Entrepreneurial / Startup
The last things on the mind of an entrepreneur starting a new business are entity structure, governance, accounting solutions, and tax reporting. I’ll simply refer to this as “EGAT”.
In working with many start-ups, I have seen all of these things ignored for more critical elements of the business-like operations and marketing. And rightfully so, without these more critical elements, there wouldn’t be a business, to begin with! And it’s not just a lack of time to devote to EGAT; it’s also the fact that there are also limited resources and funding to devote really any resources to it.
Initially, EGAT can be ignored for maybe the first year or two of operations. But beyond that, it can lead to many problems that will eventually impact other areas of the business including its operations. Take for instance one start-up client I have that was going on year 4 of its operations. It had failed to pay state franchise taxes since its inception in a very aggressive state that will simply work with the Secretary of State to suspend the business. No big deal, right? I mean who cares if the Secretary of State shows the business as suspended? A suspended business can have its bank accounts frozen where it cannot access funds or process receipts. This created a giant headache for my client and we had to work with the state taxing agency and Secretary of State to pay all back taxes, file returns, and request to change the suspended status to active.
If the company simply complied with the state agency from the beginning and paid its taxes, this additional exercise wouldn’t have to have happened. dubmac understands these needs and the clients’ restraints on resources and funds to devote to these efforts. This is where dubmac provides a start-up with an overall approach to focusing on their EGAT needs with one reasonable annual fixed fee arrangement that’s reasonable, adds value, and invests in the start-up to help it achieve its goals. Think of this arrangement as an initial outsourced CFO and/or finance department for the start-up. Another member of your team for a fraction of the cost of hiring folks or hiring other service providers for each element a-la-carte.
Talk to dubmac to describe the background of your business and we will provide you with an entrepreneurial/startup plan.
Entity
Structure Optimization
Before you set up that Limited Liability Company (LLC) online or simply started doing business with only a DBA (that you never registered); did you do so with any thought of the tax consequences or liability protection?
I’ve come to find that in many cases, entity choice is often done haphazardly or with little guidance. When this happens, there can be unintended tax consequences that the owner didn’t realize would occur. Maybe the most common example is the self-employment tax on net income. With the proper entity choice and planning, the self-employment tax assessed at the individual income tax level can be avoided. And beyond entity choice is multi-entity structures.
These come into play when there are more complex elements of a business. With proper planning, set-up, and execution, a proper structure can also be used to limit risk or produce a more efficient tax outcome. dubmac can easily point these out when understanding your business or in discussing these options with us.
AirB&B
Short-term Rental Business
dubmac has assisted these businesses from entity designation/structure planning, setting up their accounting and bookkeeping and performing tax consulting around avoidance of passive activity losses, maximizing deductibility of capital improvements, solar or energy-efficient solutions, and budgeting/forecasting.
Real Estate Investments
As a real estate investor himself, dubmac’s owner has direct experience in managing long-term rental properties for over a decade. His tax experience with such investments almost spans three decades. dubmac also has experience in consulting clients before they make their investment in rental real estate to help them determine their annual income or return on investment. Exit strategies consisting of 1031 exchanges or property sale planning have also been performed.
Establishing a Nevada Business Nevada Residency
dubmac’s owner who was a life-long California native relocated his family and began this business in Nevada in 2019. Though he was already familiar with the strict change in residency standards California has, he researched many of the issues others have had before him to limit his risk of being challenged by this aggressive state. Many believe the notion “I’ll just get a driver’s license and set up my LLC in Nevada, and I’ll be fine”. Well, it’s much more complicated than that and dubmac can help you fully understand what needs to take place for a proper transition.
dubmac anticipates that this will be a very popular topic as well post-Covid-19; employees who worked in offices now have the ability to work from “home”. “Home” may not be where the company is based anymore; it might be another state that doesn’t have income taxes, like Nevada. We’ve already seen this happen on the east coast, where former New York residents are moving to states like Florida. We imagine that California and New York will become very aggressive in this area to either change their laws (i.e. taxing employees not where they perform work but in the state their employer is) or by challenging residence changes. So it will be very important to meet the required standards for changes in residency, to have that appropriately documented and have that ready to present to questioning tax authorities. This is where dubmac can provide you with assistance.
Professional Gambling Business
Before 2018, it was easier for a professional gambler to incur business losses where net operating losses (NOL’s) could be incurred and carried forward to offset future income. The Tax and Jobs Act of 2017 (TCJA) suddenly limited a professional gambler’s ability to generate NOL’s essentially by only allowing wagering losses plus business expenses for any year to be limited to the gambling income. Therefore it is imperative for professional gamblers to maximize deductions and the ability to support such deductions annually. Without proper planning and instilling accounting measures can mean that a tax liability then creeps up when returns are filed in the subsequent year. Even worse, it could mean a looming income tax audit by the IRS since this is a heavily contested area.
dubmac is familiar with professional gaming and can provide the professional gambler with appropriate accounting and substantiation process and appropriate tax planning throughout the year to appropriately manage taxable income.
Business Financial Planning
Once a business moves past the start-up phase and making steady revenues, it will want to begin budgeting and forecasting to plan for revenue growth and expense management. In addition, for closely-held businesses, financial planning doesn’t have to stop at the entity level; planning at the individual level is also available, including individual financial software solutions like Quicken or Mint.
Sports & Entertainment Services
Managing the day-to-day financial matters for athletes or entertainers is a new offering of dubmac. More or less, since dubmac manages the financial matters of many businesses and individuals already, this service offering is just an extension of that dubmac can manage:
Management of Revenue
- Coordinating deposits into banking and investment accounts.
- Cash flow management and transfers.
Vendor management
- Payment of invoices and approvals, if necessary;
- Cash flow management, negotiate pricing, or seek out competitive bids.
- Employee payroll.
- Loan-out Companies.
Regular reporting
- Periodic meetings and financial discussions
- Reporting packages
- Coordination with Financial Advisors
