Business
26.04.2012
Business, Entrepreneurship, Small Business, Taxes
Know the tax consequences before closing your doors.
You can close your business by selling all of the assets or converting the assets to personal use. The tax consequences of selling your business depend on whether you are operating a sole proprietorship or corporation. As a sole proprietor, if you sell all the assets of your business, you report the sale of each asset separately to determine the gain or loss. If you close your sole proprietorship business and keep all the assets to use personally, there may be some tax on recapture of depreciation.
When you want to end your corporate business, you can either sell the stock or the assets. If the assets are sold, the corporation pays the tax on any gain. As the shareholder, you don’t have any tax consequences unless the corporation liquidates and distributes the proceeds to you in exchange for your stock. If the stock is sold, you report the sale of your corporate stock on your personal tax return.
If you take the assets out of the corporation, gain or loss is recognized on the liquidating distribution of assets as if the corporation sold the assets to you at fair market value. You, as the shareholder, do not have any tax consequences unless the fair market value of the assets distributed exceeds your stock basis.
As with any sales contract, it’s important to determine the tax consequences before signing on the dotted line.
30.03.2012
Business, Small Business, Taxes
This is a friendly reminder about your sales tax payments.
Rate Increase
Effective April 1, 2012, sales tax in Stark County, Ohio increases to 6.25% from 5.75%. If you use a computer for your invoices, you will want to change your rates before making any sales on the 1st.”
Thank you!!!
06.02.2012
Business, Taxes
Congress and the Internal Revenue Service are on a mission to cut down on unreported income. A grilling question on the top of tax forms Schedules C and E is, “Did you make any payments in 2011 that would require you to file Form(s) 1099?”
Form 1099s are information returns. They make the IRS aware that someone else has received income from you. Generally speaking, if you paid any one person or entity $600 for services last year, tax law requires you to send them and the IRS a 1099-MISC. That MISC is for “miscellaneous” income.
This year, for the first time, the IRS is reminding all taxpayers of their legal obligation directly on tax forms. They’re also getting taxpayers on record as to whether they complied.
Taxpayers who don’t handle these questions the right way are opening themselves up to penalties. That could be up to $250 for each 1099 the IRS didn’t get and $250 for each 1099 a contractor didn’t get, with no cap on the amount. The IRS can also disallow the expenses claimed as deductions if they’re not documented as they should be on 1099s.
Due dates
The deadline to comply with these requirements is coming up. The recipients of the funds are to receive 1099s by February 15, 2012. The IRS is to receive copy A by February 28, 2012 unless filed electronically. Electronically filed 1099s are due to the IRS by April 2, 2012.
If you have any questions or concerns, please contact us.
05.07.2011
Business, Entrepreneurship, Home Based Business, Small Business, Starting a Business, Taxes
A self-employed individual expects to pay taxes on profits from their business. Unfortunately, there is an additional tax that must be paid when all is said and done.
When you work for an employer, the employer withholds Social Security and Medicare taxes from your pay. The employer also pays their portion of Social Security and Medicare taxes. Depending on the size of the payroll, the employer may make these payments weekly or monthly. A self-employed individual does not have Social Security and Medicare taxes paid for them. Instead, they pay self-employment taxes on the profits of the business.
If you have your own business or are a subcontractor, the IRS considers you self-employed. This requires you to pay self-employment tax on the profits of your business. Typically, the IRS requires self-employed individuals to make quarterly estimated tax payments. If you fail to make these payments, you may be penalized at the end of the year.
Here is a helpful tip for the self-employed. Open a bank account just for your self-employment taxes. Every week or month, deposit enough money into the new account to cover the taxes for that time period. At the end of each quarter, when your self-employment taxes are due, you should have enough money saved up to make your payment. This will reduce the shock and frustration of trying to find the money to make the payment at the last minute. It will also help you avoid the nasty penalties from the IRS for not making your payments large enough or on time.
27.06.2011
Business, Entrepreneurship, Home Based Business, Small Business, Starting a Business, Taxes
Due to outrageous gas prices, the IRS will increase mileage rates for the second half of 2011. What does this mean for you? If you are reimbursed for your mileage or claim your mileage on your tax return, you will have to distinguish the miles traveled in the first half of the year from the miles traveled in the second half of the year. For those that log their mileage on a daily or weekly basis, this may not be an issue. For those that do not frequently log their travel, take note that your employer or accountant will be asking you to determine in which part of the year the mileage occurred.
01/01/2011 – 06/30/2011 RATES
- Business Mileage: 51 cents per mile
- Medical/Moving Mileage: 19 cents per mile
- Charitable Mileage: 14 cents per mile
07/01/2011 – 12/31/2011 RATES
- Business Mileage: 55.5 cents per mile
- Medical/Moving Mileage: 23.5 cents per mile
- Charitable Mileage: 14 cents per mile
15.06.2011
Business, Entrepreneurship, Home Based Business, Resources, Small Business, Starting a Business, Taxes
If your business makes sales in Stark County, Ohio, please take note of the new sales tax rate. Effective July 1, 2011, the sales and use tax rate for Stark County will change from 6.00% to 5.75%.
12.03.2011
Business, Home Based Business, Small Business, Starting a Business, Taxes, Uncategorized
Former Central Ohio television news anchor, Anietra Hamper, lost her deduction for business clothing in tax court (Hamper, TC Summ. Op. 2011-17). The tax court ruled that regardless of her wearing certain attire only on TV, such items were not consistent with the definition of ordinary and necessary use for business the services uses for what is an allowable deduction. Hamper claimed her employer required her to maintain a professional appearance and to keep abreast of breaking news events as good reason for the deduction. read more
14.12.2010
Business, Taxes, Uncategorized
Beginning on Jan. 1, 2011, the standard mileage rates for the use of a car (also vans, pickups or panel trucks) will be:
- 51 cents per mile for business miles driven
- 19 cents per mile driven for medical or moving purposes
- 14 cents per mile driven in service of charitable organizations
The standard mileage rate for business is based on an annual study of the fixed and variable costs of operating an automobile. The rate for medical and moving purposes is based on the variable costs as determined by the same study. Independent contractor Runzheimer International conducted the study.
A taxpayer may not use the business standard mileage rate for a vehicle after using any depreciation method under the Modified Accelerated Cost Recovery System (MACRS) or after claiming a Section 179 deduction for that vehicle. In addition, the business standard mileage rate cannot be used for any vehicle used for hire or for more than four vehicles used simultaneously.
Taxpayers always have the option of calculating the actual costs of using their vehicle rather than using the standard mileage rates.
08.12.2010
Business, Uncategorized
Before we close out 2010, let’s not over look some of the small business tax considerations.
New Credit Available in 2011
The HIRE Act of 2010 provides incentives to employers who are contemplating adding staff to their workforce. If a business hires a qualified employee and retains that employee for 52 consecutive weeks, the business will be entitled to a general business credit of up to $1,000 per qualified employee.
Qualified employees must meet the following requirements:
- The employee must have been hired after February 3, 2010, and before January 1, 2011.
- The employee must certify on Form W-11 that he/she has not been employed for more than 40 hours in the last 60 days.
- The employee is not a replacement for another employee unless that other employee voluntarily separated from employment or was terminated for just cause.
- The individual is not related to the employer, including family and in-laws.
To be considered “retained,” the employee must be employed by the employer for 52 consecutive weeks, and wages paid to that employee for the last 26 weeks of the period must be at least 80 percent of the wages paid during the first 26 weeks of the period. The credit is equal to 6.2 percent of the wages paid during the 52-week period, with a maximum of $1,000.
If the employee is paid more than $16,129.03, the employer will receive the full $1,000 credit. The earliest the employee would meet the requirements for this credit would be February 4, 2011, so keeping good records of all wages earned and hours worked is very important.
Health Care Credit Available to Small Businesses
Complex rules may provide up to a 35 percent credit for premiums paid
Currently, one of the largest costs for small businesses is health insurance. Whether the insurance is offered in full or the employee pays for a portion, the cost is continually increasing. This deters many small businesses from offering health insurance.
In an effort to assist employers with this ever increasing cost, the IRS is allowing a credit of read more
30.11.2010
Business, Taxes
Effective January 1, 2011, subject to limited exceptions, owners of property who receive rental income will be required to issue Forms 1099 to service providers (such as a plumber, painter, or accountant) for payments of $600 or more during the year. This was part of the recently enacted Small Business Jobs Act.
While rental property owners will not actually issue the required 1099s until early 2012, they need to start keeping adequate records of payments starting January 1, 2011, so they will be prepared to issue correct 1099s. They will need to obtain the name, address and taxpayer identification number of the service provider by using Form W-9 or a similar form.
Exceptions to this reporting requirement are made for:
- members of the military or employees of the intelligence community who rent their principal residence on a temporary basis;
- individuals who receive only minimal amounts of rental income, as determined by the Secretary in accordance with regulations; and
- individuals for whom the requirements would cause hardship.
The IRS is directed to issue regulations on this, but has not done so yet, so there is currently no guidance on what constitutes sufficient hardship or minimal amounts of rental income yet.
Taxpayers should be aware that in addition to creating a new reporting requirement, the act increased the penalties for failure to file a correct information return by more than double the previous penalties. The minimum penalty for each failure due to intentional disregard increases from $100 to $250. This penalty can be as high as $500,000 for the third-tier business.
