Charities Protect Your Donors With The “Magic Blurb”

Bottom Line:  Non-Profit organizations (i.e. Churches and Charities) must ensure that they protect their donors by including the “magic blurb” stating that no goods or services were provided in exchange for the donor’s contributions no later than January 31 of the year following the donation.

What does It Mean:  In a recent tax court case a Texas couple, the Durden’s, were denied a deduction for a $25,171 cash contribution to their church. As customary the church sent the couple a letter acknowledging the charitable gift in January however the Church failed to include the “magic blurb.”  When the Durden’s were audited, they produced this statement to the IRS and were denied the deduction. Later, the church produced a second statement that included the proper wording however the tax court ruled that the statement was not received by the due date for filing the Durden’s original return for the year. In the end, the tax court sided with the IRS due to the fact that the Durden’s did not have the proper receipts to take the deduction.

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How to Use Per Diem Rates for Small Business

Small business owners are always trying to make their lives easier and efficient.  Who could blame them.  This article aims to explore the entrepreneurs option to use per diem rates while traveling.

Basically there are two ways one can deduct travel expenses.

  1. The actual cost of meals, incidental expenses, and lodging can be deducted provided that the taxpayer can substantiate the expenses with the amount, time, place, and business purpose.
  2. The taxpayer can elect to deduct the expenses at the federal per diem rate, in which such an amount is deemed substantiated provided it meets the business purpose requirement.

Keep in mind, that there are some quirks relating to certain small business entity.  Of course, I am sure you didn’t expect the per diem to be simple and easy.  However, if you can take advantage of per diem rate then why not make life easier

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Crush the Triangle of Triple Constraints

Triangle of Triple Constraints

When performing a service, the provider is often times caught in a quandary between price, time, and quality.  The Triple Constraint Theory of Project Management states that one is given the options of Fast, Quality and Cheap, and told to pick any two.

The triangle of triple constraints reflects the fact that the three properties of a service are interrelated and it is not possible to optimize all three.  One option will always suffer. This dilemma is no different in operating a small business because the owner can’t be everything to everybody.  So the question becomes how you can manage this issue.

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Three types of profit measures that small business owners should be concerned?

There are many different measurements of profit that can cause confusion while presenting the financial statements.  Our main goal here is to explain how to use the three types of profit and the differences between them in the most simple way possible.

Three types of profit measures that small business owners should be concerned?

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How Does The Home Office Safe Harbor Work

What is the Small Business Home Office Safe Harbor Deduction

The new business use of home safe harbor option has revolutionized the much maligned home office deduction.  I am sure that many of you were like me when I start my small business, scared to death of the IRS.  Currently, I run my CPA / Virtual CFO firm out of my home office so this is an essential deduction.

It was common practice for many accountants to talk clients out of the home office deduction because the IRS continually scrutinized the deduction.  However, in 2013, taxpayers are generally permitted to use a simplified method of calculating home office deduction. Even now, when I talk to clients, they want to know how does the home office safe harbor work.  Should they be willing to take the deduction?

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Rally Around The Barn: Plan to Like People Lessons Learned

A couple of years ago, a massive wind storm that produced extraordinary damage across the Midwest has caused me to realize that success depends on the support of other people. The night started at my 31st birthday party in which the electric went out soon after everyone arrived. I spent the first half-hour with the grill pulled up to the back door and cooking during the horrible storm. It was much cooler in the moment, I guess you had to be there.

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Balance Sheet Simplified and Defined

The Balance Sheet Simplified

The balance sheet is a statement of financial condition on what a firm’s assets, liabilities, and stockholder’s equity are at a point in time with the essence of the total of all “assets must equal the sum of liabilities and stockholders’ equity.” (Fraser and Ormiston 37).  The balance sheet is understood easier when you break it down into its two main sections and subsections.

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Health Savings Account (HSA) Option for Small Business Owners and What HSA Bank To Use

Health Savings Account (HSA) Option for Small Business Owners

In my opinion one of the scariest things about being self-employed is health care coverage especially if you have a family.  Obtaining reasonable health care coverage with affordable premiums is a problem that plagues many small business owners since you will probably end up with a high deductible plan.  With that said one of the best things that you can take advantage of is the Health Savings Account (HSA).  Another huge issue is choosing a HSA Bank. Continue reading