- Writing Off Your Business Start-Up Expenses
- Unfortunately, as a result of the COVID pandemic many small firms have gone out of business. However, with the help of vaccines and the waning lethality of the latest versions of the virus, new businesses will be opening as the economy returns to near normal. New business owners, especially those operating small businesses, may be helped by a tax provision allowing them to deduct up to $5,000 of the start-up expenses and $5,000 of organizational costs in the first year of the business’s operation. These types of expenses not deductible in the first year of the business must be amortized (deducted) over 15 years. If a taxpayer who incurred start-up expenses does not make the election, the start-up costs must be capitalized, meaning that the expenses can only be recovered upon the termination or disposition of the business.
- Best Accounting Tips for Auto Repair Shops
- If you own or manage an auto repair shop, then accounting and bookkeeping are likely pretty low on your list of favorite past times. Learn how to get help.
- Video Tips: Thinking about Bunching Your Tax Deductions?
- Bunching your tax deductions can help you get the most out of itemizing your taxes. Watch this video for an introduction to bunching.
- S Corporations Reasonable Compensation Requirement
- Unlike a C corporation, which itself pays the tax on its taxable income, an S corporation does not directly pay taxes on its income; instead, its income, losses, deductions, and credits flow through to its shareholders’ individual tax returns on a pro rata basis. These distributions are not subject to self-employment (Social Security and Medicare) taxes. As a result, many S corporations ignore the requirement that each shareholder-employee must take reasonable compensation in the form of W-2 wages in exchange for services performed for the corporation. These wages are subject to Social Security and Medicare taxes (which the corporation and the employee generally split equally); the corporation is also responsible for paying the Federal Unemployment Tax (as well as any state unemployment taxes).
- The Ever-Changing Role of Tax and Accounting Professionals in the Modern Era
- Accounting professionals were able to help many organizations avoid things like cash flow emergencies, burnout, and anxiousness. Learn more.
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