Small Business - Cooke, Lavender, Massey & Co

As a leading provider of accounting and tax preparation services to Blacksburg, Christiansburg, Radford, and the surrounding New River Valley, Cooke, Lavender, Massey & Company, P.C. offers years of experience working with many small business owners. We serve all types of small businesses, including retail stores, consultants, home-based businesses, and other professionals.

We understand that having an excellent CPA is essential to the long-term success of any small business. Whether you have a sole proprietorship, a partnership, an LLC, or a corporation, our team of accountants can help you navigate the complicated tax preparation, bookkeeping, and accounting landscape that small businesses face. We provide all the services a small business might need, including:

Accounting
Bookkeeping
Payroll Services
Income Tax Preparation
Audits, Reviews, and Compilations

Unique Accounting and Tax Challenges Faced by Small Businesses

No matter what kind of small business you own and what product or service you provide, each small business faces accounting and tax preparation challenges. Our accountants are ready to help our small business clients alleviate these complications.

Employee Benefits

Our team can help our clients who are small business owners choose benefit plans that suite their business and their personal circumstances. Retirement plans are a necessity for many small business owners and can be essential for recruiting talented staff and saving for personal retirement. We help our clients choose from the numerous retirement plans available to small businesses and to identify which employees are eligible for these benefits.

We also help our clients determine whether they must offer medical benefits to their employees and which of their employees must have access to these benefits.

Accounting for these benefits can vary widely depending on the type and size of a small business. If our clients elect to offer retirement and medical benefits, our expert accountants can provide guidance for how to maintain accurate records for payroll and income tax purposes.

Proper accounting systems

Having a proper accounting system helps business owners understand the financial health of their business. Small business owners often find the maintenance of a proper accounting system to be overwhelming and cumbersome. We provide our clients with accounting services, so they have an accurate and current record of their company’s financial stability and can focus their time and effort on the parts of their business that they enjoy.

Broadly, there are two accounting methods that small businesses can utilize. An accounting method determines the timing of reporting of income and expenses. The accrual method of accounting measures earnings more accurately than the cash method since it records income and expenses in the period to which they apply, instead of simply reflecting cash flow. This method of accounting is more complicated than the cash basis of accounting but it is required in certain circumstances. The cash basis of accounting is used by most small businesses and generally reports income when it is constructively received and expenses when they are paid.

Setting up and processing payroll

Payroll is a significant part of most small businesses. We offer small business payroll services that include processing payroll checks and accurately reporting and paying payroll taxes. Our team provides tailored levels of assistance to each of our payroll clients in order to meet each of our clients’ specific needs.

Legal entity type selection

As you establish a new small business, entity type selection should be a priority. There are several general categories of legal entities: sole proprietorships, partnerships, corporations, and LLCs. Choice of legal entity impacts a variety of aspects of every business including taxation, record keeping, legal liability, etc.

Workers’ comp for small businesses

Depending on your state’s requirements, most businesses with numerous employees are required to provide workers’ compensation coverage, an insurance policy that protects the company, and provides for employees who become injured or sick from workplace exposure.

Workers’ compensation laws are legislated and regulated by each state. In Virginia, employers who regularly employ two or more employees are required to carry coverage. Coverage is optional for businesses that regularly maintain fewer than two employees.

Frequently Asked Questions

How do I deduct travel expenses, meals, and entertainment?

For an expense to be deductible as a business expense, it must be ordinary and necessary. An “ordinary expense” is something common in your trade or business. A “necessary expense” is a cost that is helpful and appropriate in your specific trade or business. Small businesses should always attempt to categorize expenses in accounting systems accurately. In many cases, business expenses are fully deductible, meaning you can subtract them from your taxable income dollar for dollar. Other business expenses are not deductible dollar for dollar, but they do provide businesses with a tax break. Meals expenses, for example, are typically deductible up to 50% of the expense (with some exceptions).

How do I deduct self-employed health insurance?

Many small business owners can deduct premiums for medical, dental, and some long-term care insurance for themselves, their spouse, and any dependents. This health insurance write-off is on Form 1040, which benefits most business owners, whether you itemize deductions or not. This deduction lowers your adjusted gross income.

Shareholder health insurance solutions

If you own an S-Corp, you likely own more than 2% of your company. If your company provides and pays for your health insurance, these benefits have specific reporting requirements for each applicable shareholder’s W-2. For these shareholders, premiums are included as federal and state taxable wages, but they are not subject to Social Security and Medicare.

Common Mistakes

Not accurately reporting self-employed health insurance

Self-employed individuals may be able to deduct medical insurance premiums. Even if you do not itemize your deductions, most business owners can deduct health insurance costs on Form 1040, which lowers adjusted gross income.

Business owners can only report health insurance premiums when they are not eligible to participate in an employer-subsidized health plan.

We help our clients accurately report self-employed health insurance to get the most advantageous benefit from these deductions.

Qualified business income (QBI) expense

Each industry has unique qualified business income expenses. Some services do not qualify for the QBI deduction.

Specialized service, trade, or business (SSTB) don’t qualify for the 20% business income deduction when certain income levels are exceeded. Businesses like physicians, accountants, and lawyers offer specialized services that do not qualify for QBI deductions.

For other businesses that are not specialized, the 20% deduction can be a significant advantage! We help our small business clients take advantage of the QBI deductions wherever possible.

Inadequate accounting records and financial statements

One of the most significant issues our accountants find with most of our new clients is poor accounting records and financial statements. This is especially challenging for small businesses that may have smaller budgets and less resources for internal or external bookkeeping and accounting services.

It is essential not to commingle personal and business accounts. Small business owners should make it an early priority to keep separate accounts for their business. It can be tempting to use the same credit card and bank account for all business and personal expenses, especially if the business is a sole proprietorship. However, commingling these funds is very likely to result in errors when claiming deductions and can quickly become a problem if the taxpayer or their business is audited.

We can help you find an affordable, effective bookkeeping solution that meets your needs and fits your budget so that your business can avoid the costs and potential stress and financial burden that can result from poor bookkeeping.