Posts tagged business taxes
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.
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.
What is Considered “Bad Debt” and How Do I Claim It for My Business?
Jul 28th
Credit enables many customer transactions that would not otherwise be possible. If your business offers customer credit, you’ve most likely had someone unable to repay their debt. If you report these sales as income but cannot collect, the IRS calls this “business bad debt.” In these cases, the IRS allows you to deduct those debts to decrease your federal tax liability. These frequently asked questions will help you understand how to proceed if this happens to your business.
When is a business debt considered “bad”?
There are two kinds of bad debts — business and personal. Business “bad debt” is a loss from an uncollectible loan. These loans can be from clients or suppliers, previous partners, or political parties.
Depending on your accounting practices, credit sales for goods or services that have not been paid in a reasonable period of time may be considered bad debt. If your business uses a cash accounting method, you only report the income once you receive it; therefore, you cannot claim a bad debt because you did not yet count the sale as income. If your business uses accrual accounting, you may have already included the sale as income. In that case, the sales would be classified as bad debts and are subject to deductions.
Not only do some credit sales lead to bad debt, but also debts from a former business, debt acquired from a decedent, and liquidation of a business. If you retained your receivables from a previous business, but then you were unable to collect, those can be considered bad debt. This is the same if you liquidate your business and you do not collect on all of the accounts receivable.
For the rest of the article by Jim D of Business.gov, please go to http://bit.ly/cmqrtG
4 Tips to Get the Most From Your Tax Planning
Jul 19th
I need to begin the article by explaining how many times I have heard a company’s tax adviser make a comment like this after the year is over for which they are preparing the taxes: “If only you would have talked to me last year we could have saved you some taxes.”
In addition to this reality, I have yet to see a business that faithfully and correctly engages in tax planning that does not save a significant amount of money—far in excess of any costs inherent to this planning.
Most entrepreneurs and business owners do not engage in tax planning in a meaningful and high-impact way. To help you overcome the barriers to completing this activity as well as to ensure it is effectively executed, here are four tips to implement to make your tax planning efforts fruitful:
To read the rest of this article by Ken Kaufman, Founder and CEO of CFOwise (R), please go to http://bit.ly/d6zWzB.
New 1099 Filing Requirements for 2011: Truth Serum or More Red Tape?
Jul 9th
For every one dollar in federal income taxes owed, the IRS is only able to collect 84 cents. The missing 16 cents is called the tax gap.
It’s the difference between what individuals and businesses should pay and what they actually do pay. After adjusting for late payments and enforcement actions by the IRS, the “net tax gap” is estimated to be approximately $290 billion a year.
With the federal budget suffering from massive deficits, closing the net tax gap and collecting those additional funds has become a priority.
In IRS jargon, failing to pay your tax liability — the amount you owe — is called “non-compliance”. There are three types of non-compliance that cause the tax gap:
- Underreporting of one’s tax liability by inflating your expenses or failing to report a portion of your income.
- Underpayment of one’s tax liability by not sending the IRS the full amount you owe when its due.
- Non-filing of one’s return and failure to make any kind of payment towards what you owe.
Underreporting is estimate to account for 82 percent of the net tax gap. Across all three types of non-compliance, businesses account for 70 percent. To address this situation, 1099 filing requirements have been expanded.
To read the rest of the article, please go to http://bit.ly/9YbwEu.
Paying Your Attorney: What’s Tax Deductible
Jul 6th
Small businesses use legal services for a variety of reasons, and the fees for these services can be hefty.
Small businesses, for example, are particularly vulnerable to frivolous lawsuits designed essentially to extort a settlement (a few years ago more than one-third reported that they had have been sued) and they incur substantial legal fees in these actions.
Unfortunately, not all legal fees are immediately tax deductible. The tax treatment of legal fees usually depends on what you incur them for.
For the rest of the article, please go to http://bit.ly/9tilF1.
Paperless Payroll Can Save Money
Apr 26th
Everyone seems to be trying to go “green” these days, which is a good thing. Going paperless with your company’s payroll can help with the “going green” issue today. It can also save you money. Pay-Perks has developed a Paperless Payroll Calculator in connection with the American Payroll Association to show small businesses how much they can save by going paperless with their payroll.
It has been estimated the average company can save approximately $75 per employee per year going paperless. This sounds like a great idea and one you might want to consider.
A Win-Win Tax Break: Buying Company Assets and Leasing Them Back to the Company
Apr 12th
Owners of a C corporation are sometimes hit with a double tax whammy. The corporation pays tax and the owner is taxed personally on dividends received from the company.
One potential tax break for both is to have the owner buy property and assets personally and then lease them to the company. By doing this, the owner is paid deductible lease payments instead of nondeductible dividends. The business owner’s income is offset with depreciation or amortization deductions.
The company benefits by gaining cash it may need for expansion. In addition, the business can deduct rental payments. Money paid to the owner in dividends is not deductible for the business.
There are five basic requirements for such a deal to satisfy the IRS that the transaction is legal.
Source: Small Business Strategies, March 2010
