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3 Posts authored by: Ebong Eka

If you visit your local post office on April 15th, you’ll most likely see a long line of people waiting to file their tax returns before the deadline. Getting prepared for tax season now can ensure a painless filing experience. Tax season happens every year but small businesses (and their owners) sometimes feel ill-prepared to deal with the complexities of tax compliance. And with a new tax law in place, it is more important the ever to begin your preparation

 

Here are three important tips to help you prepare for a smooth tax season.

 

1. Find an accountant or CPA now.

If you don’t currently have a CPA, ask colleagues, your local chamber of commerce or bank, lawyer and financial advisor for a referral. Once you have a CPA, you can search for their eligibility to file your tax returns on the IRS Directory. CPAs and Enrolled Agents are qualified to file your tax returns and represent you in front of the IRS.


You can visit the IRS search site here: https://irs.treasury.gov/rpo/rpo.jsf39731228_s.jpg

 

2. Get your financial house in order.

Before you can start your tax returns, you will need your financial statements in order. Speak to your accountant or CPA about when to expect the preparation of your financial statements.

 

Contact your bank or visit your online bank account to download monthly bank statements for your accountant. Consider using Quickbooks or another bookkeeping software to organize your financial data. Using accounting software makes it easier to create reports for your business, file tax returns and provide support for bank loans.

 

3. Be sure to send Form 1099s and W-2s to employees and payees.

According to the IRS, if you’re a small business or self-employed and you made payments greater than $600 during the year to independent contractors, you’re may be required to send Form 1099s to those you paid and the IRS.

          

You are required to file Form W-2 for any employees that you paid $600 or more for the year and for those you withheld taxes for during the year.

 

Getting started earlier can give you the peace of mind that comes with the knowledge that your taxes have been handled. If you follow these tips, you’ll be well on your way to dealing with this important part of your business.

 

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Tax Reform and Small Business: The Good, The Bad and The Ugly

 

 

About Ebong EkaEbong+Eka+Headshot.png

Ebong Eka is no stranger to the world of personal finance. As a certified public accountant and former professional basketball player he offers a fresh perspective to small business planning and executing. With over fifteen years of accounting, tax & small business experience with firms like PricewaterhouseCoopers, Deloitte & Touche and CohnReznick, Ebong provides practical money solutions tailored to the everyday person, the aspiring entrepreneur or the small business owner.

 

Ebong is the founder of EKAnomics, a sales, pricing and leadership firm. He is also the founder of Ericorp Consulting, Inc., a tax and management consulting firm. Ebong is the author of “Start Me Up! The-No-Business-Plan, Business Plan.

 

Ebong is also the founder of The $250 Tax Pro, which provides tax preparation and consulting services in the Washington, DC area.

 

Web: www.ebongeka.com or Twitter: @EbongEka.

You can read more articles from Ebong Eka by clicking here

 

Bank of America, N.A. engages with Ebong Eka to provide informational materials for your discussion or review purposes only. Ebong Eka is a registered trademark, used pursuant to license. The third parties within articles are used under license from Ebong Eka. Consult your financial, legal and accounting advisors, as neither Bank of America, its affiliates, nor their employees provide legal, accounting and tax advice.

   

Bank of America, N.A. Member FDIC.  ©2017 Bank of America Corporation

It’s the time of the year where we resolve to work out more, eat better and up our game at the office. For the small business owner, you’ll be exercising the brain a lot more as you wrap your mind around the largest tax reform bill in recent memory.  In short, there is some good news, bad news and ugly news regarding the Tax Cuts and Jobs Act.

 

The good news: There are plenty of opportunities for small business owners to benefit from the Tax Cuts and Jobs Act and reinvest in their business. The bad and ugly news: Some of the most enjoyable and useful business tax deductions are going away.

 

Here are the six biggest tax changes that will affect small businesses.

 

1. Lower Tax Rates = Lower Taxes

Your goal should always be to grow sales and revenue but some business owners limit their sales efforts to avoid paying higher taxes. The Tax Cuts and Jobs Act dropped the highest individual tax rate from 39.6% to 37%. For example, if you had $1,000,000 of taxable income, you would have paid $396,000 of federal income taxes vs. $370,000 you would pay under the new tax reform. 47216001_s.jpg

 

The Good: The difference of $26,000 could be used for employee bonuses, marketing or equipment for your business.

 

2. Pass-through Businesses Get Some Relief

Many small businesses are pass-through entities for tax purposes. Pass-through businesses include S-corporations, limited liability companies, partnerships and sole proprietors. The Tax Cuts and Jobs Act gives pass-through businesses an additional 20% deduction from their income. There are some limitations for professional services businesses and income limit phase-outs so be sure to speak with your tax advisor for more information.

 

The Good: Small business owners may be eligible for an additional 20% deduction on their personal tax returns if their business is categorized as a pass-through entity.

 

3. Cash Basis vs. Accrual Basis of Accounting

Per Internal Revenue Code section 448, small businesses that have average gross receipts of $5 million or less were allowed to use the cash method of accounting. Tax reform changed that limit to average annual gross receipts of $25 million or less.

 

The Good: Cash basis of accounting allows small business owners to pay taxes on income they receive and take deductions on expenses that were paid, which is advantageous for cash management purposes.

 

4. Credit for Compensation Paid to Employees on Family and Medical Leave

The tax reform bill also provides a credit for employers that offer employees paid family and medical leave for 2018 and 2019 only. Businesses must have a written policy in effect which gives full-time employees not less than two weeks of annual family and medical leave under FMLA of 1993.

 

The Good: The general business credit is 12.5% of the compensation paid – subject to limitations.

 

5. No More Special Deductions for Manufacturing

Tax reform repealed Section 199. Section 199, also known as the domestic manufacturing deduction, was a tax break for businesses that perform domestic manufacturing and certain production activities like real estate construction and production of oil, electricity, natural gas, water and computer software.

 

The Bad: The 2017 tax return year will be the last year you can claim the manufacturing deduction if you’re eligible.  Speak with your tax advisor to discuss your unique facts and circumstances.

 

6. No More Deduction for Client Entertainment and Other Fringe Benefits

The tax reform bill eliminates employer tax deductions for expenses including:

  • - Membership dues for employees for clubs and groups.
  • - Transportation fringe benefits such as parking, transit passes, vanpool and bicycle commuting expenses.
  • - Business entertainment, amusement and recreation expenses.

 

The Ugly: The days of receiving a 50% deduction on business entertainment are over. Business meals will still receive the 50% deduction but small business owners will no longer be able to deduct the cost of taking a business prospect or client to a sporting event, concert or even golf.

 

More info

For a detailed analysis of the new tax legislation—and some insights on what it might mean for you—download the latest Tax Bulletin from Merrill Lynch.

 

Related Article: The Top Four Tax Breaks for Veteran-Owned Small Businesses

 

 

About Ebong EkaEbong+Eka+Headshot.png

Ebong Eka is no stranger to the world of personal finance. As a certified public accountant and former professional basketball player he offers a fresh perspective to small business planning and executing. With over fifteen years of accounting, tax & small business experience with firms like PricewaterhouseCoopers, Deloitte & Touche and CohnReznick, Ebong provides practical money solutions tailored to the everyday person, the aspiring entrepreneur or the small business owner.

 

Ebong is the founder of EKAnomics, a sales, pricing and leadership firm. He is also the founder of Ericorp Consulting, Inc., a tax and management consulting firm. Ebong is the author of “Start Me Up! The-No-Business-Plan, Business Plan.

 

Ebong is also the founder of The $250 Tax Pro, which provides tax preparation and consulting services in the Washington, DC area.

 

Web: www.ebongeka.com or Twitter: @EbongEka.

You can read more articles from Ebong Eka by clicking here

 

Bank of America, N.A. engages with Ebong Eka to provide informational materials for your discussion or review purposes only. Ebong Eka is a registered trademark, used pursuant to license. The third parties within articles are used under license from Ebong Eka. Consult your financial, legal and accounting advisors, as neither Bank of America, its affiliates, nor their employees provide legal, accounting and tax advice.

     

Bank of America, N.A. Member FDIC.  ©2017 Bank of America Corporation

Hurricanes Harvey and Irma decimated the Caribbean and the southern United States, creating tremendous damage to businesses and much economic uncertainty. Because of these devastating storms, the IRS is providing tax relief to victims – including small business owners.

 

Unfortunately, these disasters also occurred during the extended tax filing season. Taxpayers affected by the storms and located in the disaster area now have until January 31, 2017, to file tax returns and pay taxes due.

 

Who is eligible for tax relief?

Individuals and small business owners are eligible for tax relief in any area designated by the Federal Emergency Management Agency. Additionally, taxpayers who live or operate businesses in parts of Florida, Puerto Rico and the U.S. Virgin Islands may also be eligible.  The IRS may add other localities at a future date.

 

To confirm eligibility, search the current list of eligible localities on the Disaster Relief page of IRS.gov.

 

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Tax relief for Individual Taxpayers

Individual tax filers who have tax returns due between September 15 and October 16 (including tax extensions) have until January 31to file their tax returns and make payments.  The tax relief extension also includes individuals who are required to make quarterly estimated tax payments on September 15and January 16.

 

Who are considered Individual Tax Filers?

Individual tax filers include those who operate a business as a sole proprietor or single member LLC and file Form Schedule C (Profit or Loss from Business) with their personal income tax returns.

 

Tax relief for Small Business Owners

Calendar year small businesses who file tax returns as an LLC, Partnership, S-Corporation or C-Corporation due on September 15 or October 1 are eligible and have until January 3to file returns.

 

The IRS is also providing additional relief for several other business tax deadlines, including the October 31 deadline for quarterly payroll and excise tax returns.

 

     CLICK HERE TO READ ARTICLES MORE FROM SMALL BUSINESS EXPERT EBONG EKA

 

Additional relief for Business Owners

The IRS is waiving the late-deposit penalties for federal payroll and excise tax deposits normally due during the first 15 days of the disaster period.  Check out the disaster relief page on IRS.gov for specific information to your circumstances.

 

The IRS will generally work with any individual or business owner who lives outside the FEMA designated disaster area but whose necessary records are located within the disaster area. Tax relief is automatic but if you receive an IRS notice for late filing or late payment, call the number on the notice (or contact your CPA, Enrolled Agent or tax professional) to discuss the options to get the penalties waived.

 

Claiming Losses from Hurricanes Harvey and Irma

Individuals and businesses who suffered uninsured or unreimbursed disaster-related losses can either claim the loss on the 2016 income tax returns or on the 2017 income tax returns. Make sure you speak with your CPA, Enrolled Agent or tax professional as everyone’s circumstances may be different.  Refer to IRS Publication 547 for more details.

 

Remember: You have automatic tax relief for hurricane disasters if your location is eligible so there is no need to contact the IRS for additional information unless you receive an IRS notice.

 

     RELATED VIDEO: Why you may be able to deduct a casualty loss on your personal tax returns

 

 

About Ebong Eka

Ebong Eka is no stranger to the world of personal finance. As a certified public accountant and former professional basketball player he offers a fresh perspective to small business planning and executing. With over fifteen years of accounting, tax & small business experience with firms like PricewaterhouseCoopers, Deloitte & Touche and CohnReznick, Ebong provides practical money solutions tailored to the everyday person, the aspiring entrepreneur or the small business owner.

Ebong Eka Headshot.png

 

Ebong is the founder of EKAnomics, a sales, pricing and leadership firm. He is also the founder of Ericorp Consulting, Inc., a tax and management consulting firm. Ebong is the author of “Start Me Up! The-No-Business-Plan, Business Plan."

 

Web: www.ebongeka.com or Twitter: @EbongEka.

You can read more articles from Ebong Eka by clicking here

 

Bank of America, N.A. engages with Ebong Eka to provide informational materials for your discussion or review purposes only. Ebong Eka is a registered trademark, used pursuant to license. The third parties within articles are used under license from Ebong Eka. Consult your financial, legal and accounting advisors, as neither Bank of America, its affiliates, nor their employees provide legal, accounting and tax advice.

     

Bank of America, N.A. Member FDIC.  ©2017 Bank of America Corporation

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