SBG CONSULTING, INC. &

BOOKKEEPING MATTERS, LLC

Fall 2017 Table of Contents:

Tax Implications of Crowdfunding…. 2-3

Summer Fun…. 4

Health Savings Account…. 5

Sara’s Corner…. 6

Client Spotlight…. 7

Halloween Happenings…. 8

Calendars…. 8-9

Reporting Reminders…. 10

Sbgcpafirm.com Bookkeepingmatterslv.com

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Crowdfunding websites such as Kickstarter, GoFundMe, Indiegogo, and Lending Club have

become increasingly popular for both individual fundraising and small business owners

looking for start-up capital or funding for creative ventures. The upside is that it’s often

possible to raise the cash you need, but the downside is that the IRS might consider that

money taxable income. Here’s what you need to know.

WHAT IS CROWDFUNDING?

Crowdfunding is the practice of funding a project by gathering contributions online from a

large group of backers. Initially used by musicians, filmmakers, and other creative types to

raise small sums of money for projects that were unlikely to turn a profit, now it is used to fund

a variety of projects, events, and products–and has even become an alternative to venture

capital for some.

ARE FUNDS I RECEIVE TAXABLE?

All income you receive, regardless of the source, is considered taxable income in the eyes of

the IRS–and that includes crowdfunding dollars.

Say you develop a prototype for a product that looks promising. You run a Kickstarter

campaign to raise additional funding, setting a goal of $15,000 and offer a small gift in the

form of a t-shirt, cup with a logo or a bumper sticker to your donors.

Your campaign is more successful than you anticipated it would be and you raise $35,000–

more than twice your goal. Let’s look at how the IRS might view your crowdfunding campaign:

Taxable sale. Because you offered something (a gift or reward) in return for a payment

pledge it is considered a sale. As such, it may be subject to sales and use tax.

Taxable income. Since you raised $35,000, that amount is considered taxable income. But

even if you only raised $15,000 and offered no gift, the $15,000 is still considered taxable

income and should be reported as such on your tax return–even though you did not receive a

Form 1099-K from a third party payment processor (more about this below).

Generally, crowdfunding revenues are included in income as long as they are not:

Income offset by business expenses. You may not owe taxes however, if your

crowdfunding campaign is deemed a trade or active business (not a hobby) in that your

business expenses might offset your tax liability.

Tax Implications of Crowdfunding

• Loans that must be repaid;

• Capital contributed to an entity in exchange for an equity interest in the entity; or

• Gifts made out of detached generosity and without any “quid pro quo.” However, a

voluntary transfer without a “quid pro quo” isn’t necessarily a gift for federal income

tax purposes.

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Camerocpa.com

Crowdfunding Continued

Factors affecting which expenses could be deductible against crowdfunding income include

whether the business is a start-up and which accounting method you use (cash vs. accrual) for

your funds. For example, if your business is a startup you may qualify for additional tax benefits

such as deducting startup costs or applying part or all of the research and development credit

against payroll tax liability instead of income tax liability.

Timing of the crowdfunding campaign, receipt of funds, and when expenses are incurred also

affect whether business expenses will offset taxable income in a given tax year. For instance, if

your crowdfunding campaign ends in October but the project is delayed until January of the

following year it is likely that there will be few business expenses to offset the income received

from the crowdfunding campaign since most expenses are incurred during or after project

completion. As such, you would not be able to offset any income from funds raised during your

crowdfunding campaign in one tax year with business expenses incurred the following tax year.

Non-Taxable Gift. If money is donated or pledged without receiving something in return, it may

be considered a “gift,” and the recipient does not pay any tax. Up to $14,000 per year per

recipient may be given by the “gift giver.”

HOW DO I REPORT FUNDS ON MY TAX RETURN?

Companies that issue third party payment transactions (e.g. Amazon if you use Kickstarter or

PayPal if you use Indiegogo) are required to report payments that exceed a threshold amount of

$20,000 and 200 transactions to the IRS using Form 1099-K, Payment Card and Third Party

Network Transactions.

These minimum reporting thresholds apply only to payments settled through a third-party

network; there is no threshold for payment card transactions.

Form 1099-K includes the gross amount of all reportable payment transactions and is sent to the

taxpayer by January 31 if payments were received during the prior calendar year. Include the

amount found on your Form 1099-K when figuring your income on your tax return, generally,

Schedule C, Profit or Loss from Business for most small business owners.

DON’T GET CAUGHT SHORT.

If you’re thinking of using crowdfunding to raise money for your small business startup or for a

personal cause, consult a tax and accounting professional first.

Don’t make the mistake of using all of your crowdfunding dollars on your project and then

discovering you owe tax and have no money with which to pay it.

SUMMER FUN!

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Amber had an excellent time exploring the Pacific

Northwest with her mom and aunt on their twelve

hundred mile girls only motorcycle ride. A highlight

of the trip was the picturesque town of

Leavenworth, Washington.

Say hello to the newest

member of the Hill

family—Charlotte! She

was a welcome visitor to

our office this summer,

and we all enjoyed her

sweet puppy face.

Chrystee and her

family visited the

Natural Bridge Caverns

near San Antonio,

Texas.

The Hills celebrated

Grammy’s 100th

birthday in Taos,

New Mexico.

Sara and Chrystee took some time to

enjoy their friends. Cheers, ladies!

Jennifer had a great time going to her

old stomping grounds in Southern

California to visit friends. The weather

was wonderful and there was a lot of

traffic. On the last day of her trip she

went to the concert to end all

concerts…U2’s Joshua Tree tour at the

Rose Bowl in Pasadena,

California!! There were over 60,000

fans there at the sold-out concert

which was opened by The Lumineers.

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Health Savings Account (HSA)

The health savings account (HSA) is just one of many possible health plans that you can use. I’m writing about the HSA here to alert you to some of its benefits for you personally, or for you and your employees, if you implement an HSA plan in your business.

Here’s a very tight summary of how the HSA works:

1. Deduct the health insurance cost. To enable the HSA, your health insurance must be a high-deductible health insurance policy. Sole proprietors, partners, and S corporation owners can qualify to deduct this high-deductible insurance on page 1 of Form 1040. (The page 1 Form 1040 deduction does not suffer the 10 percent haircut that applies to itemized medical deductions.) Also, you generally can deduct the cost of this insurance without having to cover the employees, too. 2. Deduct the HSA contribution. For 2017, you can make a deductible HSA contribution of up to $3,400 if you have qualifying self-only coverage or up to $6,750 if you have qualifying family coverage (anything other than self-only coverage). The deduction for the contribution is above the line, so it does not suffer from phaseouts and it’s deductible whether you itemize or not. And, as with the insurance, you likely could set this up for yourself without having to cover your employees. 3. Tax-deferred earnings. The monies accumulated in your HSA grow and compound tax deferred (even tax-free if you withdraw correctly). 4. Tax-free withdrawals. Withdrawals from your HSA are tax-free when you use the monies to pay for qualified medical expenses. You can’t pay your high-deductible premiums with HSA funds. But once you reach Medicare age, you can use the withdrawals for Medicare premiums in addition to other qualified medical expenses. If the HSA still has a balance when you die, your surviving spouse can take over the account tax-free and treat it as his or her own, as long as you have named your spouse as the beneficiary of the account. 5. Retirement withdrawals. You can make your HSA work like a traditional IRA after reaching Medicare age. To make this happen, you just withdraw funds from the HSA and don’t use them for medical expenses. This triggers the federal income tax but no penalties. (However, the use of the accumulated funds for Medicare premiums and other medical expenses means tax-free use—we like this a lot better than taxable use.)

One final point: you don’t lose the HSA contribution privilege just because you happen to be a high earner. We would be happy to discuss the HSA and other health plans with you at any time.

Copyright 2017, Bradford Tax Institute.

This summer was a roller coaster—emotional and stressful and filled with more reminders of how life is short and time flies. Right before the April 15th tax deadline I learned my younger brother had stage 4 kidney cancer, pneumonia, and COPD. He passed away the following month. His last call to me in a voice I didn’t even recognize was, “Sara would you please take my dog?” I wasn’t sure how I was going to manage 3 dogs, but life handed me the answer shortly after that call when my Duchess passed away from cancer too. I found a service that would drive my brother’s dog from Austin, TX to Las Vegas. Meet Atom. He’s a very sweet dog and minds well, but what a spit fire! LOL

If that wasn’t enough, I got an offer from a drummer to buy my house of 23 years. (He wanted the land to build a music studio.) Of course it was smack in the middle of the September 15th deadline. Would you expect anything less from me? Ha ha. Let me just say, if there is ever a next move…I am going on vacation (someone else can move me)! ☺

I am so looking forward to a beautiful fall, the final tax deadline (October 15th),

and booking a vacation soon. Speaking of the final tax deadline, if we do not have all your documents to complete your return, please bring them in sooner rather than later. I have unpacking to do on the weekends and at night! LOL

I hope your summer was filled with vacations, great memories, and much laughter.

Cheers to a beautiful fall,

Sara

Sara’s Corner

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Here is your chance to experience authentic Puerto Rican Food in Las Vegas!

Angel Goitia has been a chef for over 20 years. He specializes in Puerto Rican food

and operated three restaurants in Florida before opening Puerto Rico Express at

1516 S. Las Vegas Blvd in April of 2017. Puerto Rico Express offers tripleta, Cuban,

and steak sandwiches. Specials include steak with onions, shrimp scampi, chicken

fricassee, and roasted pork. For side dishes, you can enjoy Mofongo, tostones,

maduros or empanandillas. Drinks include malta india and jupiña. And don’t

forget dessert—passion fruit pie and a variety of flans. Come enjoy these

delicious offerings and so much more. Angel and Melyssa hope to see you soon!

You can contact Puerto Rico Express at 702-471-1000.

Welcome New Clients!

Robert K. referred by Brian M.

Gianluca P. referred by Jason P.

The biggest compliment we receive is a referral to your family and friends. Thank you for the trust!

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October 2017

Sun Mon Tue Wed Thu Fri Sat

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8 9 10 11 12 13 14

15 16 17 18 19 20 21

22 23 24 25 26 27 28

29 30 31

NEVADA DAY OBSERVED

Provide final payroll

adjustments

World Teacher Day

Columbus Day

Quarter 3 payroll tax

returns due

Extended personal

tax returns due

Halloween happenings

October 16-31: Trick or treat stations

STOP by to check out our decorations, say hi, and

grab a treat. FEEL FREE TO BRING YOUR FAMILY!

October 23-27: kids pumpkin carving contest

STOP BY WITH your child & HIS OR HER pumpkin for a

chance to win a 1st, 2nd, or 3rd place prize

October 30: pumpkin carving contest winners

announced

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November 2017

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December 2017

Sun Mon Tue Wed Thu Fri Sat

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31

Closed Closed

Take a picture of your

odometer & email it to us.

Happy

Birthday,

Liz!

Happy

Birthday,

Linda!

World Kindness

Day

Red Planet Day

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SBG CONSULTING, INC. &

BOOKKEEPING MATTERS, LLC

7930 W Sahara Ave.

Las Vegas, NV 89117

702-320-9200

DECEMBER REPORTING REMINDERS!

1. S Corporation shareholders: provide your payroll service with the amount the company paid

for health insurance on your and your family’s behalf. This should be included in Boxes 1

and 14 of the shareholder’s W-2.

2. Have your S Corporation or Partnership reimburse you before December 31st, for the office

in the home and business expenses paid personally.

3. Prepare your vehicle mileage logs so that you can provide us with your total miles, business

miles, commuting miles, and personal miles for 2017.