Small Business Tax Briefs Archives - Page 36 of 37

26 Jun 2019

Key Q3 2019 Deadlines for Businesses

Here are some of the key Q3 2019 deadlines for businesses and other employers that are tax related. Keep in mind that this list isn’t all-inclusive, so there may be additional deadlines that apply to you. July 31 Report income tax withholding and FICA taxes for the second quarter of 2019 (Form 941) and pay any tax due. (See the exception below, under “August 12.”) File a 2018 calendar-year retirement plan report (Form 5500 or Form 5500-EZ) or request an extension. August 12 Report income tax withholding and FICA taxes for the second quarter of 2019 (Form 941), if you deposited on time and in full all of the associated taxes due. September 16 If a calendar-year C corporation, pay the third installment of 2019...

19 Jun 2019

Hire Your Children This Summer

Roger Rossmeisl, CPA

Small Business Tax Briefs

If you’re a business owner and you hire your children (or grandchildren) this summer, you can obtain tax breaks and other non-tax benefits. The kids can gain on-the-job experience, save for college and learn how to manage money. And you may be able to: Shift your high-taxed income into tax-free or low-taxed income, Realize payroll tax savings (depending on the child’s age and how your business is organized), and Enable retirement plan contributions for the children. Hire your children, but it must be a real job When you hire your child, you get a business tax deduction for employee wage expenses. In turn, the deduction reduces your federal income tax bill, your self-employment tax bill (if applicable), and your state income tax bill (if applicable). However, in...

17 Jun 2019

Ordinary and Necessary Business Expenses

Roger Rossmeisl, CPA

Small Business Tax Briefs

Ordinary and Necessary Business Expenses

If you've read the Internal Revenue Code, you may be surprised to find that most business deductions aren’t specifically listed. It doesn’t explicitly state that you can deduct office supplies and certain other expenses. Some expenses are detailed in the tax code, but the general rule is contained in the first sentence of §162. It states you can write off “all the ordinary and necessary expenses paid or incurred during the taxable year in carrying on any trade or business.” Ordinary and necessary business expenses basic definitions In general, an expense is ordinary if it’s considered common or customary in the particular trade or business. For example, insurance premiums to protect a store would be an ordinary business expense in the retail industry. A necessary expense is defined as...

10 Jun 2019

Employee vs Independent Contractor

Roger Rossmeisl, CPA

Small Business Tax Briefs

Employee vs Independent Contractor is an age old question. Many employers prefer to classify workers as independent contractors to lower costs, even if it means having less control over a worker’s day-to-day activities. But the government is on the lookout for businesses that classify workers as independent contractors simply to reduce taxes or avoid their employee benefit obligations. Why it matters When your business classifies a worker as an employee, you generally must withhold federal income tax and the employee’s share of Social Security and Medicare taxes from his or her wages. Your business must then pay the employer’s share of these taxes, pay federal unemployment tax, file federal payroll tax returns and follow other burdensome IRS and U.S. Department of Labor rules. You may also have to...

03 Jun 2019

Tax Treatment of New Business Expenses

Roger Rossmeisl, CPA

Small Business Tax Briefs

Have you recently started a new business? Or are you contemplating starting one? Launching a new venture is a hectic, exciting time. Before you even open the doors, you generally have to spend a lot of money on new business expenses. You may have to train workers and pay for rent, utilities, marketing and more. Entrepreneurs are often unaware that many expenses incurred by start-ups can’t be deducted right away. The way you handle some of your initial expenses can make a large difference in your tax bill. Key points on how new business expenses are handled When starting or planning a new enterprise, keep these factors in mind: Start-up costs include those incurred or paid while creating an active trade or business — or investigating the creation...

14 May 2019

Deducting Business Meals Under TCJA

Roger Rossmeisl, CPA

Small Business Tax Briefs

In the course of operating your business, you probably spend time and money “wining and dining” current or potential customers, vendors and employees. Is deducting business meals still possible? The rules changed under the Tax Cuts and Jobs Act (TCJA), but you can still claim some valuable write-offs. No more entertainment deductions One of the biggest changes is that you can no longer deduct most business-related entertainment expenses. Beginning in 2018, the TCJA disallows deductions for entertainment expenses, including those for sports events, theater productions, golf outings and fishing trips. Deducting business meals still allowed You can still deduct 50% of the cost of food and beverages for meals conducted with business associates. However, you need to follow three basic rules in order to prove that your expenses are...

09 May 2019

Taxation of Divorcing Business Owners

Roger Rossmeisl, CPA

Small Business Tax Briefs

Taxation of divorcing business owners add complications to an already stressful time. Your marital property will include all or part of your business ownership interest . . . one of your biggest personal assets. Transferring property tax-free You and your ex-spouse can generally divide most assets, without any federal income or gift tax consequences. When an asset falls under this tax-free transfer rule, the spouse who receives the asset takes over its existing tax basis (for tax gain or loss purposes). The receiving spouse also takes over the asset's existing holding period (for short-term or long-term holding period purposes). Example Under the terms of your divorce agreement, you give your house to your spouse in exchange for keeping 100% of the stock in your business. That asset swap would...

05 May 2019

Understanding How Taxes Factor Into M&A Transactions

Roger Rossmeisl, CPA

Small Business Tax Briefs

Merger and acquisition (M&A) activity has been brisk in recent years. Is your business is considering merging with or acquiring another business? If so, it’s important to understand how the transaction will be taxed under current law. Stocks vs. assets From a tax standpoint, there are basically two ways to structure a transaction: 1. Stock (or ownership interest). A buyer can directly purchase a seller’s ownership interest if the target business is operated as a C or S corporation, a partnership, or a limited liability company (LLC) that’s treated as a partnership for tax purposes. The now-permanent 21% corporate federal income tax rate under the Tax Cuts and Jobs Act (TCJA) makes buying the stock of a C corporation somewhat more attractive. Why? The corporation will pay less tax...

17 Apr 2019

(#528) Could Your Business Benefit from the Tax Credit for Family and Medical Leave?

Roger Rossmeisl, CPA

Small Business Tax Briefs

The Tax Cuts and Jobs Act created a new federal tax credit for employers that provide qualified paid family and medical leave to their employees. It’s subject to numerous rules and restrictions and the credit is only available for two tax years — those beginning between January 1, 2018, and December 31, 2019. However, it may be worthwhile for some businesses. The value of the credit An eligible employer can claim a credit equal to 12.5% of wages paid to qualifying employees who are on family and medical leave, if the leave payments are at least 50% of the normal wages paid to them. For each 1% increase over 50%, the credit rate increases by 0.25%, up to a maximum credit rate of 25%. An eligible employee is...

02 Apr 2019

(#525) There’s Still Time for Small Business Owners to Set Up a SEP Retirement Plan for Last Year

Roger Rossmeisl, CPA

Small Business Tax Briefs

If you own a business and don’t have a tax-advantaged retirement plan, it’s not too late to establish one and reduce your 2018 tax bill. A Simplified Employee Pension (SEP) can still be set up for 2018, and you can make contributions to it that you can deduct on your 2018 income tax return. Contribution deadlines A SEP can be set up as late as the due date (including extensions) of your income tax return for the tax year for which the SEP is to first apply. That means you can establish a SEP for 2018 in 2019 as long as you do it before your 2018 return filing deadline. You have until the same deadline to make 2018 contributions and still claim a potentially substantial deduction...

Key Q3 2019 Deadlines for Businesses

Hire Your Children This Summer

Ordinary and Necessary Business Expenses

Employee vs Independent Contractor

Tax Treatment of New Business Expenses

Deducting Business Meals Under TCJA

Taxation of Divorcing Business Owners

Understanding How Taxes Factor Into M&A Transactions

(#528) Could Your Business Benefit from the Tax Credit for Family and Medical Leave?

(#525) There’s Still Time for Small Business Owners to Set Up a SEP Retirement Plan for Last Year

ROGER ROSSMEISL, CPA

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