Common Reasons for Small Business Audits

For more than a decade, Todd Mardis has led Capital Preservation Services, a financial consulting firm tailored to the tax planning needs of high-earning professionals. Todd Mardis possesses more than 20 years of experience, developing tax liability and business development plans for highly-compensated medical professionals and successful business owners.

Capital Preservation Services offers a defense strategy in case business owners are selected for an IRS audit. While the overall chances of being audited are low, business owners and sole proprietorships have a higher likelihood of being audited than those in traditional employment. This is usually due to the following accounting errors or practices that can trigger a deeper investigation:

1. Overuse of cash - Cash is more difficult to track and account for, so businesses that compete mainly cash transactions are more likely to be audited. The same applies to businesses that have processed a cash transaction exceeding $10,000.

2. Unusually high salaries - If the owner or employees are receiving income that well-exceeds industry standards, it could draw scrutiny from the IRS. Rapid increases in salary can also attract attention from authorities.

3. Poor calculation methods - Some small business owners choose to work with rounded or estimated numbers. This can cause significant accounting errors and trigger an audit.

Most Americans Cannot Cover an Emergency Expense

Financial industry professional Todd Mardis has provided wealth planning services for high-earning clients for more than 15 years. Todd Mardis is also a co-founder of Wealth Without Wall Street, an educational network dedicated to helping members increase their financial literacy and disrupt the paycheck-to-paycheck cycle, which is a growing issue amongst Americans.

Poor savings habits compounded by an uncertain economic environment have resulted in millions of Americans being unable to cover an unexpected expense or manage a short-term financial crisis. According to a May 2020 poll conducted by Marketplace, 40 percent of respondents didn’t have enough savings to pay for a $250 emergency.

An earlier study by Bankrate found that nearly 30 percent of Americans had no savings at all. This leaves households especially vulnerable if income is lost due to sickness, unemployment, or reduced hours. Personal finance experts advise setting a budget and building up an emergency fund to avoid financial setbacks due to unanticipated circumstances.

Two Obstacles Keeping Business Owners from Saving Thousands in Taxes

Todd Mardis founded Capital Preservation Services in 2004 and has since grown the tax consulting firm from just one location in Mississippi to include others in Indiana, Alabama, and Wisconsin. Recently, Todd Mardis was featured on the Wealth Without Wall Street podcast where he talked about some reasons business owners fail to use tax planning strategies.

Most business owners know someone who makes substantially more money than they do but pays much less in taxes. That’s because they are not applying legal tax-saving strategies to reduce their tax burdens.

One thing that keeps some business owners from applying these strategies is the fear of audits. They think that planning their taxes to reduce their liability will open them up to an IRS audit. Many business owners know they are not good at keeping precise documentation, so they think they will fall into trouble with the tax authorities. However, good tax planning actually incorporates audit defense. In this way, it’s possible to save on taxes and be even better prepared in the case of an audit.

For other business owners, what holds them back is their over reliance on CPAs. While CPAs act in the best interests of their clients, when it comes to taxes, they often take a defensive approach rather than a proactive one. CPAs tend to work with the numbers they are given, entering them in tax returns while assuming business owners have done everything they can to reduce their taxes. However, many business owners are not taking advantage of tax incentives they are eligible for, so when they rely on CPAs who take a defensive approach to accounting, they miss out on thousands in tax savings.

This, however, does not mean that business owners should cut the relationships with their CPAs. They can work with CPAs and tax strategists together. Both can support each other for the client’s ultimate benefit.

All You Need to Know About Estate Planning

A respected presence in the financial services sector, Todd Mardis is the founder and president of Capital Preservation Services in Flowood, Mississippi. For over two decades, Todd Mardis has served a wide array of business enterprises, helping them with marketing as well as adopting effective tax dtrategies. He also has experience with estate planning.

The main reason why individuals opt for estate planning is to protect the assets to be left to their loved ones. This allows the transfer of assets to heirs within the provisions of the law but with an ultimate aim to reduce tax burdens for them. To benefit from reduced estate and inheritance taxes, you should first know whether your estate will be taxed. Contrary to what some people believe, estate taxes aren’t a problem only for the rich, but also affect middle-income families who can find themselves faced with huge bills.

Some of the assets that meet the threshold of taxation include bank accounts, businesses, life insurance and property. However, significant estate taxes are associated with real estate investments and businesses, especially if you own properties in states such as California, known for high real estate prices.

If you’re a business owner, the value of your enterprise is also included in your estate value. This means you need to be careful when valuing your business to avoid your heirs having to pay a big tax bill in the event the value of a business turns out higher than expected. Families that inherit farms may also find themselves in this situation when land value is found to be much higher than its initial valuation.

American Optometric Association Advocates for Optometrists

Todd Mardis works with clients in Flowood, Mississippi, providing tax planning and marketing services to business owners. Todd Mardis' company, Capital Preservation Services, LLC, helps optometrists and other physicians with their own practices navigate tax laws. Capital Preservation Services have been featured in articles published by the American Optometric Association, an organization that advocates for legislation that benefits optometrists.

Founded in 1898, the American Optometric Association advocates on behalf of over 44,000 optometrists across the country. The organization meets with state and federal legislators to influence the enactment of laws that would benefit their members.

Most recently, the American Optometric Association sought to earn support for optometrists and their practices as part of the ongoing pandemic relief. The group has also negotiated with legislators to gain Medicare coverage of eyeglasses and contacts for seniors.

On the state level, the organization intercedes with regulations and laws that impact members through their State Government Regulation Center. One of the topics that the group deals with on a regional and state level is the issue of children's vision. The American Optometric Association seeks to provide comprehensive eye exams to children before they turn 3 years old.

IRS Moves to Extend Tax Filing Due Date by Three Months

As president of Capital Preservation Services, LLC, Todd Mardis provides clients in Flowood, Mississippi, with knowledgeable tax and estate planning services. Todd Mardis also focuses on the developments in policy regarding the tax filing deadline in response to the coronavirus outbreak.

Recently, the White House announced a proactive measure of deferring tax payments 90 days past the usual April 15 deadline. As reported on CNN, all US citizens now having three additional months in which to file as well.

This move reflects the temporary closing of many enterprises, which range from large corporations in major industries to small businesses, as a way of limiting the spread of the virus. With economists expecting a spike in unemployment claims, the extension also provides a welcome breathing room to ordinary taxpayers uncertain about their short term finances. For small businesses, the payments that can be deferred without penalty or interest extend as high as $1 million, while corporations can defer as much as $10 million

With the IRS deadline change applying only at the federal level, individual states still have discretion over when state tax payments are due. It makes sense to consult with an experienced tax consultant in staying within the rules of the law and exerting maximum tax savings.

What Are Nonqualified Deferred Compensation Plans?

Mississippi-based executive Todd Mardis serves as the president of Capital Preservation Services, LLC. In this capacity, he oversees daily operations at the firm and works with clients to provide a range of tax planning services. Todd Mardis and his team also provide clients with services related to asset protection and estate planning, including nonqualified deferred compensation (NQDC) plans.

Deferred compensation plans are specific types of employee benefits plans offered by business owners to service employees. Through these types of plans, the employee grants their employer the ability to defer bonuses, wages, or other compensation that is earned during the year until a later year. At the same time, taxes on this compensation are also deferred until the employee actually receives the income in the future.

Deferred compensation plans can be either qualifying or non-qualifying. NQDC plans are predominantly offered to executive-level employees, since 401(k) plans and other qualifying plans are often not enough for high-earners. This is due to the contribution limits imposed on qualified deferred compensation plans. NQDC plans have no such limitations imposed on contributions, nor does the IRS require distributions from such plans.

However, while this freedom in regard to contributions is appealing to high earners, the money set aside in an NQDC plan is usually not protected against loss. Such plans are not covered by the Employee Retirement Income Security Act (ERISA), and the money within them are generally regarded as assets of the company. If the company goes bankrupt, money set into these funds may be used to pay off debts.