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50 pages

English

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Taxes for Small Businesses, Simplified

A business that neglects its taxes is a business living on borrowed time. But there’s no need to despair. Getting your business on the right side of its tax burden is easier than you think. This QuickStart Guide from ClydeBank Business will help you lay the groundwork of a sustainable business tax strategy. You’ll learn how to proactively minimize your tax obligations and how to maneuver your way out of trouble should you ever fall behind.

This best-selling QuickStart Guide form ClydeBank Business—still in its first year of publication—has already helped countless small business owners and managers boost their tax IQs and protect their bottom lines. Following in tradition with other titles from ClydeBank Business, the Taxes for Small Businesses QuickStart Guide beautifully simplifies complex ideas and presents on-point information using a style that’s accessible, easy to follow and easy to reference.

To help you further hone your newfound skills as a business tax expert, we’ve included an interactive tax deduction quiz at the end of the QuickStart Guide, along with a comprehensive glossary of terms for easy reference.

You'll Learn...

How Your Business Entity-Type Affects How You’re Taxed

How To Capitalize on the Shockingly Humane Tendencies of the IRS

How To Exercise Your Rights And Survive An IRS Audit

How Multiple Levels of Government Authorities Can Tax Your Business

How To Convert Your Administrative Tax Burden Into Real Business Value

How To Best Manage Your Business’s Payroll Taxes

How To Spot, Claim and Maximize Your Tax Deductions

Informations

Publié par	ClydeBank Media LLC
Date de parution	20 décembre 2016
Nombre de lectures	0
EAN13	9781945051371
Langue	English

Informations légales : prix de location à la page 0,0017€. Cette information est donnée uniquement à titre indicatif conformément à la législation en vigueur.

Extrait

TAXES FOR SMALL BUSINESSES

Understanding Taxes For Your Sole Proprietorship, Startup, & LLC

Contents

ACCESS YOUR FREE DIGITAL ASSETS
Introduction
| 1 | The Basics
Cash vs. Accrual-Based Accounting
The Federal Level
The State Level
The County Level
The City Level
Reasons to Prepare Your Own Tax Returns
Choosing the Right Tax Preparer
| 2 | Choosing the Correct Entity
Basic Entities
| 3 | The IRS & Your Small Business
Dealing with the IRS
Remaining in Good Standing with the IRS
Understanding Your Rights
What the IRS Auditor Wants
The IRS Statute of Limitations
| 4 | How to Keep Good Records
What to Keep & For How Long
The Mileage Log
Keep a Journal or Daily Planner
Keep Accurate Financial Records
A Final Note About Records
| 5 | Handling Payroll Taxes
Federal Unemployment Tax
What if I Don’t Pay My Payroll Taxes?
Independent Contractors vs. Employees
Reporting Obligations
| 6 | The Most Important Deductions
The Home Office Deduction
The Pros & Cons of Working from Home
Business-Related Meals & Entertainment
Travel Expenses
Section 179 Deductions
Deducting Self-Employment Tax
Deducting the Cost of Health Insurance Premiums
Interest Expenses
Software Expenses
Family Employees
Retirement Contributions
Every Deduction Under the Sun
| 7 | Common Business Tax Mistakes
Receipts Aren’t Enough
Don’t Borrow from Designated Tax Accounts
Don’t Celebrate your Tax Refund
Don’t Take Too Much Salary from the Business
Get the Retirement Plans Up & Running
Stay in Regular Touch with your Accountant
Know When to Call it Quits
Conclusion
Bonus Quiz
Glossary of Terms
About ClydeBank

Terms displayed in bold italic can be found defined in the glossary.
BEFORE YOU START READING, DOWNLOAD YOUR FREE DIGITAL ASSETS!
Visit the URL below to access your free Digital Asset files that are included with the purchase of this book.
DOWNLOAD YOURS HERE:
www.clydebankmedia.com/taxes-assets

Introduction

Taxes are a significant expenditure for any business, large or small. They must be readily considered and incorporated into your business plan from the very beginning. Understanding them, however, can be a chore.
Benjamin Franklin said, “In this world, nothing can be certain except death and taxes”, and taxes can be a whole lot more complicated than death.
The typical small business owner works three to four months just to earn enough profit to pay taxes. As a matter of fact, the largest single expense for most small business owners is their annual tax bill. But that’s all part of operating your own business, and the process of planning for, collecting, and paying taxes needn’t be complicated. The basic information offered in this book will provide you with the material you need to maximize your understanding of a variety of tax laws and to keep you in compliance and out of trouble.
Though you may be inclined to want to turn all of your tax questions, issues, and problems over to an accountant, it’s still important for you - the small business owner – to understand the ins and outs of the U.S. tax system. However, it’s also essential to recognize that this is an ever-changing system, full of modifications that seem to come out almost annually. That means staying in the loop might require some regular education and research as well as consultations with any tax professional you might hire.

| 1 | The Basics

Simply put, you’re required by law each year to complete the tax forms that pertain to your business. You MUST complete these forms or you face penalties from the various entities that demand the reporting. There are deadlines for filing each as well, so it’s important to get a handle on what’s due and when it should be submitted.
I t all starts with good accounting.
Cash vs. Accrual-Based Accounting
Formally speaking, it is proper for businesses to choose and rely on accrual-based accounting rather than cash-based accounting for generating financial reports to submit to banks, partners, and other parties, but, when it comes to reporting tax liability, cash-based accounting is the preferred method. (If you’re not clear on the difference see the Glossary of Terms at the end of this text.) The important thing to know is that many well-run businesses need to maintain two distinct accounting record systems: an accrual system for their business and financial management and a cash system to determine their appropriate tax liabilities.
Just as is the case when filing personal taxes, you’ll be filing your business tax returns at various levels.
The Federal Level
Federal taxation is primarily focused on taxing the profits (or income) of your small business. Though the state you live in may also collect income tax (not all states do), the largest income tax you pay is to the federal government.
If you have employees, you must submit your employees’ tax withholdings to the federal government, along with your share of payroll taxes, including 50% of the Medicare and Social Security taxes, as well as FUTA-based taxes, which are reviewed in detail in Chapter 3.
If you’re filing on your own without help from a tax preparer, you may find yourself a bit confused about which forms to use.
H ere is a quick overview:
• Sole Proprietorships file a Form 1040 and a Schedule C or C-EZ, depending on your expenses. If you are a farm business, you also need to file a Schedule F.
• Partnerships file a Form 1065 to report their incomes, gains, losses, and deductions. A partnership does not pay tax on its income but, rather, passes through profits and losses to its partners.
• C Corporations are taxed as separate entities and must file annually via a Form 1120.
• S Corporations are pass-through entities (see more about this in the next chapter). Shareholders of S Corporations report the flow-through of income and losses on their personal tax returns and are assessed at their individual tax rates. Nonetheless, an informational Form 1120S must be filed.
• Limited Liability Companies that are single-member LLCs file Form 1040 along with a Schedule C, E, or F, whereas multiple-member LLCs need to file a Form 1065.
Forms 1120, 1120S, and 1120A are due to the IRS by March 15th of each year for the previous year. Forms 1040 (and its variants), Schedule C, and Form 1065 are due to the IRS by April 15th.
If you’re tackling this without help, companies such as Turbo Tax offer good guidance, or you may call the IRS or log onto their website for more specific information.
The State Level
Each state in the U.S. has its own set of tax laws. Your tax requirements for your state largely depend on your business structure (LLC, sole proprietorship, S corporation, etc.).
Businesses with employees are required to pay employment taxes. All states, for example, demand taxes associated with unemployment insurance and workers’ compensation insurance.
In addition to taking their share of income taxes, states tend to rely heavily on collecting sales taxes . If you sell goods or services (as most do), then you are responsible for collecting sales tax and submitting the revenue to your state’s Board of Equalization according to the timetable mandated by your state authority.
States also collect what’s known as use tax , which is a type of excise tax on a good or service purchased outside the state for which no sales tax was collected. The internet shopping company, Amazon, recently brought up the issue of use tax for discussion since many products purchased on Amazon are sold without the addition of sales tax. As a rule, if the item purchased for use by your small business is not a food item and would have been taxed had it been sold in your state, then you owe your Board of Equalization a use tax for that item.
If the business is purchasing items for retail sale, then no sales tax needs to be paid. The sales tax is collected when the item is sold to the end consumer.
Note : If a small business owner gives to himself or someone else merchandise that was purchased for retail sale, then the small business owner is required to pay a use tax for that item, as it was purchased without paying sales tax and then used by the business owner as a gift (to himself or someone else).
Websites for the government of each state offer tax information for those who are trying to decipher the tax laws of their particular locales.
The County Level
Businesses that own real property in a particular county (land or buildings) generally pay county taxes. The county also collects taxes on property the business owns, such as vehicles or other physical goods.
The City Level
Last but not least, if the business is up and running in a city, then that city may request that the business cough up some cash for a license to operate in that city. This expense isn’t, relatively speaking, a hugely expensive one, but since it’s being paid to a government entity in exchange for governmental recognition and protection (city police), it constitutes a tax.
Reasons to Prepare Your Own Tax Returns
Small businesses, especially those just starting out, don’t always have a lot of expendable i