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Tag Archive for William Rogers

Common Scenarios In Client Retirement Planning: Account Consolidation And The Rules Of The Road

William Byrnes 2

Most clients will change jobs a few times in their lives, which often means they wind up with multiple 401(k) and other types of retirement plans. Consolidating can produce many benefits–namely, making it easier to manage retirement assets and easing RMD calculations, but there are rules to consolidating and clients also need to be aware of benefits that may be unique to any one type of plan. Clients should evaluate their goals with respect to eventual withdrawals, as the rules for penalty-free withdrawals–for example, via using an IRA to establish a series of substantially equal periodic payments to provide penalty-free withdrawals prior to age 591/2.

For more information on the rollover rules and how they may impact clients considering retirement account consolidation, visit Tax Facts Online. Read More

Written By William Byrnes

 

 

1099 Reasons To Hire Independent Contractors

William Rogers - 1099 Reasons To Hire Independent Contractors

Maybe not 1099 reasons. But there are good reasons to go the independent contractor route versus hiring employees. Of course, there are also compelling reasons to go the other direction on that. There’s a lot to consider when you make this choice, so let’s dive in.

Independent Contractors Versus W2 Employees

Before we get into the reasons to hire independent contractors, we need to understand the essential differences between the two, especially from the point of view of the IRS. Straight from IRS.gov, an independent contract is “an individual is an independent contractor if the payer has the right to control or direct only the result of the work, not what will be done and how it will be done.” With a W2 employee, the business must pay income taxes, withhold and pay Social Security and Medicare taxes, and pay unemployment tax. There are also insurance costs involved. With a 1099 contractor, the business simply pays contracted rates, and the contractor pays all associated taxes. It’s obviously important to get this right, as the business may face penalties, fines, legal fees and even an audit otherwise.

Read More: I’m Hired! Going Entrepreneur

Pros And Cons Of Hiring Independent Contractors

Depending on the business model, there are several advantages and disadvantages to hiring a contractor versus an employee.

Pros of Hiring Independent Contractors:

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2019 Federal Tax Calendar For Business Owners

William Rogers - Federal Tax Calendar For Business Owners

There’s good news in 2019! Yes, you still have to pay your taxes, and paying them on time is a great idea. So, what’s the good news? Paying taxes means your business is making a profit! But there’s a catch.

There is a new tax law for your 2018 taxes, along with some changes you’ll want to keep an eye on for 2019. In either case, you’ll need to stay on top of the calendar. Whether you’re a C Corp, an S Corp, an LLC or a sole proprietor, here are the key dates for your 2019 Federal Tax Calendar filings straight from the  (check out the IRS calendar for all dates, including payroll). Below are the key business tax dates in 2019:

  • Individuals (Sole Proprietorships): Form 1040 is due on the 15th of the 4th month following the end of your tax year.
  • Partnerships: Form 1065 is due by the 15th day of the 3rd month following the end of your fiscal year.
  • Corporations: Form 1120 is due by the 15th day of the 4th month (3rd month for S Corps) following the end of your fiscal year. And remember your estimated taxes, due on the 15th of the 4th, 6th, 9th, and 12th month of your fiscal year.

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Can You Deduct Business Travel While On Vacation?

William Rogers - TaxConnections

At this time of year, a vacation is on many people’s minds. If you travel for business, combining a business trip with a vacation to offset some of the cost with a tax deduction can sound appealing. But tread carefully, or you might not be eligible for the deduction you’re expecting.

General Rules

Business travel expenses are potentially deductible if the travel is within the United States and the expenses are “ordinary and necessary” and directly related to the business. (Foreign travel expenses may also be deductible, but stricter rules apply than are discussed here.)

Currently, business owners and the self-employed are potentially eligible to deduct business travel expenses. Under the Tax Cuts and Jobs Act, employees can no longer deduct such expenses. The potential deductions discussed below assume that you’re a business owner or self-employed.

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Best Business Entity Structure After Tax Reform – S-Corp And C-Corp

William Rogers

There’s no easy answer to this question, though the entity choice considerations have undergone some changes due to the new tax law. For tax years beginning in 2018 and beyond, the Tax Cuts and Jobs Act (TCJA) created a flat 21% federal income tax rate for C corporations. Under prior law, C corporations were taxed at rates as high as 35%. The TCJA also reduced individual income tax rates, which apply to sole proprietorships and pass-through entities, including partnerships, S corporations, and, typically, limited liability companies (LLCs). The top rate, however, dropped only slightly, from 39.6% to 37%.

On the surface, that may make choosing C corporation structure seem like a no-brainer. But there are many other considerations involved.

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How Real Estate Can Reduce Your Tax Obligation

William Rogers - Real Estate And Tax Breaks

To maximize the tax benefits of property ownership, homeowners, investors and real estate professionals alike need to be aware of the breaks available to them as well as the rules and limits that apply. Whether you’re selling your principal residence, renting out a vacation property or maintaining a home office, tax savings are available if you plan carefully. However, in some cases, tax savings may be reduced under the Tax Cuts and Jobs Act (TCJA).

Home-Related Tax Breaks

There are many tax benefits to home ownership — among them, various deductions. But when you filed your 2017 tax return, the itemized deduction reduction could reduce your tax benefit from some of these breaks. And while that limit goes away for 2018, the TCJA reduces or eliminates these breaks:

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Deducting Interest On A Home Equity Loan Under The Tax Cuts And Jobs Act

William Rogers - Deducting Interest On

Under prior tax law, taxpayers who itemized deductions could deduct “qualified residence interest” on up to $1 million of debt secured by a qualified residence and used to acquire, build or improve that residence (referred to as “acquisition debt”), plus interest on home equity debt up to $100,000. (The limits were half those amounts for married taxpayers filing separately.) The home equity debt couldn’t exceed the fair market value (FMV) of the home reduced by the debt used to acquire the home.

But the $100,000 limit didn’t apply to the extent the home equity debt qualified as acquisition debt. For example, if the home equity debt was used to improve the home securing that debt, the $100,000 limit didn’t apply.

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Choosing The Right Accounting Method For Tax Purposes

William Rogers - Accounting Methods

The Tax Cuts and Jobs Act (TCJA) liberalized the eligibility rules for using the cash method of accounting, making this method — which is simpler than the accrual method — available to more businesses. Now the IRS has provided procedures a small business taxpayer can use to obtain automatic consent to change its method of accounting under the TCJA. If you have the option to use either accounting method, it pays to consider whether switching methods would be beneficial.

Cash vs. Accrual

Generally, cash-basis businesses recognize income when it’s received and deduct expenses when they’re paid. Accrual-basis businesses, on the other hand, recognize income when it’s earned and deduct expenses when they’re incurred, without regard to the timing of cash receipts or payments.

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S Corporation Business Structures Many Considerations

William Rogers - S Corporations

The S corporation business structure offers many advantages, including limited liability for owners and no double taxation (at least at the federal level). But not all businesses are eligible – and, with the new 21% flat income tax rate that now applies to C corporations, S corps may not be quite as attractive as they once were.

Tax Comparison

The primary reason for electing S status is the combination of the limited liability of a corporation and the ability to pass corporate income, losses, deductions and credits through to shareholders. In other words, S corps generally avoid double taxation of corporate income — once at the corporate level and again when distributed to the shareholder. Instead, S corp tax items pass through to the shareholders’ personal returns and the shareholders pay tax at their individual income tax rates.

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7 Ways To Prepare Your Business For A Sale

William Rogers, 7 Ways To Prepare Your Business For A Sale

For some business owners, succession planning is a complex and delicate matter involving family members and a long, gradual transition out of the company. Others simply sell the business and move on. There are many variations in between, of course, but if you’re leaning toward a business sale, here are seven ways to prepare:

1. Develop or renew your business plan. Identify the challenges and opportunities of your company and explain how and why it’s ready for a sale. Address what distinguishes your business from the competition, and include a viable strategy that speaks to sustainable growth.

2. Ensure you have a solid management team. You should have a management team in place that’s, essentially, a redundancy of you. Your leaders should have the vision and know-how to keep the company moving forward without disruption during and after a sale.

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Choosing The Best Business Entity Structure Post Tax Cuts And Jobs Act (TCJA)

William Rogers, Tax Advisor, Choosing Best Business Entity Structure

For tax years beginning in 2018 and beyond, the Tax Cuts and Jobs Act (TCJA) created a flat 21% federal income tax rate for C corporations. Under prior law, C corporations were taxed at rates as high as 35%. The TCJA also reduced individual income tax rates, which apply to sole proprietorships and pass-through entities, including partnerships, S corporations, and, typically, limited liability companies (LLCs). The top rate, however, dropped only slightly, from 39.6% to 37%.

On the surface, that may make choosing C corporation structure seem like a no-brainer. But there are many other considerations involved.

Conventional Wisdom

Under prior tax law, conventional wisdom was that most small businesses should be set up as sole proprietorships or pass-through entities to avoid the double taxation of C corporations: A C corporation pays entity-level income tax and then shareholders pay tax on dividends — and on capital gains when they sell the stock. For pass-through entities, there’s no federal income tax at the entity level.

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Should Your Business Begin Collecting Out Of State Sales Tax?

William Rogers, Sales And Use Tax Collection

You’ve probably heard about the recent U.S. Supreme Court decision allowing state and local governments to impose sales taxes on more out-of-state online sales. The ruling in South Dakota v. Wayfair, Inc. is welcome news for brick-and-mortar retailers, who felt previous rulings gave an unfair advantage to their online competitors. And state and local governments are pleased to potentially be able to collect more sales tax.

But for businesses with out-of-state online sales that haven’t had to collect sales tax from out-of-state customers in the past, the decision brings many questions and concerns.

What The Requirements Used To Be

Even before Wayfair, a state could require an out-of-state business to collect sales tax from its residents on online sales if the business had a “substantial nexus” — or connection — with the state. The nexus requirement is part of the Commerce Clause of the U.S. Constitution.

Previous Supreme Court rulings had found that a physical presence in a state (such as retail outlets, employees or property) was necessary to establish substantial nexus. As a result, some online retailers have already been collecting tax from out-of-state customers, while others have not had to.

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