Common Tax Deductions That Are Overlooked For Small Businesses

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Having a successful tax season involves proper planning throughout the year to maximize on the deductions that relate directly to your business and its income level.

Starting up Expenses

Capital expenses are one of the expenses that are constantly overlooked when looking for ways to reduce your tax expenses. They usually include marketing, overheads and other related expenses needed to start off your business. You can only deduct them for the first five years after your business opens and cash starts flowing into the business.

Education and training expenses

These are some of the other expenses that most businesses tend to overlook as deductions. Any training and education carried out to improve the skills of your workers and the business in general can be used to reduce the tax liability. However the training and education needs to be related to the business and this rule has to be strictly followed for the expenses to qualify as deductions.

Fees for Professional Services

Some of the professional services sought by the business such as accounting and architect fees qualify as deductible expenses. The only rule that one has to consider is that the services need to relate to the current year. If they relate to the future, the expenses then need to be distributed over the years.

Bad Debts Expense

Debts that you never recover from your customers qualify as deductible expenses. However this only applies to businesses that sell goods and not those that provide services.

Other Expenses that Qualify

Businesses differ and hence there may be other expenses that may qualify as deductibles in your business. IRC and 162 can help you identify some of the unique expenses to your business. In case you find them too confusing, refer the matter to your tax accountant with some of the codes that you think fit in with your business. He or she will be in a position to guide you to identify the respective expenses.

This is one thing that you should be very sure about in your small business. Your tax accountant can help you ensure that you take advantage of the tax deductible expenses.

Factors to Consider Before Diving into a Business Loan

As the economy gets tighter and the rate of unemployment increases, a good number of our population are starting to look into setting up their own line of business in the hopes of rising up and triumphing against today’s less than inspiring economy. As most business ventures require a significant amount of money, a lot of the country’ potential entrepreneurs are resorting to taking out business loans from various lending institutions. TotallyMoney.com explains that though acquiring a financial assistance to fuel your initial capital is a good start, borrowers should first consider several important factors before filling out those loan application forms.

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Equity Investments

Getting a business loan is much more complicated as they often require a larger amount as opposed to that of a personal loan and as such they implement a more stringent approval process and asks for more detailed requirements from the borrower. One of these considerations would be your equity investment. Your particular lending institution would need to know your total current investment towards your business and discern if your business is stable enough to continue operations uninterrupted by financial setbacks. Your equity investments will help creditors undermine the value of your business vis a vis its outstanding debt to arrive at a justified loan amount for your loan. As a general rule, the weaker your investment portfolio for your business is, the lower your loanable amount.

Type of Loan

Depending on your requirements and credentials, your creditor will look into more effective and safer loan options for you. Those falling below their standard requisites might be required to take out a secured loan which gives creditors more security as they have something concrete and substantial to hold on to. These collateral are usually in the form of properties. But those who have exceptionally good credit and financial liquidity may have higher chances at getting unsecured loans. Financial experts advise discussing your available options and carefully compare unsecured loans with that of secured loans to determine which works well given your financial capacity.

Earning Capacity

Another important factor that your creditor will surely look into is that of your business’ current financial standing to help them assess the liquidity and profitability of your venture. Keep in mind that these lending institutions will look closely into your business’ viability as they too would not like to earn losses as well.

Operational Capital

Lenders will also need to account your current working funds and compare them with your existing liabilities. The higher your available operational capital is, the more assurance they get that you have the capacity to pay them at a given time.

Finding Time to Sell Your Privately Held Business

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In preparation for selling your privately held business, it is essential to determine which category the business falls within. The classification of a company will determine several important strategic decisions. Like, how the market for the company for sale, how to be valued, and the commercial brokerage firm should carry out the assistance and the type of buyer might be interested.

Determine the best time for privately held business sales depend on a number of factors, both internal and external. Eventually, the assessment is influenced by the time the causes behind the sale, particularly given the verity that, not all business sales are programmed in advance. While the maximization of value is, historically, in the top of the wish list when looking at the sale, it is often balanced with the owners’ personal objectives and lifestyle needs.

For a business owner, it is essential to identify that something is always on sale at the right cost and conditions. The business vendor must distinguish trigger points, both negative and positive, and should set up a plan to act on them.

The best time to sell is when a vendor does not have to. Few owners consider selling the company when the business is growing rapidly and the company is clicking on all cylinders. When times are lean and income have been removed, owners also dare to sell assuming the feeling that the specific dollar value they have in mind for your business may not be realistic in today’s market.

Moreover, while employers in general, indicate that maximizing the value of agreement is the 1st priority in process of business mergers. This objective is balanced with a series of personal life issues. The variables needed to determine the perfect time to sell a privately owned business are numerous, but often this decision is due to the reason that the sale is being pursued.

When you are missing your W2 Statements

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Make sure you have all your W-2 Forms before you file your 2010 tax return for this year because you will need all of them. You should have gotten a Form W-2 in the mail from each and every one of your employers for the year. The deadline for the employers to get them out to you is January 31st, so wait until then before you begin to worry.

If after that date, you do not have your Form W-2:

  1. Call up your employer. Ask them if they sent out your Form W-2. If they did, make sure that they have your correct address. If they send you another W-2, wait for a reasonable space of time to receive the paper.
  2. Call the IRS. If by February 14th, you still have not received the Form, then you should call the IRS toll free at 800-829-1040. When you contacting the IRS, you will need to give them information such as your Social Security number, your address, your phone number,  and of course your name, as well as:
    • Your employer’s contact information (name, address, and phone)
    • The dates you were employed by him or her
    • An estimate of how much you earned for that year, and an estimate of the amount of money withheld for your federal income taxes, your dates of employment. These numbers can be obtained most accurately by looking at your final pay stub or consulting your a leave and earnings statement if you have it

  3. File for your tax return. Yes, even without the needed Forms, you still have to file your tax return (or for an extension) before April 18th.  Just use Form 4852 instead as a replacement for the missing Form W-2. Send Form 4852 with your tax return and your most accurate income and withheld taxes information. This may delay your tax refund while they verify that your form is indeed accurate.

  4. File a Form 1040X. If you do eventually receive your W-2, but you have already filed for your tax return, compare the W-2 numbers with the numbers you filed. If they do not match up, obtain a form 1040X to file a revised tax return.

The mentioned instructions and forms and instructions can be obtained from IRS.gov website or by calling 800-829-3676

Free Online Taxes

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It is quite a harrowing situation when you are trying to prepare 2009 taxes, sitting with the tax booklet and form, and all your pay stubs and receipts. At the same time hiring a tax professional is quite costly for just preparing returns. However a good tax service can prove to be both beneficial and economical.

A good tax service has lot to offer and includes services like online submissions for all states, lab testing of possible mistakes and deductions, sales applications which are linked to proper import information, IRS text publications and ability to talk directly with the experts who are preparing the taxes. Such services also offer monetary advice covering topics like preparation of pension, info on rentals and ownership of homes, advice on small business and so on.

A good tax service will offer much more than free online taxes 2009 and will include the basic preparation of taxes and a conscientious strategy and planning of your taxes and finances.

Tax programs are indeed a boon, as a good one is simple to use and will relieve you of the stress and anxiety of preparing your returns.

The tax application if any should be easy to install and set-up, so as to access the online tax service speedily and effectively.

Online software for taxes should provide all the tools and features needed for filing an accurate and complete tax return. Apart from providing the relevant state forms for taxes, a good service will also provide publications from IRS, other program imports, error rectification and deductions, and a suitable audit defense.

The program should be logical and provide proper drop-down menus, relevant icons and the relevant definitions for an effective work flow.

The interface has to be extremely user-friendly as there are many who have never availed a tax service online. The databases should be up to date providing the current tax laws in an easy to understand form without using the complicated tax jargon. The program should also be proof to errors which are likely to be made by the novice tax preparer.

The online tax service should have a proper help system with contextual help menus and in-depth explanation for each step. Apart from this the service should also offer tax advice the other support through online chat, email or phone.

Whole Life Insurance for Retirement

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Most people realize that some form of life insurance is almost mandatory these days. Given the costs associated with providing for any family’s needs, the death of one spouse can leave a deficit in the family budget that simply cannot be replaced without life insurance. Whole life is one of the most popular forms of permanent life insurance for precisely that reason: because it offers guaranteed benefits and cash value upon the policyholder’s death. That does not, however, mean that it is wise to just run out and buy the first prepackaged whole life policy that you encounter. There is a right way and a wrong way to buy whole life insurance.

The Wrong Way

Too many people take the simple route to purchasing whole life insurance. They select an arbitrary number – or have an insurance agent select it for them – and settle for a policy that provides that level of coverage to their heirs. This often leads to people being either over-insured or under-insured, and both present difficulties for policyholders and their families. Being over-insured may provide for larger benefits and cash payouts when you die, but such a policy also requires you t pay significantly higher premiums than you otherwise would. Being under-insured may not present you with any immediate difficulties, but it is guaranteed to leave your family without the necessary resources to maintain a consistent lifestyle when you are gone.

Doing it Right

Obviously, purchasing whole life insurance properly entails more study and research than most people assume to be necessary. The first step is to sit down and realistically determine what your family will need when you pass away. Take into account the home mortgage, college for the kids, and any other anticipated large expenses that are likely to occur in the future. Remember, your whole life insurance policy is designed to help the family maintain a certain standard of living if you die.

The next step involves making sure that you insure the most pressing needs first. You can always add to your whole life policy as time passes and new needs arise, so concentrate on those pressing needs now with the recognition that you can modify your coverage when your situation changes. Few of us have all of the resources we would like to have to protect against any possible loss, so always begin by doing what you can do now. Always remember that the best life insurance policy is the one that you can could on no matter what.

Keeping Pace with Life

Your whole life policy should be subject to your personal review on an annual basis, so that you can keep your coverage updated as your life changes. The most important thing that you can do to help you make those updates is to partner with a life insurance company and agent that you trust. Assuming that he or she is competent, the agent will be your best resource in maintaining a whole life policy that continues to meet your needs as the years and decades pass by. Best of all, you can ensure that your policy covers everything that it needs to cover, without being excessive.