When education is deductible
Dear Karen: I’m starting on an MBA to improve my business skills. Is this a deductible expense for my company?
Answer: Education expenses can be deducted as a business expense if the purpose of the education is to maintain or improve a skill required by your business, said Barbara Rosenbaum, executive vice president at Gumbiner Savett Inc. in Santa Monica. If you’re self-employed, you will deduct your education expenses directly from your self-employment income, reducing the amount of your income subject to income tax and self-employment tax.
The deduction is not allowed if your purpose for going back to school is personal fulfillment, qualifying to meet the minimum requirements for a job or qualifying for a new career, Rosenbaum said.
“If you want to be a brain surgeon and you’re taking science classes, that’s not deductible,” she said. “But if you’re running a flower shop and you take an accounting course so you can do your own books, you can take that as a business expense.”
Your education expenses may also qualify you for other tax benefits, such as tuition and fee deductions, Rosenbaum said.
More information can be found at the IRS website: www.irs.gov/taxtopics/tc513 .html.
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Shareholders’ agreements
Dear Karen: I’ve been told I need a stockholders’ agreement for my new business. Why?
Answer: Private companies use stockholders’ agreements to address business governance and shareholders’ rights upfront, said Erika Z. Schenk, a commercial practice and transactions attorney in the St. Louis office of Bryan Cave.
Generally speaking, your company is governed by California law. But business owners often want to add certain rights and responsibilities, and they use stockholders’ agreements to do so.
“The shareholders’ agreement can cover a variety of topics, including restrictions on transferability of shares; rights of first refusal on sales of interests; and options or obligations to sell shares back to the company upon certain events, such as death, disability or termination of employment with the company,” Schenk said.
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Keep refining job listing ads
Dear Karen: Our company is looking to hire. How do we avoid getting deluged with resumes?
Answer: Make your job listing as specific as possible, using key words and clearly stating requirements. Keep evaluating your ads and revising them if they are not drawing the right applicants.
“Determined applicants will still apply for positions that don’t seem like a perfect fit,” said David Weiman, a psychologist and management consultant in Philadelphia. But he warns against rejecting those who don’t seem like immediate matches.
“Essential qualities such as determination, optimism and the ability to work well with others aren’t always apparent until the interview stage. Consider casting a wider net at first and doing phone screenings initially to pick up on qualities that would make for a great employee,” he said.
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