As head of the team of professionals at ADVISORY GROUP ASSOCIATES’ Tax & Advisory firms, Frank L. Zerjav Sr., CPA, guides a respected St. Louis County, Missouri, with clients nationwide that for over 40 years of trust offers a broad spectrum of professional accounting, compliance, tax & advisory services to Individuals, Investors, professionals, business and real estate owners. In their complimentary monthly electronic newsletter to subscribers the TAX TIPS NEWSLINE which provides comprehensive and timely insight on a wide range of taxation issues including federal and state incentives and current issues, Frank Zerjav, CPA, and the team recently highlighted strategies for Individuals or businesses that show a loss.
Business or Investment losses, in which income is exceeded by deductions, present a number of tax benefits that can also improve cash flow dynamics. This has to do with the way in which a Net Operating Loss (NOL) within a tax year results in a deduction that is carried back two years and carried forward 20 years. The carry-back element typically results in an instant refund of federal and state income taxes paid during the two years prior.
In certain cases where the NOL carry-back would not generate a significant tax refund, or the money is not immediately needed, it may be advantageous to waive the two-year carry-back and carry the NOL forward. Given the complexity of the subject, it makes sense to seek out the guidance of a knowledgeable tax advisor. The ADVISORY GROUP ASSOCIATES’ Tax & Advisory firms offer an initial complimentary consultation to help identify proven tax-smart strategies, options and solutions that deliver real value for the professional services needed based upon the particular situation of any taxpayer.
For more information, answers to questions or concerns, do not hesitate to contact a Professional Tax Advisor by calling toll free (888) 809-9595 or visit their recently launched website: www.advisorygroupassociates.com
A graduate of St Louis University, Frank L. Zerjav, CPA, holds Masters of Business Administration (MBA) with a concentration in finance and a bachelor’s degree in commerce. Now leading the ADVISORY GROUP ASSOCIATES’ Tax and Advisory firms. Frank Zerjav Sr., CPA, with his team of Professional Tax Advisors and Tax Resolution Experts helps clients with business and tax planning, tax preparation, tax problem resolution, retirement and estate planning, and the creation of business succession plans.
Business owners should start their succession plans early to avoid rushing as the deadline for their exits looms. Succession plans should be in place approximately a decade prior to the leaving date, as succession often involves working out complex emotional decisions, as well as those related to the business. For example, leaders may need to make difficult choices about whether or not to hand the reins of their companies to family members and may need to consider how to approach the situation if they decide the business should go in a different direction.
Keeping clients informed about plans also helps to give structure to the company at a time when many may be wary about how business operations may change under new leadership. Be transparent about plans when communicating with clients and provide them with information about who is set to take over the company and what that person brings to the table once you depart. Also, apprise clients of any potential changes in business processes that may affect them.
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Profit, Cash Flow
The recipient of an MBA from St. Louis University, Frank L. Zerjav Sr., CPA, is the founder and CEO of Advisory Group Associates’ Tax & Advisory firms. From his CPA office in the Westport area of St. Louis County, Mo. Frank Zerjav advises clients on the management of income and cash flow.
The two terms are common in financial discussions, but they do not mean the same thing, and substituting one term for the other can cause a great deal of confusion. The reason is the accrual system of accounting.
The accrual system requires income and expenses to be accounted for when they are incurred, and that is not necessarily when the cash was actually received or paid. For example, on an income statement, credit sales are used to calculate profit, even when no cash has been received for the sales. For an item such as prepaid rent, when a business pays rent in advance, it does not include the prepaid rent in the income statement. In this case, the expense has not yet been incurred, even though the cash has left the business.
Because of these types of differences, a business can post huge profits while struggling with the necessary cash flow to pay for daily operation. Cash flow management focuses purely on actual cash moving in and out of the business and is necessary to avoid problems. Businesses must always distinguish between reported profits and actual cash in hand.
Frank L. Zerjav, Sr., CPA, is a respected presence in the business community of St. Louis County, Missouri, where he guides Advisory Group Associates’ Tax & Advisory firms. One of the areas in which Frank L. Zerjav, Sr., CPA, and his team have extensive experience is federal tax breaks and incentives designed to enable education payments.
Prominent among these tax incentives is the American Opportunity Tax Credit, which offers a $2,500 credit each year for a maximum of four years of postsecondary education. In addition, the Lifetime Learning Credit covers 20 percent of as much as $10,000 in educational fees and costs throughout a year. An above-the-line higher education deduction is also available for qualified educational expenses, including tuition. Taken together, these tax benefits can be substantial, depending on the student’s adjusted gross income.
Taxpayers should also be aware of Coverdell education savings accounts, which offer a savings format similar to IRAs and allow savings for all types of educational expenses, from elementary school through college. These tax-advantaged distributions can be allocated for everything from tuition to room and board.