Tag: Small Business


17 Small Business Tax Credits

Sanjiv Gupta CPA - 9 years ago
President Barack Obama is all set to boost the country’s economic pillar; How? Well, surprising but yes he lent a patient hearing to the grudges and grievances of over a thousand small business entrepreneurs through the columns of Advise the Advisor and Winning the Future Small Business Forum this week. Several questions poured in. Some directly questioned Obama’s administrative policy regarding cuts on tax frills. Twitter found one Lindsmith asking Whitehouse about the 17 tax policies that Obama passed as law. This article contains a pertinent explanatory, direct from the mouths of the government’s official financial consultants. In this article, we explain the tax laws of President Obama pertaining to small business and what effect the change has had on it. Ever since Obama joined the government’s prestigious office in 2009 he put into effect 17 tax laws that promised tax-incise and increase of credits for all small business entrepreneurs.  The three key legislative acts that pronounce tax-cut terms are the American Recovery and Reinvestment Act, the HIRE Act and the Affordable care Act.Each of the Acts covers as many as eight small business tax-cut variations that have had a significant impact on the small business sector. To name a few are:Exempting 75% on capital gains (small business establishments)Health insurance tax-credit for employees (small business establishments)Tax-credit for newly recruited employees (Those that were unemployed for over 2 months) Again in September 2010 the President signed and passed the Small Business Jobs Act which contained another eight laws on tax-slash and tax-credit. The benefits of the Small Business Jobs Act are as follows: Extending small business expense limit to $500,000 (so far this is the highest amount granted)Simplification of rules when applying for business phone usage deductionTax-exempt on medical costs for the self-employedGreater tax-exempt for start-up businessmenExpelling tax imposition on capital gains (small business establishments) In the same year winter, a tax bill was passed under the Obama Administration which furthered the benefits and stated that all businessmen, large and small, could use 100% of capital gains to propel new business investment plans. This plan was however limited to the next seasonal winter of 2011. Also, the period of tax-exempt on capital gains for all small business investments was extended until the end of 2012 and well the good news is that the president suggests that he is trying to turn this policy into a permanent one. This would mean to be a special incentive for the small business sector and could function as the much-required boost for the economy that is struggling under the current recessionary scenario. In fact, experts opinion that the attention paid to small business entrepreneurs is just one of the many ways that will help the government strengthen its position by securing the economic backbone of the country- small business establishments. Obama is, therefore, all keen to win the future with the flourish of small business centers and thus he is introducing these measures in the tax rules pertaining to the small business sector. Well, his actions are heartily acknowledged and supported as long as he keeps the government running with the conscience that the government is of the people by the people and for the people. In the list given below we enumerate Obama’s 17 small business tax-cuts: Tax-laws as granted by, HIRE Acts, the Affordable Care Act and the Recovery Act:1. A New Small Business Health Care Tax Credit2. A New Tax Credit for Hiring Unemployed Workers3. Bonus Depreciation Tax Incentives to Support New Investment4. 75% Exclusion of Small Business Capital Gains5. Expansion of Limits on Small Business Expensing6. Five-Year Carryback of Net Operating Losses7. Reduction of the Built-In Gains Holding Period for Small Businesses from 10 to 7 Years to Allow Small Business Greater Flexibility in Their Investments   8. Temporary Small Business Estimated Tax Payment Relief to Allow Small Businesses to Keep Needed Cash on Hand  Tax-Laws as granted by the Small Business Jobs Act:9. Zero Capital Gains Taxes on Key Investments in Small Businesses10. The Highest Small Business Expensing Limit Ever– Up to $500,00011. An Extension of 50% Bonus Depreciation12. A New Deduction for Health Care Expenses for the Self-Employed13. Tax Relief and Simplification for Cell Phone Deductions14. An Increase in The Deduction for Entrepreneurs’ Start-Up Expenses15. A Five-Year Carryback Of General Business Credits16. Limitations on Penalties for Errors in Tax Reporting That Disproportionately Affect Small BusinessAnd Tax-law as under the Tax Relief, Unemployment Insurance Reauthorization and Job Creation Act:17. 100 Percent ExpensingHow much tax can you save with so many tax credits? Well, you need to contact your CPA to find this answer.

IRS Getting Tough on Small Business Owners

Sanjiv Gupta CPA - 9 years ago
Internal Revenue Service will not compromise while inspecting on pay-roll taxes, tax- advocates confirmed. Many will suffer consequences on having to deter tax payments,Payroll taxes are federal or central taxes that an employer is entitled to pay or withhold on behalf of his employees. Under its fold, the employing organization has to take the liability of paying social security and Medicare taxes also. There have been a large number of cases where small business entities or small companies have been found deterring central payroll tax payments. The tax lawyers express that following this the IRS has started acting stricter about exercising penalties and fine on accountants, executives, and business individuals for the tax-delays or evasion.Paying business payroll taxes must be considered a priority. The different tactics available at the hands of the IRS to treat these cases are freezing a company’s business accounts, grabbing assets, imposing garnishment on wages of a debtor. Other than tough methods it can assess substantial penalties and impose tax liens on the property of the defaulters.In the opinion of Sanjiv Gupta CPA, the payroll tax debt can be very dangerous so much so that they can completely bring down the company. To support his argument he described the instance of an equipment company that had to bite the dust for not paying the federal payroll taxes. Similar things happened to a medical care center and a group of licensed schools.According to the report of government agency findings every year $54Billion as employment dues goes unchecked. To curb this serious loss to the government exchequer the IRS sees it necessary to amend payroll-tax parameters by approximately 6600 employers for the upcoming tax years. Robert E. Mc Kenzie a tax-layer based at Chicago opposes the IRS actions and expresses that the tactics adopted by the IRS by individualizing tax-payers to penalize for defaulting are particularly harsh and cannot treat the actual cause accountable for the tax-debts.The tax laws allow certain freedom which causes an unnecessary payroll tax debt by laying the sole responsibility of tax evasion on the officers, bookkeepers, business owners, and anyone who prevents the company from clearing employment tax by taking sole control of business accounts and governing the debt payment process.When the IRS charges penalties the payroll tax debt stands double the actual amount. The three grounds that IRS can exercise its right to penalize are in the case of nonpayment of the debt, failure to state/ itemize the debt and finally for late payment. Fines that are charged for payment delay shot up to 25% tax debt.  A person who has previously failed to report tax should not make the mistake of deterring from filing tax in the future. Adverse to this there will be more penalties.The best way to avoid mounting debts with the addition of penalties is by clearing it off before the deadline and also to pay the taxes to the IRS before it imposes a personal liability.

Tax Tips That Offer Better Results for Small Businesses

Sanjiv Gupta CPA - 9 years ago
Come the month of January/February and the nation prepares itself for tax sessions. It is time to check that all your financial records are in perfect order. The Certified Public Accountant who will start corporate accounting can call you any time and ask for your spontaneous cooperation if certain papers to prepare the actual audit results are missing. Are you ready? Still, worrying if 2012 will be an expensive Tax-year? Follow the below-stated tips to prepare yourself better for the tax-return file. Establish your business as an entity with the state:This is a great tactic as it allows you to enjoy tax benefits by protecting your personal assets and possessions from your business’ sponsors or financers. This you can simply do by listing your business as an entity with the state. Being an entity of the State increases your brand value and authenticates you as a trustworthy and reliable entity to both the clients and the IRS. In order to enjoy this kind of tax benefit or tax break, you need to undergo paperwork proceedings with the Secretary of State. This process is completely different and is in no way similar to the process of filing with the country records office for an assumed-name certificate. Anyone with such a paper gets permission to conduct business under an assumed or imaginary name. If the firm is recognized as a legal entity then it attracts some amount of costs which is normally capitalized for tax purposes and considerable amortization is done for a period of 15 years. The first tax tip states that for the current year if the total start-up expense for a firm does not exceed $50000 annually then up to $5000 can be deducted from the expenses. Business owners need to keep track of their expensesThe domain of tracking expenses covers home, office, auto, and client development expenses. All these expenses are integral to the development of the business and as such is considered to be an integral part of it. The costs incurred on these heads are liable to be deducted from tax but to get the benefits there are certain rules to be followed. The IRS will ask you for the mileage bills in cases of business automobile usage. It is very well known that small businesses overstate automobile expenses and so bills must be kept for the actual information. If you fail to keep a record of your transport cost then the IRS can decline a small or major part of your deduction from auto expenses. Just like auto and home-office expenses, client development costs are also subjected to some specific rules. In matters of deductible client development costs, there must be a clear mention of time, date and place – these include details such as when you went to meet the client, the business contact’s name and the business you thought of generating as a direct effect of your expenditure. Unreasonable client development expenditures are not considered and only 50% of the business meal prices and other client entertainment expenses are deductible. Small business owners need to invest in equipmentThere is a provision of a total tax cut of $139000 on total business equipment expenses ranging between $560000 and less. This is calculated annually. If in any case repair extends the life of equipment or the equipment is used for a different cause other than the requirement of the company, then the cost will be regarded as an improvement that is entitled to be capitalized and depreciated for the purpose of tax deduction. Need to collect past due accountsIf you are running a proper business you must be well aware that for some obvious reasons there may be a few clients who will refuse to pay you the due money. The work will become easier for you if you have some valid documents to prove your claims such as a receipt, contract, or written slip which documents the fact that these people owe you money. This will place you in a position to exercise your right to collect past-dues. For speeding up the collection process write a note to your client requesting him to clear off their payment and if they express their inability or refusal to pay then you can place your claim on this amount as a “bad business debt loss” for tax purposes. But the debt has to be appropriate and on business grounds. Only then will it be granted for a tax deduction by the IRS. The need to protect payroll taxesBeware of using the payroll taxes for financing any kinds of business operations or proceedings such as clearing the dues of the creditors and suppliers. This is one common mistake that small businesses commit. Payroll taxes are strictly inspected by the IRS and in cases of tax-default or evasion, the IRS can also freeze your personal assets. Even though you have established yourself as an organized business firm the IRS will not entertain any reason while calculating payroll taxes.

Tax breaks by Obama delights small business owners

Sanjiv Gupta CPA - 9 years ago
It was early in 2011 that U.S.president Barack Obama promised to pass tax-break laws to facilitate small business investments and new entrepreneurs plan their expense judiciously. This plan will be an important part of his 2013 budget, officials from the White House report. At a recent cabinet meeting, President Obama focused on this area and emphasized it to be one of his agendas in the ensuing Presidential election this year. He expressed his desire that Congress should consider eliminating profit quotient from investment in the small businesses and must extend its wilful help by considering deductions in the purchase of essential equipment and business software. This will help small business owners develop their businesses and will also generate employment. At a press meet the President stated that he has come to know that the Democrats and Republicans on Capitol Hill had discussions about his ideas and plans that he has in store for helping small businesses get potential resources and capital. He particularly stressed on the necessity of the Republicans and Democrats working together to pass the tax bill as law. He wants to have it off his desk as early as it may be possible. Once it comes out he will enthusiastically sign the bill and would be happy if the bill is enforced right away.              Obama hopes that the Congress won’t oppose the bill as they did the previous year. His only concern, however, is the Congress’s opinion on partisan lines. He fears that it might affect agreement and that the issuance of the bill might be delayed. On the contrary, the White House hopes that whatever may be their general point of dissent, the business-friendly matters which are directed towards a common good will surely pull support of both parties.               The small business ideas that Obama wants to implement and make a part of his February 13 budget package includes a 10 % tax break that is to be enjoyed by all small businesses that will contribute in creating employment or raising wages. Alongside the proposed tax reduction on business start-up expenses. This will help launch small establishments in the commercial market with the least trouble.  He is also keen to remove country-specific restrictions for some immigrant visas so that the US can hire more highly skilled foreign workers and entrepreneurs. Obama said government departments like the energy, education, commerce, and homeland security have been strictly instructed to help the small businesses in the best possible way.

IRS Declare No Reconcile of Reports Required On Credit Card

Sanjiv Gupta CPA - 9 years ago
IRS has pointed it out to a small business advocacy group that it was not a must for organizations to reconcile their tax reports with merchant card transactions on the latest 1099k information reporting form.The circular sent recently clearly brings out the fact that no reports would be required to be shown to the IRS on 2012 business tax forms or for forms in the coming year as well.  In a previous circular, it was mentioned that no tax forms would be required on 2011 income tax returns and now it seems this has been extended as a general rule.The elaboration on the rule was a response to the query raised by Susan Ackerly, senior vice president of public policy of who wanted to know whether forms 1120 and other business forms require a reconciliation of gross receipts and merchant card transactions. The IRS deputy commissioner Steven T. Miller wrote in response to this that the reporting on gross receipts and transactions on the 2012 tax forms will be actually based on 2010 income tax forms. NO other changes concerning the payment card need to be reported.A pair of lawmakers, Rep. Aaron Schock and Bobby Schilling has recently protested against the Housing and Economic Recovery Act of 2008. The Act states that IRS will begin collecting forms of 1099-K from the third party entities which will include credit card companies and for merchant card transactions it will be credit and debit card payments. This form will reveal all credit transactions of a merchant’s business for the year before if they have exceeded $20,000 or 200 transactions for a calendar year.The lawmakers passed legislation against this Act in the Congress to prevent Congress from implementing this new reporting technique as they strongly believe that the IRS is using the 1099-K to exert extra pressure on small businessmen by asking them to show the report with the merchant’s own internal numbers. They also pointed out that when this reconciliation occurs, customers who ask for cask back, returning merchandise bought on credit for cash or gathering deposits on rentals, all will ultimately lead to a huge difference in facts and claims.  This is so since small business is not properly equipped with advanced accounting software, bookkeeping technology, or time to conduct cross-reference or reconcile their internal numbers with the third party generated numbers. This entire process will actually lead to a huge accounting workload for small businesses.However, the IRS has responded to the concerns and claims of the lawmakers and also to those of NFIB. The bill also received huge backing from the US Chamber of Commerce as well. Thus, the NFIB and several other advocated achieved a huge victory last year when the Congress cancelled the extended requirements in 1099-K reporting. President Obama has signed the legislation supporting the concerns of the lawmakers.

Don’t Miss Out on the Small Business Health-Care Tax Credit

Sanjiv Gupta CPA - 9 years ago
I am sure you won’t mind taking some more business tax credits.   Here is another tax credit, if you are a small business employer with less than 25 employees who are earning an average wage of less than $50,000 a year and you pay at least 50% of the employee’s insurance premiums.This tax credit is targeted towards tax-exempt organizations and small businesses.  This credit allows small business owners to offer health insurance for the first time.Here is the scope of health insurance tax credit:You take this credit as part of the general business credit.  You can use the form 3800 and any unused general Business Credit would be included with the tax return.  This unused credit can be carried back one year and then forward for up to 20 years. You must have less than 25 full-time employees.  The number of employees is calculated by calculating total number of hours and the total number of employees.The average annual wage should also be less than $50,000.  Once again, this is calculated based upon FICA wages and the total number of full-time employees.The tax credit is for Small Business Owners or Tax-Exempt Organization.Businesses who can’t take credit for 2011 may be eligible to take advantage in future years.  Small employers can claim this credit between 2010 to 2015.Now the question you are waiting for, How much tax credit?The maximum credit for small business employers is 35% of premiums paid.  For tax-exempt employers, the maximum tax credit is 25% of premium paid.Want more good news?Beginning in the year 2014, the tax credit will go up to 50% of premiums paid and 35% for tax-exempt organizations.Please note tax credit is on the amount you pay for health care premiums.  Credit is not on employee-paid premiums.   With up to 50% tax credit, I am sure you would love to offer healthcare for your employees.Want to take credit this year? Call our office for an appointment.

Discounted Kaiser Insurance for Small Business Owners

Sanjiv Gupta CPA - 8 years ago
Our public accounting firm is focused on Small Business Owners and Individuals and many times new business owners ask us about health insurance.   Most of us live in the Bay Area and prefer  “Kaiser” as a  health care provider and therefore I gathered some basic information about Kaiser health care plans for small business owners.Kaiser offers many health care plans but one that suits the need of small business owners is called “GROUP POLICY”.  You can buy this group policy in two flavors.  One with the annual deductible and one with no annual deductible.Plan with annual deductibles cost about $250-$300 less than the non-deductible plans. Both policies cover doctor's visits and other services offered by Kaiser.  Both plans have minimum out of pocket doctor’s visit cost but the key difference is that with an annual deductible plan you have to pay the minimum deductible ($1500) before your major benefits kick in.   For example, a daily rate for the hospital room maybe $500/night and you will have to pay for 3 nights before your insurance pays.  However, with non-deductible plans you won’t be required to pay for these three days.So, if you and your employees are fairly healthy and won’t be needing any major services than you can opt for deductible plan and save a significant amount on a monthly basis.How about Spouse and kids?Yes, of course, your employees along with officers/owners of the company can also enroll their dependents including kids and spouses.  Most policies don’t allow you to include your parents.What are the requirements for this kind of policy?You must have a business in good standing.You must have two or more people enrolling in the policy.More than 50% of all eligible persons should have insurance.Can I get a tax deduction for the health policy?You can read my post about health care policy deduction for more details.How much does the policy cost?I found the group policy of very good value. Rate varies by age but here is a simple example. Females less than 30 years old can get this kind of policy for about $300.  Not Bad?How can I enroll in group policy?Simply call Kaiser and ask for enrolling in group policy.

Why Your Small Business Need A Website ?

Sanjiv Gupta CPA - 8 years ago
This is a very simple question that I often ask my clients and end with various answers.  This one simple question allows me to open conversations with my clients and find out the real purpose of their site.  Clients often know what they really want but have a hard time nailing down the reason why do they actually want a website.  Here are some of the most common answers:Provide information about our companyProvide our contact informationMake it easy for customers to find usWell – my competition has oneWant to improve my sales.Want to capture sales leadsWant a web presenceAll of these are great reasons but before you can answer this question you need to define three things. Who are you?Who are you?Who are your customers?Who you want to be?Let’s say you are a Business Attorney and your customers are small businesses who seek advice on small business legal issues and you want to become a leader in your local community when it comes down to small business legal issues.  You want to be known as a “go-to’ person for all small business legal issues.Now all of you small business owners have a pool of referrals you get from your past clients.   This pool is often mistaken for market leadership.  Market leadership means that when average Joe thinks about a small business legal issues, he thinks of you.Truth – this is the key reason why you need a website.  Your website will tell your potential clients who are you and who you want to be.   Moreover, your site will relate directly to your audience and also tell them who they are.Little confused? Let me explain.Small Business Attorney website should clearly explain what is it that he or she does.  Most small business owners get this section right but this is only 20% of the puzzle.    The next piece of pie is to explain who your customers are.  This can be done using a “vertical” section on your website.  For example, Attorney should identify 5 or 6 major industries he or she serves.   An attorney may include Real Estate, Medical, Finance, Manufacturing as verticals on the website.  Each vertical should include a direct reference to common problems attorney solves on a regular basis.  This will help potential customers relate to this site.   The use of descriptive images, titles, and other materials can be very helpful.Now comes the hard part.  Most small businesses totally ignore the fact that you also need to clearly explain your vision on your website.  Moreover, the website should also show how this business is moving towards achieving this goal.Does this attorney go to local business events?Does this attorney know about the local business problems?Do other people talk about this attorney's involvement in the community ?Website can use tools likes video, blog, audio, PowerPoint, press release, and newsletter to inform visitors about your engagement with the community.   Your customers are your business lifeline and they deserve to know how you are moving towards your vision.Now you know the theory behind the existence of your website.   But if you would like some help planning, implementing your online and print marketing than you can contact me directly at 510-709-4030.   My name is Deepak Sharma and I am in charge of help small business grow their business.  I work with Fixtro as IT Manager and available to consult for any IT and Marketing projects.  You can also visit us online at http://www.fixtro.com

How Small Business Can Use LinkedIn?

Sanjiv Gupta CPA - 8 years ago
Linkedin is one of the most successful professional networks which has already roped in over 120 million users across the globe. This social media network has become a significant marketing tool-at-hand for business organizations and entrepreneurs.  But how? As the name suggests, “Linkedin” is all about strengthening online communication. It is like a display shelf: you put up your profile and people get to know about you. Linkedin helps you share business strategies, helps circulate innovative ideas, helps exchange work knowledge and above all keeps you connected with the world.   Is Linkedin for small enterprises? The virtual space, being a cost-effective medium of communication, is always helpful for promoting small business enterprises. Digital presence saves establishment cost, which means that even if you do not have a physical retail store you can jolly well sell your products through online marketing carts. In order to understand the usefulness of Linkedin, it is necessary that you understand the opportunities that Linkedin offers. Helps Create Customer BankWhether a manufacturer or a customer, you will get authentic views of news and reviews from Linkedin. It is a trusted portal and is least infiltrated by fake account holders. Also, Linkedin’s automated mail generation service will keep you updated with the latest events and news. Want to create a customer bank? Then start with Linkedin. Helps Build Brand ImageLinkedin serves as a perfect marketing tool. It helps build brand reputation through its intensive competitive domain. You can find all the famous brands around the world on Linkedin. So while the competition is tough its worth to have an account on Linkedin. Helps to locate the right vendorsLinkedin serves to be a useful network that helps in circulating your needs to your friends and peers who can help you out with their suggestions and recommendations. When you are in need of a web designer or web content developer for your company the Linkedin contacts help you identify the right vendors for your company. In addition to this small business, people can also extend their business with vendor connections on Linkedin. Helps Generate Positive ReviewsSmall business organizations can extend their customer base and network and in this sphere, Linkedin proves to be a great benefit. The company owner can approach customers who are hugely satisfied with the services of his company and request them to furnish recommendations and good remarks about his company on the Linkedin profile. The recommendations are then forwarded automatically to the customer’s profile. This helps bring new clients. Helps to raise fundsLinkedin is an excellent network, which helps in connecting small business owners to big investors and with those who are willing to finance start-up business plans. If you have active participation in this professional networking site then you can actually work up good strategies and allure investors to finance your business projects. 

Important Year-End Tax Implications For Ranchers

Sanjiv Gupta CPA - 8 years ago
The thing about taxes is that you always have to pay them at one point in your life. In fact, at some point, it is said that the only thing human beings are sure about is death and taxes. Ranchers make up a fairly large percentage of the human population in the USA. So what are the implications of end of year tax implications to the ranchers in the USA?The answer to this particular question is somewhat complicated in itself owing to the multifaceted way in which it can be tackled. This is because the implications can be economical, social and fiscal in nature. The magnitude of these implications is also something that needs to be looked at, especially considering that a larger part of the population is just picking itself up from the throes of financial recession. However, in this article, we are going to look at the major financial implications of the end of year tax changes to the average rancher.The baseline of this article is simple; if congress does not act this year to shield the local folk by enacting safety nets with regard to ranching, then the result is that the New Year will not be too good to the ranchers. This is because such a move will have the net effect of raising the rates on virtually all the taxes that taxpayers pay, and in this case, ranchers. Such taxes include, but are not limited to income taxes, capital gains, dividends, wages, gifts, and estates. Looking at the wholesome situation, most of the tax provisions that expire at the end of the year actually have a direct bearing on the tax amount that is paid by the ranchers and farmers in much of the USA. Most of the farmers and ranchers in the USA are owners of a large estate through which they carry out their businesses. Estate taxes are some of those taxes that are bound to increase if changes are not made. As such, a person paying a 35% tax on his estate may be slapped with a top rate tax of up to 55%. Such increases are bound to increase the cost of business and of the products sourced from these ranches. This is one of the reasons that experts advise businessmen to take care of their estates before the year-end. If not, then the net result may be something that is not entirely good.It is for this particular reason that the end of year tax implications should be put into account not only by the accountants as they crunch the numbers but also by the government and the legislators as they continue to debate the taxation issue. Initially, there were exemptions to the extent of 10 million dollars; however, with the expiry of the tax breaks, the situation is bound to get a little tighter. This is because only exemptions of up to 1 million will be entertained by the taxman. 

President Obama Has Been A Boon For Entrepreneurs And Small Businesses.

Sanjiv Gupta CPA - 7 years ago
The health care plan issued by President Obama has been a boon for entrepreneurs and small businesses. This Affordable Care Act gives these small businesses a lot of support and helps for buying health insurance. Venture capitalists see this as a massive opportunity and they have been giving away lots of cash benefits for starting up health care centers across the US.The investments made in health care setups grew at a whopping 64% in the first quarter of 2013 which is way higher than investments last year.  Brad Weinberg, a partner at Blueprint Health and venture capitalists for new health care setups suggests that this is the best time for entrepreneurs for setting up health centers as all infrastructure is available like interest, support, and capital.  Blueprint has been helping around 30 companies with $20,000 each for setting up health care centers for a stake of 6% in equity.Health care was never the most sought after industry in the US as a technology was the booming sector. Even IT companies were more focused on social networking or game centers. However, the Affordable Care Act turned everybody’s focus on the health care industry, due to the huge financial incentives that it provided. There are more opportunities to set up newer units and speedily resolve many health problems.Attractive financial incentives accompany the Affordable Care act. These are offered to health care providers to upgrade their medical equipment to newer models and the patients are encouraged to stay healthy always. People who work with the new startups have stated out of their experience, that the hospitals and insurance companies always look up to entrepreneurs for their innovative technologies. New startups are given huge aids to come up with new and cheap techniques to make healthcare a booming industry.David Whitlinger, executive director of the New York eHealth Collaborative announced recently that the list of venture capitalists and health care providers that have registered with them is more than what they can deal with.  Whitlinger runs a digital health accelerator program that had graduated its initial set of startups recently.  This initiative selects a list of startups that have the potential to help New York’s medical program that finds dozens and dozens of venture capitals who are interested in investing in these setups.Insurance leaders, medical centers and medical shops have gone on record to offer huge discounts and financial assistance for health startups that solve their problems. This has encouraged these small businesses and entrepreneurs to come out with new models and help the people in reducing their hospital visits. These entrepreneurs have found the able support of venture capitalists, who offer them the much-needed capital and support to set up their establishment. This is a mutually beneficial plan of the Affordable Care Act where the venture capitalists get a stake of equity of the fresh startups and these new businesses get the backing of established venture capitalists and enough capital to start working.

How to claim the Small Business Tax Savings Credit

Sanjiv Gupta CPA - 7 years ago
The small business employers provide good health care plans to their employees and hence they are given tax credits to reduce the burden they suffer by providing the health insurance plans.What is the small business tax savings credit?According to the Affordable Care Act, small business employers, and small tax-exempt employers like non- profit organizations get a tax credit of 35% and 2% respectively for the years 2010 to 2013.  These credits are due to increase correspondingly to 50% 35% in the year 2014. The scheme of offering such attractive tax credits is called Small Business Health Options Programs (SHOP).These tax credits can be carried back or forward to other years also thus helping small business employers in a big way. The health insurance premiums that they pay to the employees are usually higher than the tax credits that they receive through the SHOP. In these cases, these employers can claim a business expense deduction for the premiums that they pay over and above the tax credit that they get. This is a double whammy for them, as they get both the credits and the deductions that they are due to get.What exactly is a small business?The explanation of the tax credits mentions small business employers on every page. However, there are certain rules to explain to who those small business employers. To qualify for the double whammy, one needs to fulfill the following conditions:  a) the employer needs to cover at least 50% of the health care coverage (single coverage and not family) for each of his employees. b) There must be lesser than 25 full-time employees in the business for it to be classified as a small business. Two half time workers can be considered as a 1 full-time employee and c) These employees must be paid less than $50,000 a year as wages.Claiming the creditThe small business employers can arrive at the tax credit that they are due, by using the IRS form 8941. This has to be then included along with the general business credit while filing the income tax return. The small business employers have a great advantage to carry their tax credits either backward or forward and use it as and when they require it the most. Using the help of a professional tax advisor can help in calculating the exact tax credits and maximizing the benefits of this option.All sufficient evidence supporting the facts should be submitted to the IRS to make it clear that the employer, who is qualifying for a tax credit, is indeed a small business employer. Once the IRS is fully convinced about the authenticity of the paperwork, then the tax credit gets approved and it reaches the employer at the time that they have opted. The additional deductions also help employers in a big way as they don’t feel the burden of huge healthcare expenses.

Small Business Tax Savings Credit Explained

Sanjiv Gupta CPA - 7 years ago
How to claim the Small Business Tax Savings Credit?The small business employers are given excellent benefits in the Affordable Care Act. These small business employers provide good health care plans to their employees and hence they are given tax credits to reduce the burden they suffer by providing the health insurance plans.What is the small business tax savings credit?According to the Affordable Care Act, small business employers, and small tax-exempt employers like non- profit organizations get a tax credit of 35% and 2% respectively for the years 2010 to 2013. These credits are due to increase correspondingly to 50% 35% in the year 2014. The scheme of offering such attractive tax credits is called Small Business Health Options Programs (SHOP).These tax credits can be carried back or forward to other years also thus helping small business employers in a big way. The health insurance premiums that they pay to employees are usually higher than the tax credits that they receive through the SHOP. In these cases, these employers can claim a business expense deduction for the premiums that they pay over and above the tax credit that they get. This is a double whammy for them, as they get both the credits and deductions that they are due to get.What exactly is a small business?The explanation of the tax credits mentions small business employers on every page. However, there are certain rules to explain to who this small business employer. To qualify for the double whammy, one needs to fulfill the following conditions: a) the employer needs to cover at least 50% of the health care coverage (single coverage and not family) for each of his employees. b) There must be lesser than 25 full-time employees in the business for it to be classified as a small business. Two half time workers can be considered as a 1 full-time employee and c) These employees must be paid less than $50,000 a year as wages.Claiming the creditThe small business employers can arrive at the tax credit that they are due, by using the IRS form 8941. This has to be then included along with the general business credit while filing the income tax return. The small business employers have a great advantage to carry their tax credits either backward or forward and use it as and when they require it the most. Using the help of a professional tax advisor can help in calculating the exact tax credits and maximizing the benefits of this option.All sufficient evidence supporting the facts should be submitted to the IRS to make it clear that the employer, who is qualifying for a tax credit, is indeed a small business employer. Once the IRS is fully convinced about the authenticity of the paperwork, then the tax credit gets approved and it reaches the employer at the time that they have opted. The additional deductions also help employers in a big way as they don’t feel the burden of huge healthcare expenses.

The IRS Is Getting Ready to Audit More Partnerships

Sanjiv Gupta CPA - 7 years ago
If you have a partnership including an LLC or S corporation, your chances of being selected for auditing are increasing. The Internal Revenue Service is getting ready to audit more LLCs and S corps than they have ever done before.In the upcoming years, the IRS is planning on shifting the focus on business auditing from corporations and start concentrating on “pass-through” entities. This shift information comes from the head of the Internal Revenue Services’ Self-Employed and Small Business division, Faris Fink, at a recent American Institute of CPAs’ National Tax Conference. The reason for the shift is because partnerships have become more complex. The Internal Revenue Service sees partnerships as a business type that has many opportunities for potential tax fraud.For a long time, the IRS has focused all of its energy on looking into corporations. According to Mr. Fink, the IRS is behind the curve when it comes to developing a strategy for looking into partnerships.Approximately 95% of all the businesses have a pass-through structure including sole proprietors, S corps and LLCs according to official Internal Revenue Service data. With pass-through entities, the income earned flows directly down to the taxpayer. Bloomberg reported between the years 2007 and 2011, the number of pass-through entities grew 15.3%.Over the years, partnerships have gotten increasingly complex. There are some partnerships that have various tiers and even thousands of partners. These issues make the chances of fraud much more likely according to Mr. Fink. The Internal Revenue Service has started training its auditors on the best way to evaluate pass-through entities so they will be able to identify any red flags.In 2012, the Internal Revenue Service audited only a small amount of partnerships tax returns, approximately .5%. That is compared with the 1.6% of corporate tax returns and 1% of individual tax returns.In small business tax and audit news, the Internal Revenue Service announced recently that it would start allowing small businesses that had less than $10 million dollars in revenue the ability to request a fast track settlement. This fast track settlement is similar to what midsize and large businesses have had the ability to do. The rule would let small businesses appeal audits early and they can get resolution in 60 days or less instead of having to wait for the audit to be complete. CNN money sources state that it can take many years for an audit to be officially complete. This is a huge benefit for small businesses.  Sanjiv’s Thoughts on Setting Up Business:

Tax Shelter Ideas

Sanjiv Gupta CPA - 6 years ago
Tax Shelter Ideas for Small Business OwnersIn general, a tax shelter refers to a program that allows business enterprises or individuals to either defer or reduce payment of income taxes. Such programs may not suit everyone and legitimate ones do involve some level of risk, which not all investors are comfortable undertake. However, with the correct information, the process of taking advantage of these shelters becomes less involving.The Internal Revenue Service (IRS) applies huge discretion when applying tax shelters as this area has traditionally been prone to abusive practices by both individuals and businesses.How IRS Views Tax SheltersTax shelters are defined by the IRS as investments that normally require making substantial contributions which oftentimes are associated with commensurate risk levels. For an individual, tax shelter implies an investment which involves liability incurred within the short-term, with hopes of making appreciable gains across the long term.For instance, if someone invested in the property situated within a low-income environment, depreciation benefits of such property would be termed as a legitimate tax shelter.The losses or tax deductions that a person can take on potential tax shelter gets limited to total worth of investment or amount at risk. The amount viewed as being “at-risk” for example might get limited to:Adjusted basis of the propertyCash investedLoans are taken for which someone bears a personal responsibility to repayTreatment of LossesIt is vital gaining the understanding that business activity losses or credits are easily considered passive activity losses or credits. These may only be utilized for offsetting income from different passive activities. You cannot utilize them for offsetting income sources like wages, dividends or interest. Passive losses generated in excess from any tax shelter can be carried forward, or till the investor sells off the asset.Take care of tax shelters that get marketed with promises of write-offs being more significant than the invested amount. IRS considers such as Abusive Tax Shelters. People generally make investments with hopes of generating huge amounts of profits. Legitimate shelters involve a certain level of risk, cut down fairly on taxes and generate income. If the IRS takes note of someone operating an abusive scheme, the individual is then required to pay the tax owed along with penalties and interest.Legitimate Tax SheltersIt is vital knowing how to identify a questionable program. You may achieve this goal by adhering to three primary rules in order to distinguish between legal and illegal tax shelters as follows:If the primary purpose of a given transaction is lowering taxes and not offering other economic gains to parties involved, consider such a business deal unethical or questionable.Transactions involving the exchange of goods, assets or even services at prices that lie well below the fair market value should be viewed with suspicion.If the interest rate paid to a different party is unusually high or low, with the sole intention being sheltering income from taxes, such an arrangement should be seen as unethical.Tax Accrual Work-PapersThe IRS maintains a policy of requesting tax accrual along with other financial audit work-papers that relate to tax reserves. This applies to deferred tax liabilities and footnotes which disclose contingent tax liabilities that appear in audited financial statements.Owning a legitimate auto repair business enables you to take advantage of numerous tax deductions, which are unavailable to mere employees. This includes partial deductions to expenses incurred on housing, automobile, entertainment, and meals as well as cell-phone expenditure.While some expenses get deducted within a year, others get spread out over a number of years.You can write off the full cost of new furniture and computers within this year as per IRS Code Section 179. This might not be significant to a relatively new business that may not generate a lot of income within at first. A wiser strategy, therefore, might be deferring some portion of deductible expenditure to years in the future, which accountants call “depreciation”.You may deduct some portion of “start-up costs” if this year is your first in business. However, beyond a certain level, you will require spreading the remainder of associated costs across your tax returns for the next several years. This practice is termed “amortization” in accounting.Remember not to overlook the expenses below when filing tax returns:Legal and Accounting FeesWebsite/ Advertising costsAssociation DuesTruck and Auto ExpenseComputer ExpenseBank ChargesSubscriptions and DuesTraining and EducationFurniture and EquipmentHome Office ExpenseGiftsInsurancePermits and LicensesPostage and DeliveryMeals and EntertainmentPrintingOffice Administration Fees and RentMaintenance and RepairsStart-Up CostsRetirement SavingsMaterials and SuppliesTelephoneTravelTaxes (Payroll Tax, Property Tax, etc)Knowing the tax code is important for anyone who owns a business and IRS Publication 463 spells out on available business tax credits relating to travel, entertainment, gift as well as car expenses. Think about hiring the services of a tax professional to aid in preparing tax returns for your auto repair business.

Tax Deduction Strategies for Small Businesses

Sanjiv Gupta CPA - 6 years ago
As a small business owner, you can utilize a proactive approach and seize all opportunities available for conducting tax deductions as provided for under the law. Overlooking certain crucial write-offs leads to a bloated tax bill. Changes to the recent tax law have altered how Section 179 on deduction on bonus depreciation works. You can maximize write-offs for your home office and get deductions for business travel and automobiles, along with tax shelters for real estate property.Tapping into Major Tax Savings as per Section 179 DepreciationA small business can benefit through a huge increment in the First-Year depreciation allowance as covered by Section 179. Following this law, you can deduct the full cost of most used and new business personal property. The maximum amount provided for here got gradually boosted for 2009 from $25,000 to $250,000. Later on, the 2012 American Taxpayer Relief Act (ATRA) preserved the $500,000 maximum deduction adopted by the 2010 Small Business Jobs Act for two years. This provision was backdated to the 1st of January 2012 and remained effective through 31st December 2013.Claiming Bonus Depreciation for All Qualified AssetsA business can lay claim to “bonus depreciation” for assets that are qualified and placed in service during the whole year. This business tax credit applies to the following:Property with 20 years or below of cost recovery periodQualified leasehold improvementsDepreciable software which is not amortized for over 15 yearsWater utility property Triggering Quicker Write-Offs as per Section 179 DepreciationIt is possible to maximize Section 179 expensing deduction by undertaking some shrewd planning of your taxes through the ways below:You can claim the allowance accrued through compensation payments if your company zeroes out its taxable income. The tax law limits annual deduction to the amount of income taxable.Boost the limit of your business income, which should include that accrued from your active businesses.Maximize business percentage if claiming allowance for assets partially utilized for non-business reasons. Larger Deductions for ‘Heavy’ SUVs according to Section 179If you opt to deduct the annual expenditure as opposed to using standard mileage allowance, take note of an appreciably large tax advantage if owning heavy-duty vans, pickups, and SUVs. These vehicles have gross vehicle weight rating or GVWR of over 6,000 pounds from the manufacturer and are viewed as “trucks” for purposes of taxation.Such heavy-duty vehicles depreciate more rapidly than regular passenger vehicles when used intensively for business purposes.Deductions of Fuel Tax for Business VehiclesYou may deduct automotive expenses via a standard mileage rate, set each year by the IRS. Doing this sets you free from having to account for actual expenditure incurred. For instance, business drivers got 56.5 cents for each mile in 2013.Tax-Free Family Vehicles as part of Business DeductionsOperation and maintenance costs are deductible for cars utilized in doing business, which includes depreciation. Your auto repair firm may provide cars for the whole family in this case. The business you own can deduct the entire amount of operating costs if your family members are employed by the enterprise. Car expenses which are deductible include:Cost of gasolineRepairs,InsuranceInterest on car loansDepreciationLicensesTaxesGarage rentsParking tolls and fees Writing off Home Furniture and Computer as part of Self-Employed Tax DeductionsUnder Section 179, many taxpayers who are self-employed may deduct purchases for equipment, as opposed to capitalizing them. This section applies to the vast number of business assets, including furniture and computers meant for domestic use.Owning Your Business PremisesOnce the profits of your company start growing and business stabilizes, consider owning as opposed to renting your quarters. When evaluating the comparative costs, think of a reasonable time period, such as 10 years and factor into your calculations purchase price of your desired building at a prime location.Sheltering Real Estate Property of up to $25,000Prices of real estate have recently gone down in many places, presenting great opportunities for investment. As well, business owners can enjoy tax shelters for investing in property. One has to own a 10 percent minimum portion of such investment property without involving limited partnership interests, apart from actively managing it. A business tax credit of 10 percent is available too for fixing old buildings, which changes to 20 percent if the building has historic significance.Turning Home into Rental PropertyMany homeowners have been adversely affected by the recent devaluation in real estate property. This even gets worse due to the inability of deducting a loss from selling your principal residence.Turning your home into a rental property is a brilliant strategy in such situations. You only require holding it out for rent while relocating, before deducting losses once the place is sold. This is a shrewd tax move that capitalizes on an important distinction that applies to business or investment property.
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