News & Articles

Tax Issues to Consider When Small Business Owners Get Divorced

Posted on Thu, Mar 14, 2019

For many small business owners, their ownership interest is one of their biggest personal assets. What will happen to your ownership interest if you get divorced? In many cases, your marital estate will include all (or part) of your business interest.

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Tags: IRS, Divorce, Small Business

Is it Time to Rebid Your Vendor Contracts?

Posted on Mon, Aug 27, 2018

While it's great to have a good rapport with your vendors, it's important to ensure the relationship remains businesslike. Vendors who know there is a threat that they could lose your contract are more likely to focus on staying competitive.

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Tags: Business, Small Business, Business Finance, Business Owner

What's Next for State Tax Nexus?

Posted on Mon, Aug 20, 2018

The recent Wayfair decision has drastically altered the landscape for states that want to collect sales and use taxes. Prior to this landmark U.S. Supreme Court case, economic "nexus" for tax purposes was established only if the seller of goods or services exhibited a "physical presence" in the state. Under Wayfair, sales and use tax obligations may be imposed on remote sellers — even those operating solely online. (South Dakota v. Wayfair, S. Ct. No. 17-494, June 21, 2018)

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Tags: Sales Tax, Taxation, Small Business, Supreme Court, Nexus

Pull the Plug on Employee Theft

Posted on Tue, Jul 24, 2018

Not all crooks roam the streets at night. Some might be roaming your company hallways, stealing cash, forging or altering checks, and pilfering your inventory and property.

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Tags: Small Business, Employees, Theft

A Closer Look at the Excess Earnings Method

Posted on Tue, Jul 17, 2018

The Excess Earnings Method was originally created to compensate wineries and distilleries during Prohibition. Valuation experts often criticize this method, calling it ambiguous, over-simplified or outdated. But it's still used in some jurisdictions as a way to value small businesses and professional practices, especially in a divorce setting.

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Tags: Valuation, Business Valuation, Small Business

Many Businesses Will Celebrate Tax Cuts in the New Tax Year

Posted on Tue, Jan 09, 2018

Most U.S. businesses will receive a big tax cut starting with their 2018 tax years, thanks to the new law that was enacted on December 22. But some industries (such as retail, hospitality and banking) generally expect to reap more benefits than others (such as certain professional practices).

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Tags: Small Business, Tax Break, AMT, Tax Cuts and Jobs Act (TCJA)

Get Ready Businesses: Some Filing Due Dates are Changing

Posted on Mon, Nov 14, 2016

Thanks to recent legislation, the due dates have been changed for some information returns and related statements and for some business tax returns. Here's what you need to know.

Two Laws Are Responsible for the Changes

1. The Protecting Americans from Tax Hikes (PATH) Act. Enacted on December 18, 2015, the PATH Act extended or made permanent a number of "tax extenders" (provisions with expiration dates that had been routinely extended by Congress on a one- or two-year basis). It also contained a number of other provisions, including the changed due dates for W-2s and some 1099s.

2. The Surface Transportation and Veterans Health Care Choice Improvement Act of 2015. This new law was primarily designed as a three-month stopgap extension of the Highway Trust Fund and related measures. But it includes a number of important tax provisions, including the revised due dates for partnership and corporation tax returns. President Obama signed it into law on July 31, 2015.

Earlier Due Dates for Forms 1099-MISC and W-2

When a business pays non-employee compensation aggregating to $600 or more to a single payee in a tax year, the business must file a Form 1099-MISC to report the payments to the IRS. Similarly, employers must report wages paid to employees on Forms W-2. Copies of these forms (called payee statements) must also be supplied to payment recipients. 

Before a law passed last year, Forms 1099-MISC and W-2 were required to be filed with the IRS and the Social Security Administration (SSA) by the last day of February or by March 31 if filed electronically. (See "Two Laws Are Responsible for the Changes" at right.) Now, the due dates have been accelerated.

Starting with returns for the 2016 calendar year (which must be filed in early 2017), the due date for IRS and SSA filings is advanced to January 31 of the following year. The March 31 due date for electronic filings is no longer available. So the deadline for filing 2016 Forms 1099-MISC and W-2 with the IRS and the SSA is January 31, 2017.

Note: For filing 2016 Forms 1099-MISC and W-2 with the IRS and the SSA, one 30-day extension is allowed. To obtain an extension, you must file Form 8809, "Application for Extension of Time to File Information Returns," by no later than January 31.

The deadline to supply payee statements to recipients remains January 31 with no extensions allowed.

Reason for the New W-2 and 1099 Deadline

The goal of the new earlier deadline is to:

  • Give the IRS more time to spot errors on tax returns.
  • Make it easier for the tax agency to verify the legitimacy of returns and properly issue refunds to taxpayers eligible to receive them.

Reducing tax refund fraud has been a priority of the federal government in recent years.

Later Due Dates for 2016 Corporate Federal Income Tax Returns

For many years, C corporation federal income tax returns on Form 1120 were due two and a half months after the end of the corporation's taxable year (March 15, adjusted for weekends and holidays, for a calendar-year corporation). Form 1120 could be automatically extended for six months (through September 15, adjusted for weekends and holidays, for a calendar-year corporation).

However, a law passed last year established new due dates for Form 1120. For tax years beginning after December 31, 2015, the due date is generally moved back one month to three and a half months after the close of the corporation's tax year (to April 15, adjusted for weekends and holidays, for a calendar-year corporation).

Automatic five-month extensions are allowed (to September 15, adjusted for weekends and holidays, for a calendar-year corporation). You must file Form 7004, "Application for Automatic Extension of Time to File Certain Business Income Tax, Information, and Other Returns," to obtain an automatic extension.

The Form 1120S due date for S corporations is unchanged.

Note: Under a special transition rule for C corporations with fiscal years ending on June 30, the due date change won't kick in until tax years beginning after 2025. Until then, the traditional due date of September 15 (adjusted for weekends and holidays) for these corporations will continue to apply, with automatic seven-month extensions allowed.

Earlier Due Dates for 2016 Partnership and LLC Returns

For many years, partnership federal income tax returns on Form 1065 have been due three and a half months after the end of the partnership tax year. So for a calendar-year partnership, the filing deadline was April 15 of the following year (adjusted for weekends and holidays).

The Form 1065 due dates have also now been changed. For partnership tax years beginning after December 31, 2015, the Form 1065 due date is accelerated by one month, to two and a half months after the close of the partnership's tax year (March 15 for calendar-year partnerships). The same deadline applies to limited liability companies (LLCs) that are treated as partnerships for federal tax purposes.

Automatic six-month extensions are allowed (to September 15, adjusted for weekends and holidays, for a calendar-year partnership or LLC). File Form 7004 to obtain an automatic extension.

Need Help with Compliance?

If you have questions about the new filing deadlines for tax returns or information returns, or you want to file an extension, contact your EHTC Tax Advisor.

 

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Tags: Tax, Business, IRS, IRS Filing, Small Business

Year-End Tax Strategies for Small Businesses

Posted on Fri, Nov 11, 2016
It's not too late to take steps to significantly reduce your 2016 business income tax bill and lay the groundwork for tax savings in future years. Here's a summary of some of the most effective year-end tax-saving moves for small businesses under the existing Internal Revenue Code. After President Obama hands over the baton to his successor and new members of Congress are sworn into office in January, the tax laws could change. But here's what we know now.

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Tags: Year-End Tax Planning Strategies, Business, Year-End, Year-End Planning, Small Business, Business Owner

Managing the Ups and Downs of Seasonal Business

Posted on Mon, Nov 07, 2016

What do pumpkin patches, ski resorts, ice cream shops and accounting firms have in common? They're all seasonal businesses that experience a surge in revenues during their busy seasons that tapers off in the slow season. Seasonal peaks and troughs present challenges that require creative planning and fiscal prudence.

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Tags: Business, Season Hiring, Small Business, Business Owner

Back-to-School Tips for Grownups

Posted on Wed, Aug 17, 2016
August is back-to-school time across the country. Whether the school buses are already disrupting your commute to work — or will be soon — the start of the school year brings opportunities for savvy business owners.

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Tags: Expenses, Small Business, Education