Credit Union Program Offers Tax Tips for Business Owners

WARREN, Ohio – Should you take a large business deduction as a lump sum or stretch it out over the next year or longer as your small business grows?

Taxpayers, including small business owners, leave a lot of money behind, and Barb Cibella, owner of Black Cat Tax in Champion, said she looks at three years of back tax returns and makes suggestions business owners should consider when investing in their own company.

Cibella, an enrolled agent who has experience working with the Internal Revenue Service and business owners on taxes, spoke Thursday at The Chophouse in Warren as part of the 717 Credit Union’s Business Accelerator program, giving small business owners and entrepreneurs some tips and strategies for keeping their books in order.

From her favorite accounting software for small businesses to suggestions on when to make large purchases for deductions, Cibella gave advice to those already operating as a business or considering taking their idea to the next level.

For example, one of the signs it may be time to progress from a sole proprietorship to an S corporation could be the amount of money a business is bringing after expenses. Those clearing $40,000 to $45,000 should consider transitioning, Cibella said, which means petitioning the IRS to allow the business to change designations. For someone who has been a sole proprietor for a few years, there is a window early in the year, prior to March 15, to file.

It will save the business owner from paying self-employment taxes as he or she is now paid as an employee of the business.

Cibella said buying large equipment is best done in the first three quarters of the year if the owner intends to take depreciation deductions.

Cibella also suggested using a logbook or one of the newer apps for tracking mileage, which will hold up during an audit.

Cibella said that with the IRS sometimes running more than two years behind on audits, business owners should make certain they scan or take pictures of their receipts. With exposure to air, many receipts fade.

She also suggested using one credit card for the business, which makes it easier to keep expenses in one place.

Cibella said though the IRS can be difficult to deal with, the state of Ohio can be worse, charging penalties and interest for those not keeping up with sales tax and other filings.

“You’ve got to really keep and be diligent on keeping up on your end of the deal,” Cibella said of business filings with the state.

Cibella noted the importance of filing taxes as a business grows or builds, even if it is not yet making a profit.

She reminded business owners, many who already have one or more limited liability company in their name, that nearly all LLCs must file beneficial ownership information, a new requirement some in the room had not heard about yet. Cibella said the business owner’s address on their driver’s license must match the LLC’s address, even if the business owner is renting space elsewhere for the business to operate.

Though Intuit QuickBooks is one of the most frequently used accounting programs – for ease of use and low expense – Cibella said she recommends Wave to new business owners. It’s cloud-based for both computer and phone use, allows invoicing and integrates with professional accounting systems for tax preparation.

Thursday’s Business Accelerator program was the second in the free series. The first, held in late July, provided information about using e-commerce to start or grow a business.

Tanisha Wheeler, regional director of the Minority Business Assistance Center at the Youngstown Business Incubator, also gave a brief introduction to the services the MBAC offers and introduced some of the MBAC team members who were in attendance.

Other upcoming topics for the 717 Business Accelerator program include:

• Finding & Hiring Great Employees: Noon to 1 p.m. Aug. 27 (webinar); presented by Michelle Herron, manager of recruitment and training at 717 Credit Union.

• Contractor’s Workshop: 5:30 to 7:30 p.m. Sept. 17 at Brite Energy Innovators, 125 W. Market St., Warren.

• Business Law Basics: 11:30 a.m. to 1 p.m. Sept. 19 at The Magic Tree, 7463 South Ave., Boardman; presented by attorney Joe Datchuk, 717 Credit Union.

• Business Marketing Bootcamp: 11:30 a.m. to 1 p.m. Oct. 9 at The Chophouse, 9519 E. Market St., Warren; presented by Wheeler. 

Pictured at top: Barb Cibella of Black Cat Tax speaks at The Chophouse on Thursday as part of the 717 Credit Union Business Accelerator program.

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