No matter which version of QuickBooks you’re using, there are always ways to make your workday easier. As with any software, we tend to learn the features we need and not much more. But small changes in the way you operate can add up to significant time savings and more accurate files. Continue reading
There are an abundant number of provisions that provide tax relief to small businesses this year. Just so that you don’t overlook any of these benefits, or in case your business would like to position itself to take advantage of some before the close of the year, here is a brief rundown on many of the business benefits that are available for 2011. Continue reading
An often overlooked part of the financial picture for a small business owner is life insurance. Not maintaining a life insurance policy or being under-insured can be devastating to your family and your business. Continue reading
In an earlier post, we focused on tax planning moves for individuals. We want to focus now on business tax planning for 2011. Continue reading
We have compiled a checklist of actions based on current tax rules that may help you save tax dollars if you act before year-end. Regardless of what Congress does late this year or early next, solid tax savings can be realized by taking advantage of tax breaks that are on the books for 2011. Continue reading
We’ve all heard of a scary story someone’s had with the IRS or state department of revenue. Surpise IRS agents at the door, nasty tax bills, audits, relentless IRS agents.
So what’s your story. We’d like to hear them.
Leave a comment below to share your most Scary Tax Tale.
The Internal Revenue Service today announced cost of living adjustments affecting dollar limitations for pension plans and other retirement-related items for Tax Year 2012. In general, many of the pension plan limitations will change for 2012 because the increase in the cost-of-living index met the statutory thresholds that trigger their adjustment. Continue reading
Many small businesses do not have a group health insurance plan in place for their employees. Yet, as an added benefit, employers may want to reimburse all or a portion of the individual health plan that the employee maintains and pays for on their own. The question arises, “What are the tax ramifications of reimbursing my employee for their own medical insurance premiums?”
Have you received an IRS notice that your tax returns are being audited? What should you expect?
An IRS audit can be a nerve-wracking experience. The IRS audit process is fairly simple when you boil it down to what the IRS is looking for. Here’s what the IRS will ask for in an audit of a business tax return, and how you can prepare for an audit before you even get selected. Continue reading
The filing deadline for filing your corporate income tax return is coming on September 15, 2011. The penalties for not filing your return can be rather steep. Over the years the IRS has taken steps to implementing penalties and, in recent years, dramatically increasing them. If you file your S Corporation return late, you will be assessed penalties of $195/month, per shareholder. So if your S-corporation has 2 shareholders, you will be assessed penalties of $390 per month, up to a maximum of 12 months.
Steve Trojan, CPA is owner of SMT & Associates, Inc. (www.smt-associates.com), a Crystal Lake IL based tax and accounting firm, and Complete Payroll Inc, (www.completepayrollinc.com) a payroll processing firm. He specializes in tax and accounting issues affecting small business owners.
As an Illinois veterinarian, you will be interested in the following as it applies to sales tax liability you may have. One of our veterinarian clients asked about whether they must collect sales tax from their customers and remit the funds to the state for items sold to their clients or used in the treatment of their animal patients.
Illinois treats veterinarians as being primarily engaged in rendering service to their clients. Thus they fall under the rules as it applies to “servicemen.” In general, you do not have to charge and collect Illinois sales tax when you are providing product as a by-product of the service provided. Examples of such non-taxable products that may be used during the visit include vaccines, flea and tick products, shampoos, bandages, ointments, splints and sutures. Examples of products that may be sold free of retail sales tax include medicines, drugs and other products having a medicinal purpose as part of the continuing care for the animal. Good records should be maintained detailing the items prescribed to the animal.
It is important to understand that, even though the end sale of the product may be free of the retailer’s occupation tax charged to your client (fancy word - otherwise known as sales tax), you must still pay any sales or use tax to the vendor from which you purchased these items. The reason is that Illinois provides veterinarians several ways for handling sales tax on these sales. One is by separately billing your client for these items and collecting sales tax. The other method applies if the cost of the items transferred as a result of the service is less than 35% of your total gross receipts from service. If this ratio applies, you are deemed a “de minimis” serviceman and you can pay the sales or use tax when you purchase the product from your vendor.
The area that is a risk to most veterinarians is when they buy their products from out of state, and that vendor does not charge you Illinois sales tax. If this is the case, Illinois expects you to self-assess the sales tax. When this happens it is considered “use tax” and the funds must be paid to Illinois ona regular basis.
The other area that could present a problem is not charging full sales tax on items sold to the general public that are not directly related to the service performed at the time of the visit. In these cases, regular sales tax (Retailers’ Occupation Tax) must be collected from your client and submitted to the state. Examples of such products include non-prescription medicines and foods, grooming supplies, toys and training equipment.
If you have any questions regarding sales tax as it applies to Illinois veterinarians, please contact me.
Steve Trojan, CPA is owner of SMT & Associates, Inc. (www.smt-associates.com), a Crystal Lake IL based tax and accounting firm, and Complete Payroll Inc, (www.completepayrollinc.com) a payroll processing firm. He specializes in tax and accounting issues affecting small business owners.
I was posed with this question recently, one that I frequently get when someone starts a new business in Illinois.
Q: “I just started a new business and want to start keeping track of things for next year’s taxes. What costs do I need to track and what is deductible?”
My first suggestion is to open a separate checking account to be used strictly for the business. If you need to use a credit card to make purchases, I would get a separate card for that too. By keeping all your business activities in accounts separate from your personal expenses, you will be more likely to have captured all of your deductible expenses than if you comingled funds. This alone probably results in more deductions, than knowing which expenses to deduct.
My second suggestion is to obtain a copy of QuickBooks to record all of your business income and expenses, and religiously maintain the bookkeeping. It will make tax time much simpler, and will be an aid to doing tax planning, or projecting tax liabilities so you can properly make estimated tax payments during the year.
As for the costs that should be tracked, a simple way to look at this is like this: any expense you incur because of your business (within reason), is deductible. In your case, the obvious expenses are materials you purchase for your customer’s jobs, small tools and supplies, subcontract labor, payroll for employees, etc. Other not so obvious expenses could be:
• Insurance (general liability, workers’ comp)
• Office supplies
• Travel – easiest is to track your miles and reimburse yourself for miles multiplied by the standard rate. Deductible mileage includes travel to customer locations, running errands, picking up supplies, travel to industry events, networking events, etc.
• If you maintain a home office, you should track your utilities for the home, homeowners’ insurance, and major repairs to your home (roofing, siding, painting the outside, water heater or A/C repair, etc)
• Office supplies
• The cost of your QuickBooks software
• Telephone (the cost of your first line into the home is considered personal)
This is not a complete list, but should get you going. If you take into consideration my guideline that any expense incurred because of your business is deductible, you will likely cover most items.
Don’t forget to consider making estimated tax payments. If you are not incorporated, the amount to pay could range from 25-40% or more of your net income (income less deductible expenses), plus 5% for Illinois income taxes.
Steve Trojan, CPA is owner of SMT & Associates, Inc. (www.smt-associates.com), a Crystal Lake IL based tax and accounting firm, and Complete Payroll Inc, (www.completepayrollinc.com) a payroll processing firm. He specializes in tax and accounting issues affecting small business owners.
The IRS announced today an increase in the standard mileage rate for 2011 due to the 
increased price of fuel. The revised standard mileage rates are 55.5 cents per mile for business use of an automobile and 23.5 cents for use of an automobile as a medical or moving expense. The mileage rate for use of an automobile as a charitable contribution is fixed by statute and remains 14 cents.
The increase goes into effect July 1st. So you will need to track your mileage to provide the number of miles driven from Jan-June, and from July – December.
Small businesses who currently have employees can qualify for an In-Business Trust Fund Express Installment Agreement (IBTF-Express IA). These installment agreements generally do not require a financial statement or financial verification as part of the application process.
The criteria to qualify for an IBTF-Express IA are:
To Request an In-Business Trust Fund Express Installment Agreement, call our office at 815-788-5114. For more information about tax problem resolution and how we can help with IRS tax issues, see our related website at www.illinoistaxhelp.com.
Steve Trojan, CPA is owner of SMT & Associates, Inc. (www.smt-associates.com), a Crystal Lake IL based tax and accounting firm, and Complete Payroll Inc, (www.completepayrollinc.com) a payroll processing firm. He specializes in tax and accounting issues affecting small business owners.
There is still time to hire employees for your Illinois business to qualify for the Illinois Small Business Job Creation Tax Credit. By creating at least one new, full-time position that meets the eligibility requirements, you may be eligible to receive up to $2,500 in tax credits. The deadline to create new positions and hire the employees is June 30, 2011.
Here are a number of important details you need to know in order to claim this credit.
1. The most important detail is that you, as the employer, must register your new hire online, as soon as you hire this individual. Registration takes place at JobsTaxCredit.illinois.gov. It is important to realize that this is not a tax credit taken on your corporate or business income tax return. Credits are taken against payroll tax withholdings and will offset amounts required to pay in with regular payroll tax payments.
2. The credit is granted on a first-come, first-served basis and will support about 20,000 new jobs. Registering your new employee at JobsTaxCredit.illinois.gov is critical in order to stake your claim before the funds run out.
3. Eligible employers must have fewer than 50 full-time employees as of June 30, 2010.
4. The tax credit is worth $2,500 per new hire; tax credits will be issued beginning July 1, 2011 and will be used to offset the employer’s payroll tax withholding for Illinois taxes.
5. The position for which this credit qualifies must pay no less than $10.00 per hour.
There are other qualifications and Illinois has a very good FAQ document at their website. I would highly recommend reading this document. If you still have questions, feel free to contact us for details.
Steve Trojan, CPA is owner of SMT & Associates, Inc. (www.smt-associates.com), a Crystal Lake IL based tax and accounting firm, and Complete Payroll Inc, (www.completepayrollinc.com) a payroll processing firm. He specializes in tax and accounting issues affecting small business owners.
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