In the dynamic world of entrepreneurship, the ability to weather financial storms is a hallmark of success. For small businesses, achieving financial resilience is not just a goal—it’s a necessity. Building a robust financial foundation is the key to navigating uncertainties, seizing opportunities, and ensuring long-term sustainability. In this blog, we’ll explore essential guidance on financial management for small businesses, focusing on budgeting, cash flow management, and financial planning.

1. The Power of Budgeting: A Roadmap to Success

Budgeting is the cornerstone of effective financial management for small businesses. It serves as a roadmap, providing a clear overview of income, expenses, and financial goals. Entrepreneurs should create a comprehensive budget that encompasses both fixed and variable costs. Regularly revisiting and adjusting the budget allows businesses to adapt to changing circumstances and stay on course.

2. Cash Flow Management: The Lifeblood of Small Businesses

Cash flow management is the lifeblood of any business, especially for small enterprises. Maintaining a healthy cash flow ensures that a business can cover its day-to-day operating expenses, seize growth opportunities, and navigate economic downturns. Small businesses should monitor cash flow closely, identifying potential bottlenecks and implementing strategies to optimize the timing of cash inflows and outflows.

3. Emergency Funds: Shielding Against the Unexpected

Building financial resilience involves preparing for the unexpected. Small businesses should prioritize creating an emergency fund to cover unforeseen expenses or weather periods of reduced revenue. This fund serves as a financial cushion, offering peace of mind and allowing entrepreneurs to focus on strategic decision-making rather than scrambling to address immediate financial challenges.

4. Diversification and Risk Management: Mitigating Financial Vulnerabilities

Diversifying revenue streams is a fundamental strategy for building financial resilience. Relying on a single source of income can leave a business vulnerable to fluctuations in the market. Entrepreneurs should explore opportunities to diversify products or services, target new customer segments, or expand into additional markets. Additionally, implementing risk management strategies helps mitigate potential financial pitfalls.

5. Debt Management: Strategic Borrowing for Growth

While debt can be a valuable tool for funding growth, strategic management is crucial. Small businesses should carefully assess their borrowing needs, explore favorable interest rates, and have a clear plan for repayment. Responsible debt management ensures that borrowed funds contribute to business growth rather than becoming a burden on financial stability.

6. Financial Planning: Charting the Course for Success

Financial planning is an ongoing process that involves setting clear financial goals, outlining strategies to achieve them, and regularly assessing progress. Entrepreneurs should collaborate with financial professionals to create a comprehensive financial plan that aligns with the business’s vision and objectives. This plan should encompass short-term and long-term financial goals, guiding decision-making and resource allocation.

In conclusion, building a strong foundation for small businesses requires a holistic approach to financial management. By embracing budgeting, mastering cash flow management, establishing emergency funds, diversifying revenue streams, managing debt strategically, and engaging in comprehensive financial planning, entrepreneurs can cultivate financial resilience. In the face of challenges and opportunities, small businesses that prioritize financial stability are not merely surviving—they are thriving, poised for sustained success in the ever-evolving business landscape.

At Peavy and Associates PC our mission is to assist you with all your tax preparations, payroll and accounting needs.  We provide our clients with professional, personalized accounting services and guidance in a wide range of financial and business needs. Give us a call today (843) 347-0849 and discover why our clients return to Peavy and Associates, PC year after year!

As the calendar flips to a new year, a familiar season looms on the horizon – tax season. For individuals and businesses alike, this time of year often brings a mix of anticipation and apprehension. However, with strategic planning and a keen understanding of the tax landscape, navigating through the complexities of tax season can become a smoother and more manageable process. In this Tax Season Survival Guide, we’ll explore essential strategies, insights into tax planning, key deductions, and common pitfalls to avoid.

1. Early Bird Gets the Deductions: Start Tax Planning Now

The old adage “the early bird catches the worm” holds true in the realm of tax planning. Instead of waiting until the last minute, individuals and businesses can benefit significantly from early tax planning. Consider consulting with a tax professional to assess your financial situation, identify potential deductions, and implement strategies to optimize your tax liability.

2. Keep Immaculate Records: The Devil is in the Details

One of the cornerstones of successful tax preparation is maintaining meticulous records throughout the year. Whether you’re an individual tracking expenses or a business maintaining financial statements, organized and accurate records are your best allies. This not only simplifies the tax filing process but also ensures that you don’t miss out on valuable deductions.

3. Leverage Tax Credits and Deductions: Know Your Options

Understanding the plethora of tax credits and deductions available is crucial for individuals and businesses alike. From education credits to business expenses, staying informed about the various opportunities to reduce your tax liability can result in significant savings. Explore deductions specific to your industry or personal situation and make sure to take advantage of every eligible benefit.

4. Avoid Common Pitfalls: Learn from Others’ Mistakes

Every tax season, individuals and businesses encounter common pitfalls that can lead to headaches and financial setbacks. Stay vigilant by learning from the mistakes of others. Common pitfalls include late filings, inaccurate information, and overlooking deductions. By familiarizing yourself with these pitfalls, you can proactively sidestep potential issues.

5. Seek Professional Guidance: A Wise Investment

In the complex world of taxes, seeking professional guidance is often a wise investment. Certified Public Accountants (CPAs) and tax professionals have the expertise to navigate intricate tax codes, interpret regulations, and provide personalized advice tailored to your specific situation. Their insights can uncover additional deductions, ensure compliance, and ultimately save you time and money.

6. Plan for the Future: Beyond Tax Season

Tax season shouldn’t be viewed as a standalone event but rather as part of a broader financial strategy. Use this time to assess your financial goals, plan for the future, and implement tax-efficient strategies that extend beyond the current year. Whether it’s retirement planning, investment strategies, or estate planning, a holistic approach ensures sustained financial success.

Mastering the Art of Tax Season

In conclusion, mastering the art of tax season requires a proactive and informed approach. By initiating early tax planning, maintaining meticulous records, leveraging available credits and deductions, avoiding common pitfalls, seeking professional guidance, and planning for the future, individuals and businesses can transform tax season from a stressful ordeal into an opportunity for financial optimization. As the tax deadline approaches, let this Tax Season Survival Guide be your roadmap to a smoother and more successful journey through the intricacies of tax season.

At Peavy and Associates PC our mission is to assist you with all your tax preparations, payroll and accounting needs.  We provide our clients with professional, personalized accounting services and guidance in a wide range of financial and business needs. Give us a call today (843) 347-0849 and discover why our clients return to Peavy and Associates, PC year after year!

Being united in wedded bliss brings a myriad of changes and that extends to your federal income tax return. If you were married by Dec. 31 of the current year, the IRS considers you married for the entire year. The following are some things you need to know, do and be aware of before filing your taxes.

Name Change and Address

You need to ensure that your Social Security card reflects your name change or your return could be rejected and a name change can take weeks to process. Don’t forget to report any change of address to your employer to ensure your address is correct on your W-2 and it arrives in a timely manner. You’ll also need to change your address with the Postal Service.

Standard Deduction

As a married couple, you’re eligible to file jointly and take the standard deduction instead of itemizing. You can choose not to file jointly, but the deduction will be less.

Saving for Retirement

If you or your spouse works while the other stays at home to care for children, and you file a joint return, the working spouse can contribute to the other’s IRA up to a specified amount.

Selling a Home

You may be able to retain more of your profit if you sell a home. Part of the amount may be tax free. To qualify, it must have been your primary residence for 2 of the last 5 years, but the years don’t have to be consecutive.

A Word of Warning

If your spouse has questionable ethics and you can’t trust them to be honest, don’t file a joint return. Filing a joint return makes you equally responsible for any lies, omissions or misrepresentations. Other reasons to file separately is if your spouse has defaulted on a student loan, is in arrears on child support, or owes back taxes. Filing jointly means the IRS can take any refund to which you’re entitled.

At Peavy and Associates PC our mission is to assist you with all your tax preparations, payroll and accounting needs.  We provide our clients with professional, personalized accounting services and guidance in a wide range of financial and business needs. Give us a call today (843) 347-0849 and discover why our clients return to Peavy and Associates, PC year after year!

Inflation is making it more difficult for parents to afford the basics of life for their children. Economists estimate it costs parents approximately $20,800 per year to raise one child in 2023. That’s accounting for the cost of food, housing, clothing and childcare so parents can work. That doesn’t count the cost of college or trade school.

It highlights the importance of obtaining every credit and deduction possible when filing your federal income tax return. A tax credit decreases what you owe. A tax deduction decreases your taxable income. Children will need a Social Security card for you to claim those credits and deductions.

Child Tax Credit

This can earn you up to $2,000 for each of your children under the age of 17 if they qualify. The IRS has very specific rules in regard to your income level, filing status, and who qualifies as a dependent.

Credit for Other Dependents

An increasing number of families are intergenerational households. If you’re supporting a child too old to claim on the Child Tax Credit, you may be able to claim them under Other Dependents. Elderly parents living with you may also qualify.

Child and Dependent Care Credit

Paying for childcare so parents can work can cost $300 per week or more. If you qualify, you can receive up to $3,000 to help defray childcare costs for 1 child or $6,000 for 2

Earned Income Tax Credit (EITC)

To claim this, you’ll have to fall within certain income limits according to your adjusted gross income. The amount will vary, depending on the number of your dependents. People without children may also qualify.

American Opportunity Tax Credit

You can recoup a portion of the cost of sending your child to college if you paid for tuition, books or supplies. If you qualify, you can claim the credit for the first 4 years of their college.

Lifetime Learning Credit (LLC)

This can be worth $2,000 if you paid for qualifying expenses. There’s no limit on how many years you can claim it.

At Peavy and Associates PC our mission is to assist you with all your tax preparations, payroll and accounting needs.  We provide our clients with professional, personalized accounting services and guidance in a wide range of financial and business needs. Give us a call today (843) 347-0849 and discover why our clients return to Peavy and Associates, PC year after year!

Every year, Congress makes what’s known as inflation adjustments and hands down the changes to the IRS to implement. The adjustment will be about 5.4 percent in 2024, which is smaller than last year’s 7 percent. The IRS has announced changes to tax rules for 2024 as inflation adjustment measures.

The changes will take effect when people file their federal income tax returns in 2025. Several of the changes will be of major interest to the average taxpayer, depending on their individual circumstances. Everyone needs to understand how important it is to claim the appropriate amount of withholding tax.

Standard Deduction

The standard deduction for the 2024 tax year will increase by $750 for those that are single or couples filing separately, by $1,100 for heads of household, and by $1,500 for couples filing jointly.

Tax Brackets

The U.S. has 7 tax brackets. Individuals are taxed at rates of 10 percent, 12 percent, 22 percent, 24 percent, 32 percent, 35 percent and 37 percent, depending on income. Tax brackets and tax rates will remain the same, but income thresholds will change.

The result is that some people will remain in a lower tax bracket, while others who received a cost-of-living increase could find themselves in a higher tax bracket. An example is married filers. They’ll be able to make up to $94,300, while staying in the 12 percent tax bracket.

Other Changes

There will be some other adjustments that will affect the average taxpayer along with a major change for the wealthy.

• The Earned Income Credit increases to $7,830 for qualifying filers with 3 or more children.
• People with an FSA can contribute up to $3,200
• Those with an HSA can contribute $4,150 for their own coverage or $8,350 for family coverage
• The gift tax exclusion will increase to $18,000 per person in 2024.
• Estates valued at $3.6 million won’t be subject to estate taxes.

At Peavy and Associates PC our mission is to assist you with all your tax preparations, payroll and accounting needs.  We provide our clients with professional, personalized accounting services and guidance in a wide range of financial and business needs. Give us a call today (843) 347-0849 and discover why our clients return to Peavy and Associates, PC year after year!

If you’re dreaming of working from home, being your own boss, or owning your own business in the gig economy, think carefully. You need to be aware of some pertinent facts that will significantly affect your financial health and welfare. It can be especially shocking and frustrating when it’s time to file your federal income taxes. Be prepared – you’re going to pay more in taxes in 2025 when you report your 2024 earnings.

You’re Self-Employed

The IRS defines gig workers as self-employed if they earn $400 or more. As such, you must pay employer and employee federal income taxes. That means Social Security, Medicare, and a self-employment tax. The self-employment tax is 15.3 percent of what your gig work earnings, 12.4 percent for Social Security, and 2.9 for Medicare.

You Might be a Gig Worker…

You could be a gig worker and not even realize it. If you do on-demand freelance projects, you’re a gig worker. The realm of gig work encompasses food delivery, driving a rideshare, or walking dogs.

Ways to Reduce the Burden

The first rule as a gig worker is to save every receipt for money you spend in connection with your work, whether you consider it gig work, freelancing, or a side hustle. You can deduct those expenses on your income tax return.

Hire an Accountant

With gig work, your taxes become more complex, complicated, and require more forms. The services of an accountant familiar with gig work and the tax structure is indispensable. He or she can help you find ways to minimize taxes, while maximizing what you keep.

Software and Setting Aside Funds

It can be helpful to use home accounting software, but you have to be diligent about making entries. You’ll need to set aside a portion of your earnings to cover the cost of your taxes when you file, since it’s difficult to know exactly how much you’ll owe. A good rule of thumb is to set aside 30 percent.

At Peavy and Associates PC our mission is to assist you with all your tax preparations, payroll and accounting needs.  We provide our clients with professional, personalized accounting services and guidance in a wide range of financial and business needs. Give us a call today (843) 347-0849 and discover why our clients return to Peavy and Associates, PC year after year!

People generally fall into 1 of 2 categories when it comes to spending – impulse or deliberate. Both types of spending have an important impact on your personal and/or business finances. The truth is that everyone makes an impulse buy from time to time. It’s only when it’s a consistent habit that you need to be concerned.

Impulse Spending

This is the type of spending that’s not pre-planned. An example is going into a store to buy a loaf of bread and leaving with $10 or more – usually more – of other items. Impulse spending it typically triggered by a reaction to something seen or an emotion. The mind is an expert at justifying these types of purchases.

Impulse buying is often a type of “retail therapy” to make yourself feel good. Try to find other activities that elevate your mood such as meditating or taking a walk. Impulse buying makes it more difficult to manage your money, can lead to excessive credit card debt, and leave you with insufficient funds to pay essential living expenses. It can lead to the failure of a business.

Deliberate Spending

These are purchases that are pre-planned, made with forethought, and for a specific reason. It applies to everything from food to office equipment if you have a business. You buy only what you need and with the features you’ll actually use.

Breaking the Habit

Kicking the habit of impulse buying can be extremely difficult. It can be very helpful to make a list and stick to it when you go shopping. It can take time to learn to be a deliberate spender. When tempted toward an impulse buy, take a step back and examine why you want to buy a specific item.

Your Accountant Can Help

An accountant is a valuable ally in helping you control your financial health. They can assist with personal and business finances, along with guidance on purchasing decisions. He/she can help with investments, savings income issues, and budgeting.

At Peavy and Associates PC our mission is to assist you with all your tax preparations, payroll and accounting needs.  We provide our clients with professional, personalized accounting services and guidance in a wide range of financial and business needs. Give us a call today (843) 347-0849 and discover why our clients return to Peavy and Associates, PC year after year!

A record number of people are turning to credit cards and/or taking hardship withdrawals from their 401(k) retirement funds. They’re doing so to pay for reasons ranging from medical bills and to prevent losing their homes to job loss and tp meet the basic expenses of everyday life. Inflation and the overall increase in the cost of living is a major motivator.

Hardship Distributions Rise

Taking early distributions is essentially prioritizing short-term needs over long-term saving goals. The number of people utilizing hardship distributions has increased 36 percent over the last quarter.

Credit Cards Aren’t the Answer

Credit card debt has risen dramatically, topping $4 trillion for the first time ever. A full 60 percent of Americans are living pay check to pay check and using credit cards to make up for deficits in income. Hiring is down and job seekers are relying on credit cards until they find new employment. Statistics show that 22 percent of the population doesn’t have any savings. The upcoming holidays are exacerbating the situation, as people struggle to purchase Christmas gifts.

Long-Term Consequences

Early withdrawal from retirement accounts don’t come without a price. The IRS imposes a 10 percent penalty on early distributions before the age of 59.5 years of age. That’s in addition to the tax an individual will pay on the income. That doesn’t even count the overall loss to your retirement funds that can be extremely difficult to make up.

Seek Professional Advice

Before deciding to hit your retirement fund, speak with your accountant or a financial adviser to fully understand the ramifications of an early distribution. The experts can provide advice on alternative solutions. In some circumstances the IRS may waive early withdrawal penalties for situations that include a federally declared disaster, terminal illness, long-term care insurance, and domestic abuse. There are limits to how much can be withdrawn and other terms can apply. The rules are complicated and complex, but an expert can help anyone navigate the intricacies.

At Peavy and Associates PC our mission is to assist you with all your tax preparations, payroll and accounting needs.  We provide our clients with professional, personalized accounting services and guidance in a wide range of financial and business needs. Give us a call today (843) 347-0849 and discover why our clients return to Peavy and Associates, PC year after year!

Expense fraud is a common occurrence in many enterprises and organizations. Owners may be unaware that it’s happening or even be aware that it could be a problem. The practice can cost you dearly, reducing your profitability and hindering future growth.

It occurs when someone manipulates or falsifies costs or expenses for personal gain. The culprit can be employees, vendors or volunteers. It’s done to avoid paying out of pocket or to receive a larger reimbursement. It’s unethical, illegal and a type of financial fraud. All businesses and organizations are at risk.

Common Schemes

Expense fraud occurs at all levels each year. Some of the most common ways it’s committed are:

• Claiming mileage that isn’t driven
• Fake receipts for food, gas or lodging
• Claiming a personal expense as one that’s work-related
• Submitting duplicate receipts
• Using company funds for personal expenses, usually in the form of a credit card)

Why People Do It

The most common reasons are for personal or financial gain. Sometimes the individual may not understand a company’s or organization’s procedures or policies. They may also falsify records to demonstrate they’re making quotas or target goals. It may be a form of rebellion against an employer they feel doesn’t value them. Others may simply feel that the company can “afford it.” Reasons aren’t excuses for essentially committing theft.

Talk with Your Accountant

No one can help your company or organization more effectively than your accountant. He/she will track all the expenses associated with your business, detect patterns of behavior, and bring it to your attention. It’s just one way that your accountant helps you efficiently and effectively manage your finances.

It’s essential to have a very specific reimbursement policy in place that spells out the consequences. It’s equally critical that someone is vetting all requests for reimbursement Make sure that the policy is included with the packet of papers that every employee receives when they’re hired.

At Peavy and Associates PC our mission is to assist you with all your tax preparations, payroll and accounting needs.  We provide our clients with professional, personalized accounting services and guidance in a wide range of financial and business needs. Give us a call today (843) 347-0849 and discover why our clients return to Peavy and Associates, PC year after year!

Contributions to non-profit organizations increase during the holidays. It’s an excellent way to support your favorite cause and the gifts are tax deductible on your income tax return.

The Revenue Act of 1917

Prior to the Act, charitable donations weren’t tax deductible. With passage of the Act, individuals were able to deduct their donations to tax-exempt organizations on their federal income tax for the first time. At that time, tax rates were increasing to fund the war effort during World War I. Making contributions tax deductible was a way to increase charitable giving at a time when it was decreasing.

Why They’re Tax Exempt

Non-profits work for the private and public good. They don’t seek to profit for their efforts or create personal gain. Organizations that qualify for 501(c)(3) status don’t have to pay taxes so that any money they raise or is donated can go back into the organization to further their work. They have a specific mission, such as churches, foundations and animal shelters.

Exclusions for Tax Exempt Status

If a non-profit organization earns too much income from activities unrelated to the organization’s mission, its tax-exempt status can be revoked. Charitable organizations have to file income tax returns each year to maintain their tax-exempt status. They have to provide information about donations received, their mission and board members. Their status can also be in jeopardy if the organization benefits any of the board members, officers, employees or other insiders.

5 Types of Non-Profits

Non-profit organizations fall into one of 5 categories.

• Charitable organization
• Churches and religious organizations
• Political organizations
• Private foundations
• Other non-profits

They’re operated for specific purposes and must meet IRS requirements. It’s important research any charitable organization before making a monetary donation. Scams are particularly prevalent during the holidays when people are in an especially giving frame of mind. Research them online and utilize a charity evaluator to ensure they’re legitimate.

At Peavy and Associates PC our mission is to assist you with all your tax preparations, payroll and accounting needs.  We provide our clients with professional, personalized accounting services and guidance in a wide range of financial and business needs. Give us a call today (843) 347-0849 and discover why our clients return to Peavy and Associates, PC year after year!