Monthly Archives: August 2015

Home Office Tax Rules

There was a time that determining the correct deductions for your home office was complicated and could potentially lead directly to an audit. Luckily, those days are in the past. The IRS no longer considers a home office a red flag, and they have found ways to simplify the process of taking this deduction.

Before 2013, business owners that worked out of their home were required to determine the actual expenses of their home office. This could include items such as utilities, insurance and mortgage interest. The amount that could be deducted as a business expense was determined by the percentage, of the total square footage of your home, that was used for office space, but in 2013 that all changed.

For taxable years of 2013 and beyond, the IRS has introduced a simplified option. This allows business owners to multiply a prescribed rate by the square footage of the home that is being used as office space to determine the allowable deduction.

This change permits business owners to reduce the need for recordkeeping as actual expenses no longer need to be tracked.

There are two requirements that a business owner needs to meet to be eligible for the home office tax deduction. First, the area of your home that is used for your office must be used exclusively for conducting business. That means a kitchen table is not a home office, but if you have a room in your home that you use for office space exclusively, that would qualify.

Secondly, your home office must be your principal place of business. That doesn’t mean you can’t have an office elsewhere, but you need to be using your home office for meetings with clients, or some other activity that would suggest it is not simply an area that you work in from time-to-time.

If you have a home office, don’t hesitate to take the deduction you are entitled to. With the simplified option to determine your deduction, this is one time the IRS has made it too easy to pass up.

For more information about deducting a home office, please contact us!

What is Cost Segregation?

Cost segregation is the process of identifying your assets and correctly classifying those assets for the purpose of paying federal taxes. In this process, personal assets that are mixed with real property assets are separated out, so all assets can be depreciated properly and potentially increase your bottom line.

Cost Segregation Studies

A cost segregation study is performed to determine which assets can be claimed as personal property instead of real property. These items usually include indirect construction costs, non-structural elements of buildings and exterior land improvements.

By separating these assets, they can be depreciated over a shorter term, which will reduce your current income tax liabilities and increase cash flow. This decreased depreciation period is typically between five and fifteen years instead of the twenty-seven and a half to thirty-nine years for non-residential real property.

For example, items such as carpeting, wallpaper, parts of the electrical system, and even sidewalks and landscaping all qualify for the shorter depreciation periods.

Eligibility and Advantages of Cost Segregation

To be eligible for cost segregation, a building must have been purchased, remodeled or constructed since 1987. This method of tax reduction is best used on new construction, but it can be used retroactively on older buildings as well.

Beyond the benefits of reduced tax liability and increased cash flow, a cost segregation study will provide your business with an audit trail of all costs and asset classifications. This will help put to rest any unwanted inquiry from the IRS in its early stages. Finally, during this process, you may identify possible ways to reduce your real estate tax liabilities as well.

While there are some costs associated with performing a cost segregation study, as long as the assets in question are valued over $200K, it’s worth the time and expense to complete the study and categorize these assets correctly.

For more information on the process, please contact us.

Michael & Company Accounting Associate Diana Signoriello Passes Third Part of CPA Exam

Michael & Company, a CPA firm headquartered in Fresno, Calif., is excited to announce that Diana Signoriello has successfully completed the third part of the CPA examination. Ms. Signoriello is currently an accounting associate at the firm.

Ms. Signoriello embarked on the journey to become a Certified Public Accountant (CPA) approximately one year ago. One condition of the program is that candidates are required to pass all four sections of the examination in an 18-month window. Now that she has completed the third part, Ms. Signoriello has only one more section to pass before becoming eligible to receive her CPA designation.

Upon receiving her CPA license, Ms. Signoriello will be exposed to numerous opportunities for growth within Michael & Company. The fourth section of the CPA exam focuses on tax regulation, and once she completes the necessary workload, her understanding of her accounting work will continue to expand, and her efficiency will immensely increase.

“In my eyes, achievement means growth. If there is anything that I strive for in life, it’s always learning and growing in all aspects of my life,” said Ms. Signoriello in regard to receiving her CPA certification. “I will be very proud of myself once the tests are over, and I plan on continuing to grow from there.”

Ms. Signoriello is scheduled to take the fourth part of the exam in October 2015 with the intent of completing the program in its entirety by summer 2016.

Ms. Signoriello can be reached at For more information about Michael & Company and the financial services offered, call 559-436-8907 or visit the firm’s website at

Steps to Reduce the Risk of Getting Hacked at Your Dental Practice

BQgSvvg277m2ItyezgDjTyVj1WcFV1oeaYI_z0MvFa8Hacking is on the rise and dental practices are not immune from the risks hackers pose to businesses today. In fact, due to the rapidly evolving pace of technology and the single-minded resourcefulness of today’s hackers, businesses, especially in those in the medical industry, face greater risks than ever before.

Bigger businesses have become increasingly harder nuts for hackers to crack, despite a few high-profile hacking instances, making the little fish more appealing targets for many hackers. That’s why your small dental practice must begin creating policies that make your business a less attractive target for hackers of convenience.

Educate Yourself and Your Employees on Cyber Security

It might sound like a buzz word of the future, but the future is now when it comes to securing the information that matters most to your business. Educate yourself and your employees on what needs to be done to secure passwords, improve network security, safeguard person, medical information and reduce the odds of hackers finding backdoors into your network.

Create Policies that Promote Cyber Safety

It might be tempting to allow employees to bring in their own devices to connect to the business network, but it exposes your network, your employees, your customers and your practice to untold risks. The best practice is to create policies that strongly discourage these actions – complete with consequences for offending employees.

Encrypt Your Data

All information has value. Information that’s stored on your networks and not actively being used by employees needs to be encrypted. Most operating systems offer encrypting as a feature. It’s a simple matter to activate and provides a huge benefit when no one is actively logged into the computer.

Unfortunately, your systems are still vulnerable while the computer is operational, which is why you must also set computers to log out after 10 or 15 minutes of inactivity.

Taking more proactive and forward-thinking measures to reduce your risks of getting hacked at your dental practice is the best way to reduce your risks in today’s business environment that is increasingly reliant on technology.