Small Busines
31 Small Business Tax Deductions
Sep 1st
Since deducting expenses from your top-line revenues reduces your tax burden, it’s easy to be too aggressive in claiming them. However, not deducting all that you are allowed leaves money on table. Use the following checklist of rules to reduce your taxable income as much as legally possible.
To read the rest of this article by Greg Go, the cofounder and CTO of Wise Bread, a top personal finance community, please go to http://bit.ly/dcPMuT.
Employee vs. Independent Contractor – Seven Tips for Business Owners
Aug 23rd
IRS Summertime Tax Tip 2010-20 http://bit.ly/9jHRSQ
As a small business owner you may hire people as independent contractors or as employees. There are rules that will help you determine how to classify the people you hire. This will affect how much you pay in taxes, whether you need to withhold from your workers paychecks and what tax documents you need to file.
Here are seven things every business owner should know about hiring people as independent contractors versus hiring them as employees.
- The IRS uses three characteristics to determine the relationship between businesses and workers:
- Behavioral Control covers facts that show whether the business has a right to direct or control how the work is done through instructions, training or other means.
- Financial Control covers facts that show whether the business has a right to direct or control the financial and business aspects of the worker’s job.
- Type of Relationship factor relates to how the workers and the business owner perceive their relationship.
- If you have the right to control or direct not only what is to be done, but also how it is to be done, then your workers are most likely employees.
- If you can direct or control only the result of the work done — and not the means and methods of accomplishing the result — then your workers are probably independent contractors.
- Employers who misclassify workers as independent contractors can end up with substantial tax bills. Additionally, they can face penalties for failing to pay employment taxes and for failing to file required tax forms.
- Workers can avoid higher tax bills and lost benefits if they know their proper status.
- Both employers and workers can ask the IRS to make a determination on whether a specific individual is an independent contractor or an employee by filing a Form SS-8, Determination of Worker Status for Purposes of Federal Employment Taxes and Income Tax Withholding, with the IRS.
- You can learn more about the critical determination of a worker’s status as an Independent Contractor or Employee at IRS.gov by selecting the Small Business link. Additional resources include IRS Publication 15-A, Employer’s Supplemental Tax Guide, Publication 1779, Independent Contractor or Employee, and Publication 1976, Do You Qualify for Relief under Section 530? These publications and Form SS-8 are available on the IRS website or by calling the IRS at 800-829-3676 (800-TAX-FORM).
Links:
Publication 15-A, Employer’s Supplemental Tax Guide ( PDF )
Publication 1779, Independent Contractor or Employee ( PDF )
Publication 1976, Do You Qualify for Relief under Section 530? ( PDF )
Form SS-8, Determination of Worker Status for Purposes of Federal Employment Taxes and Income Tax Withholding ( PDF )
Do You Need a Board of Directors?
Aug 19th
As a small business owner, you’re always prioritizing efforts and making resource decisions. You may feel like you live in your own world… wearing all the hats of the business, or “doing it, doing it, doing it” as we often put it. Of course, we recommend getting an E-Myth Business Coach to help guide and support your business development process, but today we’re discussing a different kind of support group – one that is perhaps underutilized in your business: your Board of Directors.
Starting a board of directors and maximizing its usefulness may not be high on your list, but as your business grows, having an active board can provide significant advantages. It’s also something you may not have a choice about; every corporation is required by law to have a board of directors. You should, of course, be working with your attorney on matters such as these. But whatever the legal requirements, satisfying the laws of incorporation is only the beginning for this vastly underutilized small business resource.
What Kind Of Board Is Right For Your Business?
There are two basic kinds of boards: advisory or fully mandated. An advisory board does just what it says: it’s a board that provides feedback and advice, but nothing is binding. The second type, a fully mandated board has real power and accepts fiduciary responsibility for the company.
To read the rest of this article by E-Myth Business Coach, please go to http://bit.ly/9OVLfB
Getting Federally Funded Construction Projects: Tips for Finding, Pursuing and Winning Government Contracts
Aug 17th
With the falloff in residential and commercial construction in many markets, some construction contractors have considered expanding their revenue horizons by investigating contracts funded by the American Recovery and Reinvestment Act of 2009.
However, locating, pursuing, and meeting the requirements of government contracts is vastly different from private sector work. Construction professionals should be aware of some of the key challenges and best practices of government contracting.
To get started, spend some time examining where contract dollars are spent in your area and which companies are winning contracts. The databases at www.usaspending.gov and www.fedspending.org contain a wealth of free information.
Almost all federal procurements must first be publicly advertised through the Federal Business Opportunities (FBO) site at www.fbo.gov. Register on this site to receive notices of upcoming procurements in your locality. Be aware that, as many experienced government contractors say, if you are only responding to procurements when they hit the FBO, you are behind the curve.
To read the rest of this article, please go to http://bit.ly/aNE4vf.
Tips for Dealing with Cash Crunches
Aug 16th
Cash flow is the lifeblood of any business.
Understanding how money moves in and out of your company will help you measure the amount of cash you have on hand—and prepare you for any surpluses or shortages down the road.
Projecting your cash flow is a bit like preparing your budget and balancing your checkbook at the same time. You’ll begin with a starting point—say, the first of the year—and then you’ll outline your anticipated income and expenditures for the next several months or year. Be careful about assuming too much—and don’t forget to factor in everything from insurance payments to raises in employees’ salaries.
To read the rest of this article by Colleen DeBaise, go to http://bit.ly/97Rfx7.
Leave Your Business in Style
Aug 6th
Nora Chapman’s story was typical of most business owners. At age 54, she was ready to leave her 25-employee advertising business. She was thinking of selling to one or two of her key employees and when we met her, her first question was: “Is this the right exit choice?”
Many of you find yourself in the same predicament. You’re beginning to think of a time beyond business ownership. But you don’t have a clear vision of how to “leave your business in style.” So what do you and the Nora Chapmans of the world do? Here’s what we told Nora:
First, understand that leaving your company is a process. If you’re already taking action to leave your business, ask yourself if you’re approaching your exit in a methodical, logical and rational manner. Most owners don’t undertake the necessary thought and planning that supports good ownership transitions because they don’t know how to begin or exactly what to consider and analyze.
Most owners, and their advisors for that matter, are unaware that there is a planning and implementation process that can provide that foundation.
To read the rest of this article by John H. Brown, founder and president of Business Enterprise Institute, Inc., please go to http://bit.ly/de5kQ4.
Back to School for Boss? Tax Breaks Can Help
Aug 5th
If you’re a small-business owner seeking more training for yourself or for your staff, now is the time to enroll for the fall term. Fortunately, Uncle Sam helps defray the costs of education by providing important tax breaks.
Owners’ Education
Successful business owners often pursue higher education or take courses in sales, software or other specialized learning programs. What’s the best way to write-off the cost of education that the owner pays for personally? It depends on several factors, including the type of education, the entity used by the business (such as a sole proprietorship or C corporation) and the owner’s personal tax picture. Here’s a short list.
To read the rest of Barbara Weltman’s article, please go to http://bit.ly/a1t5r9.
State Tax Nexus: Everybody’s Talking About It, But Why?
Aug 4th
Do you know what states your business or your clients have a taxable presence in? Do you know what activities your business is conducting across the country? Has the activities your business conducts across the country changed?
State tax laws regarding nexus continue to change either through legislation or interpretation by the courts; therefore, it is very important to gain an understanding of nexus, and to determine what states your company has a filing obligation or tax liability exposure.
NOTE: Steps can be taken to mitigate this exposure.
What is “Nexus”?
Nexus, in simple terms, is having a taxable connection or presence with a state.
Why Should I Care?
If you are a corporation, pass-through entity (i.e., LLC, partnership S corporation), nexus will determine what states the entity is required to file returns and pay tax. If you are a partner, member of an LLC, or a shareholder of an S corporation, the nexus determination affecting the entity within which you own an interest, will determine what states you file in as an individual (in addition to your state of residency).
To read the rest of this article by Brian Strahle, please go to http://bit.ly/9KIKHk.
Tax for Truckers
Aug 3rd
If you are a trucker, check out this article by Bruce, aka “taxguy,” at http://bit.ly/cZACwg. He has been part of the truck-diving industry for 22 years. He covers the following topics, which could be important toward your taxes:
- Keep Immaculate Records
- Track the Little Things
- Meal Allowances
- Travel Expenses
- Lumpers
- Truck Weight
- Fuel Taxes
Hire Your Kids, Cut Your Taxes
Jul 30th
The keys to success:
- Your business is not incorporated.
- You hire your children to work for you in your business.
- You pay them reasonable wages.
If you do those three things, you can deduct their wages from your income and shift the money to your children who will be in much-lower tax brackets.
Here’s how my three-step hiring process works:
To read the rest of this article by Jeff Schnepper, MSN Money, please go to http://bit.ly/b2SJkr.
