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Unemployment tax can be one of the most daunting taxes for many small businesses. Information is scant and it can seem you are at the mercy of the Unemployment Insurance Office in your state to know your rates and when you need to pay, not to mention understanding different regulations and laws. It’s many hoops to jump through but this article will help some light on this mysterious topic.
Preparing a tax return is a hassle that no one looks forward to. On the other hand, as the saying goes there are only two certain things in this world – death and taxes. So even if you do not enjoy either the fact is you still have to complete and file your taxes come April 15. Many people like to do the taxes themselves either to save money or they think of themselves as expert enough. The fact is hiring a professional can pay off in terms of lower taxes, bigger refund and the overall peace of mind. Here are 6 reasons why hiring a professional for your taxes is a smart idea.
The saying goes there are only two things certain in life – death and taxes. It is difficult to find anyone who likes thinking about either. While you cannot do anything about death, you can certainly find ways to, at least, lower the taxes you need to pay to the government. As a small business owner you have number of things to worry about and keeping track of all the possible tax deductions you can take should not be one of them. This is what you hire accountants and financial planners for. However, it is your responsibility to understand what taxes your small business can claim so that you can plan your expenses accordingly. Below we discuss three tax deductions many small business owners usually forget to pay attention to. Study them to ensure you don’t overpay your taxes.
There is wealth of information on the Internet about starting and running a small business. A small business entity can be set up in variety of fashions from tax and reporting perspective – sole proprietorship, LLC, S Corporation, C Corporation and so on. There are several aspects about sole proprietorship that are fundamentally different from other forms of entities, so it is important to understand the details and procedures for them, such as when you should apply for an EIN.
In a small business it is easy to forget the importance of maintaining accurate records. These records need to be kept far longer than the time they are active. Even after an order is completed and fulfilled or, in the case of a purchase from a vendor, after you have received and fully paid for the merchandise and service, all records will need to be maintained. The typical rule of thumb is 7 years, however there are certain regulations that may increase or decrease that period. In some professions you are required maintain the records indefinitely.
Here is a simple question you should be able to answer quickly – how much asset do you own in your small business? No, you cannot look at your balance sheet statement to find out the value of total assets. I am talking about the inventory of everything you have in your business. I bet most small business owners do not really know what they own. And yet this is one of the places where they spend lot of money.
Come January, the festive season will be over and will soon be followed by the tax season. Small business owners will start sending and receiving form 1099’s showing the money paid and received for the services they rendered in the year 2012. One of the newer forms that IRS has introduced is 1099K starting in 2011. Sellers of items on E-commerce sites such as eBay and Etsy, that include many home-based merchants, are the typical recipients of this form. Many of them were caught by surprise last year upon receiving this form. There was also lot of confusion surrounding the form resulting from the instructions provided by IRS on this form (What else did you expect from IRS?)
So what is form 1099K and what does it include?
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