Posts By :

smolinlupinco

Tax Considerations When You Decide to Close a Business
Tax Considerations When You Decide to Close a Business 850 500 smolinlupinco

Shuttering your business is a significant milestone, often marked by a mix of relief and uncertainty. If you’ve opted to wind down operations on your business, it’s essential to tie up certain loose ends, especially tax-related ones. 

Return filings

Businesses must file specific federal income tax returns to finalize their situation. The type of return you need to file depends on the type of business you have. For instance:

  • Sole proprietors typically need to file a Schedule C, “Profit or Loss from Business,” with their individual returns for the year they close their businesses. This can also include self-employment taxes.
  • Partnerships must file Form 1065, “U.S. Return of Partnership Income,” to report capital gains and losses on Schedule D. This indicates that it’s the final return and partner shares are finalized on Schedule K-1, “Partner’s Share of Income, Deductions, Credits, etc.”.
  • Corporations require Form 966, “Corporate Dissolution or Liquidation,” if they adopt a resolution or plan to dissolve an entity or liquidate any of its stock, along with:
    • Form 1120, “U.S. Corporate Income Tax Return,” for C-corps,
    • Form 1120-S, “U.S. Income Tax Return for an S Corporation,” for S corps
  • All businesses might need to file other tax forms to report sales of business property or asset acquisitions when selling a business.

Employee and contractor obligations

If you have employees, you’ll need to ensure final wages, taxes, and deposits are handled correctly. Failure to make federal tax deposits, report employment taxes, or deposit employee income can result in serious penalties. Additionally, Social Security and Medicare taxes can result in full personal liability for what’s known as the Trust Fund Recovery Penalty.

You also need to report if you’ve paid independent contractors at least $600 from the calendar year on Form 1099-NEC, “Nonemployee Compensation.”

Beyond the basics

Your tax responsibilities might extend beyond the above requirements. For instance:

If your business has a retirement plan for employees, you’ll need to terminate the plan and distribute benefits to participants. This includes health savings accounts (HSAs) and flexible spending accounts (FSAs). When you terminate these plans, there are specific notice, funding, timing, and filing requirements you need to meet. 

Once you address tax matters including debt cancellation, use of net operating losses, freeing up passive activity losses, depreciation recapture, and possible bankruptcy issues, you can cancel your Employer Identification Number (EIN) and close your IRS business account. Please note that you need to retain business records for a set amount of time.

If your business cannot pay all the taxes owed, you do have options! Contact your Smolin advisor to discuss your situation. Closing a business is never an easy choice but with a trusted Smolin advisor by your side, you can navigate the process more smoothly.

Could Borrowing From Your Corporation Equal Lower Rates, Bigger Risks?
Could Borrowing From Your Corporation Equal Lower Rates, Bigger Risks? 850 500 smolinlupinco

Did you know that you can borrow funds from your own closely held corporation at rates much lower than those charged by a bank? This strategy can be advantageous in some aspects but careful planning is crucial to avoid certain risks.  

The Basics

Interest rates have risen sharply over the last couple of years, making this strategy more attractive. Rather than pay a higher interest rate on a bank loan, shareholders can opt to take loans from their corporations. 

This option—with its lower interest rates—is available thanks to the IRS’s Applicable Federal Rates (AFRs) which are typically more budget-friendly than rates offered by banks. If the charged interest falls short of the AFRs, adverse tax results can be triggered.

This borrowed money can be used for a variety of personal expenses, from helping your child with college tuition to tackling home improvement projects or paying off high-interest credit card debt. 

Two Traps to Avoid

1. Not creating a genuine loan 

The IRS needs to see a clear-cut borrower-lender relationship. If your loan structure is sloppy, the IRS could reclassify the proceeds as additional compensation, which would result in an income tax bill for you and payroll tax for you and your corporation. However, the business would still be able to deduct the amount treated as compensation as well as the corporation’s share of related payroll taxes.

On the other hand, the IRS can claim that you received a taxable dividend if your company is a C corporation, triggering taxable income for you with no offsetting deduction for your business.

It’s best to create a formal written loan agreement to establish your promise of repayment to the corporation either as a fixed amount under an installment schedule or on demand by the corporation. Be sure to document the terms of the loan in your corporate minutes as well.

2. Not charging sufficient interest

To avoid getting caught in the IRS’s “below-market loan rules” make sure you’re charging an interest rate that meets or exceeds the AFR for your loan term. One exception to the below-market loan rules is if aggregate loans from corporation to shareholder equal $10,000 or less.

Current AFRs

The IRS publishes AFRs monthly based on current market conditions. For loans made in July 2024, the AFRs are:

  • 4.95% for short-term loans of up to three years,
  • 4.40% for mid-term loans of more than three years but not more than nine years, and
  • 4.52% for long-term loans of over nine years.

These rates assume monthly compounding of interest. However, the specific AFR depends on whether it’s a demand loan or a term loan. Here’s the key difference: 

  • Demand loans allow your corporation to request repayment in full at any time with proper notice.
  • Term loans have a fixed repayment schedule and interest rate set at the loan’s origination based on the AFR for the chosen term (short, mid, or long). This type of loan offers stability and predictability to both the borrower and the corporation.

Corporate Borrowing in Action

Imagine you borrow $100,000 from your corporation to be repaid in installments over 10 years. Right now, in July 2024, the long-term AFR is 4.52% compounded monthly over the term. To avoid tax issues, your corporation would charge you this rate and report the interest income.

On the other hand, if the loan document states that the borrowed amount is a demand loan, the AFR is based on a blended average of monthly short-term AFRs for the year. If rates go up, you need to pay more interest to avoid below-market loan rules. And, if rates go down, you pay a lower interest rate.

From a tax perspective, term loans for more than nine years are because they lock in current AFRs. If interest rates drop, you can repay the loan early and secure a new loan at the lower rate.

Avoid adverse consequences

Shareholder loans are complex, especially in situations where the loan charges below-AFR interest, the shareholder stops making payments, or your corporation has more than one shareholder. Contact a Smolin advisor for guidance on how to proceed in your unique circumstance.

Maximize Giving and Minimize Taxes with the Power of Qualified Charitable Distributions
Maximize Giving and Minimize Taxes with the Power of Qualified Charitable Distributions 850 500 smolinlupinco

Are you a philanthropic person nearing or past retirement age and facing required minimum distributions (RMDs) from your traditional IRA? There is a smart strategy that allows you to support the causes you care about while reducing your tax burden: Qualified Charitable Distributions (QCDs).

Here’s how it works:

Once you reach age 70½, you can make a cash donation to an IRS-approved charity out of your IRA. This method of transferring assets to charity leverages the QCD provision so you can direct up to $105,000 of their distributions to charity in 2024 (or $210,000 for married couples). 

By making QCDs, the money given to charity counts toward your RMDs but won’t increase adjusted gross income (AGI) or generate a tax bill.

There are several important reasons to keep your donation amount out of your AGI. When distributions are taken directly out of traditional IRAs, federal income tax of up to 37% (in 2024) and possible state income taxes must be paid. A QCD avoids these taxes. 

Here are some other potential benefits:

  1. You might qualify for other tax breaks. A lower AGI can reduce the threshold for itemizers who deduct medical expenses, which are only deductible to the extent they exceed 7.5% of AGI.
  2. You can skip potential taxes on your Social Security benefits and investment income, avoiding the 3.8% net investment income tax.
  3. It might help you bypass a high-income surcharge for Medicare Part B and Part D premiums that are triggered when AGI falls above a certain level.

Note: You can’t claim a charitable contribution deduction for a QCD that is not included in your income. Also, remember that the age after which you must begin taking RMDs is now 73, but the age you can start making QCDs is 70½.

To benefit from a qualified charitable distribution for 2024, you must arrange for the payment from your IRA to go directly to a qualified charity before December 31, 2024. 

QCDs are truly a win-win. You can use them to fulfill all or part of your RMD for the year. 

Think of it as a double-duty approach, supporting a cause you care about while meeting your IRA withdrawal needs. For example, if your 2024 RMDs are $20,000 and you make a $10,000 QCD, you only need to withdraw another $10,000 to satisfy your requirement.QCDs aren’t right for everyone, though. Depending on your unique situation, additional rules and limits may apply. Contact a Smolin advisor to discuss whether this strategy makes sense for you.

Decoding Corporate Estimated Tax: Which Method is Best for You?
Decoding Corporate Estimated Tax: Which Method is Best for You? 850 500 smolinlupinco

With the next quarterly estimated tax payment deadline coming up on September 16, it’s the perfect time to brush up on the rules for computing your corporate federal estimated payments. Ideally, your business can pay the minimum amount of estimated tax without triggering any penalties for underpayment. 

But how do you determine that amount? To avoid penalties, corporations must pay estimated tax installments equal to the lowest amount calculated using one of these four methods: 

Current Year Method

Pay 25% of the tax shown on the current tax year’s return (or, if no return is filed, 25% of the tax for the current year) by each of four corporate installment due dates –  generally April 15, June 15, September 15 and December 15. If a due date falls on a Saturday, Sunday or legal holiday, the payment is due the following business day.

Preceding Year Method 

Pay 25% of the tax shown on the return for the preceding tax year by each of four installment due dates. For 2022, corporations with taxable income of $1 million or more in any of the last three tax years can only use the preceding year method to determine their first required installment payment. Additionally, this method is not available to corporations whose last tax return covered less than a full year (i.e. new corporations) or corporations without a tax return from the previous year showing some tax liability.

Annualized Income Method

Under this option, a corporation can avoid the estimated tax underpayment penalty if it pays its “annualized tax” in quarterly installments. The annualized method estimates tax based on the corporation’s taxable income for the months leading up to the installment due date. It also assumes income will stay consistent throughout the year.

Seasonal Income Method

Corporations with recurring seasonal patterns of taxable income can annualize income by assuming income earned in the current year is earned in the same pattern as in preceding years. There’s a somewhat complicated mathematical test corporations must pass to establish that they meet the threshold to qualify to use this method.

If you think your corporation might qualify, reach out to your Smolin Advisor for assistance making that determination.If you find yourself needing to adjust estimated tax payments, corporations are able to switch between the four methods during the given tax year. Let the Smolin team help you determine the best method for your corporation.

Tax Breaks for Family Caregivers: Are You Eligible?
Tax Breaks for Family Caregivers: Are You Eligible? 850 500 smolinlupinco

Caring for an elderly relative is a privilege that offers many rewards: a deeper bond with your loved one, the knowledge that you are making an impact, and the peace of mind knowing they are in good hands. There are also potential tax benefits that can help lighten the load of caregiving. 

1. Medical expenses. When you provide over 50% of your loved one’s support, including medical expenses, they qualify as your “medical dependent” on your tax return. This allows you to include their qualified medical expenses along with your own when you itemize, which can potentially lower your income. The test for determining whether an individual qualifies as your “medical dependent” is less stringent than that used to determine “dependents,” which is covered in more detail below. 

In order to claim medical expense deductions, the total costs must exceed 7.5% of your adjusted gross income (AGI). 

Deductible medical expenses include costs for qualified long-term care services required by a chronically ill individual. Eligible long-term care insurance premiums can also be deducted; however, there is an annual cap on the amount. The cap is based on age, and in 2024 goes from $470 for an individual aged 40 or less to $5,880 for an individual over 70.

2. Filing status. You may qualify for “head-of-household” status by virtue of the individual you’re caring for if you are not married and:

  • The person you’re caring for lives in your household,
  • You cover more than half the household costs,
  • The person qualifies as your “dependent,” and
  • The person is a relative.

If you are caring for your parent, they do not need to live with you. As long as you provide more than half of their household costs and they qualify as your dependent, you can claim head of household status which has a higher standard deduction and lower tax rates than a single filer.

While dependency exemptions are currently on hold for 2018 through 2025, the rules for determining who qualifies as a dependent still apply when determining eligibility for other tax benefits, like head-of-household filing status.

The following must be true for the tax year you are filing in order for for an individual to qualify as your “dependent”:

  • You provide more than 50% of their support costs,
  • They must either live with you or be related,
  • They must not have gross income in excess of an inflation-adjusted exemption amount,
  • They can’t file a joint return for the year, and
  • They are a U.S. citizen or a resident of the U.S., Canada or Mexico.

3. Dependent care credit. In cases where your loved one qualifies as your dependent, lives with you and is physically or mentally unable to take care of themselves, you may qualify for the dependent care credit. This credit is designed to account for costs incurred for their care necessary while you and your spouse go to work.

4. Nonchild dependent credit. For 2018 through 2025, the Tax Cuts and Jobs Act (TCJA) created a credit of up to $500 dependents who don’t qualify for the Child Tax Credit. This could apply to a dependent parent; however, they must pass the aforementioned gross income test to be classified as your dependent. You must also pay over half of your parent’s support.

If your adjusted gross income (AGI) is above $200,000 ($400,000 for a married couple filing jointly), this credit is reduced by $50 for every $1,000 that your AGI exceeds the threshold.

Contact your Smolin Advisor to explore the tax implications of financially supporting and caring for an elderly relative.

Planning For Foreign Assets in Your Estate
Planning For Foreign Assets in Your Estate 850 500 smolinlupinco

If you own foreign assets but haven’t included them in your estate plan, it’s time to revisit your plan. It’s possible to structure the ownership of your foreign assets according to the laws of the U.S. and the country where they’re located. But you probably should engage the help of an experienced estate planning advisor so you avoid these common issues.

The Burden of Double Taxation

U.S. citizens are subject to federal gift and estate taxes on all worldwide assets, regardless of where they live or the location of the assets. This means that If you own assets in other countries, you run the risk of double taxation if the assets are also subject to inheritance, estate, and other death taxes in those countries. 

A foreign death tax credit can help offset the US gift or estate tax; however, those aren’t necessarily available in all situations.  It’s possible that you might be able to get a foreign death tax credit which can lower your US estate and gift tax. But that is often dependent on tax treaties the other country has with the United States, and in some cases those credits aren’t available.

You are a U.S. citizen if:

  • You were born in the U.S., whether or not your parents were ever U.S. citizens and regardless of where you currently reside, unless you’ve renounced your citizenship, or
  • You were born outside the U.S. but at least one of your parents was a U.S. citizen at the time.

Even if you’re not a U.S. citizen, living inside the U.S. can make your worldwide assets subject to US gifts and estate taxes. This depends on the concept of “domicile”, meaning you have made the U.S. your home and plan to return there when you leave. When the U.S. is your domicile, their gift and estate taxes apply to your assets outside that country, even if you leave the country. Unless you take action to change your domicile, these taxes apply.

This may not be cause for concern. The U.S. gift and estate tax exemption amount is $13.61 million for the 2024 tax year. But remember, the exemption amount is scheduled to revert to its pre-2018 level of $5 million (indexed for inflation) as of 2026 unless an act of Congress extends it. 

Regardless, it’s best to plan for potential estate tax in the future. Additionally, married couples have different and potentially more complex rules. This is specifically true if one spouse is not a U.S. citizen nor considered a resident for estate tax purposes.

Plan to make two wills

If you want your foreign assets distributed exactly as you’d prefer, your will must be valid in both the U.S. and the other countries where assets are located. While it can be possible to prepare a single will that meets the requirements of each jurisdiction, it is still preferable to have separate wills for your foreign assets. If you opt to have a separate will, written in the foreign country’s language (if not English), it can help smooth the probate process.

Should you opt to prepare two or more wills, you should definitely work with local counsel in each foreign jurisdiction so you can be certain your wills meet each country’s requirements. If possible, it’s preferred that your U.S. and foreign advisors are able to coordinate to avoid any nullifying conflicts between the two wills. 

The bottom line is that if you own foreign assets, the wisest decision is to work with a Smolin advisor to ensure your wishes are executed in the most tax-efficient way possible. Reach out to a Smolin Advisor for support in all your estate planning needs. 

Is Switching to an S-Corp Right For You? A Tax Guide For Business Owners
Is Switching to an S-Corp Right For You? A Tax Guide For Business Owners 850 500 smolinlupinco

The type of business you run (sole proprietorship, partnership, limited liability company or LLC, C corporation, or S corporation) can greatly impact your tax bill. Choosing the right one is important from the get-go, but you can switch from one entity to the other if it makes sense to maximize your tax benefits.

For instance, S corporations commonly provide substantial tax benefits over C corporations; however, there is the potential for costly tax issues that should be considered before making a decision on whether or not to convert from a C corporation to an S corporation.

Here are four considerations to help guide your decision:

1. LIFO Inventory Tax: If your C corporation uses a last-in, first-out (LIFO) inventory method, converting to an S corporation can trigger a tax payment on benefits gained by using LIFO. While this tax can be paid over four years, you should weigh it against any potential tax gains you’ll receive by converting to S status.

2. Built-in Gains Tax: S corporations generally do not pay taxes on their profits. However, if your business was formerly a C corporation, you could be taxed on certain profits (like appreciated property) that were already owned before the switch. This tax applies if those assets were sold within five years of the switch to being an S corp. While this tax is a drawback, there are situations where the tax benefits of an S election outweigh this cost.

3. Passive Income: S corporations with a history as C corporations may face a special tax on passive investment income (such as dividends, interest, rents, royalties, and stock sale gains) that exceeds 25% of their overall income, and they carried over profits from their C corporation years. Owing this tax for three consecutive years can cancel the S corporation status! There are ways to avoid this tax, like distributing accumulated earnings and profits to shareholders or limiting passive income. 

4. Unused Losses: If your C corporation has accumulated losses, they cannot be used to offset the S corporation’s income, nor can they be passed through to shareholders. If the losses can’t be carried back to an earlier C corporation year, you need to weigh the cost of giving up the losses against the potential tax savings of becoming an S corporation.

Beyond Taxes: Other Considerations

These are just some of the factors to consider when switching from C to S status. For example, employee-owners of S corporations may not qualify for all the tax-free benefits available to C corporations. There can also be complications for shareholders who have outstanding loans from their qualified plans. These factors need to also be taken into account to have a clear picture of the implications when making your decision.If you’re considering changing your business structure, reach out to a Smolin Advisor. We can explain your options and potential strategies that can minimize your tax burden. 

Q3 Tax Deadlines for Businesses
Q3 Tax Deadlines for Businesses 850 500 smolinlupinco

Can you believe the third quarter is already here? We’ve compiled a list of key tax-related deadlines that might affect your business and employees to give you a leg up as we head into Q3. Keep in mind that this list isn’t all-inclusive and there could be other deadlines that apply to you. 

July 15

  • Employers with monthly tax deposit rules must submit Social Security, Medicare, and withheld income taxes along with nonpayroll withheld income taxes for June.

July 31

  • Report and pay second quarter taxes: Report income tax withholding and FICA taxes for employees paid in April, May, and June using Form 941. Be sure to pay any tax due by this date. (See the exception below, under “August 12.”)
  • File or request an extension for retirement plan report (if applicable): File your 2023 calendar-year retirement plan report using Form 5500 or Form 5500-EZ or request an extension.

August 12

  • Report income tax withholding and FICA taxes for second quarter 2024 using Form 941, if you deposited on time and in full all associated taxes due.

September 16

  • Calendar-year C corporation be sure to pay the third installment of 2024 estimated income taxes.
  • Calendar-year S corporation or partnership that filed an automatic six-month extension:
    • File a 2023 income tax return with Form 1120-S, Form 1065 or Form 1065-B and pay any tax, interest and penalties due.
    • Make contributions for 2023 to certain employer-sponsored retirement plans.
  • Employers should deposit Social Security, Medicare and withheld income taxes for August if monthly deposit rules are applicable. Include non-payroll withheld income tax for August if subject to monthly deposits.

Contact your Smolin Advisor to ensure you’re meeting all applicable deadlines and filing requirements.

hiring child for summer tax move

Is Hiring Your Child For the Summer a Smart Tax Move?
Is Hiring Your Child For the Summer a Smart Tax Move? 850 500 smolinlupinco

School’s out, and that can mean opportunities for your business. If you have a child interested in your work, consider hiring them for the summer.  Not only does it give your son or daughter a great experience, but you can both reap the tax benefits too! 

Benefits for Your Child

Depending on your business structure, your child might get special tax breaks come filing season. These entities include:  

  • Sole proprietorship,
  • Partnership owned by both spouses,
  • Single-member LLC that’s treated as a sole proprietorship for tax purposes, or
  • LLC that’s treated as a partnership owned by both spouses.

Hiring your child if you operate one of these types of businesses is a smart tax more because:

  1. Your child’s wages are not subject to Social Security, Medicare, or Federal unemployment (FUTA) tax until the employee-child reaches age 21, which means significant tax savings for your business.
  2. If your child is considered a dependent, their standard deduction for 2024 wages shields up to $14,600 from federal income tax. Depending on their rate of pay, this might mean a significant portion of their summer earnings won’t be taxed at all.

Benefits for Your Business

When hiring your child, you get a business tax deduction for employee wage expense and this deduction reduces your federal income tax bill, self-employment tax bill, as well as your state income tax bill (where applicable). 

It is important to note that there are different rules for corporations:

  • C and S corporations:  Your child’s wages are subject to Social Security, Medicare and FUTA taxes, like any other employee but you can deduct their wages as a business expense on your corporation’s tax return. In turn, your child can shelter the wages from federal income tax with the $14,600 standard deduction for single filers.

Traditional and Roth IRAs

Regardless of the type of business you operate, your child is eligible to contribute to an IRA or Roth IRA. For Roth IRAs, contributions are made with after-tax dollars meaning that taxes get paid upfront. For accounts that have been open for more than five years, the account owner, upon turning age 59½, can withdraw the contributions and earnings without paying federal income tax. 

Contributions to a traditional IRA, on the other hand, are deductible and subject to income limits. Deductible contributions to a traditional IRA lower the employee-child’s taxable income. 

As such, contributing to a Roth IRA is a better idea for a child than contributing to a traditional IRA. First, your child probably won’t get meaningful write-offs by contributing to a traditional IRA as their standard deduction shelters to $14,600 of 2024 earned income, and additional income will likely be taxed at very low rates.

A further benefit is that, your child can withdraw all or part of the annual Roth contributions for any reason without federal income tax or penalty. Of course, the best strategy is to leave as much of the Roth balance untouched until retirement so it can accumulate a larger tax-free amount.

The only tax law requirement for your child when making an annual Roth IRA contribution is having earned income for the year that at least equals what’s contributed for that year, regardless of age. For 2024, your child can contribute to an IRA or Roth IRA the lesser of their earned income or $7,000.

Even modest Roth contributions add up over time. If your child contributes $1,000 to a Roth IRA each year for four years, the account would be worth about $32,000 in 45 years –  assuming a 5% annual rate of return. If you assume an 8% return, the account would be worth more than three times that amount!

While hiring your child can be a tax-smart idea, you need to ensure that their wages are reasonable for the work performed. Be sure to maintain the same records as you would for any other employee to ensure the hours worked and duties performed by using timesheets, job descriptions and W-2 forms. 

Reach out to a Smolin Advisor with any questions you have about employing your child at your small business.

Boost Business Profits Cost Cutting Tips

Boost Business Profits with These 4 Cost-Cutting Tips
Boost Business Profits with These 4 Cost-Cutting Tips 1063 625 smolinlupinco

While it’s common for businesses to be most concerned with the volume of sales, this is not necessarily the only, nor most reliable, way to raise profits. In fact, the cost of making a sale can sometimes lead to lower than expected net profits. 

Business owners must consider their overall expenses, including cost per acquisition, as they aim to increase profits. Here are four areas to focus on when reviewing expenses and considering cost-cutting measures. 

1. Costs of Labor: Did you know that employee benefits like health insurance and retirement contributions account for nearly 30% of employee compensation? As you calculate your total labor costs, be sure to include these figures in addition to salaries and wages. 

While you want to be competitive in your total compensation and benefits packages, it’s also important to compare your offerings to those of similar roles in your industry. If your amounts are skewed higher or lower than other employers, you might want to reconsider your pay structure, salary amounts, or bonuses moving forward, at least in the short-term. If you need to reduce salaries or explore different benefit options to rein in spending, be mindful of how this can impact morale and turnover rates. It is wise to consider other ways to show appreciation for the value of your employees’ work, such as offering flexible work schedules or employee incentives to help them achieve their goals. 

2. Relationships with Vendors: Whether or not you are trying to cut costs, it’s generally a good idea to evaluate vendor contracts regularly to verify that each line item is still necessary for your business. Consider each vendor you work with (suppliers, cleaners, landscapers, technology firms, and other service providers) to ensure you aren’t duplicating services. You should also consider whether you are paying a vendor for work that could be reassigned to an existing employee’s workload. 

A final consideration is the potential to renegotiate vendor agreements and leases for property or equipment. It might be possible to work out a better deal, especially if you have a positive, long-standing relationship. If negotiations aren’t working, it might be time to research other options for those services. 

3. Efficacy of Advertising: Ad campaigns can be one of the biggest drains on your budget, especially if they are not effective with your target audience. Excessive spending on ineffective campaigns can be a huge drain on funds. If you’re seeing sluggish or stalled results, brainstorm with your advertising agency on ideas to boost your return on investment or ROI. It is also worth a look into other agencies that might be a better fit for your budget and goals. While fresh ideas from a new agency can increase sales, you should also talk openly with your current agency about how they can help before jumping ship.

4. Impacts of Interest: It’s common for businesses to borrow money for real estate, equipment, and operations, but these can carry a hidden, or often unconsidered, expense.  The hefty weight of interest can be a game-changer for business profitability, depending on rates. If rising commercial interest rates and the flux of variable-rate loans are draining your budget, it’s time to reconsider those lien-burdened operational expenses. Are they helping to generate more money than the cost of the interest? 

If not, you may need to brainstorm ways to lower your borrowing costs. This may mean switching to shorter-term or fixed-rate loan options or exploring ways to run your business more efficiently and, thus, operate with lower line credit. 

Even if your business isn’t experiencing profit pain points, it’s smart to implement a plan for continuous process improvement. Review your operations expenses and assess each cost’s ongoing need and reasonableness. 

If something is dragging your budget down, it might be time to cut that cost. However, remember each decision you make impacts other areas of your business and can even hinder productivity and growth. 

Reach out to a Smolin Advisor for support evaluating costs to ensure the overall health of your business. 

Start Typing
in NJ, NY & FL | Smolin Lupin & Co.