Tax Tips for New Business Owners

Each year, almost half a million new businesses are started. With the tax season in full swing, it’s critical that the taxpayers behind these new businesses know what to look for when preparing their taxes, which can make a huge difference in how much they owe.

                     

Entrepreneurs new to tax filing should keep some of the following tips in mind:

•  Any individual who is self-employed is required to pay into Social Security and Medicare.

• New business start-up costs can be deducted.

• If you started a business in 2014, consider becoming incorporated, to protect your personal assets.

• Take into consideration those doing work on your behalf, such as employees or contractors.

•  If you set up your business as an S Corporation you can avoid paying some of your profit into Social Security and Medicare.

To read the entire article, please visit www.cpapracticeadvisor.com

The “Dirty Dozen” Tax Scams for 2015

The Internal Revenue Service (IRS) completed their 2015 “Dirty Dozen” list of tax scams this week, including a warning to taxpayers about aggressive telephone scams continuing across the U.S. during the early weeks of this year’s filing season.

Aggressive and threatening phone calls from scam artists are being reported on a daily basis in states across the nation. Taxpayers are urged not to give money or personal financial information over the phone or through emails claiming to be from the IRS. Illegal scams can lead to major penalties and interest for taxpayers, and even possible criminal prosecution.

Keep in mind that, as a taxpayer, you are legally responsible for what is on your tax returns, even if it is prepared by someone else. Phone scams and email phishing schemes top the “Dirty Dozen” list of tax scams that are being highlighted by the IRS.

To view the full list, and to read the entire article, please visit www.irs.gov.

A Key Part of Estate Planning? Income Tax Planning

It’s been two years since Congress enacted the American Taxpayer Relief Act (ATRA), which increased the federal estate and gift tax exemption to $5 million and the maximum estate, gift, and generation-skipping transfer (GST) tax rates from 35 percent to 40 percent.

For 2015, taking into account the inflation adjustment, the federal estate and gift tax exemption is $5.43 million for each individual, or $10.86 million for a married couple. The ATRA also made permanent the portability feature introduced in 2010. The portability provisions allow a surviving spouse to combine the deceased spouse’s unused exemption with the surviving spouse’s exemption, thereby effectively assuring that married couples utilize their full exemptions.

With respect to the federal income tax, the ATRA increased the top individual income tax rate from 35 percent to 39.6 percent and the top capital gains rate from 15 percent to 20 percent. In addition, the Affordable Health Care and Patient Protection Act added the 3.8 percent income tax on net investment income (NII). Therefore, taking into account the 3.8 percent tax, the top federal individual income tax rate can reach 43.4 percent for ordinary income, and the top rate on dividends and long-term capital gains can reach 23.8 percent.

Keep in mind, the 3.8 percent tax only applies to individual taxpayers whose modified adjusted gross income exceeds $200,000, or $250,000 for married taxpayers filing jointly. The 3.8 percent tax also applies to trusts when the adjusted gross income of the trust exceeds $12,150. Because of the ATRA, the increase in the federal estate and gift tax exemptions, coupled with the increase in the top individual income tax rates, has now shifted the focus of estate planning to include income tax planning.

Two Income Tax-Planning Strategies to Consider

Traditionally, estate tax rates exceeded income tax rates, but the ATRA has closed that gap significantly. Now, individuals are well-advised to consider income tax-planning strategies where they had not done so previously.

Here are two approaches:

1. Assign income from a taxpayer in a high-income tax bracket to a taxpayer in a lower bracket: For example, gifting income-producing assets to a complex trust allows the trust to shift taxable income to beneficiaries in lower tax brackets.

2. Avoid the phase-out of itemized deductions and personal exemptions: By reducing one’s income, taxpayers may be able to decrease the phase-outs of itemized deductions and personal exemptions.

To read the entire article, please visit www.accountingweb.com.

Three Tips to Boost Your Business

Most entrepreneurs feel overwhelmed by what they have to do and the little amount of time they have
to do it in. 

There are three strategies you can use – simple things you can do each week, in less than an hour, that will help you become a better, stronger business leader.

Call a Client

E-mail is a great vehicle for communication, however, there is real value in picking up the phone.  In less than 15 minutes, every week, you can call a client.

Read Trade Publications

Every business market has trade publications or a website that covers your market; most big markets have more than one.  Devote 20 minutes a week to read through it and find out what the key players in your trade are up to.

Close your door

One of the few things every entrepreneur agrees on is that the demands of leading a business can be stressful.  While there is value in having a literal open door policy at work, try closing it for 15 minutes a week. 

A successful entrepreneur must be a finisher.  To get things done requires focus.  Unplug for a while – turn off the phone and stay away from e-mail and you’ll regain focus and clarity.

To read the entire article, please visit www.inc.com. 

Reporting Phishing and Online IRS Scams

Protect yourself – don’t fall prey to IRS scams.  Note that the IRS does not initiate contact with taxpayers by any of the following methods: e-mail, text messages and social media channels.

They will not issue requests for PIN numbers, passwords or similar access information for credit cards, banks or other financial accounts via any of the above methods.

Phishing is a scam typically carried out through unsolicited e-mail and/or websites that pose as legitimate sites and lure unsuspecting victims to provide personal and financial information.

What should you do if you have received an unsolicited e-mail claiming to be from the IRS?  Report it via e-mail to phishing@irs.gov.  If you've experienced any monetary losses due to an IRS-related incident, please report it to the Treasury Inspector General Administration (TIGTA) and file a complaint with the Federal Trade Commission (FTC) through their Complaint Assistant to make the information available to investigators.

To read the entire article and for more tips and helpful links, please visit www.irs.gov.

Attention Small Businesses: Here’s what to Watch in 2015

With the New Year in full swing, small business owners are focused on implementing their strategic plans for this year.  


An important component of those plans should include monitoring potential regulatory changes and understanding how they may impact the small business landscape.


“Staying up-to-date with the ever-changing regulatory environment can be the difference between your business maintaining compliance and potentially facing steep IRS penalties,” said Martin Mucci, president and CEO of Paychex.  “Paychex keeps a close eye on regulatory issues to help business owners plan for changes that may be required in the New Year.”


Paychex has compiled its annual list of the top 10 regulatory issues that small business owners need to be aware of in 2015:

Tax Extenders and Tax Reform

The Affordable Care Act

Taxation of Online Sales

Immigration Reform

Overtime Regulations

Employment-Related Legislation

Privacy

Retirement

FUTA Credit Reduction

Banking Developments

For more expansive information on these items and to read the entire article, please visit www.cpapracticeadvisor.com.