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About Laura Stees, CPA

Laura Stees, CPA is a Partner and Business Strategist with Stees, Walker & Company LLP — a San Diego, Calif.-based boutique tax consulting firm focused on personalized tax and financial guidance to individuals and businesses.

Tax Planning: It’s Not Just for the Super Wealthy

By |2024-10-30T12:59:49-07:00October 30, 2024|Categories: Tax Planning|Tags: , |1 Comment

It’s no secret that some of the wealthiest people in the United States pay the least income tax. According to some reports, billionaires can even get their income tax down to zero, and it’s entirely legal.

In some instances, they build their wealth through ownership of shares in one or more companies and then borrow against that wealth to cover their expenses. And because they don’t realize any gains from selling shares, they’re not earning income subject to tax. In fact, they can even claim the interest they pay on their loans as a deduction against any income they earn!

Here at SWC, that’s what we call savvy tax planning. Don’t you wish you could do that?

Tax planning photo

Well, you may not be wealthy enough or low-income enough to pay zero income tax, but if you’re somewhere in between, strategies are available for reducing your tax bill and building your wealth at an accelerated rate. Tax-saving strategies include maximizing tax deductions and credits and contributing to tax-deferred retirement accounts. And you don’t have to be super-rich to take advantage of them. You just need to engage in tax planning.

What Is Tax Planning?

Tax planning is the process of analyzing your financial situation to minimize tax liabilities. It involves careful consideration of income, expenses, investments, deductions, credits, and future opportunities to take advantage of all available tax laws and regulations.

Suffice it to say, tax planning plays a crucial role in building wealth. By investing some or all of the money you save on taxes, you can provide yourself with additional tax-savings options while your investments grow in value.

Understanding Tax Planning: Tax planning is the exercise of reviewing the amount of tax you pay in an effort to maximize your after-tax income. To do this properly, it is important to understand myriad federal and state rules and regulations related to deductions, credits, income deferral, and tax minimization strategies where possible.

When you engage with a tax planning firm like SWC, the process is designed to help you or your business pay the least amount of tax legally possible, based on current tax law and regulations as they relate to your current and future financial goals and objectives. Legal tax strategies encompass leveraging retirement planning, estate planning, investment income, investment vehicles, and the optimization of your business operations if you own a business or work in an entrepreneurial capacity.

Here are some of the ways tax planning can help you build wealth: Continue reading… Continue reading… Continue reading…

The Basics of Finding New Sources of Business: Part 2

By |2022-05-04T15:45:41-07:00May 4, 2022|Categories: Business Advice|Tags: , , , , |0 Comments

Welcome to the second part of our two-part series, “The Basics of Finding New Sources of Business.” In Part 1 of this series, we explored various ways to grow your business, including increasing customer spend, diversifying, and increasing market share.

In this part, we seek to inspire more ideas for driving growth through disruptive innovation, alliances, and partnerships. Then we wrap up this series by taking a quick look at how to analyze your company’s strengths so you can leverage them to grow in the right direction.

The Basics of Finding New Sources of Business

As we explained in Part 1, growth is essential not only for a business to succeed but, more important, for its very survival. As the old saying goes, “If you’re not growing, you’re dying,” and that’s especially true for small businesses. If you’re not actively pursuing customers, a competitor will be chipping away at your consumer base until the entire foundation of your business crumbles. This series might inspire you, but only you can do the difficult and creative work to make growth happen.

Growth Through Disruptive Innovation

One great way to quickly grow a business is through disruptive innovation — introducing a new product or service to a market that makes traditionally successful products or services in that market obsolete.

Two familiar examples of disruptive innovation

Here are a couple examples of disruptive innovation that you’ll probably recognize:

  • The first digital cameras were low on functionality and didn’t match the quality of traditional film cameras. The leading camera manufacturers, including Kodak, continued to manufacture and market cameras that used film. This of course left a massive opening for smaller consumer electronics manufacturers to nearly supplant their larger and more entrenched counterparts. Since then, smartphones have made traditional digital cameras nearly obsolete.
  • In its early days, Amazon.com disrupted traditional bookstores, using the Internet and traditional delivery services to make it far more convenient and less expensive to purchase books. It has continued to disrupt the publishing industry with its Kindle reader and self-publishing services, making it possible for authors to publish and sell directly to readers.

Principles of disruptive innovation

Several factors make disruptive innovation possible. By understanding these factors, you have a better chance of identifying the soft underbelly of large companies and taking advantage of their susceptibilities: Continue reading… Continue reading… Continue reading…

The Basics of Finding New Sources of Business: Part 1

By |2022-04-28T17:18:04-07:00April 28, 2022|Categories: Business Advice|Tags: |0 Comments

Frequent readers of our blog may recall that in How to Grow Your Business: 4 Surefire Methods, we suggested that the primary causes of business failure are often related to cash flow (more cash flowing out than flowing in), poor money management, slow or non- existent growth, and a decline in sales and revenue.

Business growth, as it turns out, is the heartbeat of success. The more business you conduct, the more revenue you generate. The more customers or clients you have, the less likely your business will fail if you happen to lose a few. The broader your market, the less susceptible your business is to market changes. And the happier your customers are, the more your business is worth when you decide to sell.

As a business owner, you want to be constantly finding or creating new sources of business. But how?

In Part 1 of this series, we dive deep into the basics of growth and explore how to grow your business by increasing customer spend, diversifying, and increasing market share. In Part 2, which we’ll publish next week, we introduce a few more ways to grow your business — including through disruptive innovation and by pursuing alliances and partnership opportunities. Finally, we look at how to analyze your business’s strengths so you can leverage and build on them to grow.

So, let’s get started.

Business Growth Basics

Business growth is about expanding your business in some way — increasing revenue or profitability, your customer base, your market share, your physical size or geographic coverage, your executive and/or support staff, or some other aspect of your business.

To understand business growth basics, you just need to know Continue reading… Continue reading… Continue reading…

Obtaining The Best Valuation of Your Business

By |2022-04-11T12:22:14-07:00April 11, 2022|Categories: Business Advice|Tags: |0 Comments

Do you have any idea how much your business is worth? If not, we can guide you through the process of securing an accurate business valuation.

A business valuation is just that: an analysis of how much money a business entity is worth. Knowing the fair value of a business is useful for many reasons, including selling or buying a business, establishing partner ownership, securing business loans, calculating taxes on gifted shares, and in the context of succession and estate planning or divorce proceedings.

Here at SWC, where we help entrepreneurs and business owners maximize their return on investment while achieving both their professional and personal goals, we encourage you to get up to speed on the basics of business valuation, which we cover in this post:

  • Why you should have a current valuation of your business
  • Some common methods of valuing a business
  • How to prepare so as to get the best valuation
  • Some advice for improving business valuation prior to a sale or merger
  • Next steps you can take with us to get a valuation done for your business

Why You Need a Business Valuation

Business valuations are not exclusively for large corporations. Even small and midsize business (SMB) owners can benefit from knowing the value of their business. For example, a business valuation:

  • Reduces the likelihood of costly tax audits and penalties on your estate
  • Improves the odds of being approved for a business loan, assuming the valuation supports the business’s credit worthiness
  • Reveals the true value of stock/shares
  • Simplifies calculations during partner buyouts
  • Save heirs from extreme tax liabilities

Not every business needs a valuation. If you are self-employed (meaning, you are the business) and not planning to ever sell your business, pass it down to heirs, or borrow against it, you probably won’t benefit from undertaking a business valuation. (However, that may open the door to the more pressing discussion of why you are not building a business that you can eventually sell or pass down to your heirs.)

Here is a more detailed list of common reasons to get a business valuation: Continue reading… Continue reading… Continue reading…

SWC’s 10 Point Identity Theft Recovery Action Plan Means You Can Close the Barn Door

By |2022-03-16T15:31:21-07:00March 16, 2022|Categories: Fraud Prevention|Tags: , , , , |0 Comments

Despite huge advances in cyber security, identity and digital wallet theft is on the rise, and experts cite a perfect storm of circumstances as a major reason.

For one thing, more people are working from home, and they’re working without the protections of corporate networks which are more reliable at blocking phishing schemes than home networks are. In addition, there are more transactions being handled online these days, including the electronic forwarding of unemployment checks and other government benefits.

Then there are the lingering fears about COVID that make some people vulnerable to online tactics dreamed up by nefarious hackers that enable them to steal your personal information and access your online accounts. And having more of your information stored in the cloud doesn’t help matters in the least.

We’ve all heard the expression about “shutting the barn door after the horse has bolted.” It’s a folksy idiom that means it’s too late to try and stop something that has already happened. It’s a futile effort because, of course, the horse is history.

Unfortunately, even if you are being careful and doing all the right things to prevent identity theft, you can still fall victim to it. That’s why it is so important to know how to recover when the unforeseeable and unavoidable happens to you.

Which is why, in this post, I present SWC’s 10 Point Identity Theft Recovery Action Plan.

(Click for free download — Identity Theft Recovery Action Plan.)

Rest assured that, as your trusted tax planning and financial strategy adviser, we take every precaution to safeguard your personal information, and we’re here to help. If you’ve fallen victim to identity theft, call our offices to find out how we can be of service. We’ll get your wayward steed back in the stall.

Step 1: Don’t Panic

Fear increases your vulnerability to identity theft. Panic makes it worse. You’re not legally liable for crimes that other people commit using the personal information they stole from you. So just scratch that concern off your list.

Likewise, if someone used your personal information to steal from you, you should be able to get your money back. For example, if a con artist filed a fraudulent tax return using your name and their address to steal your tax refund, the Internal Revenue Service (IRS) still owes you that refund.

Pro Tip: While you shouldn’t panic, you should act with a sense of urgency. The faster you do all the right things, the less damage you’re likely to suffer, and the greater the chances the perpetrator of the crime(s) will be caught and brought to justice.

Keep a detailed record of all the steps you take to curtail the damage, along with all the documentation you collect along the way. A written record will smooth the path to recovering any losses and protecting you from any losses that others (for example, your bank or creditors) may suffer as a result.

Step 2: Contact All Organizations That May Be Impacted

Although identity theft involves your personal information, it also impacts companies and organizations you do transactions with, so be sure to involve them in your recovery plan: Continue reading… Continue reading… Continue reading…

Distinguishing Employees from Independent Contractors Under California AB 5

By |2020-06-17T13:41:46-07:00June 17, 2020|Categories: California AB 5|Tags: , , , , |0 Comments

Determining whether someone working for you is an employee or an independent contractor used to be easy. If the person worked for your business a certain number of hours per week, they were an employee with rights to benefits and overtime pay (when applicable). If the person didn’t meet those criteria, he or she was considered an independent contractor.

Back in 1987, the Internal Revenue Service (IRS) developed a list of 20 factors to examine in determining whether an employer-employee relationship exists. Based on case law and judicial rulings, the IRS determined that the degree of importance of each factor varied, depending on the occupation and context in which the services were performed.

Distinguishing Employees from Independent Contractors Under California AB 5, ABC’s of AB5

But that all shifted last year here in the Golden State with the passing of California’s Assembly Bill 5 (AB5), which was signed into law by Gov. Gavin Newsom in September 2019 and went into effect on Jan. 1, 2020. That bill classifies most workers as employees, placing the burden of proof for classifying workers as independent contractors on the hiring entity (i.e., the small and medium size business, not-for-profit, or enterprise).

In essence, a worker is to be treated as an employee unless the business can prove otherwise. Another way to put it is that under AB5, it is California law — not businesses — that determines who is an independent contractor and who is not. It’s a fairly rigorous law, and both business owners and workers are understandably confused by it.

In this post, we set out to help you determine whether a person working or performing work for you is doing so as an employee or as an independent contractor under California’s AB5 law.

The ABC Test

The California bill replaces the common law test (the Borello test described later in this post) with the so-called ABC test to determine whether a worker is an employee or an independent contractor in California. And if you’re wondering why the test is named “ABC,” it’s because it features three parts — a Part A, a Part B, and a Part C.

For purposes of California employment laws, the test applies to those requiring minimum wage, overtime pay, unemployment insurance, workers’ compensation insurance, and paid family leave. As an aside, AB5 does not change how out-of-state workers are classified.

Under the rule established by AB5, hiring entities are now required to classify workers as employees unless the person in question meets all the following conditions of the ABC test: Continue reading… Continue reading… Continue reading…

Update on How to Have Your Paycheck Protection Program Loan Forgiven

By |2020-05-29T11:22:27-07:00May 28, 2020|Categories: COVID-19|Tags: , |0 Comments

If you read our April 29 post, “How to Determine Loan Forgiveness Under the Paycheck Protection Program,” or if you’re an owner or manager of one of the nearly 4 million U.S. businesses that received a loan under the Paycheck Protection Program (PPP) — you’re probably starting to wonder how to go about having that loan converted to a grant and forgiven.

SBA Paycheck Protection Program Loan Forgiveness Application

For the uninitiated, the PPP is a $659-billion economic relief program established as part of the Coronavirus Aid, Relief, and Economic Security (CARES) Act to help small businesses, self-employed workers, sole proprietors, certain nonprofit organizations, and tribal businesses remain solvent and continue paying their workers during the COVID-19 shutdown. Under the PPP, a qualifying small business (generally with fewer than 500 employees) could obtain a loan of up to $10 million at a very low interest rate (1%) and have the loan forgiven after proving that the money was used for qualified payroll and other expenses.

Earlier this month, the Small Business Administration (SBA)released its PPP Loan Forgiveness Application along with detailed instructions for completing and submitting the application.

The form’s instructions help you understand how to apply for forgiveness of your PPP loan, consistent with the CARES Act. and to simplify the process, the instructions and form include several measures to reduce compliance burdens, including: Continue reading… Continue reading… Continue reading…

How to Determine Loan Forgiveness Under the Paycheck Protection Program

By |2020-04-29T15:08:05-07:00April 29, 2020|Categories: COVID-19|Tags: , |1 Comment

The recent $669-billion Paycheck Protection Program (PPP) established by the Coronavirus Aid Relief and Economic Security (CARES) Act has been enacted to a chorus of mixed reviews.

The PPP provides loans of up to $10 million per eligible small business to cover payroll costs and other qualifying expenses (such as rent and utilities) to keep small businesses afloat and employees paid until government agencies allow them to reopen. Perhaps best of all, the total amount of each loan used to cover payroll and qualifying expenses may ultimately be forgiven. In other words, the U.S. government won’t require repayment under certain conditions.

Since banks started taking applications for PPP loans, the program has been plagued with controversy — from big businesses getting the lion’s share of the allocated funds to employers having to contend with furloughed and laid off employees who do not see the value in returning to work because they may be able to earn more by remaining on unemployment.

Paycheck Protection Program Forgiveness Loan Calculations

If your company applied for and was approved for a PPP loan, all of this controversy may be water under the bridge. Now your concern is focused on how much of the money you received in the form of a PPP loan will need to be paid back. This post addresses that concern — both for businesses with employees and for self-employed individuals.

Loan Forgiveness for Businesses with Employees

If you own a business and have employees working for you, the amount of your Paycheck Protection Program loan that will be forgiven is said to be equal to the following payments made, and the costs incurred during the eight-week period beginning on the loan origination date (the first disbursement date):

  • Payroll costs:
    • Gross salary, wages, commissions, or tips paid to employees (based on an annual wage of up to $100,000 per worker)
    • Vacation, parental, family, medical, or sick leave (excluding any family or sick leave covered under the Families First Coronavirus Response Act and reimbursed through payroll tax credits)
    • Termination allowances
    • Group health care benefits, including insurance premiums
    • Retirement benefit payments
    • State and local payroll taxes
  • Mortgage interest on a mortgage taken out by the borrower for real or personal property incurred prior to Feb. 15, 2020 (not including prepayments)
  • Rent on a lease taken out before Feb. 15, 2020
  • Utilities for service begun before Feb. 15, 2020

The entire amount of the Paycheck Protection Program loan is supposed to be forgiven if you meet all three of the following conditions: Continue reading… Continue reading… Continue reading…

How to Protect Yourself Against COVID Scams and Hoaxes

By |2020-04-22T14:47:45-07:00April 22, 2020|Categories: COVID-19|Tags: , , , |0 Comments

Run a Google News search for COVID Scam and you’ll find an endless stream of negative articles. These range from a California doctor busted for selling a bogus “miracle cure,” to a staggering number of stories describing pandemic-related malware and phishing email scams in the past two months.

Then there are news alerts from the Federal Trade Commission, Federal Bureau of Investigation, and U.S. Department of Treasury (among others) telling us to avoid being pulled into these scams and rip-offs. It’s not like we don’t have enough on our plates with this pandemic, now we now have to watch out for criminals determined to scam us out of our money — often when we’re at our most vulnerable.

COVID Scam Image

Here at Stees., Walker & Company, LLP we hate to see anyone being suckered by a clever con, so in this post, we offer guidance on how to protect yourself and your money in these difficult times.

Recognizing Common Scams and Hoaxes

One of the best ways to avoid falling victim to a scam or hoax is to recognize how the fraudsters operate. Here are some common scams and hoaxes to beware of:

  • Government imposters: “Con” is short for “confidence,” and what elicits more confidence from people than the belief that they’re dealing with a trusted government representative? Con artists often reach out to people via social media, emails, phone calls, and even knocking on their doors, trying to win their confidence. They present themselves as government agents offering to help, and they use greed or fear to trigger impulsive action. For example, a recent text message claiming to come from the “FCC Financial Care Center” offers $30,000 in COVID-19 relief. Another text message impersonating the U.S. Department of Health and Human Services informs recipients that they must take a “mandatory online COVID-19 test” by clicking a certain link. Whenever someone claims to be from the government threatening punitive action or offers to help, tread very carefully.
  • Scams related to stimulus payments: Taxpayers should be on the lookout for IRS impersonation calls, texts, and email phishing attempts about the COVID-19 Tax Relief and Economic Impact Payments (the so-called stimulus checks). The con artists involved in these scams are looking to steal your stimulus payment or your identity. Take the following precautions: Continue reading… Continue reading… Continue reading…

Understanding Small-Business Tax Deductions

By |2020-04-15T15:45:42-07:00April 15, 2020|Categories: Taxes|Tags: , , , , , , , , , , , |0 Comments

As part of an effort to mitigate the effects of the spread of the coronavirus known as COVID-19, the Internal Revenue Services has chosen to delay the April 15, 2020 tax filing deadline for most individual taxpayers and businesses to July 15, 2020. Regardless of the deadline, one thing that isn’t expected to change anytime soon is what a business can and cannot claim as a tax deduction. And in today’s post, we offer insight into exactly that — what small businesses can and cannot deduct, regardless of the tax filing deadline.

A deduction (or write-off) is an expense or portion of an expense subtracted from your company’s gross income that reduces the income on which taxes are calculated. Every dollar you claim as a deduction is a dollar less that is subject to federal, state, and local income tax and self-employment tax (Social Security and Medicare).

Small Business Deductions Image

For example, if your effective federal income tax rate is 25 percent, and you pay 15.3 percent in self-employment tax and 5 percent in state and local income tax, every thousand dollars less you report in taxable income is over 450 dollars you save in taxes: (0.25 + 0.153 + 0.05) x $1,000 = 0.453 x $1,000 = $453.

The Tax Cuts and Jobs Act (TCJA), which became effective in 2018, made it less advantageous for taxpayers to itemize personal deductions. However, if you own a small business — such as a sole-proprietorship, limited liability company (LLC), or partnership — you can deduct a broad range of business expenses to lower the taxable income you earn from that business.

Here are a couple tips for claiming business deductions without getting into legal trouble:

  • Seek confirmation from a tax specialist or certified public accountant (CPA) before claiming any business expense as a deduction.
  • Keep accurate, detailed records, including invoices and receipts for all business expenses. (Your CPA can help you find accounting packages and apps to simplify your record-keeping.)

In the following sections, we present a long list of common small-business tax deductions. Continue reading… Continue reading… Continue reading…

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