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Taxes

Small business management: Hire a full-service tax & accounting service!

Many small business & startup founders have a hands-on approach to management, often because they don’t want to spend huge amounts of money on having a team for every task. However, when it comes to accounting, tax planning & filing, your company definitely needs a full-service tax and accounting service. There are some amazing Tampa CPA firms to choose from, and many of these services work extensively with small businesses. In this post, we are discussing more on how tax & accounting services can help your company.

Get help with taxes

Unfortunately, a lot of small businesses take tax consulting for granted. The role of consultants is to do more than just the paperwork. Yes, they will help with tax planning & preparation, but you can also expect them to determine a strategy to maximize your financial returns. You can expect small business accounting services, which can be managed in a way that your business goals are always on track. With a proficient team of tax consultants, you can expect to reduce your tax burden in a planned manner.

Assistance with business operations

For small companies, financial decisions are often hard, because they don’t know the implications in the long run, and more importantly, they don’t have adequate resources. With tax planning and small business accounting, you can get an unbiased opinion on most things. For instance, should your company lease or purchase equipment? How can you possibly minimize your taxable income this year? Are you making the most of deductions? Allow a team of tax consultants and accountants to explain that.

A full-service tax & accounting service is always around to take your questions, and they can guide with basic things like cash flow management. Just make sure that you hire a service that’s locally accessible in Tampa, and they should have experience with small businesses.

 

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Taxes

Tax Facts: 3 Reasons the IRS May Audit You

Unless you are an expert aiding others in filing taxes or tax law, you probably hate taxes like the rest of us. Unfortunately, tax audits can create real headaches and instill fear in individuals who wing tax season.

Knowing the correct tax facts can save you down the line.

The IRS audits individuals each year. If they find your tax return to be inaccurate you could be subject to penalties. Let’s get our tax facts straight and explore top reasons the IRS may audit you this upcoming year.

Tax Facts Show Fewer Audits Each Year

Each year, audit rates in the United States continue to decline due to a reduction in staff at the IRS. 2019 saw a 0.45% individual audit rate, down from 0.9% in 2009.

Audits are performed to ensure that the majority of the American population is filing taxes and paying appropriately. Thankfully, your likelihood of getting audited is relatively low and continues to decline.

However, this doesn’t mean you can slack on your taxes. Penalties for inaccurate tax returns can be hefty. These range from additional interests, civil penalties, civil fraud penalties, and criminal penalties. These can cost you a hefty amount.

Criminal charges can also be on your record for a lifetime.

The safest way to avoid these penalties is to file on time and accurately. Unfortunately, even accidental mistakes can get you in trouble with a tax audit.

Top Reasons the IRS May Audit You

When it comes to taxes, an innocent mistake can cost you a lot of money and headache. Here are our top reasons the IRS may take a closer look at you via a tax audit.

  1. Mathematical Errors

If you have obvious mathematical mistakes on your tax return, the IRS is more likely to audit you. For example, reporting a $400 yearly income while filing for a $5000 business expense would trigger a red flag.

It’s always a good idea to proofread and double-check your tax return. Hiring an IRS tax attorney can also help ensure your taxes are accurate.

  1. Missing or Underreporting Income

Did you know that the IRS receives copies of employee W-2 forms? They also receive 1099 forms from contract work. it can be easy to forget about the smaller gigs you’ve completed before tax season.

Make sure you keep receipts and report all your taxable income to avoid a tax audit.

  1. Claiming a Large Number of Business Expenses

If you are a small business owner, it’s smart to file for deductions in taxes due to business expenses. It costs a lot of money to start and run a company. Claiming equipment and service expenses is vital.

However, this can become a red flag and trigger a tax audit if your business expenses are extremely high. Make sure you only claim business expenses.

If you use any items or vehicles for personal and business use, you cannot claim the entire cost of the item or vehicle as a business expense. Split any multi-use items or vehicles.

Legally Avoiding Tax Audits

Nobody likes tax season. But dealing with a tax audit is a bigger headache than filing correctly.

Ready to avoid audits and grow your financial endeavors in 2021? Read more on our blog today.

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Taxes

Why Its a Good Idea to Get a Payroll and Billing Software

Payroll refers to professionals, systems, tools, and software that professionals use to manage payables due to their employees. Its one of the critical functions in a company and should always be for the most part accurate. Any mishap on the payroll will only lead to disgruntled employees and can even be a reason for mass resignation and even revolt. That’s why it’s very critical to always nail the payroll since its what most people live for. The better the payroll the fewer complaints that people will have.

Billing refers to the process in which a company or an individual drills another company or individual for the products and services that are given or fendered. BIlling is not just a formal way of collecting payment, its also lawful. Since these things will be used for taxation purposes. It’s safe to say that its a critical practice that every company should practice diligently in order to have lesser problems during the time when they need to pay their taxes and assess the company’s or an individual’s success.

There are 3rd party payroll and billing software solutions: You should know that there are 3rd party payroll and billing software solutions that are out there for you. These are 3rd party software providers that provide you with instant software that you can use for your payroll and billing purposes. It helps make your process automated without the hassle of making it and wonder how to get it fixed in no time for the next payroll and billing dates.

They provide the training: These companies that provide the software for your payroll and billing will also provide training for your people. Training varies based on how complicated the software is and how many steps it would take to complete the task. The fact that the company will provide the training does save you money in getting your people to train. They also have that liability as hell if your people will be able to perform better.

It’s flexible: The best thing about these 3d party software is that it’s built flexible for your needs. This is a good thing for you as well since you know that whatever changes you will have for updating your payroll or billing or both, you can expect that the 3rd party provider will be able to make the necessary changes. But of course, you need to find a company that will fit in your process like a glove and not just because its the cheapest ones that are out there.

There are a few good reasons why any company should consider getting a 3rd party for their payroll and billing software solution. This is a good thing because they provide everything and will adjust to your needs. Aside from that, it’s a good cost-saving option as well in the long run. For the best one, visit the link.

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Taxes

The 1099-NEC Makes a Comeback in 2020

Companies making payments to self-employed contractors used to file Form 1099-NEC. That form was done away within 1983 after Box 7 was added to the 1099-MISC form. The latter form is the form companies have been using to report non-employee compensation (NEC) for the last 36 years. That changes in 2020. Yes, the 1099-NEC is making a comeback.

BenefitMall, a nationwide payroll and benefits administration provider based in Dallas, explains that employers will still issue 1099-MISC forms this year to cover NEC payments made in 2019. Any payments made from 2020 forward will be reported on the new form.

The IRS issued a draft form in late summer 2019. The form has two parts, Copy A and Copy B. It should be noted that both parts can be downloaded from the website, but Copy A cannot be used to file with the IRS as it is not scannable. Anyone wishing to use the Copy A must obtain a paper copy from a local IRS office. Copy B can be downloaded, printed, and used to file.

Why the Change Was Made

Government officials decided to move away from the 1099-NEC in 1983 as a means of streamlining tax filing. By adding Box 7 to the 1099-MISC, the IRS was able to eliminate both an extra form and the required steps to complete it. That has changed due to concerns over fraud.

Said fraud is the direct result of a loophole in the law regarding 1099-MISC forms. According to the law, employers furnishing the forms to independent contractors for NEC have to file those forms and have them in the contractor’s hands by January 31. If the forms are used to make any other kind of income, the January 31 date is not applicable. Other types of income do not have to be reported until the end of February or March.

This loophole gives fraudsters the ability to file fraudulent tax returns throughout February and March while legitimate taxpayers wait on their 1099-MISC forms. By requiring the 1099-NEC instead, that loophole is eliminated.

Only Non-Employee Compensation Changes

It is worth noting that only NEC payments are affected by the new form. All other forms of income reported on the 1099-MISC remain the same. With the change, the IRS and SSA will have NEC information in their systems by the end of January, thus reducing the likelihood of a fraudulent tax return by someone claiming to be an independent contractor.

BenefitMall says that the new 1099-NEC is a short and simple form. It should not require a tremendous amount of effort to complete. Companies that handle payroll in-house should check with software vendors to see if an update is forthcoming this year. If not, they should be pressing for such an update.

Companies that outsource payroll to a third-party should check with that service provider to ensure they are up to date on the change. It is assumed they will be, but it never hurts to check. Payroll providers like BenefitMall will likely be updating their own systems in the coming months.

Also, note that the change in forms does not change the fact that the IRS expects employers to classify their employees correctly. If there is ever a question of whether or not a worker meets the requirements for being classified as an independent contractor, the IRS website offers some guidance.

In closing, expect a 1099-NEC form next January if you receive any NEC as an independent contractor. You will report that form and its contents on your 2020 tax return filed sometime after January 31 of next year.

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Taxes

Why are ELSS funds becoming increasingly popular instruments?

Most of us are searching for savings options when the taxman is knocking at our door. We willingly or unknowingly ignore ELSS most of the time. The Equity Linked saving Scheme (ELSS) is a diversified tax saving mutual fund where most of the funds invested in equity markets.

Now, through the SIP route, you can start investing in ELSS schemes. However, you must remember that each investment will provide for a lock-in of 3 years from the date of investment. ELSS funds give you two options for growth and dividend. The growth option gives you a lump sum after the lock-in period completed, while the dividend option gives you a dividend each time the fund declares the dividend, even if it is in the lock-in period.

ELSS funds are becoming an increasingly popular tool; let’s find out why this can be useful for you.

Get tax savings and investment benefits

ELSS fund gives you double benefits. In fact,s due to the benefit of its equity exposure market, it helps in multiplying your wealth faster by keeping your taxes under check through the benefits of Section 80C. Consequently, unlike PPF, ELSS is not merely an essential vanilla saving tool. The ELSS opens up the possibility of receiving tangible benefits when you save taxes.

Short lock-in period relative to other tax saving options

Compared to other conventional instruments, ELSS has the shortest lock-in period in just three years. These include PPF (15 years), NSC (6 years), and FD (5 years) tax savings. Therefore, among the other options, ELSS has the highest liquidity.

Superior and tax-free returns

Returns from ELSS and PPF are tax-free from all the options available under Section 80C. However, due to its competitive position, ELSS offers you excellent returns. NSC and FD returns are taxable. Therefore ELSS gives you the best yields among all the instruments.

Investing in equity

You may worry about mutual fund investment. Therefore, if you have not invested directly or indirectly in equity markets, ELSS is the best way for you to continue your equity journey. If you invest directly or indirectly in the markets, a small rise or fall in the markets can lead to a wrong decision to sell. ELSS gets serious here. A 3-year lock-in term in ELSS leaves you tied up, and you can continuously see returns over three years. Looking at the last two decades, the ELSS has given the best returns compared to the rest of the 80C.

The only benefit of an ELSS to regular equity mutual funds is that they are tax-saving by nature. Meaning, if you invest in an ELSS account, the amount invested can be taken as a tax deduction under Section 80C. On the other hand, SIP or Systematic Investment Plan is an investment process.

Therefore, invest in SIP-based ELSS Tax Saving Funds to save taxes and earn better returns while balancing market risks.

Note: PPF is ideal for those who are absolutely at risk and can afford a lock-in period of 15 years. Whereas, investors willing to take a moderate risk for high returns can opt for ELSS.

The best way to reduce risk in ELSS is to stay invested for a long time.

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Taxes

Your Source for Help with an HMRC Tax Investigation

You can benefit from professional help at any point in the tax process, from making sure that the proper amounts are provided for to ensuring that the correct documents are filed accurately. But there’s one point in this process where you will definitely benefit from the input of an experienced tax specialist – an HMRC investigation.

A Positive Result?

HMRC, of course, stands for Her Majesty’s Revenue and Customs, the department with the responsibility for raising income for government use through taxation. An investigation into your tax status by HMRC will be time-consuming and can be expensive. But, with the assistance of an individual who provides qualified HMRC tax investigation services in London, you may be able to achieve a more positive result.

You also have access to an array of services, including:

  • Corporation tax returns
  • Self-assessment tax returns
  • Inheritance tax assistance
  • VAT registration and returns
  • Capital gains tax help, either business or personal

What you need and what you receive is professional support for tax compliance at different points in the compliance process. An expert can help you with tax planning so you’ll be aware of your requirements. The use of extensive experience in the field and the use of proven systems can make sure that you comply, doing so in an efficient manner.

You can get started by visiting the website maintained by a trusted provider of these special services. After you’ve gathered the information you need, be sure to call and schedule an initial consultation. You’ll open the door to the experience and knowledge you need to reach your best tax solution.