Taxation

Important Tax Changes for Small Businesses

Posted on 07/12/2018

Tax laws have been constantly changing over the years. However, it is safe to say that it’s been over 30 years since there has been any significant change. Tax Cuts and Job Reforms Bill that recently passed is certain to impact everyone from individual taxpayers to business owners. In line with the previous sweeping tax reforms, this new tax act is likely to foster a great deal of business for accountants. The ideal way for accountants to take advantage of this potential boon is to demonstrate an intimate awareness of all the different ways the TCJA affects the majority of small businesses.

Important Tax Changes for Small Businesses

1. 20% Income deduction for most Small Businesses

Congress didn’t want small businesses to miss out on the party either, but they simply couldn’t lower the tax rate either. So, in order to give small businesses a tax cut, Congress brought around a new tax deduction; the 20% Qualified Business Income Deduction. If the taxable income is less than $157,500 (for individual) or $315,000 (for married) taxpayers filing jointly, then the deductions are generally 20% of the net income of the business. If the taxable income is higher than these threshold amounts, then a deduction can still be availed but the limitations and exceptions will apply based on the occupation and wages.

2. 100% Bonus Depreciation

Depreciation is a tax deduction that facilitates the writing off of the gradual wear, tear and obsolescence of certain properties. Depreciation rules can be complicated, with varying types and degrees of deprecation on different schedules. For instance, many types of properties take as much as 39 years to reap the benefits of depreciation. Fortunately, the Congress introduced Bonus depreciation to speed up the process to muster tax savings faster. Then in 2015, the Congress shot up the Bonus depreciation deduction to 50% in the first year. Now, the new tax reforms bill bumps the deduction all the way up to 100%. It is likely to stay this way until 2023.

3. Retroactive Refunds

One chief tax benefit for business owners is retroactive tax refunds. Having paid taxes in 2017, 2016, 2015 — or possibly even 2014 — can earn a 3-year review of tax returns for missed tax savings. And making a cut in the 93% of business owners who have paid too much in taxes, one can qualify for a retroactive tax refund. Fortunately, this law was not changed in the tax reform bill.

4. Mortgage Interest Deductions

Mortgage interest deductions will continue to exist. But only few people will be claiming the deduction on their tax returns. Deductions can either be itemized individually or can take the Standard Deduction. Whichever method renders larger deduction is what would be considered for return. However, there was one key change to mortgage interest deduction. The deductions have now been limited to new mortgages of $750,000 or less – down from $1 million in 2017. As for the mortgages originating before 2018 of $1 million or less are grandfathered in and keep their mortgage interest deduction.

Why Velan?

We at Velan are equipped with skilled tax preparers possessing over a minimum of 7 years of experience in the domain of Taxation. Available round the clock at your disposal, we cater to services with utmost sensitivity and sensibility that the work demands. With encomiums and testimonials speaking for themselves, one needn’t think twice before calling us. Our pricings are highly competitive and guarantee international standards in terms of delivery. We cost less than an in-house tax preparer’s salary exclusive of his paid vacations, incentives and bonuses.

Not only do we regularly keep updated with the latest tax laws, but support high-end infrastructure which allows us to function as a virtual extension of our client’s team, while ably providing our cost-friendly services.

If you have any queries related to your tax returns feel free to contact us for detailed information, we will be glad to assist you.

Call us today!!! And give your business the head start that it deserves!

Topics: Accounting , Tax Preparation , Taxation


Preparing for 2018 Tax Filings

Posted on 04/12/2018

With the rush of the upcoming holidays and just weeks away from the New Year’s tax season officially getting underway, it is just about right time to consider your tax preparations. Tax season creeps upon millions of taxpayers every year as a recurring exercise. Instead of being caught off guard towards the end, one can actually follow few guidelines to start preparing for the upcoming 2018 filing season and gain an advantageous head start.

Preparing for 2018 Tax Filings

1. Review your filing status:

Filing status can impact as to how much one owes in taxes each year, and whether or not one would have to file at all. It is also important to forecast if ones filing status will change during the course of the year.

For someone who’s single and is planning to get married by Dec. 31, 2018, choosing to file a joint or separate return with the future spouse would be viable options.

Alternatively, one might be filing as a single taxpayer if he/she expects to get divorced during the year or as head of household if single and having a child or taking on another dependent.

2. Look back to leap forward:

It is expected that by now the 2017 tax filing would have be filed for or at least an extension applied. If the 2017 taxes have already been filed for, then a review considering the areas that were problematic or extra stressful would be helpful. This can come in handy in alleviating that stress for the upcoming season.

3. Set up your system:

Organizing tax records can be done in numerous ways. However, having an established filing system in place would feature as the core of the organizational structure. Waiting until 2019 is not a good idea to start sorting out important documents of 2018. While many important tax documents will arrive at the beginning of 2019, others like receipts for deductibles will sprout out along the year.

4. Save documentation for deductible items:

Receipts and other documents for eligible expenses are crucial components; though it might not be necessary to submit those receipts with the tax return, it may be required to substantiate the expenses if the IRS audits the returns. Hence, whether a business or a personal account, it would be wise to hold on to receipts meticulously.

5. Track your charitable contributions:

The old saying goes, “What goes around comes around.” When you do good for others, you deserve to get some tax benefits. Charitable contributions to qualified organizations in the itemized deductions may require a little extra documentation. For example, deductions for contribution worth more than $250 cannot be done without a written acknowledgment from the recipient organization.

It must also be noted that non-cash contributions may require different records, such as a description of the donation and its fair market value. In order to ensure full tax benefit of one’s generosity, keeping good records of all charitable contributions to qualified organizations throughout the year will be highly crucial.

6. Plan for your retirement:

Having 401(k) or traditional IRA, may help get a tax break by making a contribution to ones retirement account. The contributions made on these accounts are typically deductible on the pertaining tax return.

It would be useful to remember that though there are income restrictions and contribution limits that determine how much can be put in an IRA, and deferral limits on how much can be put into your 401(k). Understanding what those limits are, and how much can be contributed for the year will come in handy.

7. Forecast your estimated taxes:

It is common knowledge that underpaying taxes throughout the year can have very negative repercussions. If one is expected to owe at least $1,000 in taxes, the IRS generally requires one to make estimated tax payments throughout the year. This is especially highly critical for business owners or self-employed individuals who generally don’t pay income taxes on their earnings.

8. Stay abreast with the changing Tax rules:

The Tax Cuts and Jobs Act that took effect in December 2017 ha brought about drastic changes in the U.S. tax code.

In general, tax reforms can translate to two things:

  1. Some of the tax breaks you might have taken advantage of in the past will no longer exist.
  2. There may be some new tax breaks you can use when preparing for 2018 taxes.

Velan Bookkeeping:

We at Velan are equipped with skilled tax preparers possessing over a minimum of 7 years of experience in the domain of Taxation. Available round the clock at your disposal, we cater to services with utmost sensitivity and sensibility that the work demands. With encomiums and testimonials speaking for themselves, one needn’t think twice before calling us. Our pricings are highly competitive and guarantee international standards in terms of delivery. We cost less than an in-house tax preparer’s salary exclusive of his paid vacations, incentives and bonuses.

Not only do we regularly keep updated with the latest tax laws, but support high-end infrastructure which allows us to function as a virtual extension of our client’s team, while ably providing our cost-friendly services.

If you have any queries related to your tax returns feel free to contact us for detailed information, we will be glad to assist you.

Call us today!!! And give your business the head start that it deserves!

Topics: Tax Preparation , Taxation


Why Should Your Business Outsource Tax Return Service

Posted on 01/12/2018

Small business owners often find themselves worrying when it comes to filing tax returns. It is generally considered cumbersome for small businesses to collect all financial and business transaction records at the end of every quarter/year and put it across to the CPA to prepare tax returns.

Putting of tax preparations until the last minute can not only prove to be an expensive affair but also necessitate the recruiting of seasonal accountants and managing them for the associated period of time. An easier way around this fiasco would be to outsource tax preparation services by sending over the required documents to a skilled tax financial service provider in India.

By outsourcing tax return services, small businesses can get instant access to a team of dedicated and skilled accountants who are well acquainted with how things are best done. There are several reasons that strongly recommend why small businesses should outsource their tax return services, some of which are mentioned below:

1. To begin with, the number of CPAs in the United States is hardly sufficient to cater to the high soaring volume of accounting jobs. Also, with the dynamic and ever-changing government rules for tax returns and accounting, finding an experienced CPA is like finding a needle in a haystack. Hence outsourcing tax return services is the most practical and plausible solution for small businesses.

2. Medium and large businesses outsource mainly to reduce operational cost and boost productivity. This should also be the reason why small businesses should outsource too. The fruits of outsourcing can be reaped in a very short span of time, and this can further encourage outsourcing. Once the fixed costs can be transformed into variable ones the business can redirect its funds for better productivity.

3. Professional tax service providers are well aware of the significance of meeting a deadline and ensuring that the business meets the tax returns deadlines on time. With outsourcing service providers well equipped with high tech web management systems that can help keep track of the status of tax returns at any given time.

4. Another known fact is that outsourcing tax preparation would undoubtedly reduce the amount of paperwork involved as all the documents would be stored electronically.

5. Outsourcing companies can also take advantage of the time difference in the time zones and make the most of the turnaround time. Sometimes the turnaround time can be as low as 3 to 6 hours. Because of the time difference between the US and UK with countries like India, a tax return that you send in the morning can be completed in time to be downloaded in the morning by your small business situated in the US or UK.

 

Topics: Tax Preparation , Taxation


Plan Ahead to Make Tax preparation Easier for You

Posted on 12/10/2018

Planning, in general smoothens the course along every walk of life. And planning ahead provides the added advantage of forecasting possible scenarios down the road. Many perceive taxes as a once-in-a-year exercise, but it has all the elements of being a year round agenda. To exercise precaution, it is highly recommended that you keep receipts for all expenses and possible tax deductions that you consider claiming. Scanning and electronically filing for better accessibility will come handy for tax preparation services and audit purposes.

Tax return preparation

If given its daily due, taxes can become a lot less daunting than they are generally believed to be. Let’s take a look at few practices that if followed, will help alleviate the burden and reduce the headaches and gray hairs you’ll accumulate come April.

Adam Spiegel, a Miami-based certified public accountant recommends using the word ‘plan’ as a guiding acronym for the year:

P: Prepare your records ahead of time.
L: List your issues and questions.
A: Analyze your financial statements for accuracy.
N: Note the changes in laws during the year and discuss them with your tax advisor.

1. Forecast filing status

Filing status can have a have an impact on how much you owe in taxes each year. It can also determine whether or not you have to file at all. It’s is a healthy habit to forecast if your filing status will change during the course of the year.

For instance, you may be presently single but with plans of tying the knot by the end of the year. In such a case you may choose between filing a joint or separate return with your future spouse when you file your upcoming taxes.

Conversely, you may be looking to file as a single taxpayer if an imminent divorce is in order during the year, or you may also file as head of household if you’re single and have a child or are taking on another dependent.

2. Look Back to Leap Forward

Now that you would have filed your 2017 tax returns, this would a good time to look back and consider the areas that were the most problematic. This exercise will help tackle similar problems with ease in the coming tax season. Certain problems can be easily circumvented by effecting necessary precaution.

For instance, if you did your own taxes and hit several dead ends along the way, it’s would sound logical to assign the task to someone experienced. While an in-house tax preparer might be too expensive, options like outsourcing that can be effective and budget friendly.

3. Familiarize yourself with new tax rules

It is highly critical to stay abreast with rules that would have an impact upon the taxes. For example, with the implementation of Tax Cuts and Jobs Act that took effect in December 2017 there has been some major changes to the U.S Tax code. These Tax codes could generally mean two things.

  • Some of the tax breaks you might have taken advantage of in the past may no longer be available.
  • There may be new tax breaks that you could use to your advantage.

 4. Contribute to your retirement accounts throughout the year

It is preferable to use an Individual Retirement Account (IRA) instead of saving account. Many taxpayers generally put their saving into a typical bank account that earns taxable interest. However, you can avoid paying tax on the interest each year by depositing money into a traditional IRA instead where the interest will accumulate tax-free. When you do, you might also be also eligible to claim a deduction each year for a certain amount of contributions you make to the account

5. Automate the Accounting process

Accounting solutions go a long way in driving efficiency and accuracy all year long. If you don’t use accounting solution, it’s high time you consider getting one. Gone are the days when installed desktop software was the only possible solution. Today, we have a wide range of online solutions available. As an added bonus, the usage of online solutions helps eliminate the need to invest a large amount of money upfront with the assurance of access to the latest version of the tool. Your accountant can help you determine the best fit, and bonus points if the solution lets your accountant have access to your real-time data.

Still a little too much?

Most of the suggestions mentioned above cater to individuals without complicated tax situations. However, if the taxes seem a bit overwhelming to handle, there always exists the option of hiring tax preparation services. Though one way to go about it would be hiring a solid CPA, this can be a bit too expensive for small businesses. In such cases, Outsourcing is the most practical solution.

Why Velan?

We at Velan Bookkeeping are a well acclaimed and renowned bookkeeping firm that fix accounting related issues with the required sensitivity and sensibility that the work demands. Our distinctive, trustworthy and effective methods have helped many companies overcome issues that would have certainly staggered their progress. Having been shaped and moulded with over a decade of experience in this arena, we cater to a web of services like:

  • Bank Reconciliation
  • Statement of Assets and Liabilities
  • Accounts Receivable and Payable
  • P&L Statements
  • Payroll Tax Preparation
  • Sales Tax Preparation
  • Individual Tax returns Preparation
  • Corporate Tax returns Preparation

Our pricings are highly competitive and guarantee international standards in terms of delivery. We cost less than an in-house accountant’s salary exclusive of his paid vacations, incentives and bonuses. With accolades and testimonials such as those bestowed upon us, one needn’t think twice before picking up the phone to outsource their bookkeeping and accounting services with us.

Phone:   +1-860-215-4997
E-mail: reachus@velan-bookeeping.com

 

 

 

 

Topics: Tax Preparation , Taxation


Impact of the New Tax Rates on Your Pocket

Posted on 28/09/2018

As a consequence of the latest tax reform, there are going to be changes in Federal revenue tax charges for nearly all taxpayers. The charges of some of the taxpayers’ are likely to change greater than others. A closer look into the new tax rates and corresponding brackets will help shed some insight into the possible impact that will ensue.

Impact of the New Tax Rates on your Pocket 3

The following tables compare and contrast the changes in the Tax rates and brackets for 2017 and 2018 along the Single and Married filing categories.

New Tax Brackets for Single Filers

New Tax Brackets for Married Filing Jointly

A clear dip by an average of 2% to 4% in the tax rates is pretty apparent while going over the tables. These dips arise mainly out of the Tax Cuts and Jobs Act. However, the lowest rate – 10% remains unchanged. Another point to be noted is that, it isn’t just the tax rates that have been changed, but also the brackets within which they fall, and this has been done not just to adjust inflation.

For instance, in the Single filer’s category let us consider the 24% tax bracket for 2018, which has been brought down by 4% from a thumping 28%. Simultaneously, it must be noted that the in 2017, the 28% tax rate was applicable to income levels between $93,701 and $195,450, where as in 2018 this bracket ranges between $165,001 all the way to $315,000. So, in other words, not only has the tax rates come down, but the brackets have also been readjusted so as to accommodate more income in the lower tax brackets too.

Income under the lens of Taxation

It’s a fairly common misconception to think that when a particular income reaches a certain bracket level, the entire income would be subjected to a tax deduction of the tax rate corresponding to that bracket level. It has to be understood that the only the taxable portion of the income is taxed at the applicable bracket rate. Say for example, a single person makes $10,000. He/ She would have to pay a flat 10% on the first $9,525 of the income and 12% on the remainder of the income.  The taxable incomes referred to in the tables above are your income after all your adjustments and deductions.

Tax Bracket Implications:

Your tax bracket rate is the amount you pay on each additional dollar you earn. You can use that information to determine how much you get to keep if you earn another dollar, or how much good a deduction does you. So it is important to know what bracket you come under.

Does a drop in tax rate mean a lesser Tax Bill?

It is highly probably that a dip in the tax rate of your bracket could translate to a lower Tax Bill. However, it has to be noted that the new tax law changed more than just the tax rates. It has also doubled the standard deduction, eliminated personal exemptions and added expanded credits for dependents. It has also changed the rules for deducting state and local and mortgage interest among other things. Your tax bill may go down, but along the high income spectrum, some may find that they now pay more.

It’s always wise and smart to estimate your taxes during the year to make sure you’re not overwhelmed by a big tax bill when you file your return. It’s also important to ensure that the IRS doesn’t hold any money that you don’t owe them in case you’re overpaying. Though the money will eventually return in the form of a tax refund, why let them hold it all year interest-free?

The feeling of having an expert, whose professional life is dedicated to taxes, and that you’re not left alone with the pile of forms and numbers is quite relieving. Hiring a tax preparer makes the process easier, less stressful and time-consuming, which is something a lot of people are ready to pay for. By outsourcing tax preparation service, one can increase the productivity of firm and profitability by freeing them to focus on higher value client service. This will also help to achieve better personal and professional life to contribute more in each field.

Why Velan?

We at Velan Bookkeeping are a well acclaimed and renowned bookkeeping firm that fix accounting related issues with the required sensitivity and sensibility that the work demands. Our distinctive, trustworthy and effective methods have helped many companies overcome issues that would have certainly staggered their progress. Having been shaped and moulded with over a decade of experience in this arena, we cater to a web of services like:

  • Bank Reconciliation
  • Statement of Assets and Liabilities
  • Accounts Receivable and Payable
  • P&L Statements
  • Payroll Tax Preparation
  • Sales Tax Preparation
  • Individual Tax returns Preparation
  • Corporate Tax returns Preparation

Our pricings are highly competitive and guarantee international standards in terms of delivery. We cost less than an in house accountant’s salary exclusive of his paid vacations, incentives and bonuses. With accolades and testimonials such as those bestowed upon us, one needn’t think twice before picking up the phone to outsource their bookkeeping and accounting services with us.

Phone:   +1-860-215-4997
E-mail: reachus@velan-bookeeping.com

** The images and statistical data used in this blog are a product of research of various websites. All references used are purely for informational purposes only. Consult your own tax, legal and accounting advisors before engaging in any transaction.

 

 

 

Topics: Tax Preparation , Taxation