Category: Tax Deductions
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How Long Should You Keep Payroll Tax Records for Your Business?
Payroll is complicated. Because of that, many businesses choose to stay small for as long as possible before hiring employees. When you finally do hire, it’s a good instinct to hold onto anything related to payroll and employment taxes. You never know if the IRS will come knocking, and you want to be on the Read more
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How Far Back Can the IRS Audit You?
How far back can the IRS audit you? Wouldn’t it be comforting to know that certain tax years are officially off the table—that the IRS simply can’t go back that far? Even if you’ve done nothing wrong, the idea of limits is reassuring. That said, it’s still wise to operate on the principle that authorities Read more
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Sales Tax Nexus: What Online Businesses Need to Know After Wayfair
Sales tax nexus determines when a state can require your business to collect and remit sales tax—even if your business is located somewhere else entirely. Let’s say you’re a ski clothing retailer with an online store. You’re based in Reno, Nevada, and 40% of your sales are shipped to customers in Colorado. At what point Read more
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Understanding the Marginal Tax Rate: How Tax Brackets Really Work for Small Business Owners
The marginal tax rate is the percentage of tax applied to each portion of your income that falls within a specific tax bracket. In other words, it’s the rate you pay on each additional dollar you earn. As your income increases, higher portions of your earnings are taxed at higher rates—but only those portions, not Read more
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LLC Taxed as a C Corporation: What It Means and When It Makes Sense
In a previous post, we talked about what happens when your LLC is taxed as an S Corporation. But what are the implications when an LLC is taxed as a C corporation instead? To become a C corporation, LLC members must file IRS Form 8832 to elect C corporation status. Why would anyone do this? Read more
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De Minimis Safe Harbor & Routine Maintenance: How Small Businesses Can Expense Tools, Equipment, and Repairs
When you buy new equipment, it makes sense to capitalize large purchases and take annual depreciation. But is that really necessary for every small tool or repair? Wouldn’t it be easier to expense smaller items in the same year you buy them? The IRS agrees. That’s where De Minimis Safe Harbor and Routine Maintenance Safe Read more
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Don’t fear taxes… They’re a GREEN Flag for your business
It is easy to put off taxes to the last minute, or not think about them until you absolutely have to. This may give you more time to focus on growing sales or improving business systems. If this is the case, then maybe that’s now it should be. If, however, you have no business reason Read more
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Here’s How to Deduct Your Next Vacation
Many if not most of your vacations expenses can be deducted if you are smart about how you conduct your business. First, while I have studied taxes a little, I am not a CPA. Check with a CPA to see if your travel plans will be an effective and legal tax strategy. These strategies work Read more
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How Do Spouses as Partners or Employees Affect Taxes?
Are there any advantages to hiring one’s spouse from a tax perspective? If it’s a sole prop or LLC, you don’t have to pay Federal Unemployment Tax (FUTA) when you hire your spouse. Other than that, you still have to pay Medicare, social security taxes for them. They are also still subject to federal income Read more
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Tax Benefits of Hiring Your Kids on Payroll
Building a successful business can be a multi-generational project. What better way to show that than to hire your children and give them a chance to both learn and earn? But there are tax rules (and benefits) to hiring your kids. The rules Check the fair labor standards act (FLSA) for your industry. In general, Read more