It’s probably no great revelation to learn that taxes are complicated. As a consequence, most small business owners rely on tax professionals, at least for preparing income tax returns. I’ve been working with federal taxes for many years, and it never surprises me that there are surprises. Here are some tax rules that aren’t obvious, […] The post 5 Tax Rules that May Surprise You appeared first on Barbara Weltman ..read more

The IRS has a slew of penalties that may be imposed for doing something wrong, doing something late, or failing to do what you should have done: failure-to-file, failure-to pay, failure-to-deposit. Obviously, the best course of action is to avoid penalties by knowing the rules and acting correctly and on time. But this isn’t always […] The post Surprised by Tax Penalties? How to Get Relief appeared first on Barbara Weltman ..read more

Tax planning may not be your favorite activity, but it’s one that can put money in your pocket. The decisions you make now and execute before the end of the year can result in tax savings for 2024, as well as position you to realize tax savings in 2025 and beyond. The sooner you begin to focus on tax planning, the less stress you’ll experience as the days of the year dwindle down and the more opportunity you’ll have to take action. Assess and project your profitability As 2024 been a good year so far? Have you been struggling? Your numbers for the first half of the year can give a good idea of ..read more

Taxes and the related chores—recordkeeping, filing, and paying—are perhaps the least favorite things for a business owner to do. Still, they’re unavoidable. Being in business requires you to keep books and records and then report income and expenses to the government. All of this takes considerable time and a lot of effort. Whatever you can do to make things easier, do it! Here are 5 ways to help. 1. Simplified home office deduction If you run your business from home, you may qualify to take a home office deduction. There are certain conditions for this, which are explained in IRS Publication ..read more

Entrepreneurs may not be content with owning a single business. They may have two or more companies going at the same time. They may own some or all of them by themselves or have co-owners. A 2022 Bank of America survey found that 26% of small business owners had multiple businesses, and of these 58% had 2 businesses and 30% had 3 businesses running at the same time. When there is common ownership, certain aggregation rules are triggered. Some results are favorable; others are not. For multiple C corporations, sometimes called controlled or affiliated corporations, special rules apply and are ..read more

If you’ve incorporated your business or formed a limited liability company, you may have the belief that you can’t be personally liable for your business’ debts. Think again. If you have employees and you fail to deposit the taxes you’ve withheld from their paychecks, you may be 100% personally liable for these taxes. Here’s what you need to know. What are trust fund taxes? When an employer withholds income tax and the employees’ share of FICA to cover their Social Security and Medicare taxes, the employer is acting in a fiduciary capacity. The taxes don’t belong to the employer; they represen ..read more

A deficit occurs when the federal government’s spending exceeds its revenues. The federal government has spent $1.06 trillion more than it has collected in fiscal year (FY) 2024 (as of May 1, 2024), resulting in a national deficit. When governments—federal, state, and local—experience deficits, their typical go-to strategy is raising revenue. It’s rare they address the deficit by cutting expenses. Some recent proposals to increase taxes could hit small business owners. Here’s what to watch out for: Exit tax A significant number of businesses—large and small—are moving from high tax/high r ..read more

For many people, tax filing is becoming a distant memory for this year; April 15 has passed. But taxes are year-round for business owners. They deal with payroll taxes on a regular basis and many pay quarterly estimated taxes. A few even pay excise taxes. But what about the big picture when it comes to tax filings? Each year, the IRS creates a data book with tables showing various information—how many returns were filed, how many were filed electronically, how many were examined, and more. The most recent data book covering the government’s fiscal year 2023 (ending September 30, 2023) shows ch ..read more

If you’ve incorporated your business or formed a limited liability company, you may have the belief that you can’t be personally liable for your business’ debts. Think again. If you have employees and you fail to deposit the taxes you’ve withheld from their paychecks, you may be 100% personally liable for these taxes. Here’s what you need to know. What are trust fund taxes? When an employer withholds income tax and the employees’ share of FICA to cover their Social Security and Medicare taxes, the employer is acting in a fiduciary capacity. The taxes don’t belong to the employer; they represen ..read more

Like December 7, April 15 for many is “a date which will live in infamy.” It’s Tax Day in most of the U.S. Calendar-year partnerships and S corporations were required to file their 2023 returns, along with Schedule K-1s for owners, on March 15, 2024, or obtain an extension. Now, the filing deadline for owners of these pass-through entities is approaching. Here are 5 last-minute reminders to help you meet your tax obligations and avoid penalties, interest, and IRS scrutiny. 1. Check your filing deadline. April 15th is the due date for the 2023 federal income tax return. But the deadline is Apri ..read more