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September 15th There is no income tax withholding on self-employment income, but that doesn't mean you're not required to pay taxes during the year. Self-employed individuals generally must make quarterly estimated tax payments due April 15, June 15, September 15, and January 15 of the following year.

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Gunnip & Company is proud to again be recognized as a Top Workplace by the Wilmington News Journal.Our staff voted us Number 7 in the Small Workplaces category (124 or fewer employees), and has consistently voted us in the Top 10 since our first participation in the survey in 2008. Gunnip is the highest ranking CPA firm on the list, with our employees voting our workplace the one where they feel most appreciated.  View the full article here.The survey was conducted in the spring by Workplace Dynamics and sampled more than 11,000 workers at Delaware companies.  Find out more information about the survey and the winning companies by visiting the website for the publication here.

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Break Even Analysis GraphThe figures on an income statement report the sales, expenses, and net profit or loss of a business. But these figures can be helpful in another way. They can be used to compute the breakeven point for the business. Knowing your breakeven point can help you run your operations more efficiently and profitably.Simply put, the breakeven point is the sales volume at which the business generates just enough revenue to cover its expenses. While a business that's breaking even doesn't have a profit, it's not losing money either.* How to determine breakeven. To calculate your breakeven point, you'll need to know three things: sales, variable costs, and your total fixed costs. Variable costs are those that fluctuate with the number of items sold, such as the cost of materials and sales commissions. Within limits, fixed costs do not fluctuate with sales volume (i.e., rent, insurance, and property taxes).* Calculating the breakeven point involves two steps. First, it's necessary to figure out the amount left over from each sales dollar after the variable expenses have been subtracted. This is known as the contribution margin. Then the contribution margin is divided into your fixed expenses to get the breakeven point.* How to use breakeven. How can you benefit from knowing your breakeven point? First, you'll be able to manage your business better once you know the sales volume needed to turn a profit. Second, by monitoring your sales, you can accurately predict whether you're on course to reach your profit goals. Third, you'll be able to take corrective action more quickly.There are other benefits too. Using breakeven analysis, you can calculate the sales volume you'll need to cover the costs of a proposed new product or service. Plus, if you have a desired profit, you can add it to your fixed expenses and calculate the precise sales volume you need to achieve that targeted profit.Call us at (302) 225-5000 or email us if you would like assistance in using breakeven analysis to improve your business.

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The end of the year is the traditional time for securities investors to "harvest" capital losses for federal income tax purposes. But there's an added wrinkle in 2012: Due to pending tax law changes, you might try to reap more capital gains than losses. Thus, the usual strategy of harvesting losses could be turned upside down.Here's a recap of the basic rules. The capital gains and capital losses you realize during the year are "netted" under complex rules when you file your tax return. A gain or loss is treated as being long-term if you've held the securities for more than one year. For 2012, net long-term capital gain is taxed at a maximum tax rate of 15% (0% for investors in the regular 10% and 15% tax brackets).If you're showing a net capital gain on paper as year-end approaches, any capital losses you realize will reduce the amount of the taxable gain or offset it completely. An excess loss can then offset up to $3,000 of highly taxed ordinary income before any remainder is carried over to next year. However, the usual strategy of harvesting losses is complicated this year by three key tax law changes scheduled for 2013.1. The maximum tax rate for net long-term capital gain will increase to 20% (10% for investors in the lower tax brackets).2. Ordinary tax rates are going up. For example, the top rates of 33% and 35% will increase to 36% and 39.6%, respectively.3. A special 3.8% Medicare surtax will apply to the lesser of net investment income for the year or the amount by which modified adjusted gross income (MAGI) exceeds $250,000 ($200,000 for single filers).Barring any late legislation by Congress, investors may be inclined to harvest capital gains instead of losses at year-end. As a result, you can benefit from the favorable tax rates in effect for 2012. If you've already realized short-term gains in 2012, you might want to realize short-term losses to offset those gains. But don't use short-term losses to offset long-term gains, if you can help it, because long-term gains are taxed at a maximum rate of only 15% in 2012.Other considerations may come into play. The best approach is to do what's best for your situation. Contact us for assistance in reviewing your options.

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IPO letters on gold coin stacksDo you know anybody who's tripled his money investing in the IPO (initial public offering) of a hotshot new company? It can happen. And many investors thought the recent Facebook IPO was a way to quick riches.Yet the truth is, most investors don't make money playing IPOs. It's just that no one brags when they lose money. Nonetheless, investors of all kinds are lined up for a shot at the next IPO. So it pays to know the facts before diving in.First bit of advice: Don't bet the farm. The problem is that generally IPOs are issued by companies with no track record, inexperienced management, and few assets. And, unfortunately, the underwriters for these IPOs are motivated to complete the transaction, collect their fees, and move on. Their compensation is linked not to the quality of the firms they take public, but rather to the number of deals they sell to the public.To protect yourself, you must do your homework, as you would for any investment. A company planning an IPO writes a prospectus that describes the business and details management's plans for what they intend to do with the money, how fast they intend the company to grow, and what profits they expect. The prospectus also discusses the competition and markets, and, most importantly, describes the risks of investing in the IPO.Do the necessary research, and be sure you understand the risks before you make an investment in an IPO.

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teen with credit card Should you send your child off to college with a credit card? Opinions are divided, both among parents and financial advisors. It's a situation that can work out really well or really badly, depending on the student and the parents.At its best, everyone benefits from giving a student a card. The student uses the card for budgeted expenses, pays off the balance each month, and starts building a good credit history. The parents sleep better knowing the student has a credit source in case of emergencies.At its worst, the student is unused to managing money or living within a budget. The student fails to make payments on time, incurs high interest charges, and ruins his or her credit history. The parents have to step in to bail the student out. Among the risks:* Lack of experience in managing money can lead a student to overspend or to neglect making payments on time.* Peer pressure may encourage a student to spend on entertainment or clothes, just to keep up with friends.* Failure to agree on a budget beforehand can result in shock when you see your student's monthly statement.* Parents co-signing for the card can put their credit scores at risk, too.* Loss or theft of the card can lead to problems that take time to resolve.To minimize risks:* Set ground rules for use of the card. Agree on what it may and may not be used for. Put the agreement in writing and have the student sign off.* Establish a budget. Talk regularly about how your student is managing his or her expenses within the budget.* Consider alternatives to a credit card, at least for the freshman year. Consider using a prepaid credit card, or set up a checking account with a debit card. That allows the student to gain experience managing expenses within a budget.Finally, remember you may have no say in the matter. Students are bombarded with credit card offers as soon as they enroll. Card companies are usually happy to issue a card to any student over age 18 in his or her own name.

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Subscribe to Blog: August 2012