The true performance of your business shouldn’t be a mystery. TGG is a leading provider of outsourced accounting and business advisory services for small to mid-size businesses. We provide the critical information business owners need to manage their business by the numbers. Our mission is to make business owners lives better through excellent financial management. Disclaimer: Services offered do not require a state license. www.tgg-accounting.com
That's exactly how I sold my 3 companies 4 to 5 times net profit that's it takes 5 min to evaluate..I am selling the 4th one next month same way thanks
Thanks for watching, Christi! Net income is the profit a company makes after deducting all expenses, taxes, and costs from its total revenue over a specific period, such as a quarter or a year. Retained earnings, on the other hand, are the cumulative amount of net income that a company has kept or "retained" within the business rather than paying out as dividends to shareholders. Essentially, net income is a measure of profitability for a specific period, while retained earnings reflect the total profits reinvested in the company over time.
if I own a cybertruck, but do not currently have a business, is it too late to open an LLC and transfer it to my business. What percentage of the car have be put under section 179. I was a bit confused on the part where you say dont write off 100% but keep a balance of 2.
Found your post interesting to watch. I can't wait to see your new videos soon. Good Luck with the upcoming update. This RU-vid channel is very informative and effective.
Hey, Kudos to your efforts🙌! I'm not really sure if it is the best time to ask but, I was wondering if I could help you create a better distribution by working on post-production like better storytelling through Edits, Keywords, think catchy intros and outros, or even some engaging short clips! Would love to chat if you're interested and keep creating good content:)
If company A within the group is selling company B , but wants to transfer the retained earnings of company B (being sold) to company A , is this possible and how is it valued at point of sale?
Thanks for watching, Garrett! Retained earnings themselves are not directly taxed. However, the way they are treated can have tax implications depending on the business structure. Here’s an overview: Sole Proprietorships and Partnerships: Retained earnings are not taxed separately. Instead, the profits of the business are taxed as personal income to the owners, regardless of whether the profits are retained in the business or distributed. Corporations (C Corporations): Corporations are subject to corporate income tax on their profits. If the corporation retains earnings (instead of distributing them as dividends), those earnings have already been taxed at the corporate level. If the retained earnings are later distributed as dividends to shareholders, the dividends are taxed again at the individual level, resulting in double taxation. S Corporations: S Corporations are pass-through entities, meaning the profits (including retained earnings) pass through to the shareholders and are taxed as personal income. The business itself is not taxed at the corporate level. The specific tax treatment can vary based on the jurisdiction and other factors, so it’s always a good idea for small business owners to consult with a tax professional or accountant to understand their specific tax obligations.
I’m looking at a companys annual return. Retain earnings 500m. Cash, property equipment etc adds up to 200m. Where are the other 300m ? It doesn’t look like as straight straight forward as you painted. Is goodwill or receivables retain earnings, ?
Thanks for your comment! Retained earnings represent profits kept by the company instead of being paid out as dividends. The $300 million difference could be due to other assets not included, liabilities, and other equity components. Goodwill and receivables aren't part of retained earnings but can affect total equity. Hope this clarifies things!
Thanks for the reply, but then a company with big retain earnings is not directly to the companies savings then, or it doesn't mean that the company is getting safer.. etc. @@TGGAccountingSanDiego
Are there considerations if assets (and subsequent debt) are being sold with the business? For example, if a bakery owner wants to sell his 5 year old bakery due to illness (bakery closed, no longer earning), including machinery, then there is more risk (since NI or EBOTDA) is less…. Butttt there is a significant amount of assets (ovens, commercial mixers). How are those assets factored in?
Yes, when assets are being sold with the business, their valuation is a critical factor in determining the overall value. In the case of the bakery owner selling due to illness, while reduced earnings impact the valuation based on income metrics like Net Income (NI) or Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA), the assets such as ovens and commercial mixers still hold tangible value. These assets would typically be assessed separately through methods like replacement cost or market value, and their inclusion can mitigate some of the risk associated with reduced earnings, potentially increasing the overall valuation of the business.
I appreciate your detailed response. That what I was thinking as well. Would you have additional resources you recommend looking at for business valuations? @@TGGAccountingSanDiego
Section 179 deductions allow businesses to deduct the full purchase price of qualifying equipment and/or software purchased or financed during the tax year. However, when it comes to mortgage applications or financial matters outside of tax filings, the treatment of Section 179 deductions may vary depending on the lender's policies and the specific circumstances of your situation. Generally, lenders may have their own criteria for considering income, including deductions, in determining mortgage eligibility.
question: if we made an equipment purchase in mid-December, paid in full, but shipment has been delayed until 1/3 of next year, which year would be able to deduct that purchase? I know there is something about having the equipment "in-use" that year. we have received the software for the equipment and have created programs, however the physical piece of equipment does not have a dock date until the first few days of January. Thanks!
Hi, thanks for watching and interacting with our content! In general, the equipment must be placed in service during the tax year in which you want to claim the Section 179 deduction. "Placed in service" generally means the equipment is ready and available for use in your business, even if it is not actually used until a later date. In this situation, although your operations are ready for usage of the equipment, because you will not physically have the object until next year, it will likely not be considered as "placed in service". Due to the delayed shipment, we recommend claiming the Section 179 deduction in the following year.
@@whitnasty1 We're happy to help! It shouldn't be a problem. When you file your tax return, you'll typically report the relevant information, including the cost of the equipment and the date it was placed in service (not purchase date), to support your claim for the Section 179 deduction. Keep records of the purchase documentation and any other relevant information that supports the timing of when the equipment was put into service. To be sure, we recommend you verify with a tax professional. We are managerial accountants and happy to advise on tax planning, but we are not tax professionals.
Hi, I have a doubt please. I have seen many times that, in a "Financial Modeling" (usually used for valuation, M&A, Strategic Planning, and similars) there are NOT calculated things as costs of the products, raw materials, direct and indirect materials, direct and indirect labor, planned level of production, etc., all in a depth "level of detail" as, for example, in a "Normal" Budgeting. Am I right? Or not? I mean, it is, or not necessary to "includes" in a "Financial Modeling" the level of detail and calculations like costs, production, etc? And why or why not? What is the difference between a a "Financial Modeling" and a "Normal" Budget process? Are the times? (1, 2, 3, N years) What are used for? What more? If I do a Business Plan, do I need a “normal” and detailed budget, or a a Financial Modeling? and for a Strategic Planning? Because both looks forward to the future, and both finish in the three statements (Balance, P&L and Cash Flow), I'm some confused. Thank you in advance for your advice!
Hey, I really enjoyed this but had a question. So is ROR at the rate you estimate (20% standard is your example) the price you’d then value the business at? I wasn’t sure how you tie it together to the pricing.
Thanks! Can I take 50% 179 deduction in first year and then the remaining 50% next year? or does it go to MACRS if you don't deduct it all first year? Thank You.
No, a taxpayer cannot take 50% of the section 179 deduction in the first year and the remaining deduction in the next year. The section 179 deduction must be taken in the year the property is place in service. In 2022, the maximum section 179 expense deduction is $1,080,000. This limit is reduced by the amount by which the cost of section 179 property placed in service during the tax year exceeds $2,700,000. The taxpayer must have sufficient business income to take the full deduction. If any of the deduction is disallowed because of the business income limitation, the remaining deduction may be carried forward to another tax year in which there is sufficient business income to take the remaining deduction. Yes, if the taxpayer does not elect to take a section 179 deduction, the property would be subject to MACRS based on its asset class. The taxpayer must decide which deduction, either section 179 or MACRS, makes the most sense given its own unique circumstances. Here are a couple of IRS publications to provide additional support on this issue. www.irs.gov/pub/irs-pdf/i4562.pdf www.irs.gov/publications/p946 - Stephen Birnbaum, TGG CFO
Thanks for your question, Rose! When you take the Section 179 deduction, the tax savings does pass-through to your personal return if your business is structured as an LLC or other pass-through entity. However, the deduction is limited to taxable income from your business in the year. If you don’t have revenue yet, you probably will not have taxable business income or be allowed to use the Section 179 deduction in this tax year.
@@TGGAccountingSanDiegolease correct me if I'm wrong ... In my case I also have 64k in W2 income. My LLC just started so there will be no profit in 2023.. But if I understand my research correctly, I should be able to take my start-up costs (cake home business) and take those deductions using 179 because it can flow through my W-2 2023. I think it's the best of both worlds to actually have a W-2 income while starting a business. I was going to wait until I retired but it made more sense to do it now financially. I took a $3,000 bonus this year and that's what I did - started a home LLC business😀. Thank you for your video.
@@consumerdebtchitchat Thank you for your input and we're glad you valued our video! We'd always direct these questions to a tax preparer, but generally, you can deduct accelerated depreciation (section 179) against W-2 income on the personal return. Start up costs are not always capitalized and therefore not subject to depreciation. A preparer could better advise as to the best route to minimize the tax liability. We appreciate the conversation starter and wish you the best with your business!
Rather than having the business buy-out the owner over a 10 year period the company could purchase disability insurance to cover the obligation in the buy-sell agreement. That way the company doesn't have to come up with all that money either in a short or long period of time. It's all about cash flow.
Matt, I agree with your opinion about a glut of blatant scams in the market centered around the ERC, but I think the actual deadlines are 3 years from the original deadline of the 941 you will filing a 941x for to amend. That would be April 2024 for 2020 quarters and April 2025 for 2021.
So the retained earnings is money that’s just sitting waiting to be used for whatever the company Chooses in the future ? Or does it represent money that has been Spent already on purchasing more assets or reducing liabilities?
Retained earnings are profits accumulated over time that haven't been distributed to shareholders as dividends. They can be used for various purposes, including investing in assets, reducing liabilities, or funding future growth initiatives. So, it can represent both money awaiting allocation for future use and funds already reinvested in the company's operations.
It really depends on what you're trying to hedge. Feel free to email us at info@tgg-accounting.com and we can get you in touch with someone who can assist.
