You are forgiven for not being able to keep up with all of the changes in small business taxes. It has been a chore to digest everything even for professionals. Here is a recap of recent small business expense changes.
Profit First can truly change your business, and it is 100% effective when implemented. But there's the catch! You have to implement it.
An S corporation is a type of corporation that meets the specified requirements of the Internal Revenue Code (IRS). An S corporation passes through most of its business income and loss to its shareholders like a sole proprietor. The owners are not liable to pay double tax, at the corporate level and then on the individual shareholder level.
Accountants are weird. They use funny words and use lots of spreadsheets. One common word is Capital Improvements. Similar words that they use to describe the same things: Capital Assets, Fixed Assets, Property, Real Estate, FF&E (Furniture, Fixtures, & Equipment). In the accounting tax world, all of these terms describe something with an economic benefit beyond one year.
You're not really getting paid to learn, but it definitely pays to learn.
Ask any entrepreneur about their business goals and the No. 1 or No. 2 answer is going to be something around growth. In my entrepreneurial circles, the questions are, “How much revenue do you have?” or “How many employees do you have?” Never, not once, have I asked the question, “Yeah, but how much money did you make?”
We've written about the Employee Retention Credit (ERC) expansion in the American Rescue Plan Act of 2020, but our experience is that most small businesses don't realize they are probably eligible for large refunds. Eligible businesses can receive up to $14,000 PER EMPLOYEE, so it is worth revisiting to see if your business is eligible.
During lean times, people find opportunities to turn their hobby into a few extra bucks. Sometimes those opportunities explode into more possibilities than expected. It doesn’t take long before you ask yourself a reality-check question.
Lots of the old tax rules have changed in the last few years. If you haven't reviewed and adapted, you are likely paying your rich Uncle Sam too much. The Tax Cut and Jobs Act (TCJA) combined the amounts for standard deductions and exemptions into one number. The Act also eliminated deductions entirely. This effectively removed itemized deductions for many tax payers since the standard deduction/exemption for 2020 is $24,800 (married filing jointly).
2020 brought a lot of unique challenges to entrepreneurs, and 2021 is shaping up for a wild ride as well. It is easy to miss tax planning when you're trying to keep your proverbial head above water. I've created a quick check list of the most impactful small business tax strategies for 2021.