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Tag: tax tips

Understanding Resale Certificate Rejections and How to Prevent Them

August 4, 2025 / / 0 Comments

Navigating Texas taxes can be overwhelming for businesses, especially when it comes to understanding resale and exemption certificates. These documents are essential for claiming tax exemptions on qualifying purchases. However, despite their legal standing, many Texas business owners face denied certificates during audits. In this month’s blog, we will explore the most common reasons resale and exemption certificates are rejected.

What Are Resale and Exemption Certificates?

In Texas, resale certificates allow businesses to purchase items tax-free if they’re reselling them. Exemption certificates apply to specific purchases, such as those made by nonprofits or government entities. Although both are legitimate tax-saving tools under Texas Comptroller guidelines, their misuse or mismanagement often leads to issues during an audit.

Auditors primarily aim to verify compliance with tax laws, and that’s where many businesses fall short. Whether it’s incomplete documentation or incorrect usage, these small missteps can raise red flags.

Related: learn more about whether manual or automated bookkeeping is right for you here.

Common Reasons Texas Resale & Exemption Certificates Are Denied

Even well-intentioned businesses can find themselves in trouble if they don’t follow protocol. Auditors in Texas are meticulous when verifying exemption claims, and they frequently deny certificates based on these common issues:

  • Improperly filled-out certificates: Leaving out key fields like tax ID numbers or signatures makes the document invalid.
  • Wrong certificate type used: Using a resale certificate when an exemption certificate is required – or vice versa – will lead to rejection.
  • Failure to prove resale intent: If there’s no documentation or the product clearly wasn’t resold, expect the exemption to be denied.
  • Outdated certificates: Certificates must be current and updated regularly.
  • Missing backup documentation: Sales invoices, purchase orders, or proof of resale should always accompany certificates.

Related: Learn more about why a bookkeeper is a must for your small business here.

How to Protect Your Business:

Ensure certificates are complete, accurate, and obtained before audit begins. Keep detailed records—and if in doubt, seek a compliance review.

Related: learn more about the difference between tax planning and tax preparation here.

Let MARIELA RUIZ, CPA, PLLC Help You

Don’t let avoidable mistakes cost your business time and money. Our team specializes in Texas tax compliance and audit preparation. Whether you need a quick review or full-scale assistance, we’re here to help you stay ahead of the curve. Contact mruiz-cpa.com today at (956) 997-0067 to schedule a consultation and ensure your resale and exemption certificates are audit-ready.

Minimizing Self-Employment Taxes: A Guide for Texas Entrepreneurs

July 10, 2025 / / 0 Comments

If you are self-employed in Texas, understanding self-employment (SE) tax is vital. Because you pay both the employee and employer portions, managing this tax burden can significantly affect your profit margin. That’s why every Texas entrepreneur should consider strategies to minimize SE tax legally. In this blog, we will share four practical, IRS-approved tips for reducing your tax exposure.

Tip 1: Take the SE tax deduction. You are allowed to deduct the employer‑equivalent portion of your SE tax on Form 1040, reducing your adjusted gross income and your income tax liability. While it does not reduce the tax you pay directly, it lowers taxable income. Be sure to report it correctly on Schedule 1 of your return.

Tip 2: Maximize legitimate business expenses. Net earnings from self-employment drive the tax calculation, so lowering that figure through ordinary and necessary deductions, such as home office costs, mileage or vehicle use, and health insurance premiums, can substantially reduce your SE tax base. Texas self-employed individuals can also deduct health insurance premiums paid for themselves and qualifying dependents.

Tip 3: Elect S‑Corporation status. By forming an LLC or corporation and making an S‑Corp election, you can pay yourself a “reasonable salary” subject to payroll taxes while leaving the remainder of the profit as distributions, which are not subject to SE tax. This structure can dramatically reduce your SE tax bill, but make sure your salary reflects IRS guidelines to stay compliant. Failing to pay a “reasonable salary” can trigger IRS audits or penalties.

Tip 4: Contribute to retirement plans like a SEP‑IRA or Solo 401(k). Contributions reduce your taxable income, and some retirement plans are self-employed specific. For example, you may contribute up to ~25% of net earnings to a SEP‑IRA or, if eligible, a Solo 401(k)—both lowering your adjusted gross income and reducing your SE tax base. Texas entrepreneurs benefit from this above-the-line deduction regardless of itemizing status.

Read More: Bookkeeping for Freelancers and Self-Employed Individuals

In Summary

Texas entrepreneurs can legally reduce their SE tax by using the SE tax deduction, maximizing business expense write-offs, electing S‑Corp status, and contributing to self-employed retirement plans under IRS rules. To ensure these strategies are implemented correctly, contact MARIELA RUIZ, CPA, PLLC in Mission, TX. Visit mruiz‑cpa.com for expert guidance and personalized tax planning.

Strategic Tax Planning Tips

April 29, 2020 / / 0 Comments
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Planning for the upcoming tax season? Perhaps you’re already thinking about next years? If you want the best outcome for your tax return, it’s a good idea to do a little bit of research before you click ‘submit’ to the IRS. From looking over previous tax documents to claiming medical and education expenses, there are many ways you can make a difference when it comes to filing. Follow along in our blog for strategic tax planning tips.

Check Last Year’s Documents

Before starting on your current taxes, review the previous year to check for errors. If you have documents like W-2 and 1099s in your filing cabinet, go through them and make sure there are no inaccuracies. Identifying any problems early on can give you more time to resolve any issues with the company who sent the document.

Organize Investment Earnings

According to WrapManager, “the IRS requires that you report your interest and dividend categories separately.” With your investment accounts, it’s important to keep all statements and records pertaining to your earnings. Even if yearly statements have an overall review included, details of monthly or quarterly statements may be needed for your filing too.

Write Down Medical or Education Expenses

Having proof of medical records will allow you to make tax deductions, but only if you have the proper documentation. Claims that are commonly made can be anything from travel expenses to medical appointments, treatments that aren’t covered by insurance, and much more. Likewise, college-related expenses can also be deducted. Costs for tuition, books, and boarding are just a few examples. WrapManager advises to “keep track of these records throughout the year, either in a paper folder or an electronic file.”

Conclusion

Talk with a tax professional at MARIELA RUIZ, CPA, PLLC today. We work with individuals and businesses that need assistance with tax planning and much more. For a full list of our financial services, visit our website here. You can also reach us at (956) 997-0067 to speak directly to one of our advisors. Contact us today!

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