New Articles

Ignoring Creative Concepts Only Burdens Taxpayers

individual tax season corporate cleveland

Ignoring Creative Concepts Only Burdens Taxpayers

When you’ve had the chance to travel extensively and live in more than one major metropolitan city-state (I’ve resided in a handful including Cleveland before planting roots in Florida), it’s inspiring to see innovative concepts that have proven to be successful elsewhere and would not require reinventing any wheels. Concepts and ideas that could create rare opportunities for Northeast Ohio if considered. And, as someone who not only has spent the last twenty-plus years working in the international trade/maritime industry, but who’s also been affiliated (behind-the-scenes) with government/politics for several years, it is disappointing to see most of Northeast Ohio’s elected officials and business leaders ignore models that could potentially work well in Cleveland-Cuyahoga County. 

 According to the Office of the U.S. Trade Representative, research proves that roughly three-quarters of the world’s purchasing power and over 95% of the world’s consumers are located outside of America’s borders. And, a Peterson Institute for International Economics analysis estimated that the elimination of remaining global trade barriers would increase the benefits America already enjoys from trade by another 50%. Trade remains an engine of growth for America. (And, other countries too for that matter).

This means there is a growing need for manufactured products and equipment (made in places like Ohio) around the world. Coincidentally, for quite some time I’ve often pondered: 

  1. Why the current leadership and Board of Directors at the Port of Cleveland has not effectively promoted or marketed the local waterfront port to the national and global business communities? Unless you work in manufacturing, maritime, or logistics, most people outside of Cuyahoga County do not know the Port of Cleveland exists or understand the significance of its services. Furthermore, anyone who travels frequently – domestically and internationally – will likely not hear the “Port of Cleveland” mentioned as an optional or preferred destination for cargo/freight coming into or out of the Midwest region. However, you can be assured that most such business professionals in other states and countries who have an interest in business relationships throughout the Midwest are quite familiar with Rickenbacker International Airport (LCK) in Columbus (which is one of the world’s only cargo-focused airports), and other popular cargo/freight gateways like the Port of Duluth-Superior, Port of Chicago, and/or other popular competing facilities.  
  2.  Why the leadership of the city, county, and port have not explored the idea of bringing smaller passenger vessels into Cleveland to accommodate the growing interest of one-day and two-day (local) cruise-oriented passengers? Cleveland and Cuyahoga County are missing out on tens of millions of dollars annually from this segment of the population alone.   
  3. How the City of Cleveland, Cuyahoga County, state, and federal officials should be contracting with environmentally conscious service providers like The Ocean Cleanup. These subject matter experts are the answer to irresponsible and destructive consumers who are notorious for discarding everything from plastic and glass bottles, non-biodegradable bags & utensils, and more into bodies of water that ultimately lead to contamination and other hazards. Especially since research has already proven that “1% of the world’s rivers (and lakes) are responsible for 80% of the pollution to our oceans.” These forward-thinkers could be one solution to ridding Lake Erie of such debris, which would then make it more appealing for tourism/waterfront enthusiasts.
  4. The City of Cleveland, Cuyahoga County, and the Port of Cleveland collectively need to consider evaluating the pros-cons of what has continued to evolve from the creation of more industrial “warehouse space” near the Port of Savannah in Georgia. A like-minded push to create vast warehouse space (in communities surrounding seaports) could ultimately reduce financial burdens upon taxpayers and instead become another option for tax revenue from entities who engage in business with the Port of Cleveland or occupy warehouses developed in/near Downtown Cleveland. One key recommendation is to avoid oversaturation of warehouse development in overlapping residential neighborhoods. 

Naturally, achieving those goals requires properly implementing an effective marketing plan and costly infrastructure improvements to the Port of Cleveland’s waterfront areas and neighboring communities. Investment that could certainly stimulate the local-regional economies via job creation, boost tourism dollars spent in Cleveland-Cuyahoga County, and increase the volume of products, equipment, and materials moving through local warehouse space and entering-exiting the Port of Cleveland. 

Author Bio

Santura Pegram is the Director of Government Relations for STS Logistics LLC – Seaport Transportation Services LLC.  A socially conscious and seasoned business professional, he has served in multiple leadership capacities within the international trade/maritime industry, yet got his start as a one-time aide & protégé to the late Honorable M. Athalie Range – the “Political Matriarch of the State of Florida.


individual tax season corporate cleveland

Work on Taxes Year-Round to Cancel Your Business’s Tax Season and Gain Financial Stability

No one likes taxes, but if you’re a small business owner, this cumbersome activity can be stressful. Small business owners are tasked with a lot more work for tax season, meaning long days and nights surrounded by budgets, receipts, and spreadsheets.

Want to get a head start on your tax season? Focus on business taxes all year long. Preparing for tax season strategically means handling tasks related to your taxes throughout the year, so you can have a stress-free deadline.

What Is Strategic Tax Planning?

Tax planning is an analysis of your financial situation or a plan to make sure that each aspect of your tax situation works cohesively to pay the lowest tax amount possible – legally. This is what it means to be tax efficient with a lower tax liability.

With this approach, you plan throughout the year to reduce the amount of taxes you pay within a period of time. You must plan this all year, however, and particularly in the middle of the year to have enough time to implement new strategies as needed.

Benefits of Strategic Tax Planning

There are numerous advantages to strategic tax planning, especially for small businesses like LLCs or a sole proprietorship in California.

Reduce Liabilities

Your tax plan should focus on reducing your liabilities to avoid overpaying taxes. To do this effectively, you have to have time to prepare your taxes and avoid common mistakes. Often, small business owners end up over-expensing themselves and end up paying far more than they need to.

When you’re preparing for taxes throughout the year, you can reduce payable taxes by deducting your expenses from your income and gain more control over when you pay. For example, if you have revenue running into the end of the year that would put you in a higher tax bracket, you could spend it on business expenses or push it into the new tax year to reduce your income.

Stay Current on Tax Laws

Tax laws change all the time. The COVID-19 pandemic changed a lot of things when it comes to taxes, and for small business owners, those deadlines and new requirements can be a lot to keep up with.

Having a plan in place for your taxes helps you stay current on any changes that come around so you can prepare for them. You’re also at a lower risk of noncompliance with regulations that are new or updated, meaning fewer errors on your return, a lower risk of audit, and a lower tax bill.

Understand Your Financial Situation

With financial visibility, you have a clear vision of your business’s financial situation to make strategic decisions about investments and spending. You’ll see how your business’s revenue waxes and wanes throughout the year, so you can prepare for times of low or high cash flow.

Having a clear picture of your spending also helps you prepare for deductions and save money, which you can then reinvest into your business to fuel future growth.

Tax Planning Strategies

Take a look at these strategies to keep taxes in the forefront throughout the year:

Track Spending and Do Budget Check-Ins

You can’t truly prepare for tax season if you’re not tracking your spending throughout the year and noting fixed and variable expenses. Waiting until the tax season rolls around makes it much more difficult to record your expenses accurately, but if you do it along the way, you won’t make many errors.

Budget planning check-ins are one of the best ways to keep up with your spending. You’ll pay attention to your spending habits on a schedule, or if you prefer, you can use an app to track your expenses for a clear view of your possible deductions.

Keep Business and Personal Money Separate

However you choose to track spending, make sure you’re keeping your personal spending and your business spending separate. You should have separate business and personal bank accounts for checking and savings, but if you don’t, that’s your first priority. You may also want a business credit card for some financial cushion.

Keep Up with Deadlines

There are several tax deadlines throughout the year that are important for small business owners. Keep yourself on a schedule with the deadlines by tracking them on your phone or calendar.

Your monthly or quarterly expense check-ins should fall somewhere near these tax deadlines to ensure that you’re prepared for payments you need to make. Staying organized will help you tremendously around tax time.

Use the Qualified Business Income Deduction

The qualified business income deduction (QBI) offers a tax deduction for up to 20% of the share of the business income for pass-through business owners, such as an S Corp in California, an LLC, or a sole proprietorship. These business entities have profits that flow through to the owners to be taxed under individual income tax.  

Include Employee Bonuses and Retirement

Employee bonuses not only keep employees motivated, but they offer tax benefits for your business. You must finalize bonuses by the end of the year and pay them within a few months to qualify, however.

Retirement plans for employees also reduce your taxable income. Employee 401(k) accounts allow you to deduct your employer contribution before the end of the year, for example.

Invest in Tax Software

Tax software is a huge help come tax time. You can automate your accounting tasks and keep your expenses and other documents stored safely in one secure location, which gets you ready for tax season.

For example, predictive accounting software helps you manage your taxes throughout the year to claim deductions, pay your estimated quarterly payments, report major events, and report your income and expenses when they happen, reducing future mistakes that may occur.

Get Ready for Tax Season

Tax time is stressful enough, so no one wants to be rushing around to make the deadline. Business taxes are often more complicated, so you can miss out on big deductions if you’re not prepared in advance. Planning for taxes all year long gives you a comprehensive view of your business’s financial health and prepares you to breeze through tax time.

Author Bio

Shahar is a tax and accounting expert with over 20 years of experience in the field. He is an entrepreneur and known as The Tax Guru on the west coast. Shahar moved to Seattle from Israel and founded, scaled, and sold a leading tax and accounting firm in the Seattle Metro area. Over the years, he served thousands of business owners and perfected the playbook for self-employed tax strategy. That’s why he founded Formations, to make sure the self-employed never overpay on taxes again.



Should Five Percent Appear Too Small? The Penny Lane of E-commerce.

Benjamin Franklin may not have predicted the internet, but he got it right (inspired by Christopher Bullock’s 1716 insights) when he wrote that, “…in this world nothing can be said to be certain, except death and taxes”. On that note and in related news: buying that inflatable yellow submarine just got more costly! Slowly but surely, shopping from the hopefully convenient home sofa is becoming more expensive: what used to be a ‘tax-free experience’ is now a joyful web-shopping outing until the very end when you see a surprise invoice that includes taxes you’ve never heard of. That surprise now extends to Consumer to Consumer (C2C) sales that historically never used to incur taxes.

Probably not invited and (therefore?) a little late to the internet party, tax authorities found the long and winding road on how to subject e-commerce sales to sales and/or other taxes. With more than 50% of government income depending on taxes in most countries (up to 80% in some, according to and booming internet sales (39% growth in Q1 2021 in the U.S., according to nibbling away at that revenue, it’s a surprise that it took this long for the taxman to issue comprehensive legislation to get back to what once belonged. Over the last few years, as more tax authorities found the right tune for enforcing taxes on e-commerce (Australia, New Zealand, and the U.S. were recently followed by the EU and other countries), more and more taxes have appeared in that cute little checkout cart. It progressed from customs duties on international sales over a certain threshold to sales tax (or its local equivalent like consumption tax or value-added tax (VAT)) on B2C sales and, recently, many countries (including the EU) went all-in and now tax practically all internet transactions.

From a compliance perspective, multiple e-commerce platforms have been quick to implement tools for sellers to apply taxes. In many instances, taxes are automatically collected and submitted, with the seller only responsible for filing monthly or quarterly reports/returns on sales and taxes charged. And, as a considerable percentage of transactions are routed through a small number of major platforms (e.g., Amazon, eBay, Shopify, Magento), conducting audits is not reaching for Lucy in the sky. Compared to decentralized in-store retail sales, authorities have a relatively easy job with enforcement for online sales. Obligatory penalties and the threat of shutting down the seller—or even the site—when regulations are ‘forgotten’ make it easier to get taxes accounted for.

But what about those low-value exemptions? Glad you asked. The low-value exemption (Section 321 Type 86 shipments in the U.S.) may still apply on the customs duty portion of a purchase, or even on the local tax part, but e-commerce legislation in many countries requires the seller to charge taxes on every transaction, no matter how small—which is why a 5% tax on a $10 purchase is no longer impossible. Keep those pennies coming! For example, on that eBay purchase of some fine Portuguese stamps, the seller will either charge local Portuguese value added (e-commerce) tax or be required to register in the country of destination and charge that country’s sales/consumption/value-added tax—not good for the buyer’s wallet (especially as VAT can be as high as 25%), yet excellent for the tax authorities.

And the news for the Revenue Service is only getting better: e-commerce is projected to grow to $4.88 trillion in 2021, with McKinsey predicting growth of 8-9% annually in countries like Germany and France and 20% for countries in Asia. That adds up nicely, especially since taxes, as mentioned, are now collected on C2C transactions that were previously never taxed. Furthermore, with the e-commerce model having struck a serious chord with Gen Z, C2C growth is projected at 35% annually for the next four years (C2C e-commerce: Could a new business model sell more old goods?, McKinsey), which in total adds up to quite the lucrative revenue source. Quick note: this is different from the revenue related to the taxation of digital services, for example, digital marketing or reselling of user data.

While many traditional retailers, other than perhaps the barber showing photographs, have had to close due to the pandemic and the never-ending wave of e-commerce, the tax authorities are in a much better position than before to both collect and increase tax revenue on e-commerce and other sales—leaving them to safely count even more pennies from their own hopefully comfortable sofas.

Anne van de Heetkamp, is the VP of Product Management GTC at Descartes