Employee vs. Independent Contractor?

Here’s another tip for small business owners during Small Business Week. The IRS encourages all businesses and business owners to know the rules when it comes to classifying a worker as an employee or an independent contractor.

An employer must withhold income taxes and pay Social Security, Medicare taxes and unemployment tax on wages paid to an employee. Employers normally do not have to withhold or pay any taxes on payments to independent contractors.

Here are two key points for small business owners to keep in mind when it comes to classifying workers:

1. Control. The relationship between a worker and a business is important. If the business controls what work is accomplished and directs how it is done, it exerts behavioral control. If the business directs or controls financial and certain relevant aspects of a worker’s job, it exercises financial control. This includes:

• The extent of the worker’s investment in the facilities or tools used in performing services.
• The extent to which the worker makes his or her services available to the relevant market.
• How the business pays the worker.
• The extent to which the worker can realize a profit or incur a loss.

2. Relationship. How the employer and worker perceive their relationship is also important for determining worker status. Key topics to think about include:

• Written contracts describing the relationship the parties intended to create
• Whether the business provides the worker with employee-type benefits, such as insurance, a pension plan, vacation or sick pay.
• The permanency of the relationship.
• The extent to which services performed by the worker are a key aspect of the regular business of the company.
• The extent to which the worker has unreimbursed business expenses.

For more information on deciding whether your worker should be classified as an employee or independent contractor, please call our office today.

Source: Small Business Week Tax Tip 2017-02

If you have questions about starting, growing, protecting, understanding business taxes, or selling your small business, please contact us. As a CPA, Certified Business Advisor, Small Business Consultant, and Advanced Certified QuickBooks ProAdvisor, we specialize in working with small business owners and provide tax, accounting, financial analysis, business planning, and small business advisory services. For more information, call (727) 391-7373 or else visit us on the web at http://www.LindaStortzCPA.com.

IRS Promotes Specialized Online Services During Small Business Week

National Small Business Week for 2017 runs from Sunday, April 30 through Saturday, May 6. During this time, the Internal Revenue Service will promote many online products to help small business owners and those who are self-employed understand their tax responsibilities.

Here are just a few among dozens of useful IRS products in the spotlight for this year’s National Small Business Week that can be found at http://www.irs.gov:

1. Sharing Economy Tax Center. This special webpage provides fast answers to tax questions, as well as links and forms for the sharing economy. People who use one of the many online platforms to engage in this type of business, such as renting a spare bedroom, providing car rides or providing many other goods or services, are involved in the sharing economy. Topics include filing requirements, rules for home rentals and business expenses.

2. Self-Employed Individuals Tax Center. Taxpayers will find the Self-Employed Individuals Tax Center to be a great resource for sole proprietors and others who are in business for themselves. This site has many handy tips and references to tax rules a self-employed person may need to know. In addition to many other subjects, taxpayers will find information on:

• How to Make Quarterly Payments.
• Requirements for Information Returns.
• How to File an Annual Return.
• Business Structures.
• Qualified Joint Ventures

3. Small Business and Self-Employed Tax Center. This online information center features links to a wealth of useful tools, including Small Business Taxes: The Virtual Workshop and common IRS forms with instructions. Find help on everything from how to get an Employer Identification Number online to how to engage with the IRS during an audit. The IRS Tax Calendar for businesses and Self-Employed is a convenient, at-a-glance resource designed to show key tax dates for businesses.

For more information about how these IRS products relate to your business, please call our office today.

Source: Small Business Week Tax Tip 2017-01 http://www.irs.gov

If you have questions about starting, growing, protecting, understanding business taxes, or selling your small business, please contact us. As a CPA, Certified Business Advisor, Small Business Consultant, and Advanced Certified QuickBooks ProAdvisor, we specialize in working with small business owners and provide tax, accounting, financial analysis, business planning, and small business advisory services. For more information, call (727) 391-7373 or else visit us on the web at http://www.LindaStortzCPA.com.

Year-End Business Tax Tip: Deduct Your Travel Meals and Entertainment Expenses

Business travel meals and entertainment expenses are deductible if your business trip is overnight or long enough so that you need to stop for sleep or rest to perform your duties. Meal expenses are also deductible if the meals is business-related entertainment, such as taking a customer to an educational or sporting event if business is discussed.

Deducting travel meal expenses can be calculated by either of the following methods:

1. The actual cost. If you use this method, you must keep records of your actual costs such as lodging, meals, taxi, airfare, bus, tolls, and tips.

2. The standard meal allowance, which is the Federal meals and incidental expense (M&IE) per diem rate. You can find the per diem rates by location at gsa.gov. The lower rates listed apply for the first and last days of travel.

The deduction for unreimbursed business meals is subject to a 50% limitation.

For more information, please call our office today.

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

Hire Your Child To Work In Your Business

One of the advantages of operating your own business is that you can hire your child to work in the business.

Payments for the services of a child under age 18 who works for his or her parent in a trade or business are NOT subject to Social Security and Medicare taxes if the trade or business is a sole proprietorship or a partnership in which each partner is a parent of the child. Payments for the services of a child under age 21 who works for his or her parent in a trade or business are NOT subject to Federal Unemployment Tax Act (FUTA) tax. Payment for the services of a child ARE subject to income tax withholding, regardless of age.

Wages paid must always be reasonable for the work performed. Also, a timesheet must be kept to document all hours worked.

The wages for the services of a child ARE subject to income tax withholding as well as Social Security, Medicare, and FUTA taxes if he or she works for:

1. A corporation, even if it is controlled by the child’s parent;

2. A partnership, even if the child’s parent is a partner, unless each partner is a parent of the child; or

3. An estate, even if it is the estate of a deceased parent.

For more information, please call our office today.

If you have questions about starting, growing, protecting, reducing business taxes, or selling your small business, please contact us. As a CPA, Certified Business Advisor, 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 advise you on how to start, manage, grow, and terminate a small business. For more information, call (727) 391-7373 or else visit us on the web at http://www.LindaStortzCPA.com.

Year-End Business Tax Tip: Small Employer Health Insurance Credit

Eligible small employers may be entitled to a tax credit of ranging from 35% to 50% of their contribution toward employee health coverage. This credit is available for two consecutive tax years. An eligible small employer must have:

1. No more than 25 full-time equivalent employees during its tax year.

2. Employees who have average annual wages of no more than $51,800 for 2016.

3. A qualifying arrangement in effect that requires the employer to contribute at least 50% of the health insurance premiums.

Tax-exempt organizations may also qualify for the credit. The credit is refundable for tax-exempt employees but is limited to the amount of the tax-exempt employer’s payroll taxes withheld during the calendar year in which the taxable year begins. The credit for tax-exempt organizations can range from 25% to 35% of employer contributions.

This tax credit must be calculated annually on Form 8941, Credit For Small Employer Health Insurance Premiums, and must be attached to the business tax return.

For more information, please call our office today.

If you have questions about starting, growing, protecting, reducing business taxes, or selling your small business, please contact us. As a CPA, Certified Business Advisor, 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 advise you on how to start, manage, grow, and terminate a small business. For more information, call (727) 391-7373 or else visit us on the web at http://www.LindaStortzCPA.com.

Year-End Business Tax Tip: Business Auto Depreciation

If you plan to purchase a business vehicle in 2016 before year end to use for business travel, you’ll be able to deduct the depreciation on the vehicle as a business expense.

For 2016, a new passenger vehicle placed into service for business can be depreciated at $3,160, or $11,160 if bonus depreciation is taken. For trucks and vans used for business, the depreciation amount is $3,560, or $11,560 if bonus depreciation is taken.

For more information, please call our office today.

If you have questions about starting, growing, protecting, reducing business taxes, or selling your small business, please contact us. As a CPA, Certified Business Advisor, 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 advise you on how to start, manage, grow, and terminate a small business. For more information, call (727) 391-7373 or else visit us on the web at http://www.LindaStortzCPA.com.

Year-End Tax Planning Tip: Keep A Log of Your Business Miles

You may be able to take the standard mileage rate for business miles driven on your personal vehicle in 2016 or else depreciate the cost of owning your business vehicle used in your business. Here’s how:

1. If you’re using your personal vehicle for business, you can take a deduction for the business miles that you drove multiplied by the IRS standard mileage rate of $.54 in 2016. According to decisions made in recent IRS court cases, the business owner must keep a business auto mileage log to document the date, starting mileage, ending mileage, and business purpose.

2. If your business owns the vehicle and the title of the vehicle is in the business name, then you’ll need to still keep track of business mileage with a mileage log. However, any personal miles that you drive on the business vehicle will be taxable as income to you. The business deductions that you will be able to take include depreciation and the actual expenses incurred for use of the vehicle (ex.-repairs, maintenance, title, tags, insurance, interest on loan, etc.). However, only the percentage of business use based on actual business miles driven will be deductible.

For more information, please call our office today.

If you have questions about starting, growing, protecting, reducing business taxes, or selling your small business, please contact us. As a CPA, Certified Business Advisor, 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 advise you on how to start, manage, grow, and terminate a small business. For more information, call (727) 391-7373 or else visit us on the web at http://www.LindaStortzCPA.com.