Understanding Tax Requirements

Understanding Tax Requirements

by | Jul 10, 2020 | Taxes

As a business owner, it’s important to understand your federal, state, and local tax requirements. This will help you file your taxes accurately and make payments on time. The business structure you choose when starting a business will determine what taxes you’ll pay and how you pay them.

The two most common types of state and local tax requirements for small business are income taxes and employment taxes.

Your state income tax obligations are determined by your business structure. For example, corporations are taxed separately from the owners, while sole proprietors report their personal and business income taxes using the same form.

If your business has employees, you’ll be responsible for paying state employment taxes. taxes, and temporary disability insurance. You might also be responsible for withholding employee income tax. Check with an accountant or tax professional to assist you in making all of the relevant assessments for your business.

If you owe taxes, you have options

If you owe taxes, you have options

by | Jul 9, 2020 | Taxes

It’s best for all taxpayers to file and pay their federal taxes on time. If you can’t pay the full amount due at the time of filing, consider one of the payments agreements the IRS offers. These include:

  • An agreement to pay within the next ten days. 
  • A short-term payment plan to pay within 11-120 days.
  • An installment agreement, to pay the balance due in monthly payments.

Businesses owing $25,000 or less from the current and prior calendar year, who can pay what they owe within 24 monthly payments, can use the IRS online application.

5 Things to Consider for your Business During the Summer

5 Things to Consider for your Business During the Summer

by | Jul 9, 2020 | Taxes

Summer is here, and many people are looking forward to a few months of fun with their kids. As a small business owner, it is easy to let some of the business management tasks slide because you are distracted with activities outside of work. Even though it is common for some industries to experience a decrease in business during the summer months, it doesn’t mean that you can get lazy with your bookkeeping or other activities.

Here are a five things that you can consider ensuring a successful summer:

  • Scheduling – Put together a summer schedule in advance to work around the anticipated vacation schedules of your employees. This makes sure have all of the tasks and activities covered throughout the summer months.
  • Adjust Your Staffing – It might make sense to hire seasonal employees. Consider working with a temporary hiring agency or looking for options to bring on freelance contractors for a time. An accountant can also help you distinguish the differences in these duties as well as the inherent differences in which your employees and contractors are paid and taxed.
  • Keep Up with Your Bookkeeping and Payments – Small business owners can get stressed because they are trying to crunch the numbers during a busy time of the year. Summer is a great opportunity to get caught up on the busy work that has been neglected.
  • Track Expenses – It is always a good idea to gather the receipts and file them for the future. A good filing system will ensure that you can find the documentation if it is needed for any reason.
  • Hire Professionals – Accountants are going to analyze your business records and make recommendations to cut your business costs and streamline your business.
Tax Professionals Can Assist With Tax Planning

Tax Professionals Can Assist With Tax Planning

by | Jul 1, 2020 | Taxes

Everyone is – or at least should be – aware of the deadline to pay our taxes, but you may not be aware that there are some long-term benefits of an overall analysis of your financial situation throughout the year in order to receive the maximum tax breaks.  This is known as Tax Planning, and it can ultimately shrink your tax bill, but first, here are some things you need to know, and that a tax professional can help you with:

 

  • Understand Your Tax Bracket – The United States has a progressive tax system. That means people with higher taxable incomes are subject to higher tax rates. People with lower taxable incomes are subject to lower tax rates.
  • The Difference Between Tax Deductions and Tax Credits – Tax deductions are specific expenses you’ve incurred that you can subtract from your taxable income. They reduce how much of your income is subject to taxes. Tax credits give you a dollar-for-dollar reduction in your tax bill.
  • What Kind of Deductions to Make – Deciding whether to itemize or take the standard deduction is a big part of tax planning, because the choice can make a huge difference in your tax bill.
  • Knowing What Tax Records to Keep (And for How Long?) – Keeping tax returns and the documents you used to complete them is critical if you’re ever audited. Typically, it’s advised that you keep them for a period of 6 or 7 years, but it may vary depending on circumstances. A tax professional or tax preparer can help in this area.
  • Move Your Money – A tax professional can advise you on a number of strategies to protect your assets from IRAs to 401ks and Flexible Spending Accounts – as well as Health Savings Accounts.
Tax Deadlines Are Approaching

Tax Deadlines Are Approaching

by | Jun 29, 2020 | Taxes

Did you know that Michigan has pushed all April 2020 state and city income tax deadlines to July 2020 to help taxpayers during the COVID-19 pandemic. Returns and payments otherwise due on April 15, 2020, are now due on July 15, 2020. Returns and payments otherwise due on April 30, 2020, are now due on July 31, 2020. This applies to:
  • Annual state and city income tax returns and payments
  • Estimated state and city income tax payments
  • Estimated city income tax extension payments
Moreover, any penalties and interest for failure to file or pay will not begin to accrue until after the date of this extension deadline.
Tax credit benefits employers providing paid family and medical leave

Tax credit benefits employers providing paid family and medical leave

by | Jun 28, 2020 | Taxes

Under tax reform, employers providing paid family and medical leave might qualify for a tax credit.

Here are some facts about the credit.

An employer must have a written policy that provides:

  • At least two weeks of paid family and medical leave annually to full-time employees, prorated for part-time employees.
  • Family and Medical Leave pay that is at least 50 percent of employee’s wages.

Other facts:

  • For tax year 2019, the employee must earn $72,000 or less to qualify.
  • The credit ranges from 12.5 percent to 25 percent for qualifying employees.
  • Some employers are eligible to claim the credit retroactively.

For more information visit the IRS Tax Reform for Businesses page.

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