/Taxes

Paying Your Small Business Taxes: Three Options to Consider

285_2792143If you’re like most small business owners, you groan when April rolls around. You know you have a hefty tax bill waiting for you, and it’s one you despise paying.

What’s your plan for paying that tax bill? Did you know you had options? Let’s look at three smart ways you can get your taxes paid with minimum stress or fees.

Method 1: The Plan-Ahead Strategy

Now, we’re not all this diligent, but if you plan now for the taxes you’ll need to pay in 2016, you can easily set aside enough to cover the bill. Likely, your tax bill is pretty steadily the same amount each year. So use this year’s amount as a guideline for next year. How much would you need to set aside monthly to cover it in 12 months?

If you don’t have a business savings account, set one up so the money is diverted from your savings account and you’re not tempted to spend it. Look for a high-yield savings account so the interest helps you toward your financial goal.

You can also send the IRS quarterly estimated tax payments to keep from having a gigantic bill come April. Continue reading “Paying Your Small Business Taxes: Three Options to Consider” »

By | April 15th, 2015|Taxes|0 Comments

Starting a Business? You Can’t Deduct All Your Startup Costs Up Front

609_3543649When first-time entrepreneurs begin the process of starting a business, they sometimes throw caution to the wind when it comes to investing in that business, because they assume they can write off all of their business expenses.

Those entrepreneurs are in for a serious shakeup, because that’s not explicitly true. There are some rules about what and when you can deduct as it relates to startup costs. Take notes, folks. This is important.

You Can Only Deduct Once Your Business is Operating

Let’s say you started investing in your new business in November of 2014. You bought office supplies, furniture, and inventory. But you didn’t actually start your business until January 2015. You won’t be able to claim those business expenses on your taxes for your 2014 taxes; instead, you’ve got to wait until next year when you file your 2015 taxes. Continue reading “Starting a Business? You Can’t Deduct All Your Startup Costs Up Front” »

By | April 8th, 2015|Starting a Business, Taxes|0 Comments

Small Business Taxes and How Incorporating Affects Them

705_3546205This time of year, most business owners are thinking about their small business taxes: how much they owe, what they need to do to file them, whether they have enough to pay what they owe.

But did you realize that if you incorporate a business, how you file your small business taxes and how much you pay can sway in your favor (depending on the corporate structure you choose)? Let’s take a look at how incorporating affects your taxes.

Small Business Taxes and the C Corporation

As I said, being incorporated can be better for you taxwise, but not always. If you incorporate as a C Corp, there’s actually some drawback to your tax situation. Essentially, you’re taxed twice on profits: first you’re taxed on the profits of the corporation, then you as a shareholder are taxed on your dividends that you receive from the company. And the tax rate for a corporation can be higher than what it is for a sole proprietor. Continue reading “Small Business Taxes and How Incorporating Affects Them” »

By | April 6th, 2015|Taxes|0 Comments

14 Days til Tax Day? 14 Things You Must Take Care Of Before Then

257_4577185If you’re like a lot of other small business owners, you drag your feet until the last minute to file and pay your taxes. It’s getting down to the wire, folks, so even if you want to wait until April 15 to file your taxes, you still have a lot of work to do to prepare.

1. Decide: DIY or Professional?

Your decision here can determine how easy it is to get your taxes filed. If you’re filing them yourself (easiest for solopreneurs with simple tax situations), you might need more than a day or two to do so. Start blocking off time to sit down and go over your taxes. If you’re planning to hire a tax professional, it might not take as long to do, but you’ll be competing for that pro’s time. Book your appointment now so you don’t miss the deadline.

2. Consider an Extension

If you’ve been frantically working to pull together all the necessary documents to file your taxes, but still don’t have them, you can file an extension. This can get you up to 6 months to work on your taxes. It’s not ideal, but sometimes it’s the best option. Continue reading “14 Days til Tax Day? 14 Things You Must Take Care Of Before Then” »

By | April 1st, 2015|Taxes|0 Comments

LLC or Corporation: Which Has Better Tax Benefits for You?

998_4166537If you’ve already put changing your business structure on your New Year’s Resolutions list for 2015, kudos to you. The right business structure can not only protect your personal assets but also give you some relief come tax time.

The two most popular business structures for small businesses — the LLC and the corporation (specifically the S Corp) — have some fantastic tax benefits. But which have the best benefits for your business?

The Perks of the LLC

LLCs have a few less rigid requirements than corporations, and don’t require having a Board of Directors. Taxwise, the LLC can be treated as a pass-through entity, which means rather than filing corporate taxes, you file your business profit and loss on your personal tax forms. Those business losses come in handy in reducing your taxable income. This is great for simplifying the amount of time you spend on your taxes!

And because LLC members aren’t considered employees, their share of the company profit is not subject to social security or Medicare tax. (Keep in mind you still need to pay self-employment taxes on your income.) On the other hand, a corporation requires shareholders to pay social security and Medicare taxes on their salaries. Continue reading “LLC or Corporation: Which Has Better Tax Benefits for You?” »

By | December 31st, 2014|Business Filings, Taxes|0 Comments

What You Need to Know About Internet Sales Tax

998_4166537.JPGIf you sell products online, you need to be aware of some changes surrounding Internet sales tax. Here are some of the highlights of the law that you need to know to stay compliant and keep the IRS off of your back.

If You Only Sell Online…

You technically should be paying state sales tax, though there’s not currently much in the way to enforce this. Many ecommerce systems charge sales tax based on what state the customer is in, so see if yours does so.

If You Also Have a Storefront…

If, in addition to selling products online you also sell them through a physical location, you are required to collect applicable state and local sales tax from your customers. Continue reading “What You Need to Know About Internet Sales Tax” »

By | June 27th, 2014|Taxes|Comments Off on What You Need to Know About Internet Sales Tax

Small Business 101: What You Need to Know About Franchise Taxes

Tax calculator and penOnce you start a business, it seems like every time you turn around, you’re getting another notice to renew a license or pay a business tax. It’s hard to know what they’re all for, but keeping them straight is a necessity if you want to stay compliant with your business.

In the coming months, I’ll be writing about some of these licenses, permits, and taxes to help you demystify the world of small business ownership. This month, let’s look at franchise taxes.

First of All, What IS a Franchise Tax?

In a nutshell, a franchise tax is one the state you incorporated your business in charges you for the privilege of running your business in that state. Every state has a different fee structure; some, like California, have a flat minimum rate plus a percentage of net income (for California, that’s a minimum of $800, and 1.5% of income). Others have just a flat rate or percentage of net income or net worth.

Sometimes, LLCs and Limited Partnerships have to pay the franchise tax, in addition to specific types of corporations, like the S Corp.

Some states, like California, may waive your first year’s franchise tax fee, but check to see if you qualify before you assume you don’t have to pay. Continue reading “Small Business 101: What You Need to Know About Franchise Taxes” »

By | May 5th, 2014|Taxes|Comments Off on Small Business 101: What You Need to Know About Franchise Taxes

Five Last Minute Tax Tips for 2014

Businessman holding a sand timerThis is a post written by Dawson & Associates.

Are you one of the millions of Americans who haven’t filed (or even started) your taxes yet? With the April 15 tax filing deadline less than a week away, here’s some last minute tax advice for you.

1. Stop Procrastinating. Resist the temptation to put off your taxes until the very last minute. You need time to prepare your return, and may need certain documents that might take more time to pull together.

2. Include All Income. If you had a side job in addition to a regular job, you might have received a Form 1099-MISC. Make sure you include that income when you file your tax return because you may owe additional taxes on it. If you forget to include it you may be liable for penalties and interest on the unreported income.

3. File on Time or Request an Extension. This year’s tax deadline is April 15. If the clock runs out, you can get an automatic six-month extension, bringing the filing date to October 15, 2014. You should keep in mind however, that filing the extension itself does not give you more time to pay any taxes due. You will still owe interest on any amount not paid by the April deadline, plus a late-payment penalty if you have not paid at least 90 percent of your total tax by that date. Continue reading “Five Last Minute Tax Tips for 2014” »

By | April 10th, 2014|Taxes|Comments Off on Five Last Minute Tax Tips for 2014

8 Top Secret Tax Tips the IRS Doesn’t Want You to Know About

finger on lips.JPGWhen it comes to filing your small business taxes, it can seem overly complex. After all, what qualifies as a deduction? Are you filing as the proper status?

Don’t let tax season overwhelm you. Believe it or not, the IRS isn’t out to get you, but they do want you to play by the rules. These tips will help you alleviate the stress you feel this time of year and help you maximize your refund.

1. You Can File an Extension

Now, I’m not encouraging you to procrastinate each year, but you can ask for an extension if it’s taking longer than anticipated. And now you can file for that extension online rather than fill out a pile of paperwork. An extension will give you until October 15 to file your taxes, but be aware: penalties and interest on what you owe start on April 16. So while you’ll avoid the Failure to File penalty if you file an extension, you will still have to pay a Failure to Pay penalty.

2. Sometimes It’s Better to Ask for Help

If you’re one of the millions of business owners struggling with your own taxes, consider whether it’s the best use of your time. You may think it costs more, but in reality, working with a tax professional or accountant may only run you a few hundred dollars. And when you factor in the savings they can help you recoup, it’s well worth it. Continue reading “8 Top Secret Tax Tips the IRS Doesn’t Want You to Know About” »

By | April 8th, 2014|Taxes|Comments Off on 8 Top Secret Tax Tips the IRS Doesn’t Want You to Know About

How to Get Your Maximum Tax Refund: Nellie Akalp on FOX Business

Looking for the maximum tax refund back this year? Nellie Akalp provides tips on FOX Business.

foxtax

She says it’s worth it to pay an accountant to help you, as he’ll know the deductions that apply as well as the best filing status for your business. This can maximize your refund by $1,000 or more. She also says it’s important to know your expenses and which can be deducted on your taxes, like a home office or business office expenses. She stresses the importance of knowing your filing status, whether you’re filing as a business or an individual. Most people don’t think twice about what status to use, and sometimes overpay in taxes. Nellie also says to take advantage of your IRA contribution limit, which you can contribute for 2013 until April 15. She also says that many people overlook charitable contributions being tax deductible.

By | March 13th, 2014|Taxes|0 Comments