Chumenti Accounting

Enjoy The Weekend! “Whether you think you can or think you can’t, you’re right.”

How does an LLC protect my personal assets? An LLC creates a legal separation between you and your business. If the business is sued or incurs debt, creditors generally cannot pursue your personal assets, provided you maintain proper business practices.

What is the biggest benefit of forming an LLC? One of the primary benefits is personal liability protection. In most cases, your personal assets—such as your home, savings, and personal property—are protected from business debts and lawsuits.

Tax deductions and tax credits may be the best part of preparing your tax return. Both reduce your tax bill, but in very different ways. Knowing the difference can create some very effective tax strategies that reduce your tax bill.

Self-employed. Remember to pay your Social Security and Medicare taxes in addition to your income taxes. Creating and funding a savings account for this purpose can help avoid the cash flow hit each quarter when you pay your estimated taxes.

Fast Fact: Equity denotes the value left over after liabilities have been removed. Recall the equation Assets = Liabilities + Equity. If you take your Assets and subtract your Liabilities, you are left with Equity, which is the portion of the company that is owned by the investors and owners.

If you are planning to buy a house or anticipate any other transaction that will require proof of income, you may wish to file early. This is especially important if you are self-employed. You can then make your filed tax return available to your bank or other financial institution.

Looking to buy a business? Most buyers don't ask enough questions or require enough financial history to make an informed decision. Any business worth buying should have kept adequate records. The inability or the unwillingness to provide the proper financial information is an indication that the business may be overpriced.

Many tax credits are “refundable credits.” This means you can receive a refund even if you owe no income tax. Common examples available to students and parents are the earned income tax credit and the premium tax credit.

An operating agreement is an agreement, usually a written document, that sets out the rules by which a LLC is to be operated. It is the LLC equivalent of corporate bylaws or a partnership agreement.