Tax Forms Filing Tricks and Tips

By Alex Steven

It's that time of the year again, when business houses, individual workers and families are gearing up to pay their dues to the Government, and be the law abiding citizen of the United States. As the date of April 15th, is inching closer upon, you might need to get the perfect assessment of all the taxes due and how much can you save this time around.

For all specific tax guidance and other financial advice that pertains to your organization, one can get in touch with your financial accountant for the perfect guidance. It is important for you to know the exact details of filling out tax forms.

Read below to know more about the tax filing process:

Organize all your records

It is very important to gather all the necessary documents before you fill the tax form or the estimate forms. This will include everything from important receipts for cancelled checks. Essentially, one needs to collect all the documentation that supports claims on your returns, such as income or deductions. If your company is like most organizations, the number of necessary records will be massive, and located in several different places, so start compiling these papers well before tax time approaches.

Decide how you will you go about to file the records

Remember that while you are filing your taxes, there is no one particular way to file, but keep in mind that it is an absolute requirement. Figure out what is more helpful for your organization, you can get yourself equipped with tax filing software for better assistance. Avoid errors and omissions as they can hamper your filing process and is also mentioned in the guidelines depicted by the IRS.

Never forget to Analyze

There is an old saying that goes like, 'Hurry and a Spicy Curry Makes a Man Worry. Do not rush on to filing the tax returns as you might miss on some important points while doing so. Mistakes are easy to make on your returns if you aren't paying attention to detail. Always double-check all the Social Security numbers, calculations, and other final details before you submit your return. Pick the accurate tax form or estimated forms. Some may require the W-Form or the popular 1099 form. Keep in mind that, if you make a mistake, your return will be delayed in processing. But not to worry, get in touch with the IRS as soon as you pinpoint an error.

Alex is a seasoned writer covering various topics on Banking, Finance and Accounting. For more information on tax forms please visit http://www.lyonchecks.com/

Article Source: http://EzineArticles.com/?expert=Alex_Steven
http://EzineArticles.com/?Tax-Forms-Filing-Tricks-and-Tips&id=8921297

Taxes and Wealth

By Evelyn Ivy

If there is one thing I can guarantee in life, it will be that you are going to pay taxes. The way taxes are treated for individuals are different from the way it is treated as a business. As a wage earner you have the least control of when and how you get taxed. Running your business through a legal entity gives you more flexibility. This is one area you will want to consult an expert as to what entity lets you keep more of your hard earned cash.

Taxes play a big role in any wealth building strategy and the amount you pay depends on how you earn income. In this article I talk about earning income as a wage earner, sole proprietor, general partnership, C corporation and S corporation.

Wage earner

A wage earner is someone who works for a business and in return receives wages or salaries. As a wage earner, your employer is obligated to withhold some of your earnings for taxes. Your employer is also required to pay half of your social security and medicare taxes. Social security and medicare taxes are savings accounts enforced by the U.S. government in which you reap the benefits when you are 65. In addition, your employer has to pay federal and state unemployment taxes on your behalf. The unemployment tax acts as a buffer to keep you from becoming destitute if you lose your job.

A wage earners deduction for business expenses are limited to 2% of wages, which is something you don't run into if you have a business. Moreover, if you do not have enough expenses to itemize you lose the deduction. As an employee you are dependent on your employer for structuring your salary in a way that saves you the most money. Benefits like health insurance or expenses, reimbursable expenses, retirement benefits and fringe benefits* all have different tax consequences depending how it is structured.

*A fringe benefit is a form of payment for services rendered. For example, lodging on your business premises, using a business car for personal use, employee discounts, etc.

Sole proprietor

By default when you start your business you are a sole proprietor. As a sole proprietor 100% of your income is subject to self-employment tax. Self-employment tax can be compared to payroll taxes for the wage earner and consists of medicare and social security taxes. Unlike the wage earner where the employer pays half of the payroll taxes, you are responsible for paying 100% of your self-employment taxes.

On the other hand, you do not pay taxes on every penny you make because you are allowed deductions for expenses. Even though you have a little more flexibility than the wage earner when it comes to structuring transactions, the sole proprietor is still subject to the highest overall tax rate when compared to other legal entities.

General Partnership

A general partnership works like a sole proprietorship with more than one owner. The IRS does not consider partnerships as separate from its owners. Partnerships are considered pass through entity. This means that all profits pass through the business directly to the partner's tax returns.

Partners get taxed on their income whether they receive it or not. Like a sole proprietor, if you are actively involved in running the partnership, you pay self-employment taxes on your income.

C Corporation

Unlike a partnership, a corporation is not a pass through entity and pays its own taxes. Corporations are the best form when it comes to getting the most tax advantage for fringe and employee benefits.

Corporations are also great if you will like to go public or keep the earnings in your business. The first $50,000 of profits are taxed at a 15% tax rate which is probably less than the tax rate of the shareholders/owners.

The big problem with the C corporations is that if the shareholders choose to distribute profits rather than retain it in the business, they get taxed again on their personal tax return. This is called double taxation - shareholders get taxed on the corporate level and then on their personal tax returns.

S Corporation

Due to the fact that corporations are double taxed on earnings, most small businesses choose to form the S corporation. An S corporation is not a legal entity but an election made with the IRS. The S corporation combats the problem of double taxation.

When the election is made, the S corporation agrees to pass the corporate income, losses, and deductions to the individual shareholders. The shareholders are then taxed at their individual tax rate.

Unlike a general partnership or sole proprietor the S corporation only pays self-employment taxes on wages paid to shareholders and not on all income made. In addition to self-employment taxes, the S corporation also has to pay unemployment taxes on wages. The net left over flows through to the shareholders and is taxed at their personal tax rate thereby alleviating the problem of double taxation. The S corporation has the potential to save shareholders the most taxes when compared to other structures.

There are other variations of entities but I have discussed only the sole proprietorship, general partnership, C corporation and S Corporation here. Forming a legal entity has the potential to save on taxes. No wealth planning strategy is complete without planning for taxes. If you do not plan taxes in advance you can pay up to 50% of your income in taxes. So much for working hard!

As always contact your Certified Public Accountant for more specific advice.

Teaching freelancers and consultants how to gain financial freedom with their business. For more visit http://lifestylecpa.com/

Article Source: http://EzineArticles.com/?expert=Evelyn_Ivy
http://EzineArticles.com/?Taxes-and-Wealth&id=8941163

Tax Treatment of Funding in a Corporation

By Evelyn Ivy

The C Corporation is a legal entity most small business owners overlook. Depending on your personal circumstance it might be the most tax beneficial entity for you. In this article I look at how to treat shareholders contribution in a corporation.

Capital contributions

A corporation could receive money from shareholders either in exchange of stock or as an additional price paid for existing stock. When money or property is received in exchange of stock neither gain or loss is recognized by the corporation. Moreover, the gross income of the corporation does not include shareholders contributions.

In the same way, additional money received as pro rate transfers do not increase the income of the corporation. When shareholders elect to receive additional funds with no exchange in stock, the contributions represent an additional price paid for the existing shares. The contribution increases the operating capital of the corporation.

Basis of capital contributions

The basis of property received from shareholder as capital contribution is the same as the basis of the property when it was owned by the shareholder. Adjustments are made if the property donated is a loss property.

Debt funding in a corporation

Sometimes, shareholders might choose not to contribute their money as equity but rather fund the business with debt. If debt is chosen as an instrument of funding, care has to be taken to document the agreement formerly. Like equity funding, debt funding is not considered income to the corporation.

The advantage of debt over stock is interest on debt is deductible by the corporation, while dividend payments are not.

On the shareholder side, the loan repayments are not taxable to the shareholders unless the payment exceed basis. Furthermore, dividends are taxed at a lower rate when compared to interest payments.

Reclassification of debt as equity

If a corporation is thinly capitalized, the IRS can re-categorize debt as equity. U.S. Code � 385 - Treatment of certain interests in corporations as stock or indebtedness lists several factors that may be used to determine if a debtor creditor relationship exists. Some factors to consider are:

• Is the debt instrument in proper form? If you have a revolving debt account with no formal documentation, your contributions are more likely to be treated as capital contributions rather than debt.
• Is there a reasonable rate of interest?
• Is the debt paid on a timely basis?
• Are debt payments dependent on earnings?
• Is the debt treated equally with other debt in the corporation?

In summary, debt and equity are two ways to fund a corporation. An equity investor carries greater risks in that there is no guarantee of ever getting your investment back. As an equity investor, you are the last to get paid if the business fails. Even though debt funding carries its own risk, it is less than the risks borne by equity investors.

Lastly, due to the tax benefits of loans, there are sometimes more desirable but care should be taken to follow a formal process.

As allows consult your Certified Public Accountant for more specific advice.

Teaching freelancers and consultants how to gain financial freedom with their business. For more information visit http://lifestylecpa.com

Article Source: http://EzineArticles.com/?expert=Evelyn_Ivy
http://EzineArticles.com/?Tax-Treatment-of-Funding-in-a-Corporation&id=8941967

Requirements From a Business Tax Accountant

By Liza Jones

A business tax accountant is required for several tasks. The most important task among them is to fill the tax returns. As your business enters a new year, you would require the service of him. He knows all the legal ways that would reduce your taxes. So, go for a tax accountant to see more benefits in your business. But before that, you have to make a deep research that would enable you with the knowledge to choose the right one. The article describes the ways to choose a tax accountant.

As there are lots of legal boundaries connected to the task, a tax accountant should have enough knowledge about the legal rules. If he does not posses that, your business will not have proper tax returns. Above all, various kinds of legal issues can arise out of it. They are all specialized in specific fields and to earn benefits in your business, you have to go with someone who has some previous experience. It is always a wise decision to choose organizations because besides the rules of government, they have to follow the rules created by them.

Most of the business tax accountants are very busy. This is why they transfer their work to other accountants who may not be efficient at this work. So, before giving the responsibility, you should know who is going to do the work. His responsibility does not end with filing the taxes. He has to guide you with the investments that you are going to make in your business. It is his task to prevent you from investing in unnecessary things. He has to investigate the data and documents of your business and should understand the requirement of your company.

To run a business, you have to fulfill several requirements. Apart from the capital and manpower, marketing can also be enlisted in the list of business requirements. No matter, how big your business is, it needs a marketing strategy. Without it, your business can not get the expected success. Every big business has its own marketing plan. This is why, it has become essential to have proper planning for small businesses. It will help you with marketing equipment like logos, statements, slogans, business offers, business calls, etc. Even, you can have them placed in exact platforms. You can avail various types of software and resource books to make proper marketing planning. There are several companies that can make beneficial small business planning and can provide you with experienced business tax accountants. To select one, you have to keep the above mentioned points in your mind.

Are you searching for Tax Accountant in Melbourne then contact us http://www.kpgtaxation.com.au It is your ultimate solution of any kind of taxation services

Article Source: http://EzineArticles.com/?expert=Liza_Jones
http://EzineArticles.com/?Requirements-From-a-Business-Tax-Accountant&id=8944529