Monthly Archives: April 2016

How to check the business tax for right

It is never too early to start thinking about your annual business taxes. Day-to-day decisions can have a significant impact on your overall tax obligations. Instead of being surprised at tax time, you should be planning throughout the year to make sure you’re ready.

“When a small business owner plans for tax season strategically and consistently throughout the year, they can create a much better financial outcome for their company,” Jamal Ayyad, vice president of service delivery for SurePayroll, said in a statement.

Regardless of the time of year, here are six “checkups” you can do to make sure you’re ready for your next tax deadline.

1. Ensure that ownership records and hiring/employment practices are up-to-date

In order to guarantee that your business is complying with guidelines that are constantly changing, plan regular reviews of documents and applicable rules, said Scott Augustine, a shareholder with Chamberlain Hrdlicka law firm.

2. Calculate your projected payroll taxes

Small businesses that are having trouble paying their payroll taxes may be able to take advantage of an IRS installment plan, Ayyad said. If you owe less than $25,000 in combined tax, penalties and interest, and filed all required returns, you may be eligible. Visit the IRS website for more details.

3. Do a compliance checkup

The Affordable Care Act, the IRS and the U.S. Department of Labor have rules regarding independent contractors or 1099 employees. Make sure your firm or organization operations are in compliance to avoid costly penalties and fees, Augustine said.

4. Keep up with your home state’s tax issues

Some states take loans from the federal government to meet unemployment benefits liabilities. Ayyad noted that if your state has taken, but not repaid those loans, there will be a reduction in the credit against the Federal Unemployment Tax Act tax rate. This means employers in those states will have to pay more. A number of states may be affected, including Arizona, Arkansas, California, Connecticut, Delaware, Indiana, Kentucky, New York, North Carolina, Ohio, Rhode Island and South Carolina, as well as the U.S. Virgin Islands.

5. Review non-competes and confidentiality agreements

This is especially important for those that have been written by attorneys outside your state of operation to avoid possible theft of important assets, Augustine said. As part of this, he also advised reassessing document-retention policies to make sure they balance exposure with business needs. This will help you avoid issues in tax matter and litigation, he said.

How to retirement for small business

unduhan-25Planning for retirement can be overwhelming and complicated. But because the average American will spend about two decades in retirement, it makes sense for small business owners to learn the basics about the various retirement plan options available to them.

Offering a company-sponsored retirement savings plan has benefits that extend beyond your own well-being. Considering that only 14 percent of small businesses offer any sort of retirement plan for their employees, you can distinguish your business and attract top talent by providing this incentive. Though certain types of plans do not require you to contribute to your employees’ retirement plans, if you choose to, you also will enjoy a range of tax benefits.

Whether you’re managing multiple employees or just work for yourself, there’s an affordable option out there that’s right for you. Here are the most common types of retirement plans available to small business owners and self-employed individuals.

While the IRS website tells you exactly what you need to know about the plans, your employees might not have any idea what it actually means. Meadows advised employers to “talk in regular words [and] take the complication out of it” when explaining the plan to your employees.

Don’t understand the plan yourself, or have questions about your contributions as an employer? Consider hiring a financial adviser with plenty of experience in the industry, Meadows said.

“The best financial advisers are the people who have already done it,” he added.

 

How to success on your business

When it comes to retirement savings, one of the most common and widely used plans is the 401(k). A 401(k) is part of a profit-sharing plan that allows employees to contribute a portion of their wages to individual accounts to save money for retirement. The money is deducted from their paycheck and deposited directly into their 401(k) account. With the exception of a Roth 401(k), these plans are tax-deferred, which means federal or state taxes aren’t paid on earnings until the money is withdrawn.

Because the contributions don’t count toward the employee’s taxable income, the Internal Revenue Service sets limits on how much employees can contribute to a 401(k) plan each year. The limit for 2016 is $18,000, but can be adjusted in the future depending on cost of living.

Employers have the option to match, or make their own contributions to their employees’ 401(k) plans as an enticement for them to participate. The amount will vary with each company, but the company may offer to match between 25 and 100 percent, up to a certain percentage of the employee’s salary. The eligibility to participate also differs with each company, with some allowing employees to start contributing to a plan as soon as they are hired, and others requiring a waiting period of one month to a year.

Since the retirement industry forecasts changes years in advance, the trends in employer contribution and matching to employees’ 401(k) plans should not change in the immediate future, said Andrew Meadows, vice president of brand and culture at Ubiquity Retirement + Savings. He does add, however, that there are upcoming state mandates for small business retirement plans, such as payroll-deduction IRAs.

Types of 401(k) plans

A complete breakdown of 401(k) plans can be found on the IRS website, but the four most common types are:

  1. Traditional 401(k) plan. This is considered the most flexible of the plans and allows employees to make pretax contributions through payroll deductions.
  2. Safe Harbor 401(k) plan. This plan is similar to the traditional plan, except it mandates that employer contributions be vested as soon as they are made.
  3. Simple 401(k) plan. This plan can be offered only by businesses with fewer than 100 employees.
  4. Roth 401(k) plan. This plan is funded with post-tax income, so money saved  is not subject to any federal or state taxes as long as the investor reaches the age of 59 and a half before withdrawal.

 

Is a 401(k) plan right for your business?

You may think your business is too small for a 401(k) plan, but these plans aren’t only for big companies. Meadows noted that this is a common misconception, and said small business owners have a few main reasons for being hesitant about implementing a 401(k):

  • Having a 401(k) plan would affect the success of the business if they already don’t have enough money to run the business.
  • The plans are really complicated and usually involve a lot of jargon.
  • It is expensive. There are fees involved such as managing fees and investment fees that aren’t usually presented at first.

While the IRS website tells you exactly what you need to know about the plans, your employees might not have any idea what it actually means. Meadows advised employers to “talk in regular words [and] take the complication out of it” when explaining the plan to your employees.

Don’t understand the plan yourself, or have questions about your contributions as an employer? Consider hiring a financial adviser with plenty of experience in the industry, Meadows said.

“The best financial advisers are the people who have already done it,” he added.

How to grow up your business

When applying for a small business loan, your credit score is a major factor in determining whether you get approved. So entrepreneurs with bad credit can benefit from taking steps to boost their business’ ratings.

According to Experian, one of the United States’ three credit-reporting agencies, a credit score is a number that lenders use to help decide how likely it is that a loan would be repaid on time. In addition to the role these numbers play in the approval process, credit scores are also used to set the interest rates on the loans that lenders do pass out.

It is important to note that a business’s credit score is different from a personal credit score. According to BusinessLoans.com, a personal credit score is a reflection of how someone repays their mortgage, auto loans, or other personal obligations, while a business credit score reflects how a business owner meets their company’s financial obligations. While the two scores are different, lenders can look at both when deciding whether to approve a loan.

“Having a positive business-credit profile is extremely important because it presents a current, objective picture of how a business manages its financial obligations,” Brian Ward, vice president for Experian’s Business Information Services, told Business News Daily. “A negative credit profile can lead to higher interest rates, difficulty in securing loans and potential problems with suppliers, but a positive business credit profile can help save your business money by enabling the business to secure the best possible rates and terms.”

Recent research shows that most business owners are in the dark when it comes to their credit scores. A study from Manta and Nav revealed that 72 percent of small business owners don’t know what their credit score is and nearly 60 percent don’t know where to find their credit score.