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Business Tax Tips That Save You A lot Of Money!

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Are you struggling to get by? Do you have a hard time when tax season comes and literally steals all of your money? Paying business taxes can be a frustrating process as a small business owner. You need to be able to know what your options are so you do not end up having a difficult time owing taxes. The goal is to pay the right amount each quarter so you don’t have a large tax bill to worry about. You also need to have a good accountant help you in preparing the taxes so you do not miss any tax credits or deductions. If you do miss things, it can hurt the business.

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How to make your home business audit-proof

books30364900.jpg When you begin a home business one of the things you may be worried about is paying your taxes and doing it correctly. The IRS does their job to keep tax payers honest and to be sure that they are calculating everything properly. What the IRS will need with an audit is to check on your books and to make sure everything is properly prepared so they can check on the books and to be sure that you didn't make a mistake. So what can you do to make the audit less stressful? Here are some tips that can help.

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Finding the right business valuation professional

umbrella30324947.jpg What is a business valuation professional? How can they help you with your business finances? A business valuation professional doesn't necessarily provide you with the "traditional" help that you will get with a CPA or a bookkeeper as their main job is to provide you with a net worth number of your business. They want to be able to help you see just how much you can sell a business for if you are ready to sell. However a CPA still lies under a category of a business valuation professional, they just have different skills from what you expect as they too provide you with an evaluation of your businesses' worth.

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Are you ready to buy a small business

folder30394905.jpg When you are ready to invest some money into small businesses do you know what type of business is out there to make you money? There are a number of small business options to choose from that finding the right one for your money can be a bit of a challenge. Some people will invest in a business that is already up and running while others prefer to look for businesses that they can start up on their own. While everyone's preferences are different, there are numerous advantages to buying a small business.

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Tax advantages to new businesses

oldermanstanding26239732.jpgAs you are starting a new business, there are a number of tax advantages you should be on the lookout for. Many new businesses are able to save hundreds, even thousands of dollars a year on their taxes due to some great tax breaks you may be unaware of.

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Don't get too aggressive with your tax deductions

mansleeping8251415.jpgOne of the perks of becoming a small business owner is having the ability to have numerous tax deductions. While tax deductions will save you a lot of money, they can be potentially dangerous to your company if you are not using them correctly. A lot of small businesses will become too aggressive with tax deductions and this often sparks the IRS to come after you with a nasty fee and audit. The IRS will even shut down your business if they find that you lied and that you are claiming things that aren't tax deductions.

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How to reduce the expense of business taxes

taxesdue63559981.jpgOne of the events that are most dreaded by small business owners, is the payment of taxes. Business owners find that they are constantly up against paying some form of taxes. This can include: payroll taxes or business profit taxes. Because of the significant expense of taxes, business tax expenses really need to be managed to insure that you are not paying more than you have to. One of the major ways to help minimize business tax expenses is to make sure that tax reports are filled out correctly, and that they are filed on time. This strategy will help you to reduce business tax expense, by reducing the chances that you will be fined for filing late, or for making a mistake that leads to an overpayment, or an underpayment. To help insure that all tax reports are filed on time, and that they are correctly filled out, it can be helpful to do the following:

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Keeping track of tax write offs

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One very important part of business finance is keeping track of tax write offs. But this is easier said than done. This article discusses how a business person can keep track of their tax write offs.

Know your tax write offs

Before a business person can keep track of their tax write offs, it is essential that they know what expenses are considered tax write offs for their business. Each business is different, so their list of tax write offs will be different as well. A business owner should contact their accountant to find out a list of possible tax write offs for their business. This way they will be able to keep track of the business expenditures that can be used for tax write offs.

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Preparing year end statements

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A year end statement is basically a detailed listing of all your companies' debts and assets. It will provide information on how much money you paid to quarterly taxes and include a profit and loss sheet. Each company will have different things on their year end statement, but you need include the following:

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What to do with W-2's and 1099's

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When you start employing others in your business, a whole new world opens up within tax liability and responsibility. With you new tax liabilities comes a lot of paperwork to send to the IRS. The paperwork discussed here will be W-2's and 1099's. So you have a decision to make. Does the work you need preformed by others going to require employees or should you hire independent contractors instead? Answering this question will determine what you do with W-2's and 1099's so let's see what the difference is and what you are responsible for with each.

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Business Tax

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When you own your own business, one of your first priorities is to make sure you pay the proper taxes and pay them when they are due. Not doing so can result in heavy fines that eat into your profits and sometimes you may face federal charges. Being audited by the IRS is not a fun experience either, so it is best to do your taxes right the first time. So what taxes does your business have to pay? That depends on your business, but here are some general guidelines to consider.

Income Tax

All businesses except those that file as partnerships have to file an annual income tax return. The federal income tax for businesses is a pay-as-you-go type of tax, which means you will be paying it all year long rather than in one lump sum at the end of the year. You must pay the income tax as your business receives income throughout the year. You withhold income tax on employee paychecks, but if you don't pay enough through this method or you don't pay it through this method at all, you may have to pay estimated tax instead.

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How to handle your Business Taxes

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The IRS provides information on their website for small and growing businesses and how to pay your business taxes. The IRS also has some valuable tips on getting small businesses off the ground with checklist for your business tax account. Tax deductions can be tricky and if done properly they will keep more money in your business tax account to pay quarterly taxes for the next year. The last thing you want is to misuse your business tax account and have problems with the IRS. Take time to find the best business team you can by hiring a good bookkeeper or accountant and making a thorough decision about paying your business taxes.

A business tax account is a popular method used by companies to pay their quarterly and yearly taxes. Keeping proper records of all your finances are essential to creating a good business tax account. Getting with your accountant and your bank will help you make a proper decision when it comes to setting up your business tax account. Before you set up a business tax account, you need to have a few things in place:

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Keeping your finances straight for tax time

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Tax time is nightmare time, especially for business-but it doesn't have to be. The plain fact is that tax time is a nightmare because people aren't prepared for it, ever. Well, some people are, obviously, but I'm racking my brains to think of the last time I was, and racking them even harder to think of any of my friends or acquaintances who don't acquire that haggard, haunted, defeated look when tax times rolls around. So, let's consider a few ways in which you can keep your finances straight for tax time. That's the key to enjoying tax time: keeping your finances straight.

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What you need to know about quarterly taxes

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Quarterly taxes mostly apply to people who own their business including landlords and investors. As a home business owner, you will need to make estimated tax payments at least four times a year. This is because you are not withholding enough from your business earnings to pay the federal income tax in full at the end of the year.

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How to set up an escrow account for paying taxes

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You most often hear the term escrow associated with real estate. This is because escrow accounts are mainly used for paying property taxes and insurance on properties purchased.

Escrow works with your real estate agent or the bank you are using as your lender. You will set up an account and the money in there is simply to pay your taxes when they are going to be due. Taxes can be overwhelming if left until they are due and you have to try and scramble up the money to pay them off. Escrow is designed to slowly save away money over the year to pay those taxes, that way the money is already there.

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The facts about quarterly taxes

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April 15th is the date that most people think of when they think of taxes. They worry about getting all of their tax information together and filed by then. What many people do not know if that they may need to pay quarterly taxes.

Quarterly taxes are just that.taxes that are paid quarterly. Meaning that instead of paying your taxes once a year, as the rest of the US does, you must pay once every four months. How do you know if you are required to pay quarterly taxes? That is a good question, and I am sure you have even more questions about quarterly taxes, and so, take a look at the facts about quarterly taxes.

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Business tax law changes for the 2006 tax year - what you need to know

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Running a business is not an easy thing. There are many sides and aspects to it that not many people think about. There are a lot of things to think about and a lot of things to keep up. You cannot just sit and earn money behind a cash register; there are a lot more things involved.

Some people would tend to think that if you were going to run a business you just rent the shop, open it up and start running it. But you have to buy all the supplies and you have to keep the supplies in supply. You have to buy the equipment. You have to pay the employees. You have to do so many things. It is not a simple process.

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Is a business loan taxable income

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One of the most difficult parts of starting or running a business is knowing all of the laws and rules you have to follow to keep it in good standing with the government, IRS, etc. One of the most difficult and daunting tasks for any business is understanding and interpreting business tax law. But, do not get too discouraged, even many tax professionals do not completely understand tax law, so as long as you do what you can, and seek some help when you get stuck, chances are you will be alright. However, let's discuss the frequent question of "Is a business loan taxable income?"

This is a legitimate question, and one that you certainly want to know, as if it is you need to pay your taxes on it so you don't get penalized and your business does not get seized, etc. But if it isn't, you will need to know so you do not pay taxes that are unneeded.

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1031 Tax Exchanges

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A 1031 tax exchange is actually Internal Revenue Code 1031, which states that property owners can sell their property, then reinvest the money they earned from it in ownership of like-kind property while deferring the capital gains taxes. The 1031 tax exchange is often overlooked in real estate. This is unfortunate, as it can offer quite a few significant tax advantages to those who buy and invest in real estate.

Some of the benefits of a 1031 tax exchange include:

  • The ability to defer payment of capital gains taxes. When an exchange is done correctly and in accordance with the rules set forth, it can give real estate investors the chance to defer all their capital gains taxes. Basically, they receive an interest-free, no-term loan from the government when they reinvest the money.

  • Release from property management. The person leasing the new structure is responsible for renting out and then managing the property. This is advantageous to real estate buyers and investors, as it gives them respite from the duties of property management.

  • Upgrade or consolidate property. In addition to being able to upgrade, buyers using 1031 can also own multiple properties, instead of just one.

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The ins and outs of justifiable business expense tax write offs

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When you are in a business, you will want to make sure that you are saving as much money as possible on taxes! There are a lot of tax write offs that you probably will be able to use for your business, but you should understand the ins and outs of business expense write offs before you do anything. Here are some of the ins and outs of justifiable business expense tax write offs:



  • Rent or lease payments on your business location - One of the nice things that you can get a business expense for is the rent or lease payments on your business location. However, something that you need to know is that if you are renting from an individual or an unincorporated business (such as an LLC), then you are required to send your landlord a 1099 form in January to let them know how much you are going to be deducting. You should also check with your accountant to make sure that you are going through this process of deductions correctly.

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Estate taxes it pays to plan ahead

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No one wants to think about dying and getting excited about planning for death is equally unpleasant. However, we all understand the importance of planning ahead and even though doing so may not be enjoyable, it doesn't have to be difficult and your family will be better off because of it.

Fortunately by planning ahead there are a lot of unpleasant taxes that you can save your loved ones from having to deal with. Estate taxes may be a big concern of yours or they may not be (it really depends on how much you believe you're worth and we will talk about that a little later in the article). Regardless, you need to plan ahead for your estate so that when the time comes for your family to be given what you want for them to have, they won't have to combat lawyers or business owners over final expenses, probate costs, administrative fees, and a variety of other costs.

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Organizing Tips for Tax Time

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Taxes can be a scary time for anyone, whether you are self employed, or an owner of small business, being organized for tax time can really relieve some of the stress.

The following are some great tips for being organized for tax time:

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What is the difference in tax rates between ordinary income and capital gains?

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What is the difference in tax rates between ordinary income and capital gains? Capital gains is income you receive when you buy stock at level X and you sell it for level Y. Z is Y [sales price] minus X [purchase price].

Investors also earn ordinary income. This is the dividend and interest you receive from that stock.

Capital gains are based on an asset. A home, and bonds, and stocks are capital assets if you are holding them for an investment. When you sell an asset, there are numerous tax laws that deal with capital gains tax.

Many people think capital gains are better than ordinary income. Short-term capital gains are taxed the same as ordinary income. Long-term capital gains have a different tax rate.

A capital gain becomes effective if an investor owns an asset 366 days, or a year and a day. The basic capital gains tax rate is 15%.

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Estimate quarterly taxes tips and information

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Here is what you need to know in order to estimate quarterly taxes, and additional tips and information. For one reason or another, you are looking for the information to know how to estimate quarterly taxes. This can be due to the fact that you are running your own business, you are unemployed, or are retired and have added income.

Whatever the reason is, the process to estimate your quarterly taxes really is not that difficult. There will be some items you will need in order to get the most accurate estimate. However, for the most part you will find this is a relatively painless process.

As a responsible person living in the United States you are aware that in order for you to help support the Federal and State Government you will need to figure what amount you will need to pay for your taxes.

With this in mind, there is a little variance in the name of quarterly taxes. This is because there is some difference in when the quarterly taxes need to be paid. Here is a schedule to keep in mind for future reference.

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How to set up your business tax accounts

paymentdue19086402.jpg Your business will have to pay taxes just the same as any other person or business. Any one that runs any type of business will need to have a good set up for their business tax accounts to make tax season easier on everyone. There are different ways to set up the same type of account for anyone. You should make sure that your tax accounts are set up in a way that is easily understandable to you. You will also need to have your accounts set up in a way that your CPA can also understand.

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Best storage methods for receipts and write-offs

circled19160265.jpg If you have a business, one of the perks is the ability to write off certain expenditures that have to do with your business operations. This could be anything from meals to cell phone use to airplane tickets. In the end, faithfully reporting your expenses can end up saving you a lot of money when tax time comes.

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How to assess the effects of sales tax on cash flow

savings23278455.jpg Everyone in the business world knows that managing cash flow can be an exhausting task. It's also important to understand that there are many factors that can influence cash flow today, sales tax being one of them. But how do we assess the effects of sales tax on cash flow? Managing your cash flow effectively and forecasting are your bets bet for planning for things such as sales tax effects on your cash flow.

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What to do with sales tax after you collect it

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There are a lot of different things that you have to keep in mind when you start a business. One thing that a lot of people forget about when they are first starting a business is sales tax. Depending on what state you live in also depends on if you have to worry about sales tax or not. If you are in a state that has sales tax or are dealing with state that have sales tax will determine what you do with it. Here is some information on what to do with sales tax after you collect it that will help you out.

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A look at the forms you need to fill out to file a partnership LLC tax return

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There are a lot of things that you have to take into consideration when you are looking into starting a business of any kind. One thing that you need to think about is what type of business you want to start. There are corporations, joint ventures, and even partnership LLC. Depending on what type of company you start will depend on what forms you need to file taxes. If you have decided to start a partnership LLC you will need to make sure that you know what type of forms you need to fill out to file a partnership LLC tax return. Here is a look at the forms you need to fill out to file a partnership LLC tax return.

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Who should prepare business taxes?

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Unless you yourself are a professional accountant or tax preparer, then you should hire a professional tax preparer or accountant to prepare your business taxes. Taxes are complicated and difficult enough for individuals and couples to figure out and then file; taxes are even more complicated and consequential when it comes to businesses. Business taxes are difficult to figure out, whether you have to pay quarterly taxes or not. You should save all of your records and all of your financial information, and hire an accountant or tax preparer to prepare your business taxes for you.

It is important to choose an accountant or tax preparer whom you trust. Find somebody who is recommended by other business owners. Ensure that the accountant is a certified C.P.A. Call the Better Business Bureau and ask them if any complaints or reports have been filed against a particular accountant so that you can ensure that your accountant does not have a history of filing taxes illegally or filing false taxes and tax returns.

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Paying quarterly taxes on your business how to do this

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Do you need to pay quarterly taxes on your business? Do you even know if you need to pay quarterly taxes on your business? Here's how you can figure out if you need to pay quarterly taxes on your business. If you do need to pay quarterly taxes on your business, here is how you can do it properly so that you do not get in trouble with the government.

How to tell if you need to pay quarterly taxes on your business
The people who need to make estimated quarterly tax payments are those whose income tax withholding will not end up covering your tax liability for the next year. The people who generally need to pay estimated quarterly tax payments are those people who are self employed, those people who are landlords, and also investors. If you fall within these categories, you need to make estimated tax payments to the government every three months. You need to make these quarterly payments because otherwise any income tax withholding that is made for another job may not cover your federal income tax by the time that the year ends. You do not need to be nervous about paying quarterly taxes, however. You can figure out your quarterly taxes in about an hour and keep all of your payments up to date.

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How to set up an account for paying your business taxes

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Business taxes require a lot of time, good accounting and people. If you are a large or small business, it is always a smart plan to set up an account for paying your businesses taxes. If you are a smaller company, you most likely have a bookkeeper. Bookkeepers are great for start-up companies since they handle financial transactions and produce financial statements. Accountants are wonderful for companies who are growing beyond a 5 person operation. Accountants are great for end of the tax year preparation and planning.

Before you set up a business tax account, you need to have a few things in place.

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How to set up an account for paying your business taxes

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Business taxes require a lot of time, good accounting and people. If you are a large or small business, it is always a smart plan to set up an account for paying your businesses taxes. If you are a smaller company, you most likely have a bookkeeper. Bookkeepers are great for start-up companies since they handle financial transactions and produce financial statements. Accountants are wonderful for companies who are growing beyond a 5 person operation. Accountants are great for end of the tax year preparation and planning.

Before you set up a business tax account, you need to have a few things in place.

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Why it is important to have a great accountant

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Accountants have been around for centuries and have provided us with a number of different services. Mistakenly though, it is believed that accountants simply provide tax return preparation services so why is it so important to have a great accountant? Can't most individuals do their taxes themselves? What most people don't know is that accountants provide much more than just tax return preparation. A great accountant can save you money in many different ways.

What does an Accountant do?
An accountant is a licensed professional who has gone through some pretty grueling education to become a certified public accountant. Accountants are extremely versed in the tax code, finances and tax issues. The stereotypical view of an accountant involves someone dropping off their receipts about a month before tax returns are due, and the accountant doing the best he or she can to prepare them. If this is the only way you are using your accountant then you are wasting your money and their time and skills. Accountants are experts in the tax code, so you should use this to your advantage. Accountants are aware of all aspects of your financial life and can help you plan, invest, and save your money. An accountant can help you plan for the future so there is a future. An accountant puts together your tax strategies to save you money this year, the next year, and throughout your entire life. That's what an accountant does.

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Tax considerations for LLCs

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People who are starting a new business will have to decide whether they want to be established as a corporation or as a limited liability company (LLC). This decision can be difficult for a variety of reasons. While doing research about each type of company, business people should always be sure to look at the tax considerations for LLCs.

Only Taxed Once

Members of an LLC are only taxed one time for their income if they have not chosen to be taxed as a corporation. This differs from a corporation in that a corporation's income is taxed and then the shareholders are all taxed for the profits they earn from the company. An obvious benefit to only having their profits taxed once is that the company itself is never taxed at what could be a higher rate; instead each individual member is taxed at their own individual rate.

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Tax considerations for LLCs


People who are starting a new business will have to decide whether they want to be established as a corporation or as a limited liability company (LLC). This decision can be difficult for a variety of reasons. While doing research about each type of company, business people should always be sure to look at the tax considerations for LLCs.

Only Taxed Once

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What to do with the taxes you take out of employee checks


Everyone is familiar with the process of receiving a check from your employer and having a large percentage of the check being removed for tax purposes. We've all noticed that with every check, there seems to be quite a few different types of taxes that are removed. But where do those taxes go? Once your employer takes them out, where does your money go? This process becomes even more complicated when you are the employer taking out the taxes. What do you do with the taxes taken out of employee checks? How do you know where to send it? Do you just stash it in a bank account until tax season or do you send it somewhere each month?

The first thing you need to do as an employer is apply for an EIN, which is an Employer Identification Number, from the IRS (unless you already have a number, in which case you can skip this step). An EIN is used to identify a business entity. Generally, only businesses need an EIN. You may apply for an EIN in various ways, and now you may apply onlinehttp://www.irs.gov/businesses/small/article/0,,id=102767,00.html by clicking on this website:

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What to do with the taxes you charge on merchandise


In any business where you sell some type of product, you have to deal with charging taxes on merchandise. But what do you do with those taxes? Do you have to pay them right away or can you save the money in a bank account until tax season? And then when tax season rolls around, how do you know what to pay? Can you just send a check to the IRS or do you have to fill out some type of form? If you have any or all of these questions, you're in luck. Keep reading and learn all about merchandise taxes.
First of all, if you are in a business where you plan to sell some merchandise, you will need to register for a sales tax number. This is required in order to meet state tax law requirements. It is possible that your state either does not charge a sales tax or does not charge a sales tax on the product you sell. To determine if your state charges a sales tax, all you have to is go shopping in your state! If you are charged a sales tax at the register, then your states does indeed charge a sales tax. Generally, if your state charges a sales tax then you will need to register for a sales tax number. Without this number it will not be legal for you to sell merchandise to the public as a form of business.

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Best options for paying your taxes as a business


One of your best options that you are going to need to consider in order to ensure that you pay your taxes as a business is to make sure that you are filing the right tax forms. The reason that this is so important is that different types of businesses are required to file different tax forms in order to pay their taxes. And if you do not file the correct forms it will basically show that you have not paid your taxes as a business even if you paid them with the forms you originally filed. But something else that you are going to need to consider as an option for paying your business taxes is when you are going to pay those taxes, most companies prefer to pay their business taxes more than once a year, but a lot of that depends on what type of business you are.

Here are some tips to keep in mind to make sure that you choose the right tax forms for your business.

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How to prepare your business in case of a tax audit

Audit. IRS. Taxes. Those three words can strike fear into the heart of any business owner. No one wants to be audited. No one likes paying taxes. But unfortunately, they are a fact of life. So just in case you're ever audited, here's how to prepare your business for a tax audit.

When most people think of an Internal Revenue Service tax audit, they think of coming face-to-face with an IRS auditor who snuck into your office, waiting to pounce on you and your incorrect tax forms. However, about one-third of IRS tax audits are in the form of letters requesting explanations for various tax items on a tax return or supporting documentation. Many people also panic when they hear the words "tax audit." But don't worry. Chances are good that you were simply selected randomly to be audited, not chosen because of something that looked sneaky or shady to them.

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How to make sure you are ready come tax time

Everybody dreads that time of year when you have to submit those taxes, waiting in anticipation to find out whether you owe taxes this year or will receive a nice refund. And no one really enjoys the hassle of trying to make sure that you have everything together that you need to. You may not even be sure that you are ready. So here are some tips on how to make sure that you are ready come tax time.

If you're doing your own taxes, you must first be sure that you have all the applicable updated software prepared and ready to use. Do you know how to use it? Have you used it before? Will you be able to efficiently input all your information? Don't waste time trying to figure out your tax software 2 nights before your taxes are due. Figure it all out now. If you plan to do your own taxes and you don't have any software yet, you might want to consider getting some. But do this now, before it's too late. You don't want to have to pay extra shipping charges or just loose out on early-bird specials because you waited too long to decide what you wanted to do. If you're not going to do your own taxes, be sure you've found a reliable and intelligent accountant to handle your finances. Do a bit of background on that firm's reputation. Be sure that the person looking at your finances will do so honestly and smartly.

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Tips for tax time


Introduction

If you are involved at all in business finance, you will spend a fair amount of time looking at charts and graphs that represent visually what is happening or expected to happen with your money. Reading charts and graphs seems straightforward but there are actually some things that you need to know to read them properly.

Instructions

Difficulty: medium

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Tips for tax time


If you own or manage a small business, you probably already know that tax time is a hectic time. Reduce your stress next year by being tax smart all year long. Here are some ideas to help you do this.

Keep meticulous records all year long-there will not be nearly so much stress for you at tax time if you keep good records all year long. Rather than scramble around a the beginning of the year trying to find all your reciepts and remember every thing you did with your money last year, how about just printing out your records and sending them of to your CPA? By using accounting software, you can keep tracks of taxes paid, expenses, debts, charitable donations, and incomes with little effort. Some of the accounting software programs that can help you keep meticulous records include PeachTree Complete, MYOB Business Essentials Pro, Quickbooks Pro, and NetSuite Sm. Business Accounting. These programs all receive good ratings, are user friendly, and will help keep your records in order. MYOB Business Essentials Pro even offers tax services on the software.

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Tips for reporting goodwill donations on your business taxes


Everyone wants to get a tax deduction where possible, and one of the ways that some businesses get tax deductions is through charitable or goodwill donations. There are a lot of charitable donation options that are available, and most of them include giving to non-profit organizations, non-profit public schools, non-profit hospitals, and government relief agencies. Giving to organizations such as these is really wonderful, because not only are you getting a tax deduction, but you also are able to help and give back to your community in a positive way. Consequently, you also might get good advertising exposure through your goodwill donations! However, after the donations are made, some people aren't quite sure what they need to do to report goodwill donations on their business taxes. Here are a couple of tips for reporting goodwill donations on your business taxes:

1. Check to see what the tax stipulations are for you: Depending on the state where you live, there could be special or unusual stipulations for goodwill donations and business taxes. You also need to keep in mind that some donations are not going to give you a tax deduction - instead, you might actually need to pay taxes to cover your donation (particularly if you donated items instead of money). You or your financial advisor should check to see what the tax stipulations are for you. For example, in the state of South Dakota, a business donating items like prizes for a contest or a fundraiser needs to pay tax on the cost of the donated item (if sales tax was not previously paid on the item). It is a good idea to make sure that you are aware of the tax requirements before you make any type of donation.

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How to prepare your statements and files for tax time


Business taxes are one of the most dreaded events every year for people in the world of business! Business taxes can take a lot of work to file for, but usually it is the preparation of statements and files for taxes that is so time consuming. It is always a good idea to prepare your statements and files for tax time continually throughout the year, but your should at least start preparing at the beginning of the calendar year. This way, by tax time you will be able to be prepared for filing for taxes. Here are a couple of hints to help you prepare your statements and files for tax time:

 Internet Tax Helper: If you own a smaller business, then you might be interested in using the Internet Tax Helper to help you prepare all of your statements and files. The Internet Tax Helper also is used to help businesses take advantage of all of the tax deductions that are available, which can wind up helping you to save a lot of money!
 Turbo Tax: One of the best ways for you to prepare your tax statements and files is to use the Turbo Tax program. This program is available through Quicken, and it is one of the most popular tax preparation programs, helping millions of users. Turbo Tax for the Web is the leading program for online tax preparation, and it is also very convenient. This program promises that your tax preparation will be effortless and easy, because a lot of your statements and files could be available for direct import into this program. This way, you won't even have to deal with the hassle of preparing a whole bunch of paper statements and files! Many of the leading financial institutions and electronic retailers have found Turbo Tax to be the best solution to help them with their tax needs. Essentially, Turbo Tax is really one of the best options available for people who don't want to spend a lot of time getting all of their paper statements and files in order - instead, the Quicken Turbo Tax can do most of your work for you!

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What you need to legally do in order to hold employee taxes from their checks

When you pay your employees you will have to withhold some money for taxes. You can't just take the money and put it away somewhere. There are steps that you have to follow to make sure you a legally withholding their taxes. The first step when hiring a new employee would be to get them to fill out a W-4 form, this form comes from the United Stated Internal Revenue service.

Every business is required to withhold taxes from their employees. For a business the withholding of taxes is the way the business pays some of their taxes each year. Each withholding is a prepayment of taxes that the business will owe. Deducting taxes from employees is the government's way of making sure that taxes are paid. Every year when employees file their taxes they will have a chance to get a refund for taxes that were paid the whole year.

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What you need to know about being audited

Here's what you need to know in case your business is audited.
First of all, you need to know what kind of audits there are so that you can be prepared for the particular audit that is being done on your business.
Types of IRS audits
There are four types of audits that are performed by the IRS.
1. Correspondence Audit
A Correspondence Audit is the simplest and easiest kind of audit that the IRS will do. A Correspondence Audit is simply a letter that you will receive from the IRS Service Center that will require that you send in copies of any canceled checks and/or receipts that are associated with particular deductions that you have claimed on your tax return. Chances are that you won't be audited in this way, because it's reserved for the simplest tax returns.

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What to do daily to be prepared in case of an audit

In order to be prepared for that always possible chance of a tax audit of your business, there are daily steps that you can take in order to be ready to face the tax auditor in case he or she comes knocking at your door.

Being audited does not necessarily mean that your business is going to go down the drain, courtesy of the federal government. If you prepare for your audit by keeping careful records of your business transactions, expenses, and income every single day, then you will be ready for that potential audit, in case it comes.

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The ins and outs of justifiable business expense tax write offs

The ins and outs of justifiable business expense tax write offs

Knowing what business tax write-offs are legal and justifiable is incredibly confusing for even the most tax-savvy small or mid-size business owner. The tax code of the Internal Revenue Service is not an easy thing to navigate; and the end result is that most of the time business owners actually do not take all of the business tax write offs that they are entitled to. This is sometimes because businesses are afraid of breaking the law. And often business owners simply are not aware of the tax write offs that they are eligible for.

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4 tips to ensure you obey international tax laws

Your company is thinking about expanding its business to other countries, but is unsure if they want to make this move because of the international tax laws. Here are some tips to help ensure that if your company makes this move that they will be following internal tax laws.

Tip one:
Do your research. Every country has different tax laws for companies that are not local businesses. So if you plan on doing business in other countries then you need to know what their tax laws are. For example some countries do not require you to pay taxes or pay very little in taxes as long as you are only spending money in those countries. These places are known as tax havens. But if you decide to expand your business and start a production plant in these countries you would be subject to a higher tax.

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What you need to know about quarterly taxes

Quarterly taxes can cause quite a lot of stress in a life. Quarterly taxes means that you're not paying taxes once a year-you're paying them four times a year. Four times a year you're going through the agony of paying taxes. Luckily, it's only a very specific kind of person that has to do this.
If you're a new business owner, that is, if you're the sole proprietor of a business, the IRS expects that you pay taxes quarterly. You've got to keep careful account of all that you're earning. If you don't, the government can charge you penalties for not paying and worse. It's easy to know if you have to pay taxes for a certain quarter-so long as you've made money during that quarter, you have to pay.

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How to set up an escrow account for paying taxes:

Buying a house can be a really gruesome process. It involves a lot of interactions with loaners. Loaners usually help the buyer to be able to buy, but in the case of the escrow account the buyer helps the loaner. Let's discuss what the escrow account is. The escrow account is an account that is set up for you when you take out a mortgage on a home. This account is a real bummer for you. Basically you are paying your real estate taxes way in advance of when they are due.

The loaner makes you put them in an escrow account so that the loaner can be protected. They want to be sure that when the time comes for the taxes to be paid the money will be there. They are afraid that the time will come for the taxes to be paid and you will tell them you do not have the money. So you deposit the money early to help the loaner. Any interest that is earned on the money does not go to you but to the loaner. It is kind of a lame process but it is one you have to go through in order to get a home.

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Withholding taxes for your sales teams

Withholding taxes for your employees is common practice in the United States. This is where you as an employer withhold a certain amount from your employees' paychecks; the amount that you have withheld is then given to the proper taxing authorities. Types of withholdings include Social Security, Medicare, federal income taxes, and state income taxes. Depending on what state your sales team is working in you may or may not have to withhold state income taxes, so before withholding state income taxes you need to check the state's tax laws.

Step one:
With a sales team you will have to decide how you are going to pay them. Are you going to offer them strictly base pay or are you going to offer them commission pay, or are you going to use a combination of both pay types. Companies who use the combination usually give the employees a low base pay, this way they will still be getting paid for working, but then if you give them commissions they will be getting rewards for going above and beyond. After deciding this you are going to have to decide if you want to limit the amount of commissions, which is called capping, or if you want to leave that amount open so that they can earn as much as they want. Regardless of which pay type you choose withholding taxes is the same. Taxes get withheld on base pay and on commissions.

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Paying income tax on a variable salary

Variable salary or variable pay is what people make in addition to their regular wages. The idea behind variable pay is that employees need to be recognized when they go above and beyond what is called for which contributes to the success of the company. Employees should be recognized and rewarded for what they have done to improve company productivity, profitability, team work, safety, or anything else that they have contributed to help the company. By recognizing and rewarding your employees you will help to increase employee morale which will also help your company, in addition to what the employee or employees have already done. Variable pay can be rewarded in a variety of ways including but not limited to: profit sharing, bonuses, holiday bonus, deferred compensation, cash, a Thanksgiving turkey or a company-paid trip.

Now that we understand what a variable salary is you are probably wondering about paying income taxes on the variable salary. As most of us are aware the government taxes pretty much everything that we earn and since variable salaries are rewards for worked performed they are considered compensation for work performed and are taxed. If you are giving your employees any type of bonus you are paying them a variable salary and you must withhold taxes on that income. Some of you might think that bonuses should be considered a benefit but the Internal Revenue Service does not view it that way the only items they consider benefits are fringe benefits which can include entertainment and expenses reimbursement, medical reimbursements and cafeteria plans, these types of benefits are not taxable to the employee or the employer.

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Doing business taxes with turbo tax

When running a business you are trying to make a profit, you do not want to have to pay a fortune to get your taxes done, but they seem to be a bit more complicated than doing personal income taxes. Well good news you can save money by doing your business taxes with Turbo Tax for a one time low fee. Turbo Tax will guide you through the process of preparing your business taxes no matter the situation; it will even help to get you the most deductions possible for your business.

Here are some of the products that are available for businesses to use.

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Can your business use turbo tax

Whether you are on a fiscal year or a calendar year once a year you must prepare taxes for your business. Nobody wants to think about doing their taxes so they try to put it off for as long as possible. But the good news is doing your taxes does not have to be that hard or that stressful as long as you are prepared and can follow directions.

It used to be that if you could not do your taxes yourself you hired somebody to do it, and this could get quite expensive, depending on how complicated your taxes were. And with businesses your taxes tend to be a bit more complicated than individual income taxes. There is now software available to help you do your own business taxes or help you get your return ready for your accountant.

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Giving contractors tips on taxes, good or bad idea

If you are not a tax professional or an accountant you should never give other people tax advice directly. This is because you are not licensed in that profession, would you want a lawyer giving you advice on what kind of surgery you need? But you can give suggestions to where contractors can go to get tax advice. For example you have a tax professional that you think very highly of, it would not be considered harmful to tell your contractors about the tax professional and how happy you are about his work. What you want to stay away from is professional advice, but if contractors have general questions about generic tax questions then you could probably offer advice on what you have done in similar situations, but you should always tell them to consult with a tax professional for expert advice.

Some topics that are safe to talk about that both you and contractors might share in common are:

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How to ensure that you use the right federal tax forms

Knowing what forms you should use when filing your federal income taxes depends on what kind of business you have. Here are some general guidelines t follow to ensure that you are filing the right federal forms for your type of business.

Self-employed/sole owner:
To file your federal income taxes you will need to fill out a Form 1040 along with a Schedule C or Schedule CZ, this form is due on April 15th following the end of the tax year. You will also need to file a Schedule SE to file your self-employment tax; this form should be filed with your Form 1040. If you are paying estimated tax you will need to file a Form 1040-ES and this form is due on the 15th day of the 4th, 6th, and 9th month of the tax year, as well as the 15th of the first month following the tax year.

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5 tips to ensure that you use the right tax forms

In order to ensure that you are using the right tax forms for your business you need to do some research. Using the right tax forms for your business also depends on what type of business you have. Certain businesses are required to file personal income tax forms to file their taxes for both business and personal dealings, while other businesses need to file forms that are strictly for businesses and must file their own personal return separately.

Tip one:
To ensure that you are using the right tax forms for state income taxes you first need to know if your state collects income taxes. After doing that research you need to do some research to find out the different tax forms and choose the one that is right for your business. To find out which tax forms are right for the state your business is conducted or incorporated in you can check with your State Tax Commission by mail or by phone or you can find this information on the State Tax Commissions website.

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Organizing Tips for Tax Time

Taxes can be a scary time for anyone, whether you are self employed, or an owner of small business, being organized for tax time can really relieve some of the stress.

The following are some great tips for being organized for tax time:
1. Start January 1st. Good tax organization is a year-round process, so keep records, receipts, and everything, and start day one.

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Paying taxes on tips, what are the laws?

If you work in a restaurant, a hotel, a hair salon, or anywhere that you receive tips as part of your salary, you may have asked yourself how you handle those tips at tax time. You may wonder what tips need to be reported and how you pay the taxes on those tips. Basically there is one law when it comes to paying taxes on your tips; you must report all tips, no matter how big or small. Here are some guidelines that will help you keep track of what you make and how to go about reporting those tips at the right times and to the right people.

- The first thing you will want to do is start keeping a daily log of the amount of tips you are making. This will help keep you organized and will be a big help in later processes. Keep track of the amount you make each day and then organize it by months. If you do not keep these logs, it will be hard to know the amount of tips you need to report and, should you be questioned later on, you may become subject to paying penalties and interest.

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How to fill out a schedule C

When you are the sole proprietor, or the only owner of a business, when tax time comes around you will need to fill out a form called a Schedule C. This document is used to report any profit or loss that your business had through the year. Here are the steps in filling out this paperwork:

- The first section is simply just your general information.
You will want to fill in your name, your social security number and your address. This information is required.
This section also asks for the business name, if you have one. There is also an area for your Employer ID number, now, you may not have one unless you sell alcohol, firearms, or other products that will require you to have this. If you don't have a number, leave this blank.
The next area asks for your accounting method: Cash, Accrual, or Other, and you must specify how it is done. Check the correct box for your business.
Next, it asks you if you "materially participated" in the operation of this business during the year. This is simply asking if you were actively involved and participated in running the business.
The last question in this section requires you to check the box if you had started your business, or obtained it, within that year.

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The facts about quarterly taxes

April 15th is the date that most people think of when they think of taxes. They worry about getting all of their tax information together and filed by then. What many people do not know if that they may need to pay quarterly taxes.

Quarterly taxes are just that.taxes that are paid quarterly. Meaning that instead of paying your taxes once a year, as the rest of the US does, you must pay once every four months. How do you know if you are required to pay quarterly taxes? That is a good question, and I am sure you have even more questions about quarterly taxes, and so, take a look at the facts about quarterly taxes.

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What is the difference in tax rates between ordinary income and capital gains?

The topic of this article is the answer to the following question: what is the difference in tax rates between ordinary income and capital gains?
Let’s start the article by going over what exactly capital gains are. Capital gains is the term for the profit that you get when you sell an asset, like a stock, that you bought at a lower price than you sold it for. Capital gains can be achieved on stocks, on bonds, on property, and on precious metals like gold or silver. While many countries out there actually do not levy a capital gains tax, the United States does have a capital gains tax. It is important for you to know about capital gains and capital gains tax so that you can arrange your investments and your tax strategy accordingly.

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1031 Tax Exchanges

A 1031 tax exchange is actually Internal Revenue Code 1031, which states that property owners can sell their property, then reinvest the money they earned from it in ownership of like-kind property while deferring the capital gains taxes. The 1031 tax exchange is often overlooked in real estate. This is unfortunate, as it can offer quite a few significant tax advantages to those who buy and invest in real estate.

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What are the 10 things you can do to prevent being audited by the IRS?

1. The most important thing is to file a professional, meticulous looking return. Whether you use a professional tax preparation service or computer software like TurboTax you want to make sure your return looks carefully prepared. Hand written is a no-no and says "Hey, audit me please!"

2. Make sure you double check for math errors. Another reason to use professional or computer software to help you avoid calculation mistakes.

3. Know your tax preparer- if you file a return with a professional make sure you know them because if they are found to have errors all of their clients will be audited along with them. Do your homework and make sure you find someone who is on the up and up. If you have doubts make sure you have a second opinion before you go on.

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Business tax law changes for the 2006 tax year - what you need to know


Running a business is not an easy thing. There are many sides and aspects to it that not many people think about. There are a lot of things to think about and a lot of things to keep up. You cannot just sit and earn money behind a cash register; there are a lot more things involved.

Some people would tend to think that if you were going to run a business you just rent the shop, open it up and start running it. But you have to buy all the supplies and you have to keep the supplies in supply. You have to buy the equipment. You have to pay the employees. You have to do so many things. It is not a simple process.

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Separating Business and Personal Credit Cards:

If you have your own business you know that there are lots of expenses involved. There are a lot of things you need to buy besides the things that will actually be a part of the building your business runs in.

There are small things here and there that require you to put money on your credit card or out of your checkbook to pay for them, such as paper for a printer, or the snacks for a board meeting. If this is the case it would probably be a great idea for you to get a specific business credit card so that you can separate your business credit card from your personal credit card.

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Estate Taxes - It Pays to Plan Ahead

Estate taxes. Its not enough to simply know they exist, and to know strategies to minimize them. When it comes down to it, you need to plan how you and your family will eventually pay them.

The Estate Tax Dilemma

Estate taxes are generally due nine months after the date of death. And they are due in cash. In addition to estate taxes, there may be final expenses, probate costs, administrative fees, and a variety of other costs. How can you be sure the money will be there when its needed?

Estate Tax Options

There are four main sources of funds to pay estate taxes. First, your current savings and investments. You or your survivors can use savings and investments to cover the costs of estate taxes, probate fees, and other expenses. This is often a sound alternative. However, sometimes savings and investments may not be sufficient. And if those savings were earmarked for other financial goals, you may need to rethink how you will achieve those goals.

Another option would be to borrow the money. Unfortunately, with this option you not only have to pay the estate taxes, but you or your survivors will be forced to pay interest on the amount borrowed to pay estate taxes. Remember to consider how your familys credit standing will be affected by a death in the family.

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Home Business Tax Tips

If you have recently started an Internet or home business, your probably a little intimidated by having to submit a tax return and the possibilities of being audited. Simply follow these guidelines and rest assured that filing your next tax return will go smoothly.

Get yourself an accounting ledger booklet

The first thing that you need to do at the beginning of every year is purchase yourself a accounting ledger booklet. These can be found at your local office supply store and can be found for under $10. You can deduct your millage and the accounting legder also.

Keep a millage tracking sheet in your car

Each year I make myself a simple spreadsheet that I keep in the glove compartment of my car. Each time that I need to get office supplies, or I go to the post office to mail flyers, I write my beginning and ending millage down on the spreadsheet. At the end of the year, I just transfer the millage over to my accounting ledger.

Keep track of your Utilities

If you have a room in your home that is used only for your internet business and nothing else, you will be able to deduct a portion of your utilities. I especially like this because I have to have these things anyway with or without the internet business and now they are tax deductible. Everything from gas, electricity, long distance and garbage pick-up are allowable deductions. Be sure that you keep your payment receipts in your accounting ledger.

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Business Tax Deductions

As we enter mid-March, taxpayers begin to become very interested in deductions. Following are a few that you may be entitled to claim.

Deductible Expenses

Office expenses

Rent or lease payments

Advertising

Costs of goods sold

Insurance costs

Utilities

Payments to independent contractors [file form 1099]

Accounting fees

Legal fees

Communication expenses

Credit Card Interest for business charges

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Tax Reduction Tips

In the rush to get tax returns prepared and filed by April 15th, many overpay their taxes. Following are a few tax reduction tips that could help you save a bundle.

Tax Credit For Starting A Small Business Pension Plan

Establishing a pension plan can help you retain important employees. What many business owners dont realize is a tax credit can be claimed if the business has 100 or fewer employees. Meet this requirement and you can take a tax credit of up to $500 in each of the first three years of the plan. Tax credits are extremely valuable because they are deducted directly from the taxes you owe, not gross revenues.

The credit is 50% of certain start up costs you incur in each of the first three years. The costs include the expenses incurred in establishing and maintaining the plan. They also include the cost of any educational retirement planning programs you provide for employees.

For example, first assume that you spent $1,500 starting a pension plan for your employees in 2004. Next assume that you will spend $1,200 in both 2005 and 2006 for maintaining the program and educating your employees. In this scenario, you would be eligible to claim a tax credit of $500 in 2004, 2005 and 2006.

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Tax Audits: What Signs Make You More Likely to be Audited by the IRS?

It's a major fear for most Americans: A notice from the Internal Revenue Service (IRS) summoning you for an audit.

What is it about these three letters that strikes a cord of fear in Americans' hearts? Learning the signs that could put your tax return at the top of the list for an audit, and avoiding them if possible, may put your mind at ease.

Statistically speaking, your chances of actually being audited aren't that high-according to IRS data, one in 150 individual taxpayers were audited in 2003. This number had gone down in recent years-about one of every 79 tax returns was audited in 1998-but then, in 2004, individual taxpayer audits exceeded 1 million for the first time since 1999.

Also in 2004, the IRS gathered a record $43.1 billion in enforcement revenue, a 15 percent increase from 2003. Now in 2005, the IRS plans to add more enforcement to their team, meaning that more tax audits could potentially be performed.

What adds to most people's fear of being audited is that of the unknown: Very few people know just how the IRS chooses which tax returns to audit.

"That's a very closely guarded secret that not many people in the IRS know," said Bernard S. Kent, a partner with the human resource services group at PriceWaterhouseCoopers.

Still, there are some signs that will put your tax return at the top of the "to audit" pile. So take notice of -- and by all means avoid if they're not legitimate -- these red flags that increase your chances of catching the tax examiner's eye.

A computer program called the Discriminant Index Function, or DIF, is the first way your tax return could be marked for an audit. It looks most closely at the following items:

* Higher incomes: If your income is more than $100,000, your chances of being audited increase to one in 20. Says Eric Tyson, co-author of "Taxes 2005 for Dummies," "Higher income earners are more likely to be audited because there is more tax money at stake."

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Anticipating Your IRS Refund Can Cost You Plenty

While accountants are reaching for aspirin, millions of Americans are reaching for some fast cash this tax season. Unfortunately, those who reach for fast cash in the form of a refund anticipation loan are getting hit with interest rates and fees that are out of this world.

The tempting ads are plastered in newspapers and on television for fast cash refunds, express refunds, or instant refunds. The ads offer to get your refund in a day or two, or in some cases even instantly.

What is a refund anticipation loan? Its a loan that borrows against your anticipated tax refund from the IRS. Refund anticipation loans, or RALs as they are known in the tax industry, carry annual percentage rates (APRs) of about 60% to over 700%, a fact that many consumers either dont realize or simply overlook.

RALs are marketed to people who need money the most such as low and moderate income workers. A report by the National Consumer Law Center notes that about 40% of the 12 million refund loan customers in 2000, were families who received the Earned Income Tax Credit, the largest federal poverty assistance program. And since the RALs often use the term refund in their ads, many of those who take the bait dont realize that theyre receiving a loan and not their actual refund from the IRS.

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Navigating The Internet Sales Tax Laws

QUESTION:
I have been contacted by my local city government to say that my business is scheduled to be audited to determine if I owe any sales tax from items purchased on the Internet. Can they really make me pay this tax? I thought you could buy things online tax free? -- Katie R.

ANSWER:
I hate to burst your internet bubble, Katie, but they are within their rights to audit your business and demand payment of sales tax on items purchased on the Web.

Internet sales taxation has been a topic of contention even before Amazon sold its first book and Priceline booked its first flight.

One of the more controversial points is that no one, including our own government, seems to have a clue how to implement a fair and logical Internet taxation process.

With over 7,500 different local, county and state taxation systems in the United States, you can understand the controversy. In 1998, Congress did what it usually does when faced with a potentially explosive issue like Internet tax collection -- it decided to put off making a decision. Congress enacted a three-year moratorium on the collection of taxes to give an appointed advisory board time to come up with an acceptable solution.

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Surprising Truths About Tax Preparers

Choosing the right tax preparer for your business is a decision best not left until April. A former tax preparer and small business mastermind offers insights into the secret world of tax preparers.

1. All tax preparers are not created equal.

It stands to reason, somewhere in the country is the Worst Tax Preparer. The bad news is you may have already booked your appointment with him. Preparing taxes is a complex activity. So complex that many of us simply throw in the towel, pack up our receipts, and head for the nearest tax office. When you arrive at the office, you fully expect our tax preparer to be highly competent and completely vested in getting you the best deal in town.

Back in my tax preparing days, I worked for one of the big name tax preparation franchises both as a preparer and as a tax return editor. I worked with seasoned professionals and total neophytes. I well remember the first time I stepped up to the plate as a new preparer. I was terrified. Terrified the customer would know I was inexperienced. Terrified Id make a huge blunder and the customer would pick up on it. Terrified the more experienced preparers would laugh at my mistakes.

I quickly realized that as inexperienced as I was, I still knew way more than my clients did. And because the franchise had great systems, others would be checking and re-checking my work so my mistakes and oversights would be caught before I did any damage to the client.

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Debt Collection Techniques: Making Tax Season Work for You

Income tax refunds to debtors can be drawn upon to settle a balance when you dun and do a proper follow-up. Indeed, You can actually triple your collection amounts during tax season!

In January, pinpoint the accounts that might have refunds coming. Include a question in the "facts" part of your call as to whether the debtor expects to get a refund. Then keep tabs on them and in your conversations repeatedly confirm that they will use the refund to pay your bill. Watch out for "reduction tactics" which the debtor may try around the time he expects the refund check to arrive

"I just found out that the refund isn't going to be as much as I thought/" (sounding sincerely disappointed.)

You should then request immediate documentation of this lower figure and inform the debtor that further collection procedures will now be implemented. Then discuss other ways the debtor can come up with the money.

If the debtor becomes evasive or doesn't respond to your messages around the time he expects his check don't hesitate to call him at work. If you haven't been "ceased" from doing this (see pages 24-25).

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Small Business Tax Deductions for Year End 2004

As a small business owner, it's wise to familiarize yourself with some key deductions that may reduce your tax bill for 2004.


Employee Benefit Plans - You may deduct contributions to employee benefit plans (such as health insurance plans and retirement plans). Depending on your circumstances the maximum contribution that you may deduct per employee in a qualified retirement plan can go up to:

$100,000 or more With a Defined Benefit Plan $44,000 With a 401(k) plan $41,000 With a SEP-IRA or Keogh


Automobile Expenses- You can elect to deduct the actual expenses incurred (including gas, oil, tires, repairs, insurance, depreciation, and rent or lease payments) for the business-related portion of your car or truck expenses, or simply take the 2004 standard mileage rate of 37.5 cents per business mile.


Social Security Taxes - You may deduct Social Security and Medicaid taxes paid to match required withholdings on employee wages, federal unemployment taxes, as well as real estate or personal property taxes paid on business assets.

Continue reading "Small Business Tax Deductions for Year End 2004"

Seven Key Tax Deductions for the Self Employed

As a sole proprietor, it's wise to familiarize yourself with the some key deductions that may reduce your tax bill for 2004. Small-business consultants generally recommend that you hire an accountant to prepare your tax returns, payroll and financial statements. But you should also meet with your accountant well before the year-end rush to discuss such matters as tax planning, and record keeping for tax deductions.


Seven common small business tax deductions:

1. Employee Benefit Plans - You may deduct contributions to employee benefit plans (such as health insurance plans and retirement plans). Depending on your circumstances the maximum contribution that you may deduct per employee in a qualified retirement plan can go up to:

$100,000 or more For a Defined Benefit Plan $44,000 For a 401(k) plan $41,000 For a SEP-IRA or Keogh

Continue reading "Seven Key Tax Deductions for the Self Employed"

Taxing Times ... The Home Office Deduction

Yay! It's tax time again (or near enough). I can't wait. Just love this stuff. Not! OK, I know it's boring, I know your eyes glaze over at the mere thought of all those forms and paperwork but it has to be done so let's just bite the bullet and get on with it.

Now let's start with the fact that there's no substitute for a qualified professional when it comes to this sort of stuff so I'm not going to attempt a comprehensive survey of everything you need to think about when it comes to tax and your home business. What we're going to look at in this article is *one aspect* of home business taxation in the U.S.: the home office deduction. By having a working knowledge of this deduction BEFORE you hand everything over to your accountant will not only save both of you a lot of time (and therefore expense), you will be able to make sure you're keeping good records for everything you need to. Although this article considers U.S. tax law, many other countries have
enacted similar laws so if you're outside the U.S., check with your local tax office to see what comparable deductions may be available in your country. I know, for example, that the Australian home office deduction is very similar.

Continue reading "Taxing Times ... The Home Office Deduction"

How To Avoid Paying Too Much Estimated Tax

Many self-employed people and small business owners make quarterly estimated tax payments at both the federal and state level. (Sigh!)

Now that we're past the year's half-way point, this is a good time to take a look at how much you've paid in so far, and whether you need to make any adjustments to this year's remaining two quarterly estimated tax payments.

NOTE: If you're newly self-employed, and perhaps unfamiliar with the government's estimated tax payment schedule, here are the due dates for the Year 2003 quarterly estimated tax payments:

QTR 1: April 15, 2003
QTR 2: June 15, 2003
QTR 3: September 15, 2003
QTR 4: January 15, 2004

The form used to accompany the payments is Form 1040-ES. You can download the form and its instructions here:

http://www.irs.gov/pub/irs-pdf/f1040e03.pdf

Continue reading "How To Avoid Paying Too Much Estimated Tax"

Taxing Times ... The Home Office Deduction

Yay! It's tax time again (or near enough). I can't wait. Just love this stuff. Not! OK, I know it's boring, I know your eyes glaze over at the mere thought of all those forms and paperwork but it has to be done so let's just bite the bullet and get on with it.

Now let's start with the fact that there's no substitute for a qualified professional when it comes to this sort of stuff so I'm not going to attempt a comprehensive survey of everything you need to think about when it comes to tax and your home business. What we're going to look at in this article is *one aspect* of home business taxation in the U.S.: the home office deduction. By having a working knowledge of this deduction BEFORE you hand everything over to your accountant will not only save both of you a lot of time (and therefore expense), you will be able to make sure you're keeping good records for everything you need to. Although this article considers U.S. tax law, many other countries have enacted similar laws so if you're outside the U.S., check with your local tax office to see what comparable deductions may be available in your country. I know, for example, that the Australian home office deduction is very similar.

Continue reading "Taxing Times ... The Home Office Deduction"

Estimated Quarterly Taxes: Tips and Information

Any individual who is self-employed, retired, laid-off, or disabled, knows they are responsible for filing and paying Federal estimated quarterly taxes and in states having a state income tax, for filing and paying State estimated quarterly taxes. This can be very different from the taxation that takes place while you are employed. First of all, the term 'estimated quarterly taxes' isn't exactly accurate. The Internal Revenue Service (IRS) publishes a schedule that jumps around a little. The first payment for a tax year is due April 15, the second payment is due June 15, the third payment is due October 15 and the last payment is due January 15 of the next year. So the payment schedule is more like 31/2 months, 2 months, 4 months and 3 months in making up the Federal estimated quarterly tax payments. The intent, however, is each payment represents one quarter of what you will owe for the year.

Continue reading "Estimated Quarterly Taxes: Tips and Information"
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