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Tax Myths – Small Businesses.

The complexity of the tax code generates a lot of misinformation that could lead to costly mistakes. With this in mind, let’s take a look at some common small business tax myths.

1. START-UP COSTS ARE DEDUCTIBLE IMMEDIATELY Business start-up costs refer to expenses incurred before you actually begin operating your business. Business start-up costs include both start-up and organizational costs. Examples of these types of costs include advertising, travel, surveys, and training. These start-up and organizational costs are generally called capital expenditures. Costs for a particular asset such as machinery or office equipment are recovered through depreciation or Section 179 expensing. When you start a business, you can elect to deduct or amortize certain business start-up costs. Business start-up and organizational costs are generally capital expenditures. However, you can elect to deduct up to $5,000 of business start-up and $5,000 of organizational costs. The $5,000 deduction is reduced (but not below zero) by the amount your total start-up or organizational costs exceed $50,000. Remaining costs must be amortized.

2. OVERPAYING THE IRS MAKES YOU “AUDIT PROOF” It is never a good idea to knowingly or unknowingly overpay the IRS. You should only pay the amount of tax that you owe. It is important to properly document your expenses and make sure you are getting good advice from your tax accountant

3. THE HOME OFFICE DEDUCTION IS A RED FLAG FOR AN AUDIT. While the home office deduction used to be a red flag, this is no longer true. In fact, with so many people operating home-based businesses the IRS rolled out a new simplified home office deduction in 2013, which makes it even easier to claim the home office deduction (as long as it can be substantiated with excellent record-keeping). In other words, there is no need to fear an audit just because you take the home office deduction; however, a high deduction-to-income ratio may raise a red flag and lead to an audit.

4. YOU CAN’T DEDUCT BUSINESS EXPENSES IF YOU DON’T TAKE THE HOME OFFICE DEDUCTION. You are still eligible to take deductions for business supplies, business-related phone bills, travel expenses, printing, wages paid to employees or contract workers, depreciation of equipment used for your business, and other expenses related to running a home-based business, whether or not you take the home office deduction.

5. AN EXTENSION TO FILE GIVES YOU AN EXTRA SIX MONTHS TO PAY ANY TAX YOU OWE. It is an extension of time to file not an extension of time to pay. Penalties and interest begin accruing from the date your taxes are due.

If you have any questions about these and other tax myths, don’t hesitate to call and speak with us.

Please call or email us for more information and questions.

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Jocelyn Sihathep (Jo1)

Office Manager

We have a Sun Devil in the house! We are honored to add to our team, Jo. She is a graduate of Arizona State University (Fear the Fork) and is looking to broaden her knowledge and understanding of business and accounting.

She is the engine of our fine-tuned machine. Her “can do” attitude, commitment to customer service and outstanding organization skills allows us to focus on what matters most, our clients. She is amazing with technology and strives for excellence. She embraces the entrepreneurial spirit and is a great asset to our team.

Jocelyn Weatherley (Jo2)

Accountant

Jo was previously an accountant for a $60M company and their 13 subsidiaries. She is in charge of our accounting and bookkeeping department and serves our clients on their time schedule. Whether it is weekly, monthly or quarterly she helps provide reliable, useful and accurate information to our clients on their terms.

Jo performs full accrual accounting and is responsible for reconciling all accounts, journal entries, month end closing procedures and preparation of internal financial statements and analytics. She also assists in the preparation of sales and payroll tax returns. She holds a wide range of knowledge, from QuickBooks to travel (she spent most of her life in the UK), she’s your girl. She is excited to join the CCA team and ready to conquer tax season head on!

Dixie Cary

CPA and Tax Manager

Dixie is a Minnesota CPA and experienced accountant. She has over 25 years of accounting in both audit and tax, but her passion is tax. After years in the cold, she decided to leave the mid west and find a new home in Sunny Arizona. We are so happy that Dixie has joined our team.

Dixie leads and manages our entire tax department. She assists and leads a team through our busiest times while delivering quality, complete and accurate tax services for our clients. She is proficient in preparation, planning, and education of federal and state income taxes for individuals, businesses, estates, trusts, and exempt organizations.

Theresa Elaine Valade

CPA and Managing Partner
Theresa has over 27 years of experience in tax, audit and consulting. She was with the International CPA Firm of Arthur Anderson in Phoenix and San Francisco. She most recently was a partner with Moffitt & Company, P.C. Her areas of specialization are business consulting and advisory, audits, income tax planning and preparation, and IRS audit representation. Her industries of specialization are nonprofits, real estate, hospitality, franchises, mortgage banking and brokering, title insurance, escrow, health, and beauty.
One of Theresa’s biggest honors is being named the 2020 CPA firm of the year for her commitment and service to her clients during the challenges imposed by the COVID-19 pandemic. Putting passion and personalization at the forefront Theresa has led her firm to excellence by not only providing measurable results for clients but making them feel well taken care of during times of great uncertainty.
Theresa is also a member of the prestigious, Arizona Society of CPAs, ASCPA, 100% Membership Club. It is an honor to be part of this club that exhibit’s a high level of commitment to the Arizona Society of CPAs. We are privileged to be able to convey to our clients, staff, and colleagues of Theresa’s significant commitment to the CPA profession.