Tax Guide For Small Business
The IRS provides a tax guide for small business which is extremely comprehensive and detailed. Also available are calendars that show when certain forms should be filed and when taxes should be paid. Also discussed within this booklet are taxpayer identification numbers and instructions on how to file tax returns. The topic of self-employment tax is included, as well as issues regarding other types of taxes, such as excise. How to handle property, discussion of the various types of accounting methods, business income, cost of goods sold calculations, how to figure gross profit and figuring net profit and loss, among other topics. The tax guide for small business from the IRS has just about any answer an owner would need to know
Small business tax information is available all over the internet in various forms from a number of companies. Some offer advice on what filing mistakes should be avoided if companies do not want to draw the ever watchful eye of the IRS. Some websites discuss the experiences of other entrepreneurs who have been through several years of dealing with filing, and understand what to deduct and what to write-off. They also give strategies for dealing with inventories in excess, and how to reduce them before the end of the year. There are discussions of how to handle audits, what they look for and how to prepare for them. Looking on the state website will provide loads of information for entrepreneurs about how to go about planning for taxes. There are people who will answer any question the owner has so that all will be done correctly.
Some small business tax information sites provide help on how not to procrastinate on tax preparation. Ideas on how to get motivated abound everywhere, so an advantage for the owner would be to review these ideas and put them to use so as not to fall behind. Also offered are helps for doing payroll taxes. Software is available for purchase at stores that assist owners in preparing correct financial information all throughout the year. QuickBooks, Peachtree, Business works and others will keep the busiest owner organized.
If the owner expects revenue to be increased the following year, in order to adjust taxes to benefit the next year, then pay expenses in January so that write offs can be taken the next time taxes must be done. Conversely, if the corporation isn't doing so well this year, prepay expenses, make capital expenditures and write off as much inventory as possible. To prevent falling into a higher bracket, reduce gross income by donating to charity or contributing to a retirement income. Small business tax information will contain information such as this in detail. Jesus said, when speaking to the Pharisees, that Christians must pay to the government what is asked. "Then saith unto them, Render therefore unto Caesar the things which are Caesar's; and unto God the things that are God's" (Matthew 22:21 KJV).
What if the owner procrastinated way too long, and now getting the information from the small business tax advice people is not possible? Now there is no time to learn and file? File for an extension by filling out form 4868. Filing for an extension will allow an extra six months to get the job done. However this does not mean the actual payment can be put off. No, this must be estimated and paid on time. If this isn't paid on time, then there will be interest on the late payment! The owner would have done well to read a tax guide for small business before hand to avoid situations such as these.
In gathering small business tax information, be wary of financial advisors who are giving advice that will produce trouble for the owner. Some of these are shelters that will put the owner in very hot water if undertaken! For example, never set up a fake entity and then transfer assets into it just to avoid paying taxes on them. This is illegal and will have the IRS at your door right away. Also, never buy companies if they are a bad investment, and this is known ahead of time. Some owners do this in order to write off the losses they knew would be coming.
A tax guide for small business may not include some information that would be useful to new small entity owners, if calculations and formulas are needed. For example, how does one calculate interest on a mortgage loan? How does one calculate the likelihood that a venture will fail? This is called the Altman-Z Score. How about gross ups or cash on cash return calculations? All of these, plus more can be found on small business websites that cater to entrepreneurs - they come to the rescue!
Aside from these issues, small business tax information from the IRS can include ancillary material such as FEMA news, disaster relief information, even disaster information for areas that are local to the area of business where it is conducted. Finally, there are abundant updates about all of the recent legislation that is happening in Congress that may or may not affect how the business is run. At any rate, find and read up on the latest cases in case they apply. Don't forget about legislation that could be expiring soon. No one wants to think a deduction is legal when in reality the IRS says no. If an accountant is too expensive and the taxes must be done by the owner, then extremely vital to understand all the latest developments in the tax code and IRS rules.
No matter what kind of assistance is needed, almost anywhere one turns these days, whether to tax professionals, boxed software or online websites, the answer is sure to pop up somewhere. Just be diligent and resourceful, and the answers should be at the fingertips in no time. Now stop procrastinating and start reading!
Small Business Tax TipsSmall business tax tips help companies understand the importance of keeping receipts, maintaining good records, and knowing about deductions that are legitimate. Keeping good records make it easier when filing income tax to recognize legitimate deductions. A small business tax credit will reduce amount owed to the government. Some of the allowable credits include disabled access, investment, work opportunity, research, alcohol fuels, and employer social security. Other deductions may include travel expenses, entertainment expenses, depreciation, supplies, and equipment. A company owner should apply Biblical principles when making decisions about operations in order to be successful. "So that thou incline thine ear unto wisdom, and apply thine heart to understanding" (Proverbs 2:2).
A company will gain returns by keeping good records, receipts, utility bill statements, credit card statements, bank statements, any cancelled checks, invoices, and any other paperwork that might be needed to prove a valid expense. Deductions include office supply expenses, computer expenses, entertainment, interest paid, and equipment. Small business tax tips emphasize that anything used for the operation of the company may be tax deductible. In some situations the entire amount may not be deducted but only a portion or percentage. One example of this may be utility expense for a home office. The amount that can be used would be based upon the percentage of the space that the company uses in the home.
Building a ramp for disabled individuals to enter an establishment could mean a deduction on the expense. This could also include installing a railing in the public restroom and making a special parking space as well as any expense incurred for signs. The small business tax credit could be as much as half of the total cost up to a maximum amount. Easy access for those who are disabled is a consideration that is appreciated by the customer and is recognized by the government as a legitimate deduction.
An investment deduction includes such investments as installing solar paneling or any type of installation that saves energy. This includes any expenses incurred for remodeling a building to be more energy efficient. This type of expenditure goes a long way in not only helping to downsize costs for utility services but is also considered a smart growth or green expense. A small business tax credit makes this a worthwhile endeavor and the long-term benefits to the environment make it well worth the time and cost to make it a reality.
Travel and lodging expenses are deductible as long as they are business related. Small business tax tips include allowable deductions such as meals and airfare as long as the expense incurred is entirely for company purposes. When combining business with pleasure there are limitations on what can be claimed as a deduction. Entertainment expenditures can be claimed up to a reasonable amount while traveling.
Hiring qualified workers such as veterans, the disabled, and ex-felons can qualify a company for a work opportunity deduction. The small business tax credit applies for anyone who is receiving public assistance or has special employment needs. This type of deduction encourages employers to hire those who might be considered an undesirable employee by many. Veterans often have difficulty once they are out of the service in procuring employment. Some employers will not consider an ex-felon out of fear of loss or damage to property or other employees. In addition, hiring a disabled individual may mean making adjustments in equipment or property. Companies who take out the time to make these adjustments or changes are rewarded for doing so.
Any expenses that are incurred toward research and experimental activities can be taken as a deduction in the year that they are incurred. This encourages companies to spend more on development of worthy causes that could help the economy or the environment. Research and development could lead to drugs that could save lives or inventions that can enhance the lives of others. A small business tax credit can make these types of inventions worthwhile. Drugs can prolong life, raise the quality of life, and even save lives.
Business expenses for the use of ethanol or methanol are deductible expenses. This includes the use of or selling of these types of fuel. Alcohol produced from natural gas or coal does not qualify for the deduction. These types of allowances are there because they help the environment by cutting down on air pollution. Allowances such as these encourage company owners to consider switching to cleaner fuels. Another example of deductions for cleaner fuel includes purchasing a hybrid vehicle that runs on cleaner fuels and electricity instead of gasoline.
Other items purchased for company use may include an automobile, computers, cell phones, entertainment equipment, printer, office equipment, and so on. High dollar items can be capitalized and depreciated over several years. These are company assets and the expense on the depreciation can be claimed against taxes owed. Small business tax tips include learning about deductions and the importance of keeping up to date records on monthly depreciation and yearly depreciation. There are limits on total depreciation expense per year per vehicle.
Employers who allow their employees to accept tips that cause them to make more than minimum wage are allowed to deduct the amount from social security tax due. This usually only includes companies that sell food and beverages. Other types of companies that allow their employees to accept tips should contact the IRS to find out if they are allowable. Some of these companies may include car wash services, cosmetologists, valet parking, and so on.