RESOURCES

A Valuation Metric Just for Small Businesses: Valuing a small business, like a mom-and-pop restaurant, requires a different approach than what you’d use for a large corporation. Traditional valuation methods, such as discounted cash flow analysis or price-to-earnings multiples from publicly traded companies, are often too complex and irrelevant for small businesses. Instead, valuation advisors turn to a more suitable metric: Seller’s Discretionary Cash Flow (SDCF).

At Patten and Company LLC, we understand the unique challenges and opportunities businesses face to secure funding. If you’re building a small business and haven’t yet needed to borrow funds to expand or smooth out cash flow irregularities, you’re doing something right. And if you have borrowed and everything went smoothly, kudos again. For those who foresee the need for credit in the future, anticipating this need well in advance can significantly enhance your ability to secure a loan with competitive terms.

In the latest installment of the “Dirty Dozen” tax scams for 2024, the Internal Revenue Service (IRS) is sounding the alarm on fake charities posing as legitimate organizations to deceive well-meaning taxpayers. Especially during times of natural disasters or tragic events, individuals are inclined to offer financial support to those affected. However, scammers exploit this goodwill by creating fake charities to solicit donations and collect sensitive personal and financial information for fraudulent purposes.

Are you planning a business trip this summer to a destination known for its cultural or recreational attractions? Combining business with pleasure can still yield plenty of tax benefits if you follow a strict tax itinerary. Whether you’re traveling domestically or internationally, understanding the tax rules is crucial.

C corporation owners often need to withdraw cash from the business, whether to cover personal expenses or protect excess cash from creditors. While paying dividends is one way to take money out, it has some significant downsides. Fortunately, there are other tax-efficient methods available. Here’s what you need to know:

The IRS has recently unveiled a new initiative focusing on auditing aircraft usage by corporations, large partnerships, and high-net-worth individuals as part of their heightened enforcement efforts. This initiative scrutinizes allocations between business and personal use, potentially impacting deductions, depreciation, and taxation regulations. This guide is designed to equip business owners with the knowledge and preparation needed to effectively navigate the complexities of the IRS’s aircraft usage audit initiative.

Tax credits are far more valuable than tax deductions. Unlike a deduction, which reduces a business’s taxable income, a credit reduces the business’s tax liability dollar for dollar. Tax credits aren’t unlimited, however. For businesses, the aggregate value of tax credits may be limited by the general business credit (GBC), found in Internal Revenue Code Section 38. Taxpayers should familiarize themselves with the GBC so they can understand the value of their business credits and identify tax-saving opportunities.

If your business is expanding its geographical footprint beyond state or U.S. borders, it’s important to understand the transfer pricing rules. In a nutshell, transfer pricing refers to cross-border pricing arrangements for transactions between related companies (including parent and subsidiary or brother-sister companies with a common parent) in different jurisdictions.

Typically, these transactions involve charges for goods, services or intellectual property (such as licensing arrangements) transferred from one company to its affiliate. Because these arrangements can be highly susceptible to manipulation to minimize a business’s tax liability, taxation authorities around the world are becoming stricter in regulating them.

Employees, self-employed individuals and employers all pay the Social Security tax, and the bite the Social Security tax takes gets bigger every year. Here’s what you should know — and why you should be concerned.