Taxation

How Ready Are You For The Tax Ready?

Posted on 25/02/2017

Have you started your tax prep for your small business yet? It’s about time you started prepping and it’s not very late to hire a tax preparer to help you out with it. There can be umpteen questions to start like who can be your my preparer? Am I choosing the right person? Can I still prepare taxes on time? So on and so forth. Before you think through all these, if you think that you can’t file your returns on time, do not have inhibitions in applying for an extension using Form 4868. For all you know, an accountant at this point in time may not have time to accommodate you on board; so it is good to know the list of papers you will need for your tax preparation.

Tax time

Use the simple guide below to start prepping for your tax returns, and if you have started already using the guide to check if you have everything intact:

  1. Completed check book statements, bank account details, savings account details, cash on hand, credit details, and any other banking details
  2. Credit record should include the business loan that is outstanding, credit card statements, any vendor credits.
  3. List your receivables- you will need to have an e-list of the account receivables. Reports can be generated easily if you are using software like QuickBooks. If you find it hard to organize this, you can bring together all your physical invoices, cash drawer receipts, other receipts, and any other paper bills you have and have an accountant organize things for you.
  4. Include the entire inventory such an inventory amount in the beginning, total at the end of the year, and inventory which includes personal use, damage, and spoilage.
  5. Expenses- Again, expenses have to be e-listed. Fret not if you do have your e-list. It is perfectly okay to have a box of papers and receipts and you are not the only one to carry all your expenses physically. Hire an accountant who can help you organize everything for you.
  6. Keep track of the paid employee wages, such as forms W-2, W-3, MISC-1099 and 940.
  7. Insurance- your business insurance costs, fringe benefits, and let’s not forget the health insurance costs everything should be included. Ensure that you have calculated the premium dollars that is if you are paying your and your employees health insurance costs.

Should you have any questions or need assistance with tax preparation, contact Joyce @ +1-516-717-2049 and free yourself.

Topics: Financial Reporting , Outsourcing Accounting , Taxation


Tax Tips For Small Business Owners

Posted on 25/01/2017

Find out what you can and what you cannot deduct..

New Year 2017 has just begun. It does not only mean a new beginning; it also marks the Tax Tips For Small Business Owners season. It’s about time you started prepping your files. We know at this point in time you will be handling plethora of papers and bills. It can get over the top to handle both business bills as well as personal ones. You might also be simultaneously wondering what can get you some savings through tax deductions and what can’t?

tax preparation services

  1. Office at home

Many small business owners out there do not claim their “home office” deductions, for they fear the auditing involved. This fear should not cease you from claiming what is legitimate. Ensure that you have all the supporting papers, and you are able to prove that all the expenditure mentioned are for your business and you will do just fine. Everything you need to know about home offices:

  • Ensure that you have a distinct office area besides the living area and the office space is not used for personal stuff.
  • Owning and claiming only one computer that you have at home as your business computer can be very difficult. Either don’t claim the computer as a business property or don’t place it in the office area.
  • Calculate what percentage of the home area goes to office space and claim the rent & other bills in the said area and nothing more.
  1. Purchase of technology

Striving and thriving businesses need to stay up-to-date with the contemporary tools and technology pertaining to the business. Section 179 under the tax code allows you tax exempt on gadgets like printers, computers, and up to some amount business vehicles are tax exempt. Not only gadgets, software and subscriptions to articles, newsletters, etc. Pertaining to your business also give you the tax exemption. All you need to do is know the amount that can be deducted as it changes yearly. Therefore, do not hesitate to invest in the technology you need for your business.

  1. Cost of travelling

Some small businesses involve a lot of travelling which means a lot of expenses. Since this travelling is required for the business expansion, one cannot avoid that. Little do people know that this travelling expense is tax deductible. This exemption writes off the expenses including airfare, hotel, car rentals and mileage, other expenses like laundry, and fifty percent of the food costs. Bear these points in mind before adding your travelling expenses for deduction:

  • You can always take your family on your business trip, but only the business related travel and other costs can be deducted.
  • You get a 50% deduction for meals you treat your clients. Just ensure that you name the bill, so it doesn’t get lost among your sea of other personal bills.
  • Tax deductions also include conference fees as long as they are useful for your business directly. Note that conferences that yields a side income, lectures, and other events that are based on entertainment will not qualify for tax deductions.

Call Joyce @ +1-516-717-2049 to explore more about tax tips, tax preparation, bookkeeping and accounting assistance.

Topics: Accounting , Taxation


Things You Need To Do To Have A Stress-Free Tax Season

Posted on 09/12/2016

New Year is around the corner; and in a jiffy, your tax season will be here too!

All you need is a little knowledge and preparation to stay calm and composed when you file for the taxes next year. Whether you are electronically filing your returns or traditionally mailing your paper returns, below are the necessary information that you need to know.

stress-free-tax-season

4 THINGS YOU SHOULD START DOING RIGHT NOW TO WELCOME THE TAX SEASON STRESS-FREE

HAVE EVERYTHING ORGANIZED:

Collect all your records well in advance: Do not start filing your return until you have all the necessary papers in hand, which include:

  1. Tax Identification Number or Social Security Number: you must have this number for everybody mentioned in your return.
  2. Salary/ income statements: Collect all the salary or income certificates before you start filing.
  3. Routing numbers: have this 9 digit code right on hand if you would like a direct deposit of the refund.

See what’s changed this year: The Department of Revenue time and again amends the tax rules. Avoid any undesired surprises. Take a look if there’s any changes for this year’s tax filing.

Think about e-filing: it is always best to go e-filing, that is if you qualify. E-fling is highly recommended by the DOR as the processing is much quicker and this means you can also get your refund quicker.

 

GOING TO MAIL YOUR TAXES? THEN IDENTIFY THE APPROPRIATE FORM:

If you go for mailing your tax papers, it often gets you confused on where to start and how to proceed. Below are some of the most important documents you need:

  1. Personal income tax return
  2. Business expenses and additional income
  3. Fiduciary income tax return
  4. Healthcare proof
  5. Capital loss and gain, dividends and interests
  6. Senior tax credit
  7. Royalties & real estate rentals
  8. Use of Tax exemption
  9. Sale of motor vehicles
  10. Amendments after filing.

 

EXTENSIONS… EXTENSIONS……

We know it sometimes becomes hard to file your tax returns before the deadline. Fret not! You can very well get an extension of 6 months. To do so, you can either choose electronic options or make use of one of the two forms given below:

  • Individual resident or nonresident- if you are an individual use Form-4868
  • Partnership or Fiduciary- if you are in a partnership, use Form- 8736

 

*Condition: If you wish to get an extension, you must qualify for the same. That is, you need to pay any tax that you already owe the government.

 

FIGURE OUT THE RIGHT MAILING ADDRESS FOR THE RESPECTIVE FORMS

If you choose to mail a paper return or make a payment, you must be careful to which address you send them out to. For, the addresses depend on the forms itself.

Call Joyce @ +1-516-717-2049 to have a stress-free tax period.

Topics: Taxation


Searching for ways to save some TAX?

Posted on 01/12/2016

So, HOW CAN YOU PAY LESSER TAX AND SAVE MORE FOR YOUR RETIREMENT?

Have you ever wondered about this? And then thought Super contributions could be the best way to start saving more for retirement rather than paying the humongous amount of tax.

If you have not, think now! For, Super gives you incredible tax benefits.

At some point in time, everyone would ask this one question to their accountant which is “How can I save tax?” And the practiced response they get is “Have you ever considered Super contributions?”

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Super contributions and Tax benefits:

Super contributions provide you with some uber-cool tax benefits and the best part is your wealth remains undiminished. All you are doing with the super contribution is that you are diverting some of your capital to a super system where it is considered as an investment which can be enjoyed when you retire. Simply put, this contributed sum remains yours rather than the governments.

What exactly is your tax benefit?

Let’s say $200,000 is your income per annum, and you are contributing $10,000 for your personal tax or super contribution.

Have a look at the table below to find the difference between the two:

 

PERSONAL TAX SUPER CONTRIBUTION
You contribute : 39% You contribute : 15%
39% of $10,000 : $3,900 15% of 10,000 : $1500
You pay : $3,900 You pay : $1,500
You get : $6,100 You get : $8,500

 

Difference amount: $2,400.

You can invest the same in your super funds and guess what; the benefits yielded by this investment in future will also be taxed at the rate of 15%. This is way lesser than the non-super investments.

Are there any downsides to this?

Yes, there is. There’s one element which could be a major pitfall to super contributions which is the inaccessibility to super funds until the release conditions are met. Mostly, this condition of release can be met when one reaches the preservation age which is 55. For young people, the dilemma in choosing either super investments or personal tax can be quite annoying.

Are these tax benefits lucrative all the time?

Briefly put, no. These tax benefits are not applicable for everyone. For people with income below $18,200 will be worse as the 15% contributions are exponentially higher than the 0% personal tax. For people with income between $18,200 and $37,000 have only a slight difference between the contributions rate and the tax rates. For people with income over $180,000 have very good advantages of choosing super contributions over personal taxes.

Things to bear in mind:

You need to be watchful about the amount you invest in super contributions. You need to ensure that your investments do not exceed the concessional contributions cap to avoid any repercussions.

You also need to pay attention on where you make the investment. Check whether contributions go to funds that yield good returns and has reasonable fees. Bear in mind, a tax saving can be easily destroyed by the poor performance of the fund.

Ergo, it is always good to do a little research and get some professional guidance before you decide anything in this regard.

Call Joyce at +1-516-717-2049 to explore more about how Velan can help you.

Topics: Taxation


Must-Know Things An LLC Owner Should Be Aware Of About Taxes

Posted on 28/11/2016

Are you a single owner or an active member of an LLC (Limited Liability Company)? Are you looking to transform your company to a multi-member LLC?  Whatever it is, you will have some questions on the tax part of your business.

taxes

Below are a few things you need to know as an LLC owner:

Tax laws for LLC- Basic:

Firstly, it is very important to know the way in which an LLC is structured as stated by the tax law. Corporation and LLC are very different in terms of taxation. An LLC is not considered and taxed as a separate business unit and all the profits & losses go to each member of the company. The members of LLC must file their profits and losses on their personal tax returns, like any other owners of the partnership. The business doesn’t need to pay the federal taxes. This rule is not applicable in all the states, though; there are a few states who want LLCs to pay taxes annually.

Based on the number of members in an LLC, the Internal Revenue Service will consider the business as a sole proprietorship or partnership. But in some cases, the LLCs would automatically be classified as corporations by the tax laws and be taxed. Those companies that are not classified automatically can the business entity they would like. In order to do that, the company must file Form 8832.

Single Member LLCs and their taxes:

If you operate a single member LLC, the Internal Revenue Service would consider your business as a sole proprietorship (except if you choose to be the corporation). In this case, you will have to file all the profits and losses in your personal tax returns on attaching Schedule C and report it with 1040 tax return.

Read on to know more about when you must be filing using EIN (Employer Identification Number) and when you must be using your social security number.

Multi-member LLCs and their taxes:

If there are multiple owners in your LLC, the Internal Revenue Service will consider it as the partnership (except if you want it to be considered as the corporation). Similar to the single owner, the business doesn’t pay the taxes, but each owner of the business has to divide the profits and  pay the tax on attaching Schedule E.

You would have to file the Form 1065 with the Internal Revenue Service. This form would aid them  in determining if each member is reporting the correct profit amount. The company must also provide each partner with a report mentioning their share of income, deductions, and credits. The individual member should then report the same on their personal tax returns.

You will have to request “special allocation” from the Internal Revenue Service if the LLC does split the profits and losses in a way that doesn’t match the individual’s percentage interests. And this is something you must consult with a tax lawyer or an accountant.

Paying the Estimated Taxes

The LLC members and owners are considered to be self-employed, and hence they are subjected to file and pay the estimated amount of tax to the IRS and the state tax office quarterly.

If your LLC is a multi-member one and the owner is not active in the company that is if they have invested in the company but doesn’t participate in the operations, then the owner might be an exempt from paying the federal taxes for self-employment. Your tax lawyer or accountant will be able to tell you if your business meets the requirements for the same.

Tax for sales

Sales tax is something imposed by the local and state governments on the point- of- purchase. The buyer pays at the time of purchase and you [small business owner] will assess, collect, and pass the tax to the concerned authorities within the time period recommended. The laws and rates for the taxes will vary depending on the state; this leads to disarray particularly if you have customers in over 1 state.

State Taxes

If you run an LLC, you will have to pay to the state like you do to the IRS. Some states charge the LLC based on the income, apart from the income tax paid by the member. Other states charge the LLC an annual fee that is not related to the income; this is also known as the franchise tax, renewal or registration fee. It is ideal to check the laws in your state before forming an LLC.

Contact Joyce at +1-516-717-2049 for consultation.

Topics: Taxation