay yourself a “reasonable wage.” All wages paid in an S

dissolving an llc
Written Mar 20, 2019 by Dan Nicholson

Dissolving an LLC

“When dissolving an LLC, do you need to fill out IRS form 966?” The answer will be yes or no depending on how your entity is recognized for tax purposes. An LLC is not a recognized entity by the IRS. By default, a single-member LLC is organized for tax purposes as a sole proprietorship and

financial security
Written Mar 13, 2019 by Dan Nicholson

The Financial Security Roadmap

I like to think of myself as an anti-accountant. Instead of just dutifully checking boxes on tax to-do lists, I’m constantly peeking into the rest of my clients’ processes and actions and offering plenty of advice for how to achieve real financial certainty. For most of my clients, early on it can be a challenge