Five Tips For Starting A Business

businessplanningCongratulations! You’re thinking about starting your own business and are in the process of making initial business decisions. In your planning, understanding the tax obligation of your new venture is one key to business success. When you start a business, you need to know about income taxes, payroll taxes and much more. Here are five tips from the IRS that can help to get your business off to a good start.

1. Business Structure. An early choice you need to make is to decide on the type of structure for your business. The most common types are sole proprietor, limited liability company, partnership, S corporation, and regular C corporation. The type of business that you choose will determine which tax form that you will need to file.

2. Business Taxes. There are four general types of business taxes. They are income tax, self-employment tax, employment tax and excise tax. In most cases, the types of tax your business pays depends on the type of business structure you set up. You may need to make estimated tax payments. If you do, you can use direct debit to make them. It’s the fast, easy and secure way to pay from your business checking or savings account.

3. Employer Identification Number (EIN). You may need to get an EIN for Federal tax purposes. Search “do you need an EIN” on IRS.gov to find out if you need this number. If you do need one, you can apply for it online.

4. Accounting Method. An accounting method is a set of rules that you use to determine when to report income and expenses. You must use a consistent method. The two that are most common are the cash and accrual methods. Under the cash method, you normally report income and deduct expenses in the year that you receive or pay them. Under the accrual method, you generally report income and deduct expenses in the year that you earn or incur them. This is true even if you get the income or pay the expense in a later year.

5. Employee Health Care. The Small Business Health Care Tax Credit helps small businesses and tax-exempt organizations pay for health care coverage they offer their employees. You’re eligible for the credit if you have fewer than 25 employees who work full-time, or a combination of full-time and part-time. The maximum credit is 50 percent of premiums paid for small business employers and 35 percent of premiums paid for small tax-exempt employers, such as charities. For more information on your health care responsibilities as an employer, see the Affordable Care Act for Employers page on IRS.gov.

Source: IRS Summertime Tax Tip 2016-18

If you have questions about starting, growing, or selling your small business, please contact us. As a CPA, Accredited Small Business Consultant, and Advanced Certified QuickBooks ProAdvisor, we specialize in working with small business owners just like you and provide tax, accounting, financial analysis, management, business planning, and small business advisory services. We can help you to start, manage, and grow a successful small business. For more information, call (727) 391-7373 or else visit us on the web at http://www.LStortzCPA.com.

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OCTOBER IS NATIONAL WOMEN’S SMALL BUSINESS MONTH

womeninbusinessWomen’s entrepreneurship is on the rise, according to preliminary data from U.S. Census Bureau, which shows that women are increasingly becoming small business owners. U.S. business ownership rose 27.5 percent for women, and overall, America added one million net, new businesses from 2007 to 2012, a period in which U.S. employment fell by 3.8 million.

This is exciting news for celebrating National Women’s Small Business Month, created by the U.S. Small Business Administration (www.sba.gov), as it is important to not only recognize the contributions of women-owned businesses, but to help more women get started. Women still face many challenges when it comes to business ownership, and the Small Business Administration has the resources and assistance to help women-owned small businesses over the hurdles to start-up.

The U.S. Small Business Association broke some significant records last year: small loans under the SBA’s Community Advantage loan program went from $56 ½ million to $200 million – that’s an 80% jump. More importantly, capital was available to those who need it the most.

• Women’s lending was up 19%, and
• Minority lending was up 26.5%.

What can you do to help support women-owned small businesses? Buy from them, thank them, encourage them, brag on them, and tell your friends about them to show appreciation for their work in contributing to the U.S. small business economy by providing needed products and services.

If you are a woman, would like to start a business, and have questions or need help in getting started, please contact our office today. As a woman-owned firm, we specialize in helping women just like you to set up and run a profitable small business.

As a CPA, Accredited Small Business Consultant and Advanced Certified QuickBooks ProAdvisor, we specialize in working with small business owners and provide tax, accounting, financial analysis and management, and small business consulting services. We can help you to start, manage, and grow your small business. Our telephone number is (727) 391-7373, or you can visit us at http://www.LStortzCPA.com.

WHAT INDUSTRIES ARE HOT FOR ENTREPRENEURS IN 2015?

enteringstartupWe’re already seeing certain trends for 2015 that promise growth opportunities for entrepreneurs—particularly in areas where old and new industries overlap. While business prospects vary region to region, there are six general sectors that entrepreneurs can’t afford to overlook.

1. Education Services
Traditional ideas about learning are fading fast, which makes the education industry “ripe for disruption,” according to Shawn Sadowski, the entrepreneurs in residence at Cogswell College, which offers a master’s program in Entrepreneurship & Innovation in Sunnyvale, California. Small businesses are behind on college-level software suites for at-home learning, as well as MOOCs—massive open online courses.

“Online education is key right now in [K-12],” he adds. “There’s a lot of diversity of opportunity in education technology.” That opens the field to any innovator who is passionate about learning to develop software and technologies that can be integrated into classrooms, engage students and help connect parents with teachers.

2. Mobile SaaS
The small-to-midsize business market for Mobile SaaS—software as a service for tablets and smartphones—is expected to reach $19.7 billion by 2017, according to a report by Strategy Analytics. “There are tons of opportunities for capitalizing [on the development of] software services for mobile devices,” Sadowski says.

To support this new subscription-based model, “firms are creating the next great app or software as a service,” he says. For instance, rather than having to download an entireQuickBooks program onto a computer, small businesses are starting to offer consumers simpler ways to access accounting services when they need it.

3. Mobile Payment Trends
Smartphones may be ubiquitous, but using them to make purchases is still relatively new. More and more sellers will be looking for ways to reach consumers quickly and reliably. You don’t necessarily have to compete with the likes of Apple Pay. But as mobile wallets and otherpayment technologies are being tested in the marketplace, why not look for ways to capitalize on the trend?

4. Construction-Related Industries
As financing for construction projects becomes more available, residential growth is poised to take off this year. Commercial construction starts for 2015 are predicted to rise 15 percent, a point higher than last year. That spells opportunity for dozens of industries supported by contractors: from the developers, brokers and realtors making deals, to carpenters, landscapers and decorative lighting salespeople called in after a sale is closed. Even videographers will be selling their services to the increasing numbers of housing professionals who are showcasing their services online.

5. E-commerce
Online retail sales are on the rise. The availability of Web-hosting companies like WordPress,Yola and Weebly means that even the least-techie entrepreneurs among us will have an easier time taking products to a worldwide market. Capturing this growing market of online retailers, and innovating the way the industry works, continues to be a profitable move for entrepreneurs.

6. Healthcare
Let’s not forget the vast policy changes in U.S. healthcare in the last couple of years. Whether it is creating a seamless way to offer medical services to the newly insured or creating refreshing content for healthcare publications, independent innovators will continue to benefit from this industry.

Are you thinking of starting up a small business? Call our office today so that we can help you plan your new venture!

Source: Curley, C. (2015). What Industries Are Ripe For Entrepreneurs In 2015? Retrieved from http://www.nfib.com/article/what-industries-are-ripe-for-entrepreneurs-in-2015-bizhelp-67734/

As a CPA, Accredited Small Business Consultant and Advanced Certified QuickBooks ProAdvisor, we mentor small business owners to empower them with the knowledge and skills to run a successful business. Allow us to evaluate your small business needs. Give us a call today at (727) 391-7373 or visit us at http://www.LStortzCPA.com and www.tampabayaccountingservices.com.

THE BEST RETIREMENT PLANS FOR ENTREPRENEURS

smallbusinessretirementplansIf you want to be prepared for your retirement, you will want to contribute to a retirement plan as you run your business. There’s always the option of stashing away cash in a traditional IRA or a Roth IRA. However, there are a handful of retirement plans that work especially well for small-business owners. Solo 401(k)s can work well for super savers, while SEP IRAs are a straightforward retirement vehicle with relatively high limits. If you also want to contribute on behalf of your employees, a SIMPLE IRA offers flexibility.

Here’s a summary of these three retirement plans for entrepreneurs.

1. SEP IRA
How it works: As an employer, you can contribute $53,000 for 2015 or 25 percent of your compensation — whichever is less — as a business tax deduction to a Simplified Employee Pension (SEP) IRA. Investment earnings grow tax free.

Pros:
• There’s no IRS reporting for SEP IRAs, setup is easy, and there’s no annual funding requirements.
• You can establish the plan and make contributions as late as April 15 of the next tax year. By contrast, the deadline is December 31 for solo 401(k) plans.
• You can contribute to both a SEP IRA and an employer-sponsored retirement plan.

Cons:
• You may be required to contribute for employees. Fidelity’s SEP IRA, like others, requires that each eligible employee receive the same contribution percentage of compensation.
• If your compensation is less than $212,000, you could get a higher contribution limit with a solo 401(k).
• Doesn’t allow catchup contributions for employees over 50.

Bottom line: SEP IRAs are great for moonlighters who still want to contribute to another plan. They’re also a good option for freelancers without employees who want a no-fuss plan, and they’re best for individuals who don’t want to contribute more than 25 percent of their income toward retirement.

2. SOLO 401(k)
How it works: For 2015, you can make up to $18,000 in tax-deferred contributions as an employee, plus contribute up to 25 percent as an employer. Your total contribution cannot exceed $53,000 in the year.

Pros:
• Some brokers, like Vanguard, offer a Roth 401(k) option that allows you to use post-tax instead of pretax dollars to fund the plan.
• Solo 401(k)s allow for catch up contributions, meaning you can contribute $24,000 instead of $18,000 if you’re over 50.
• Spouses can also contribute.

Cons:
• Business owners with employees are not eligible. If you take on employees, you’ll have to convert the plan to a group 401(k).
• Once the plan has more than $250,000 in it, you must file an annual Form 5500 with the IRS.
• Compared to a SEP IRA, account setup and contribution timing rules are more complex. Maintenance fees can also be more expensive.

Bottom line: It’s the best option if you want to stash away a large percentage of your income, as long as you don’t mind dedicating a little more time and money to setup and maintenance.

3. SIMPLE IRA
How it works: For 2015, employees can contribute up to $12,500 tax-deferred. Employers can match up to 3 percent of employee salaries.

Pros:
• No annual Form 5500 is required.
• There’s no minimum contribution for employees.
• Unlike the SEP IRA, you can customize contributions for different employees.
• Allows for catch up contributions, so employees over 50 can contribute $15,500 a year rather than $12,500.

Cons:
• As an employer, you must offer a minimum match or contribution to employees. It’s customary to offer a 3 percent match, although you can dip down to as low as 1 percent for two out of any five years. Alternatively, you can contribute 2 percent of employee compensation for all eligible employees.
• Plan must be established by October 1 of the tax year.
• According to USAA, employer contributions must be made within 30 days of the employee contribution.
• Limited to companies with less than 100 employees, which means you may need to upgrade plans down the road.

Bottom line: SIMPLE IRAs are a great way to fund employee retirement plans and offer flexible contributions and matching. But if don’t plan on taking on employees, you can probably snag a higher contribution limit (and endure fewer rules) with a SEP IRA.

If you’re thinking about setting up a business retirement plan or have questions, please contact our office today.

Source: Poladian, Patricia (2015). The Best Retirement Plans For Entrepreneurs. Retrieved from http://quickbooks.intuit.com/r/taxes/the-best-retirement-plans-for-entrepreneurs

As a CPA, Accredited Small Business Consultant and Advanced Certified QuickBooks ProAdvisor, we mentor small business owners to empower them with the knowledge and skills to run a successful business. Allow us to evaluate your small business needs. Give us a call today at (727) 391-7373 or visit us at http://www.LStortzCPA.com and http://www.tampabayaccountingservices.com.

TIPS FOR PART-TIME ENTREPRENEURS

smallbusinessownerIf you run a business part time, you probably face challenges that full-time entrepreneurs don’t have to deal with. After all, many people who run a part-time business also hold down a full-time job, or have other obligations that keep them from dedicating 100 percent of their time to the business.

If you’re looking for ways to improve efficiency in your part-time business, here are some suggestions to consider.

1. Use Time Management Apps
One of the biggest challenges many part-time business owners have is finding the time to accomplish all that needs to be done in fewer hours per week. That can be a problem in a part-time business because if you’re not making the most of your time, your business’ productivity — and, ultimately, profitability — will suffer. Luckily, there are some apps that can help you manage your time better.

Basecamp: This project-management app helps you streamline communications with everyone you need to stay in touch with for your projects. With it, you can handle multiple projects at once, pull together the people you need, and conduct all communications from one place, including progress reports. Sign up for a free two-month trial on the site.

Sprinklr: Whether you need to plan a social media campaign, analyze customer behavior, organize your online content, or plan and execute an online marketing campaign in real time, you can do it all from with help from Sprinklr.

RescueTime: This app monitors your time online, so you can figure out where you’re spending the majority of it, and where it’s going to waste. You can view your logged time on your personal dashboard, and you will also be emailed a weekly report showing how you spent your time the prior week. Use a free version of the app or pay $9 per month for the premium version.

2. Explain your Time Restraints to Friends and Family
When you’re running a business at night and on the weekends, you rarely have time for long phone calls or a lot of social activities during your part-time work hours. Many non-entrepreneurs mistakenly believe that when people run their own business, they can follow any schedule they want, so they don’t always respect your time. Be sure to explain to the people close to you what kind of time restraints you are under, and ask for their support.

3. Consider Taking on a Partner
Since time is so limited in a part-time venture, some entrepreneurs start their business with a partner who can help share the load. This not only frees up more time because there are two people working on projects and tasks, but it doubles the abilities and talents brought to the company.

4. Outsource as Much as You Can
Part-time business owners have just as many marketing, customer service, and organizational tasks as full-time entrepreneurs, but only a fraction of the time to do them in. You can outsource some of your work, such as content creation, accounting, marketing, and administration tasks. You will pay less than you would for an employee, and you can scale your workforce according to your needs.

5. Use Financial Forecasting
If you plan to eventually go full time, you’ll have to keep a close eye on your financials to know the right time to take the leap. Financial forecasting can help you do that, so you should regularly run financial forecasting reports such as a break-even analysis, which predicts when your business will begin to pay for itself, sales projections to estimate the amount of sales you will bring in within a predetermined time period, and other financial forecasts.

6. Decide Whether or Not to Tell Your Boss
It is not illegal to start a part-time business while holding down a full-time job, unless you signed an employee contract that prohibits it, or if you have a noncomplete document that prevents your part-time business from competing with your employer’s. On the other hand, your employer is counting on your to do your job, so don’t allow your business’ needs to interfere with your job performance. Whether or not you tell your boss about the business is entirely up to you, and will depend on your specific circumstances. You are under no obligation to do so, unless you signed one of the documents mentioned above.

Running a part-time business is demanding. To be successful, you should take every possible opportunity to get more done in less time and track your business’ success.

Source: Kearns, Suzanne (2015). Retrieved from http://quickbooks.intuit.com/r/am-i-ready/6-tips-for-part-time-entrepreneurs

As a CPA, Accredited Small Business Consultant, and Advanced Certified QuickBooks ProAdvisor, we mentor small business owners to empower them with the knowledge and skills to run a successful business. Allow us to evaluate your small business needs. Give us a call today at (727) 391-7373 or visit us at http://www.LStortzCPA.com and http://www.tampabayaccountingservices.com

TAX TIPS FOR THOSE WHO STARTED A BUSINESS IN 2014

newbusinessSmall businesses are the backbone of America’s economy and, according to the U.S. Small Business Administration, nearly half a million new businesses are started each year. These new entrepreneurial ventures join the ranks of the nearly 28 million small businesses around the nation.

With tax season upon us, it’s important that the taxpayers behind these new businesses, often organized as a Schedule C entity, know what to look for when preparing their taxes. This can make a big difference in how much they owe come tax day.

“A new entrepreneur has a lot on their plate and they are busy with many things, but you don’t want to overlook tax issues,” explains John Gregory EA, tax practitioner and founder of 1040Return.com, a site that provides tax information, preparation tools and resources. “It’s important for these new small business owners to take the time to consider all the tax deductions they can take so they lower their liability.”

There are things that will affect your taxes if you started a business in 2014. Here are some tips for those entrepreneurs to keep in mind.

1. Those who are self employed will have to pay into Social Security and Medicare. This means that approximately 15 percent of their earnings will go toward that contribution.

2. The new business start-up costs can be deducted. There are two components of the method of availing deduction for start-up costs of your business. The IRS allows you to deduct a portion of the start-up cost in the first year of commencement of business. The remaining portion is amortized over the next 15 years / 180 months of business, beginning from the month in which your business becomes operational. You can claim the deduction of up to $5,000 in the first year itself. However, the start-up cost of your business should not exceed $50,000.

3. Consider those doing work on your behalf, such as employees or contract labor. With contract labor, you do not have to pay into Social Security, Medicare, Unemployment and Workers Compensation. For this reason, it is usually to the advantage of the owner to have contract labor. The best rule of thumb in determining if you have contract labor or an employee is how much control you have over the work of the individual. The more control you have over the individual work, the more likely they will be classified as employees.

4. If you started a business in 2014 it is a good idea to incorporate. By incorporating you can protect your personal assets.

5. If you set up your business as a S Corporation you can avoid paying some of your profit into Social Security and Medicare. Your income that you receive from your corporation flows into your personal tax return and not subject to Social Security and Medicare tax. However, the IRS does expect you to take W-2 wages for the work that you perform for the corporation.

“Keeping some of these tips in mind can save new entrepreneurs a lot of money,” adds Gregory. “The first year in business is often the most challenging year for people. The more you can do to lesson the tax burden situation, the better off you will be.”

O’Bannon, Isaac M. (2015). Tax Tips For Those Who Started A Business In 2014. Retrieved from http://www.cpapracticeadvisor.com/news/12043647/tax-tips-for-those-who-started-a-business-in-2014?utm_source=CPA+Tax+%26+Compliance&utm_medium=email&utm_campaign=CCSN150210002

As a CPA/small business advisory firm, we mentor small business owners to empower them with the knowledge and skills to run a successful business. Allow us to evaluate your small business needs today. Give us a call at (727) 391-7373 or contact us at http://www.LStortzCPA.com.

SMALL BUSINESS RESPONSIBILITIES FOR FILING FORM 1099-MISC

1099Form 1099-MISC is used to report certain types of payments made in the course of a trade or business. If you’re in business or self-employed, you may need to submit this report to both the Internal Revenue Service and the unincorporated person or business owner that you paid.

Businesses will need to fill out a Form 1099-MISC for unincorporated persons, vendors, subcontractors, independent contractors, and others in the following circumstances that were paid $600 or more in the year for:

• cash payments to fishermen
• crop insurance proceeds,
• medical and health care payments,
• prizes and awards,
• proceeds paid to attorneys,
• rents,
• services (including parts and materials), and
• other types of payments not covered by another information reporting document.

Reporting such payments is required if the recipient of the payment is not a corporation — for example, when the recipient is an individual, partnership, a limited liability company treated as a partnership or sole proprietorship.

You should request that your vendors, contractors and other payment recipients submit to you a Form W-9. This W-9 form will provide you with the legal name, address and taxpayer identification number for the vendor, which is the information you will need when preparing any 1099-MISC forms.

You should also keep track of your payments in your bookkeeping/accounting system. You will need to know whether the payment falls under any of the categories listed above for reportable payments, whether your payments to a particular recipient reaches the $600 threshold for reporting, and finally you’ll need to know the exact amount you paid the recipient for the year.

The following penalties will be in effect for the year 2014:
• $30 penalty for filing a 1099 not more than 30 days late;
• $60 penalty for filing a 1099 more than 30 days late and before August 1;
• $100 penalty for filing a 1099 on or after August 1;
• $250 penalty for intentional failure to file.

The penalties in effect for 2015 will be higher than the 2014 amounts. The Tax Increase Prevention Act of 2014 (signed into law on 12/19/14) requires that the late penalties be indexed for inflation, beginning with any information returns that are required to be filed after December 31, 2014. The IRS has not yet released the inflation-adjusted penalty amounts for the 2015 penalties.

The deadlines for filing Form 1099-MISC are:
• Provide the recipient with his or her copy of the Form 1099-MISC by February 2, 2015, reporting income payments for the year 2014.
• Mail the Form 1099-MISC to the IRS by March 2, 2015.
• Or electronically file Form 1099-MISC with the IRS by March 31, 2015.

As an CPA/small business advisory firm, we mentor small business owners to empower them with the knowledge and skills to run a successful business. Allow us to evaluate your small business today. Give us a call at (727) 391-7373 or contact us at http://www.LStortzCPA.com