#7 Hire your children to work in your business Wages paid will be deductible by your company and taxable to the family member. Your child’s earnings will probably fall in a lower tax bracket than yours. Payroll taxes apply to such wages; however, if your business is a proprietorship or family partnership, they do not…
#6 Cash Vs Accrual Consider using the cash method of accounting if you meet the qualifications. Under the cash method, you generally report income to the IRS in the year you receive payment from customers. Under the accrual method, your report income when a sale is made to a customer regardless of when the bill…
#5 Tax and Asset Protection If your business is incorporated, it is often a good idea for you to separate ownership of the business real estate and lease it to your corporation. There are a number of tax and non-tax concerns relating to real estate ownership. See us before you acquire new business property or…
#4 Keep your Corporate Blackbook up to date If you operate a business entity, keep accurate and thorough minutes for the corporation. Minutes should document transfer of funds or assets into or out of the corporation, officers’ salaries, shareholder dividends, officer and employers benefits, and related party transactions that might be scrutinized by the IRS.…
#3 Incorporate and elect S status If your sole proprietorship or partnership is producing a net profit in excess of a reasonable compensation for your time, you could save money by operation as an S corporation. You are required to take a reasonable salary for the work you do but no more than that. With…
#2 Consider “Section 1244 Stock” for a new business If you are starting a business and choose to operate as a corporation, investigate the advantage of “Section 1244 Stock.” There are requirements that must be met, but if your stock qualities and your business later fails, you can deduct up to $50,000 of the…
#1 Choose your legal structure form of doing business carefully The tax and non-tax consequences of the structure you select are significant. The basic structures of operation from which to choose include: sole proprietorship, partnership, corporation, or limited liability company. Seek professional assistance before deciding, and review your chosen business from time to time to…
“Sin tax” is a higher tax rate for products that typically have bad effects on the human body. Products that fall under Sin Tax include: GMO food, junk food, snacks, marijuana, vending machines food and soda drinks. The concept of the ‘Sin Tax’ is to make unhealthy food and drinks more expensive so people would…
Not every new company starts off with perfect tax habits, but it is important that you learn from your mistakes and correct them as you go. It is always best to correct any IRS issues voluntarily rather than being forced. A company that does not comply with the IRS rules and regulation may be subjected…
You May Face Penalties! If you have hired workers as Independent Contractors and they would not be considered as such according to the IRS or your state laws and unemployment regulations, you may face serious consequences. Before you hire an independent contractor you should know the difference between and independent contractor and an employee. If…
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