Suppose you take your best client out to dinner to celebrate your business relationship. If you own a business, are self-employed or run a side business, can you deduct any of the cost?
The answer is not so clear after the passage of the Tax Cuts and Jobs Act. Here are some tips to stay on the right side of the new rules:
As any entrepreneur will tell you, financing a business is no small undertaking. Pulling funds from personal bank accounts, liquidating assets, talking to friends and relatives about your venture — these are all actions you might take to get your business up and running. Banks and other financial institutions could also play a role.
If you own your own business or have a side business in addition to your regular job, you may need to send out several IRS forms by Jan. 31 this year.
The deadline is for forms you issue to employees and others who were paid as part of your business activities throughout the year. Forms W-2s and 1099-MISC forms that contain non-employee compensation in box 7 will have to be postmarked or sent electronically to both the IRS and the person you did business with on or before Jan. 31, otherwise you may face fines for each late form.
Most businesses understand that a W-2 is required for each of your employees. But did you know that you also may need to issue a 1099-MISC to each contractor or vendor you’ve done business with during the year?
You’ve loved dogs all your life so you decide tostart a dog breeding and trainingbusiness. Turning your hobby into a business can provide tax benefits if you do it right. But it can create a big tax headache if you do it wrong.
One of the main benefits of turning your hobby into a businessis that you can deduct all your qualified business expenses, even if it results in a loss. However, if you don’t properly transition your hobby into a business in the eyes of the IRS, you could be waving a red flag that reads, “Audit Me!” The agency uses several criteria to distinguish whether an activity is a hobby or a business. Check the chart below to see how your activity measures up.
There's an old Wall Street saying, "Sell in May and go away," advising investors to avoid the historically volatile summer markets. If you are considering selling stock this summer, you may consider donating instead as a way to lower your tax burden. Details on tax-efficient donating are inside, as well some comforting information about the declining frequency of IRS audits. Summer also tends to ignite our home buying instincts, so check out the article with tips for buying a home in this seller's market. Finally, if you're a business owner consider the list of reasons to incorporate.
Five Things Every Business Owner Must Do
If you own or manage your own business, you're probably busy monitoring operations and dealing with everyday problems. But there are a few things that you should make time to do every year. These are important for your long-term business and personal success.
Smart business people learn to delegate work
As a business owner or manager, you may think that if you want things done "the right way," you have to do them yourself. But that isn't always the best approach at work, even if you firmly believe you're the best person for the job. There simply isn't enough time in the day - not if you have a business to run.
[block type="rounded" color="#FFF" background="#000000"]Going into business with a franchise[/block]
Have you ever wanted to be your own boss, but didn't want to start a business from scratch? If so, buying a franchise might be the right choice for you.
When you purchase a successful franchise,
The IRS has reacted to the complaints of the small business community and today issued Revenue Procedure 2015-20 outlining a simplified procedure for small businesses to comply with the final tangible property regulations. The simplified procedure is available beginning with the 2014 return taxpayers are filling out this tax season.
What will happen to your business if you die, retire, or become disabled? If you are the owner of a small business, you need a means for the transfer of that business in the event something happens to you. With a "buy-sell" agreement, you are able to plan for many contingencies over which you would otherwise have little control. A buy-sell agreement should establish a price for the business and the method of succession.
Does your business make use of your financial statements?
Many small business owners pay too little attention to their financial statements. This is due in part to not understanding just what the statements have to offer. In fact, many may not be able to tell you the difference between a Balance Sheet and an Income Statement.
Review your credit policies
There are many ways to make your business more profitable, and sound credit policies are high on the list. The current slowdown in the economy is a good reason to reexamine your company's policies. Keep the following items in mind as you review your policies.
Most entrepreneurs eventually think about selling their businesses, whether as a prelude to retirement or to pursue other activities. In doing so, they often underestimate the effort required for a satisfactory outcome and overestimate the value and salability of their enterprises. If you're contemplating selling, here are some common mistakes to avoid.
1. Overestimating the value of your business.
How well do you know your customers? Which ones are the most profitable? Which ones take most of your time? It's worth taking the time to find out. If your business is like most, the 80-20 rule applies. That is, 80% of your profits come from 20% of your customers.
If you can identify that top 20%, you can work hard to make sure this group remains satisfied customers.
Should you incorporate your business?
One of the first decisions you face as a new business owner is whether or not to incorporate the business. The biggest advantage of incorporating is limitation of your liability. Your responsibility for debts and other liabilities incurred by a corporation is generally limited to the assets of the business. Your personal assets are not usually at risk, although there can be exceptions to this general rule. The trade-off is that there is a cost to incorporate and, in some cases, tax consequences.
A vital business document: the buy/sell agreement
Every business should give serious consideration to how the company would deal with the death, disability, or departure of one of the owners.
Like a will, a buy/sell agreement (also known as a business continuity contract) spells out how assets and other business interests will be distributed should an owner quit, become disabled, or die.
Thought Provoking Shorts - August 2014