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Timely and Valuable Information For
SMALL BUSINESS HOME BUSINESS
YOUR HOME-BASED BUSINESS GUIDE
Presented by: Nolan A Geraths Licensed Tax Consultant, Enrolled Agent
Disclaimer: The Materials gathered in this packet by Webtaxsolutions, LLC have been prepared from sources the presenter believes to be accurate and reliable. However, the possibility of human and/or mechanical error does exist. This material is intended only as teaching material and may omit discussion of exceptions, qualifications, definitions, and effective dates. Accordingly, the used should not rely solely on this material, but should review original sources to determine the law and applicability to each situation. Users are encouraged to secure additional sources of information, as needed, to assist them in reaching a solution to any tax matter. Tax Organizer Solutions, Inc. cannot be responsible for any error, omission, or inaccuracy under any circumstances. Copyright ©, 2008 Webtaxsolutions, LLC and Nolan Geraths DEDICATION I dedicate this book to my late father, Raymond Geraths who gave me the wisdom to see what is right. I also dedicate this book to Steven Schwindt without whom this book would have never seen the light.
CHAPTERS INTRODUCTION Chapter 1: Resume (CV) of Nolan Geraths, author Chapter 2: What to Look for in a Tax Expert Chapter 3: Steps to Start a Business Chapter 4: My Business and How I Started It Chapter 5: “I Want an Office in my Home.” Chapter 6: Items needed for an office in your home Chapter 7: Meals and Entertainment Chapter 8: Vehicles Chapter 9: Simple Retirement Account, an Example Chapter 10: What Happens When You’re Audited and What You Should Do Chapter 11: Moving from sole proprietorship to a single member LLC Chapter 12: The “Broke Line” Chapter 13: Setting Up a Bank Account for your Business Chapter 14: A “Tax Loophole” for you Chapter 15: Effective Management Tools Chapter 16: Your Business Plan and How to Write It Chapter 17: Forms Associated with Chapters in this Book
com I attach forms to this book in the last chapter. as well as The Complete User’s Guide to the Amazing Amazon Kindle by Stephen Windwalker.webtaxsolutions. you can email me if you have any questions. not for the business owner. My email address is nolan6569@live. -4- . You deserve some help when operating your business.INTRODUCTION I wrote this book for the person who owns a small business or wants to start a business. both available at the Kindle store on the Amazon site. I know you cannot print from the Kindle. When you read this book keep in mind your own situation.com I am a big fan of the Amazon Kindle. To learn how to use your Kindle I recommend Decoding Your Kindle by Jim Cheshire. Instead you get here my “plain talking” about what it you can do to help your small business. As you read this book. I try to make it as accurate as possible. Feel free to use any and all of the forms in this book. I promise to answer you promptly. I do believe this book has a place on your Kindle. So in this book you will NOT learn about the Internal Revenue Code. nor will learn about the court system for challenging actions of the Internal Revenue Service. But you can try one trick to copy a form from the book by highlighting the form and then copying it and then pasting it to your word processing program and then print it out that way. I have made every effort to keep this book up to date and complete. I read many books for the small business owner but those books seem to be written for the tax expert or the tax attorney. We have a website that you can access to print the forms from this site: http://www. I can give you some help.
com QUALIFICATIONS: • • • • • Facilitator: ability to work with diverse individuals and groups. I have created an organized filing system for all of my projects that takes into account the time line limits and the specific tasks. NOLAN A. Excellent in analyzing projects and improving them. OR. I have and am always willing to analyze complex tax issues facing my clients.CHAPTER 1 C. -5- . Hire people to follow through with my tasks and goals. I have demonstrated the concept to arise above the greed of the business world to treat everyone with fairness and respect. 97383 Fax: (503)769-7728 Email: nolan6569@live. most often in favor of my clients. Innovative. ACHIEVEMENTS: I have met and treated other people in a respected manner and took our ideas and put them into a format that is beneficial to all of you. Everyone who deals with me shares in my achievements. Able to move from the conceptual to reality and to surround myself with people who can attend to details to finish the tasks. GERATHS 1179 N 5TH AVENUE STAYTON. Decision maker. I have attended audits for clients and successfully negotiated settlements.V. My enthusiasm has attracted winners and people with projects and tasks for me. I have created a tax accounting system that made annual bookkeeping easy for my personal and business clients.
City of Stayton Toastmasters Area 43 Humorous Speech Contest Winner Distinguished Service Award.Ed Bell. Lic. San Francisco. and H & R Block Portland. Tax Consultant Stayton. Stayton Jaycees Stayton Triple Crown Tennis Winner -6- . Or. EDUCATION: Bachelor of Arts Business Administration Seattle University AWARDS: First Citizen. Tax preparer -Weir Owen. Inc. Or. Or. Or. Tax consultant with private business . Stayton Tax Service and Bookkeeping.EXPERIENCE: Partner in tax preparation and bookkeeping business. Service manager for mobile home manufacturer -Mobile home company Bank auditor -Bank of America Stayton. Stayton. Ca.
Chapter 2 WHAT TO LOOK FOR IN CHOOSING YOUR TAX EXPERT: QUESTIONS TO ASK Is the tax expert well versed in taxes and knowledgeable? How long has he or she been in business? Will the tax expert represent you in an audit without you also having to appear? What title(s) does he have? (Tax Consultant. Enrolled Agent. How many monthly tax subscriptions does he or she have and read every month? -7- . so … Ask the Tax Expert how much continuing education he takes a year! Do you like and feel comfortable with this person? Can he think “outside the box?” Google his or her name to see what others write about the person. CPA. Public Accountant. Attorney) Does he have an accounting degree? What do other tax payers in your community say about him? Is his reputation good or bad? Is he accessible to you for questions? Is he helpful with any tax question that you have? Do other experts such as attorneys. real estate agents and business leaders refer his name freely? Most professionals have a minimum 38 – 40 hour per year educational requirement to continue to remain licensed.
Chapter 3 STEPS TO START BUSINESS
Items to go over with your Tax Advisor
(Bring this list to the meeting)
1. Pick the entity to use for your business: Sole Proprietor Sole Proprietor LLC S Corporation C Corporation Partnership Partnership LLC 2. Select an “Assumed Business Name” (doing business as) 3. Register your chosen name with your state business filing office 4. Apply for your Federal Tax Identification Number (form SS4—do it online) 5. Are you hiring your spouse? 6. Are you hiring your children (aged 7 – 17 yr.) 7. Will you have your office in your home? 8. Entertainment Rules 9. Depreciation rules on equipment Vehicles over 6,000 lb. GVW 10. Medical expense as a part of your wages 11. Pick a home computer to gather & compile your information 12. Have your Tax Expert review one months “Chart of Accounts” to be sure you are on the right track from the start. Personal Use of Inventory Items Rule: Gross Profit should never be a negative figure. If it is negative, you get an audit.
Chapter 4 “MY
BUSINESS AND HOW I STARTED IT”
Introduction • Nolan Geraths – Licensed Tax Consultant/Enrolled Agent • Licensed tax consultant since 1978 • Knows about running a small business • We all run businesses because we like what we do and what we sell. • Taxation plays a role – sometimes a small and sometimes a large role. A Story How to start and operate your business FIRST-- pick a name for your operation. If you use your full name, most states will not require you to register it. ”Nolan Geraths, Tax Preparation” there is no need to register it unless you are going to make it a corporation. But – if you name it “Yellow Throat Tax Preparation” most states will require it to be registered with their corporate filing office. SECOND-- figure out how you want to operate the business. If you are in it by yourself, you can operate as a “Sole Proprietorship”. Remember – if you give it a name not your own, you must register it with your state. You also have other choices Corporation Main purpose: to provide protection of your personal assets from your business operations.
For example: If you operate as a corporation and you are sued, the person suing you cannot get your personal bank account or your home if you maintain them in your own name. Lawmakers also give different tax treatment to different types of corporation. “C” corporation is a regular corporation. This is a separate entity, apart from your personal individual income expenses. (Microsoft is a “C” corporation.) A “C” corporation also files its' own tax return and pays taxes on “C” corporation profits. There is a special law for different tax reporting and tax paying corporations called a “Chapter S Corporation”. It gets special treatment in the Tax Code. Like a “C” corporation, an “S” corporation files its own tax return, but unlike the “C” corporation, it does not pay income taxes. Repeat: It files its own tax return but does not pay any federal income taxes. How can that be? “Simple” - the income of the “S” corporation is treated as the income earned by you, the shareholders. At the end of the year, your “S” corporation provides you with a report also known as a K-1. The K-1 indicates the character of income & deductions that flow through the “S” corporation to your individual tax return. So if the “S” corporation buys machinery or vehicles, the depreciation is passed on to you to file on your own income return. The “S” corporation pays no income tax. Partnership • If two or more of you are starting a business, you have the option to operate as a partnership. • Give your partnership a name. • Unlike a corporation, you do not protect your personal assets from your business creditors.
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The income and the obligation to pay taxes on that income are shot over to you as one of the “partners” in that operation.11 - . This creature gives you the liability protection like the “C” or “S” corporations. . They allow just one person to operate a Limited Liability Company – unlike a partnership which requires at least two persons to create it. • You will need this number as you operate your business. but it reports its taxes like a partnership. It is like the “S” corporation. • The IRS gives special tax treatment to partnerships.• You will probably need the assistance of a lawyer to draft the Articles of Partnership and the Partnership Operating Agreement that defines the roles and responsibilities of each partner. • Your partnership files its own tax return but does not pay any income tax on its’ profit. THIRD-. Limited Liability Company • • • • • Legislatures have created a new special animal. Again. it gives you the personal protection like a regular “C” or “S” corporation. just like a partnership. but the income and the deductions are passed to you as partners in the partnership. Your bank will ask for it when you apply for a business bank account. • It is the choice of many people. It is called a “Limited Liability Company”. • The IRS calls this number the Employer Identification Number (EIN). In other words. • A good advantage to this form: all losses can go the primary investors. an LLC for short. it files its’ own tax return but pays no taxes. The income and deductions are passed over to you as one of the limited liability partners. Many states have a special rule for the LLC.Apply for a tax identification number. • You will use that number on when you hire employees for your business. A single member LLC is called a Disregarded Entity. • You will put that number on whatever income tax form you file for your business. in that it files a return. but it pays no income taxes. but beware of the risks.
The IRS makes it easy for you to get a number. Keep your business and family separate.id=97860. Remember the part about asset protection – if you choose a corporation or LLC. Go to this site: • http://www. You can do this online now..gov/businesses/small/article/0. This allows you to keep track of your deposits to compare with your bank statement. This allows you to track your sales. Sole proprietorships need one if it has either wages or service expense (1099) issued.ustreas. *103 • As you make deposits. loans and other deposits. The essential parts of this are in one of your handouts.00. one of the reasons you did this was to give you some measure of protection so that creditors of your business cannot get to your personal assets. a “C” corporation.irs. an “S” corporation. • The form is called SS-4. • Ask for duplicate deposit slips.html • The form is issued by the IRS and is filed with the IRS.12 - . . You do not want to pay taxes on money loaned to your company – just on the sales. Here is what you need from the bank: • Use a commercial bank. such as W-2s and 1099s. • Tell the bank you want your canceled checks returned to you each month. • You need this number regardless of the type of business entity you select. When you pay your employee withholdings. separate sales from loans. you need to have a bank that has the ability to set up for your payroll tax deposits. That is the goal of all of this is to operate your business as a business and not as a part of your family. • Tell the bank you want the end of the month cut-off for your bank statements. WHY? To keep your business stuff away from your personal income & expenditures. • Tell the bank you want “serial sort” of your checks for your bookkeeping accounts. If you use a Sole Proprietorship. a partnership or a LLC – all need this number. Keep it with you and take it to the bank representative about your business account. 100. FOURTH --Find a bank and set up a business bank account. that is.You will use that number when you issue tax documents from your operation. 101.
It is called moving from Schedule “A” to Schedule “C”. It allows you to have your business pay for personal medical problems and deduct those charges. there are some special benefits to doing it. • He or she may not want to work. If after consideration.Consider hiring your children. • Do not hire your spouse just because of the special tax treatment as described in this book. including motel charges. you decide to hire your spouse. If you do.Consider whether or not to hire your spouse in your business. Some of your expenses can be switched over to your business and deducted there. you can deduct the costs of that trip. here are some rules that apply to that decision.13 - . Just remember that you are taking some of your personal expenses and letting your business deduct them as business expenses. The best thing is many of you cannot file a schedule “A” itemize deductions anymore because of the changes in the tax law. You can create a Self-insured Medical Plan.FIFTH-. • Use your business judgment when hiring your spouse.000 for that year. For example: if your spouse has medical problems and pay $8. NEXT-. Another way of saying this is moving it from an itemized deduction to a small business form.000 in medical bills during the year and they earn $10. however.000 then they get a W-2 showing income of just $2. Sort of like hiring your spouse – you may have a lot of good reasons to hire or not to hire one or more of your children. . There are plenty of reasons to hire or not to hire your spouse. but there are good reasons NOT to hire your spouse. • How will the spouse working interact with the other employees? • How much do you want your spouse to know about your business? I need not repeat all of them here. When you and your spouse travel on business. A lawyer can help you with this.
You should type a letter of agreement for his or her employment 4.” If you do these things. 3. Actually write on the check for the child’s work: “exempt family wages.00. The wages to be paid and the requirement for time keeping. 5. The child pays no federal income taxes on over $5. You must maintain accurate time sheets showing hours worked.000. The state of residence may also offer exemptions on earnings as long as they are still in dependent status. . then you get some special benefits for the child you employ. You must pay at least the minimum wage. 2.You must follow certain rules: 1. This law changes almost every year so check with your own tax expert to see the current status of this law.14 - .
The carry forward rules apply if you have a tax loss for the year. fax machine. Using a converted garage (YES. RULE 2: The office in your home must be used exclusively and regularly for your business. If you meet these rules. then you still can get the deductions. then you can set up a depreciation schedule for your office equipment like your computer. • If you just store inventory. (NO. It must be a place that is used to store that inventory and nothing else. All your office equipment is 100% deductible. • It can be a part of your current home or a separate structure like a converted garage or shop. Using your kitchen table. if no other use is made of that garage) 3. • That is. . if you eat meals there) To do so you must meet two standards or rules. copier and phone.Chapter 5 “I WANT AN OFFICE IN MY HOME” One of the most asked questions: If I use my home as my office. if anyone sleeps there) 2. what can I deduct on my tax return? Three examples 1. Protect that deduction by having a separate phone for the office and displaying that phone number on your business card. • It is wise to have the blue prints of your home available so you can designate on them the corresponding physical area.15 - . it is a place where you work only on your business matters. • It is a place where clients and customers can come regularly to see you and conduct business. RULE 1: The place must be your principal place of business – that means that you have no other office you go to regularly. Using a bedroom (NO.
. Keep track of your own time by using a log that accounts for your time every six minutes (1/10 of an hour). Once you set up your office in your home take some pictures of it and preserve those pictures in an office file.16 - .Have your clients or customers sign a guest book or log every time they come to see you.
Item Date Purchased Cost Fair Market Value Equipment purchased after starting business. electric) Mortgage interest Property taxes paid Business square footage Total square footage of house Total rooms Number of hours used for business Total Number of Rooms Used for Business ________ ________ ________ ________ ________ ________ ________ ________ ________ ________ ________ ________ Special Note: you cannot deduct any portion of your water bill unless your business needs water as part of that business.17 - . Item Date Purchased Cost Fair Market Value .Chapter 6 ITEMS NEEDED FOR OFFICE IN HOME FOR HOME Property tax statement Cost of Home (see home basis sheet) for depreciation allowed Insurance Repairs & maintenance Utilities for the house (gas. FOR RENTAL HOUSE Insurance ________ Rent paid ________ Utilities ________ LIST OF EQUIPMENT FOR THE OFFICE Prior equipment converted to business use.
Examples of office equipment: Computer Printer Fax Machine Drapes Desk Filing Cabinet Chair Mat Chairs Phone Calculator Table Drapes Computer Table Desk Accessories .18 - .
e. It is comparable to you receiving a loan from the credit card and using that money to pay your bill. THE RECORD Where you were. There is a form for keeping a record of your entertainment expenses in the FORMS section of this book. .Chapter 7 MEALS AND ENTERTAINMENT To account for your payment on meals and other entertainment you need to keep a record. time of the day) How much you paid IF YOU PAID UNDER $75. Then put the credit card receipt in your diary. Remember – reasonable. including the name(s) of your guest(s) Describe how it related to your business How long you were there (date) When you were there (i. you can use a diary to record or log this IF YOU ARE AT A RESTAURANT uses a credit card. It will make it easier to track your expenses at year end and help separate your personal and business expenses. Just add the name of the person(s) you were with and the business purpose. and place). Your credit card receipt records much of what you need (date. One final thing: Choose a credit card for business purposes and use it only for those expenses. amount. necessary and not excessive is the standard IRS rules for business expenses.00 event. not when you pay the billing. Another rule for credit card use – you get the deduction in the year that you sign the credit card receipt..19 - .
000 miles annually. Purchase if….you think your costs will be at least 10% less than that of leasing. . You need to check your tax expert to see the current rules on how the IRS treats SUVs and large trucks. + if you want to impress a client.it is the best buy for the car investment.Chapter 8 VEHICLES INTRODUCTION One of the most often asked questions: Should I buy or lease a car or truck? Before I start there is one general rule we must state before we talk about lease and purchase.20 - . like every few years. If you buy a large sports utility vehicle (SUV) or a large pickup that weighs over 6. Lease if…. . + if you like to change cars often. you get special treatment. which usually are larger than the standard deductions available for a lease. .. + if you do not have the money to buy an expensive car. + you usually drive less than 15.. . .000 pounds. as the rules change every year.if you deduct your actual expenses. • If you have more than four vehicles in use at the same time you must use actual expenses for your deductions.if you want to convert your current car to a business car. then use the Blue Book value for the transfer.
If you are showing a profit – trade it in. • • • Have your tax advisor review special tax credits for hybrid and electric cars. . like gas and oil changes. You are doing it for your use and that of your business – not for tax purposes. use your common sense when buying a vehicle. a Ford F150 or F250 with a camper you use for trips to the lake in the summer and for elk and deer hunting in the fall will not qualify for this special treatment. get in the practice of checking your odometer during a commercial break of the football games on New Year’s Day. Also keep your actual expenses. consider whether or not you are showing a profit in your business.Remember. Just like turning your clocks backwards and forward for daylight and standard time. your business use of this vehicle must be at least 50% for business. like a F250 with a 5th wheel trailer as your office and fully depreciate it. The dealer should be able to tell you. use your vehicle. the time it took and the miles you traveled. If you are showing a loss – sell it. • If your vehicle is not over 6. If you are in the market for one of these vehicles then check the gross weight. You can also find it in the owner’s manual. • You could.000 POUND VEHICLE IS A REAL TAX SAVER! CHECK WITH YOUR TAX ADVISOR FOR APPLICATION AND USE OF THE RULES. • If you are planning on getting rid of your business vehicle. of course. THE USE OF OVER 6. then your depreciation deduction is limited to the IRS guideline for that year.21 - .000 pounds. in the log book. • Other examples are Chevrolet 1500 and most Suburbans. Remember. • So. Keep a daily log of where you go.
TAX ( 403) MEDICARE TAX ( 94) SIMPLE CONTRIBUTION* (6.390 $ 3 $15.22 - .500 SOCIAL SEC. DO NOT TAKE ACTION BEFORE CONSULTING YOUR TAX ADVISOR. $ 6.500) ( 6.000) NET PAYROLL CHECK ------SIMPLE SAVINGS ACCOUNTS HUSBAND WIFE TOTAL ------THIS GUIDE IS FOR DISCUSSION PURPOSES ONLY.Chapter 9 SIMPLE RETIREMENT PLANS: An Example (S CORPORATIONS) NET INCOME BUSINESS NET INCOME BEFORE WAGES GROSS WAGE – HUSBAND GROSS WAGE – WIFE EMPLOYER SHARE SIMPLE – HUSBAND EMPLOYER SHARE – WIFE EMPLOYER SHARE OF SOCIAL SECURITY BOTH HUSBAND & WIFE NET INCOME-BUSINESS ------PAYROLL CHECKS GROSS $6.195 6.000 ( 6.500) ( 195) ( 195) ( $ 995) 615 .195 $12.
.23 - . You will get an audit list with your notice.) Be aware: IRS auditors are suppose to ask you only for information about the tax years of your audit. If you agree to pay taxes on installments as a result of an audit. The auditor must explain the audit process to you at the beginning of the audit. the IRS must send you annual notices of the amount then owed. the amount of payments applied to the balance and your balance. If you do have a legal representative listed for you. Take only what is ask for. ++ You have the right to be helped by a tax advocate. the auditor cannot interview you without that representative being present unless you specifically consent. all according to IRS rules. an accountant or a professional tax advisor. All IRS correspondence to you must contain: --Auditor’s name --His or her telephone number --The identifying number of the auditor working on your case.Chapter 10 WHAT IF YOU ARE AUDITED? & TAX TIPS IF YOU ARE Be organized and prepared. (Unless you have some information that will definitely help you with the audit. auditors routinely ask questions beyond the announced scope of the audit. However. ++ You have the right to have one auditor work on your case on a continual basis to keep continuity in resolving issues in your case. ++ You have the right to know why the taxing authority disallowed a refund. You have an absolute right to be represented by an attorney.
considered a victory for the taxpayer.24 - . then.00 per hour or more. You never know who is sitting in the next booth to you at a restaurant or a bar. the more authority to settle rests in the IRS agent at that level. You have the right NOT to face ECONOMIC REALITY audits. It is usually a business decision to settle for $4. Be aware that an IRS auditor looks around when he visits you.000. = Pictures of your “toys” such as boats and vacation homes. Have you maintained complete and accurate books for your business? 2. You have separate bank account for your business? 4. If you are involved in audit.000 or less. that is. Of the cases that reach this level. 1. Have you “co-mingled” any funds. The IRS odds at collecting this average are about 95%. Here is what you face in audit from the IRS. A recent study showed the average amount collected from taxpayers by the IRS is $4. “The walls have ears”.You have the right to be given adequate Notice of Levy on your property and the opportunity to contest it. = Expensive cars or other “toys”. You have before you a prepared business plan or budget for the year? . If they do and you win. the higher up the IRS audit “ladder” you go. He or she will notice: = What he hears from others at your home or office. 85% are settled. Be prepared to have the correct answers to these questions. Do you have reasonable explanations for all of your business expenses? 5. It is usually. you will get your attorney fees paid at the rate of $125. paying some personal expense from your business account or depositing a business check into your personal account? 3.
for the most part. .000 then you have the right to pay that amount in installments over a three year period. If the audit determines that the amount you owe is less then $10. If the IRS attempts to levy against your home.You have the right to know in advance if the IRS is contacting other people about your audit. District Court judge must sign the levy order. a U. Your home is protected from tax levies and tax seizures.S. You have the right to prevent and stop a tax levy during a REFUND lawsuit.25 - . The IRS must exhaust all other remedies for collection before they attempt to seize your house.
computers. Flexibility: Liability without minutes or officers. Personal credit lines used for business purposes There will have to be a lawsuit to set a precedent for these and other similar questions. Need to create a separate set of double entry books and you cannot commingle funds. To limit liability is to establish an entity. office equipment. Questions since there is no case law at present: What assets are at risk? Part of office in home Vehicle(s) used Cell phones.Limited Liability. No need for payroll for a one-person operation without any employees.26 - . etc. .Chapter 11 MOVING FROM A SOLE PROPRIETORSHIP to SINGLE MEMBER Limited Liability Company Primary Advantage . A lawsuit should limit liability to assets of the company.
When his other accounts run out of money. it means they are out of money. when you fall below that line. a smart person may “sock away” $20. There will be times you need to tell friends or family you simply do not have the money to lend to them when they ask you for “some help”. With your knowledge and skill levels.000 and call that his broke line. but your brain did not. even though he has this $20. remember that your finances went broke.27 - . he is “broke”. The next time you will not make the same mistakes!!! . you are “broke”. WHAT IS A BROKE LINE? An artificial bottom line that you create to say that. If you get into a venture that fails and takes you to your Broke Line and beyond. you can take less than four years to get it all back. And…. For example. When they are broke.Chapter 12 BROKE LINE Most people do not have a Broke Line.000 socked away.
+Specify that you want the end of the month as the cut-off date for your bank statement. +Tell your bank that you want “serial sort” of your checks. Here are the basic needs you should ask your bank as you establish your accounts with them: +Ask for duplicate deposit slips.28 - . so this should be the first question you ask your bank representative. Not all banks will do this. The ones with carbon papers so you will have a copy of each deposit. first and foremost. .Chapter 13 SETTING UP YOUR BANK ACCOUNT FOR YOUR BUSINESS When selecting a bank for your business. including any requirement of “minimum balances” so that you can decide whether to accept these costs or shop other banks for these services. That is. find one that will handle your deposits of money withheld from your employee’s wages and your portion of required deposits. +Specify that you want your canceled checks returned with each bank statement. 100 101 *103 Find out what all of these services will cost you.
. This tax break is always subject to sunset rules to expire. the company can set up a “Tuition Payment Plan” to pay up to $5. Check with your tax advisor for the latest variation of this law.Chapter 14 A Tax Loophole for you: YOU CAN PAY FOR A CHILD’S EDUCATION WITH COMPANY MONEY Here is a tax “loophole” for you! If a business owner’s child: + Works for the company + Is 21 years of age or older + Owns no company stock AND + cannot be claimed as dependent on his parents’ tax return.29 - . Then.250 of that child’s tuition for higher education.
a meeting procedure. If you have all of the prior five in place. These are all essential parts of any business plan. and a budget. if you have employees. then you need to learn the art of proper delegation.30 - . evaluations. . you must train replacements for your key employees in the event the key employee leaves. as well as the duties and responsibilities of each particular position. Your Business Plan must show projections of income and expenses going forward five years.Chapter 15 EFFECTIVE MANAGEMENT SKILLS Everyone in your business. a cash flow analysis. whether it is a one-person operation or ten person operation needs a detailed job description that sets out the standards of your business. If you have employees. you are ready to begin the research for drafting the business plan. A part of your job descriptions is an evaluation system that is based on judging performance. A weekly cash flow projection allows you to make management decisions by analyzing when to make payments. Your budget must project a year in advance. dependent on the income each week. You need to forecast your cash flow on a weekly basis and project it out for at least eight weeks at a time. It must show prior reporting periods and be carried out for the 12 months of the budget reporting period. You need to run effective meetings in which everyone participates and in which everyone knows the agenda in advance of the meeting. Again. No need to do it unless you have job descriptions. based on the standards set out in the job description.
Consider reading: Achieving Objectives Made Easy! Practical goal setting tools & proven time management techniques by Raymond Le Blanc .31 - .Finally. read some books on setting goals. .
making it more frequency of excitation. Use the one below as an example. where it was incorporated or formed. You can also use the one described below as an example of a good plan. Again. give some facts about your company. THE COMPANY In two or three paragraphs. YOU SHALL WRITE a BUSINESS PLAN. Shore Trading Co. Two of the main characteristic you see when using ****** is an increase in your kilometers driven for each liter of gasoline you use. has two shareholders. Ltd. This produces a cleaner burn. Shore Trading Co. automobile engines contribute to this adverse change in our environment. . is a privately-held corporation. has an unlimited supply of ****** for its distribution in China and the Far East. Shore Trading Co.Chapter 16 BUSINESS PLAN Your business plan is a critical part of your business. Is the exclusive agent for ****** in China and the Far East. affects the burn of the fuel during combustion. You should take time to write one and update it every year. Here is a sample: With the world now focusing on dramatic changes in the environment. _____________________________________________________________________________ _ INTRODUCTION Introduce your company in two or three sentences. You can contact your attorney for a good format to use for your business. allowing the engine to run cooler and produce fewer emissions. Ltd. Shipping from the United States to China is complex but manageable. SS is CEO. WX and CC. Your MUST write a business plan. Ltd. JT is Chairman of the Board. Here is a sample: Shore Trading Co.32 - . WX is Vice President and CC is the other Vice President. and what it does. one of our products. By writing one you are teaching yourself all aspects of your business. ******. Co. Production of the company’s product takes place in the United States and manly sales exist there. Co. Ltd.
Ltd. Cleans fuel injectors and cleans the combustion chamber. As mentioned in the introduction here. 5. One is 40 milliliters and the other is 237 milliliters. Increases octane and Cetane. Co. starting in the current year and going out four more years after this year. Be realistic. The 237 ml container of ****** retails for 140 rmb. Significantly reduces emissions. how much income it takes to match expenses with no profit or loss for this calculation. Reduces black smoke emissions. Stops engine pinging (which is caused by carbon build-up. The price for the 209-liter barrel of ****** is proprietary. including carbon monoxide. FINANCIAL CONSIDERATIONS Here put in a chart of your income and expenses for five years. hydrocarbons and oxides of nitrogen. 2. Reduces vapor pressure. When you add ****** to your fuel tank. . The first effort will be for the taxi market. 8. offers ****** in two small sizes in the Chinese market. With many. 4. Co in 209 liter barrels.) Shore Trading Co. Improves efficiency of the combustion.THE PRODUCTS (or Service) Describe here what you are selling. ****** produces a cleaner burn. Show also your break-even point. The 40 ml container of ****** retails for 16 rmb. either your product or service you offer. 3. THE MARKET This is where you put in some of your research on your marketing plan and your marketing research. many taxies in Shanghai. which then reduces hydrocarbon evaporation during the refueling process. 7.33 - . It does this independently of any other emissions control devices on the automobile. 6. Other markets in Shanghai include the bus companies and private automobile manufacturers. Here is a sample of a product this company sells: ****** is a revolutionary new product that is a gasoline additive. In addition ****** can be purchased from Shore Trading Co. we will contact the taxi authority to market our product through this State-owned enterprise (SOE). Use a chart showing Income and Expenses with a Profit/Loss listed for each year. Ltd. SS lives there and is getting to know the market there. allowing the engine to run cooler and produce fewer emissions. you can see these benefits: 1. Here is some sample language used: The first market in China will be in Shanghai. ****** affects the burn of fuel during combustion. Increases the horsepower of the engine.
000. To make ****** the number one selling gasoline additive product in China. Have product available from the United States within a few days of ordering it from there. will promote ****** in China. Look at this example: To succeed. KEYS TO SUCCESS List here what you need to succeed and how you plan to do it. The majority of the start up costs are rent. OBJECTIVES Make a list here from 3 to 10 objectives in general terms such as is written here in this plan: 1. 4. Ltd. This is what you live by in your company.000. Co. 2. Ltd. Will make a steady profit by the end of 2007. A break-even analysis shows Shore Trading Co. Shore Trading Co.34 - .Shore Trading Co. and the rest comes from a private equity placed investor. Ltd.000 per month. Co’s start-up costs will be $250. Shore Trading Co. Achieve a 100% customer satisfaction with ******. while projected sales are three to five times as much each month. Work with the taxi authority to test ****** in taxis in Shanghai. starting in Shanghai and moving then to other big cities and districts in China. Will build its image as a solid. initial inventory and a strong cash account. A break-even point is $10. 3. must accomplish the following: 1. Co. To make ****** readily available to every sales person who wants to promote ****** in his or her district in China. To achieve a profit margin of 100%. 2. . MISSION In two or three sentences list your mission statement. Ltd. Ltd. Everyone in your company should know your mission statement: Shore Trading Co. 3. To achieve a market share of 10% of the Chinese market. Owner’s equity brings in $100. well-trusted company.
Sign In Guest List--for your professional visitors and clients 4. Entertainment Log—an essential log 8. IRS Form W-4. 2. Automobile Information—keeping track of your cars 7. Here is an index of the forms for your information: 1. Employee’s Withholding Allowance Certificate 21. Inc. Where to File 1040 Forms—the correct addresses 13. IRS Form W-2. Contributions Schedule for Non-cash Donations 11. Rental Income Worksheet 6.Chapter 17 FORMS Associated with this E Book The following forms are a critical part of this E Book and you should read the book with the forms in mind. Chart of Accounts outline for easy use 14.35 - . Annual Summary and Transmittal of U. Schedule A (to your IRS Form 1040) Checklist 12. Election to Amortize Start-Up Expenses 15. IRS Form W-3. You can also access these forms at the website: http://www. Information Returns 22. Factors in Establishing a Profit Motive—a must read 16. Duties Performed Worksheet—a detailed time record 9. Transmittal of Wage and Tax Statements 20. Wage and Tax Statement 20. My Question to the Folks at Tax Organizer Solutions. IRS Form 1096. IRS Form 8829.com Go to this site to make better copies of all these forms. S. Inventory on Hand—make a list 5. Apply for Employer ID Number Online 18. Expenses for Business Use of Your Home . Basis Calculation Worksheet of your home-another essential list 10. Questions to ask Yourself If You Need an Employer ID number 19. Vehicle Travel Log—easy way to keep track 3. How to Apply for Employer Identification Number 17.webtaxsolutions.
After reading this E Book. Form I-9. Ask your question by this means: 1. U. Inc.36 - .com . Department of Justice Employment Eligibility Verification—for every employee you must use this Form 1 My Questions to the folks at Web Tax Solutions. here is your chance to ask the author. By E-mail to: nolan6569@live. S. your questions. Well. The Tax Answer Man. you certainly have some questions in your mind.23.
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Form 11 SCHEDULE A CHECKLIST Medical (What is your AGI?______.52 - . take 7. __________Prescription medicine or insulin __________Doctor/Chiropractor/Psychologist __________Dentist __________Hospital __________Clinic __________Insurance Premiums (including Medicare) __________Meals for medical treatment (enter only 50% of this total here) __________Lodging for Medical treatment (enter only 50% of this total here) __________Drug or Alcohol treatment __________Ambulance __________Medical travel mileage at 14 cents per mile __________Eyeglasses __________Hearing aids and batteries __________Dentures __________Capital Expenditures __________Medical expense of a dependent not living with you __________Cosmetic surgery (with certain limits. look this up) __________Weight loss program __________Stop Smoking programs Taxes __________Your property taxes __________Your state income taxes __________Your State Sales taxes Interest __________Home Mortgage interest __________Points Amortization (deduct balance if refinanced) __________How many years left on your refinancing agreement? Contributions Yes or No If Yes: _________Church _________United Way _________Boy Scouts/Girl Scouts _________March of Dimes _________Humane Society _________Salvation Army _________Goodwill _________Veterans’ Associations _________Search & Rescue _________Muscular Dystrophy _________Heart _________Cancer _________School .5% of that figure and enter it here: $____________________) You must exceed this limit to deduct medical expenses.
medical examination __________Employee’s office-in-home expenses __________Small tools (expendable) __________Depreciation allowance allowed on employee’s tools __________Subscriptions to professional journals __________Safety equipment Certain expenses NOT limited by 2%of Adjusted Gross Income (AGI): __________Amortized bond premiums __________Claim of right to repayments __________Decedent’s cost annuity __________Short sale expenses __________Estate tax on decedent’s income __________Gambling loss. and required by employer.53 - . or errors & omission._________Other Other than Cash: Yes or No If Yes. but only to the extent of gambling winnings __________Impairment work related expenses NOTE: THESE ARE ONLY PART OF THE DEDUCTIONS YOU ARE ALLOWED ON SCHEDULE A. LOOK AT SCHEDULE A CAREFULLY AND PLAN ACCORDINGLY. . insurance premiums __________Employee paid. __________Salvation Army __________Goodwill __________Veterans __________Church Charity miles for the year _____________ (Use Form 8283 if Fair Market Value is > $500) Miscellaneous Deductions __________Union dues __________Tax preparation fee __________Attorney fees if in a tax dispute __________Professional license fees or dues __________Safe Deposit cost __________Uniforms __________Employment agency fees __________Vocational supplies __________Employee’s cost of continuing education __________Investment expense (but not seminar fees) __________Appraisal fees for charity donation or causalities __________Hobby expense if hobby income __________Job seeking expense __________Malpractice.
Massachusetts. New Hampshire.. Texas Austin. MA 5501..Form 12 Where to File Addresses for Individual Taxpayers Filing Form 1040 These Where to File addresses are to be used ONLY BY Where to File Addresses for Individual Taxpayers Filing Form 1040 These Where to File addresses are to be used ONLY BY INDIVIDUAL TAXPAYERS FILING THEIR OWN FORM 1040 during Calendar Year 2008. The first line of the address should be: Internal Revenue Service If you live in . GA 39901-0002 Atlanta GA 39901-0001 Maine. West Virginia Atlanta. Note: If you are a BUSINESS FILING YOUR OWN FORM 1040 or a TAX PROFESSIONAL FILING A FORM 1040 FOR YOUR CLIENT. NOTE: A NEW ADDRESS FOR OHIO STARTING JULY 1. Rhode Island.54 - . Georgia. Colorado. Louisiana.. North Carolina. Kentucky. PA 19255-0002 Philadelphia PA 19255-0102 Arkansas. then use this address if you .. Tennessee. South Carolina. Pennsylvania Philadelphia. ARE NOT ENCLOSING A PAYMENT OR YOU ARE ENCLOSING A PAYMENT Alabama. New Jersey.2 Andover MA 05501-0102 District of Columbia. Maryland. Florida. 2005. New York. New Mexico Oklahoma. TX 73301-0002 Austin TX 73301-0201 . Vermont Andover. Mississippi. click here for Where to File Addresses for Businesses and Tax Professionals Filing Form 1040 During Calendar Year 2008.
South Dakota. Arizona. Oregon. Nevada. Illinois. Kansas. Utah. Wisconsin Kansas City. Minnesota. Wyoming Fresno. Delaware.55 - . Michigan. Hawaii. Idaho. Montana. MO 64999-0002 Kansas City MO 64999-0201 . Iowa. North Dakota. Virginia. Nebraska. Missouri. CA 93888-0002 Fresno Ca 93888-0101 Connecticut.Alaska. Washington. Indiana. California.
Form 13 Chart of Accounts Account Type 1100 Checking Bank 1400 Fixed Assets 1420 Accumulated Depreciation 1430 Inventory 2050 Credit Card 2100 Payroll Liabilities Other Current 2300 Loan Payable Long Term 3000 Opening Balance 3900 Retained Earnings 4010 Reimbursed Expenses 4030 Returns & Allowances 4040 Sales 5000 Cost of Goods Sold 6020 Advertising 6030 Brochures & Catalogs 6050 Automobile Expense 6060 Bank Service Charge 6100 Cash Discounts 6180 Contributions 6200 Depreciation 6220 Dues & Subscriptions 6240 Equipment Rental 6380 Insurance 6400 Disability Insurance 6410 Liability Insurance 6420 Worker’s Comp 6400 Interest 6450 Finance charge 6460 Loan Interest 6500 License & Permits 6530 Miscellaneous 6550 Office Supplies 6560 Payroll 6610 Postage & Delivery 6640 Professional Fees 6650 Accounting 6660 Legal 6670 Professional Development 6690 Rent 6710 Repairs 6720 Building 6730 Computer 6740 Equipment 6820 Taxes 6830 Federal .56 Fixed Asset Fixed Asset Fixed Asset Credit Card Liability Liability Equity Equity Equity Income Income Cost of Goods Sold Expense Expense Expense Expense Expense Expense Expense Expense Expense Expense Expense Expense Expense Expense Expense Expense Expense Expense Expense Expense Expense Expense Expense Expense Expense Expense Expense Expense Expense Expense Expense Expense .
57 - .6840 Local 6850 Property 6860 State 6880 Telephone & cell phone 6900 – Travel and Entertainment 6910 – Entertainment 6920 – Meals 6930 – Travel 6940 – Utilities 6950 – Gas and Electric 6960 –Water 7010 – Interest Income 7030 – Other Income 8010 – Other Expenses Expense Expense Expense Expense Expense Expense Expense Expense Expense Expense Expense Other Income Other Income Other Income .
as taxpayer. This business began operation on __________/ __________ Month Year Type and nature of business: ______________________________________ Date Type of Purpose of Amount Expenditure _____ _____________ ______________ _________ _____ _____________ ______________ _________ _____ _____________ ______________ _________ _____ _____________ ______________ __________ _____ _____________ ______________ _________ . elect to amortize the following start-up expenses over a period ________ months.Form 14 Election to Amortize Start-Up Expenses Use this form as you start your business Name: ____________________________________SS Number ___________ Year Ending: _____________ Statement Number: _____________ ((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((( ))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))) Under Section 195 of the Internal Revenue Code. I.58 - .
What are your other income sources besides this business? 12.59 - . Do you have a Business Plan? If not. Do you have others working for you? 9. You want to show a profit. Have you turned a previously unsuccessful business in to a profitable one? 10. In the manner in which your activity is conducted. or at least a profit motive.Do your profit motives outweigh any elements of personal pleasure or recreation from your business? . explaining your answer. You do you have expertise in your business? 4. Answer each question with a YES or NO answer. 5. Do you maintain good and accurate records? 3. get one. under each question. What documents do you have in hand to show your profit motive? 7.Form 15 FACTORS in ESTABLISHING A PROFIT MOTIVE (But not an all inclusive list) Read through this list before you start a business. do you have a legitimate profit or gain motive? 2. if necessary. 1. Do you devote substantial time to your business? 8.Do your losses in your business here relate in any way to your investment income or losses? 11. Did you seek advice from a tax advisor or an attorney? 6. as you start and begin operations.
60 - . APPLY BY EIN ONLINE (USE THIS METHOD…) Start with this website and go from there: http://www.m. If it is determined that the entity needs a new EIN.00. APPLY BY FAX Taxpayers can FAX the completed Form SS-4 application to their state FAX number (see Where to File – Business Forms and Filing Addresses).. one will be assigned using the appropriate procedures for the entity type and mailed to the taxpayer. and provides the number to an authorized individual over the telephone. after ensuring that the Form SS-4 contains all of the required information.Form 16 How to Apply for Employer ID Numbers (EIN) APPLY BY EIN Toll-Free Telephone Service Taxpayers can obtain an EIN immediately by calling the Business & Specialty Tax Line (800-829-4933). APPLY BY MAIL The processing timeframe for an EIN application received by mail is four weeks.m. local time.html This Internet EIN (I-EIN) application is another avenue for customers to apply for and obtain an employer identification number. a fax will be sent back with the EIN within four (4) business days. If the taxpayer's fax number is provided. An assistant takes the information.gov/businesses/small/article/0. Ensure that the Form SS-4 contains all of the required information. Once all the . to 10:00 p. Monday through Friday.id=102767. The hours of operation are 7:00 a. If it is determined that the entity needs a new EIN. one will be assigned using the appropriate procedures for the entity type.irs. assigns the EIN.
An EIN will be issued after the successful submission of the completed Form SS-4 online.61 - .necessary fields are completed on the online form. preliminary validation is performed and the taxpayer will be alerted to information IRS needs that may not have been included. Please note that not all business entity types may use this method. .
While the IRS system calls this a provisional EIN. It also eliminates delays caused by incomplete application forms. The EIN online processing eliminates the need to send paperwork to the IRS. . The easiest. 24 hours a day. fastest.gov The IRS will issue a new business owner or other taxpayer an EIN immediately after the applicant submits a completed Form SS-4. online. and simplest way to obtain an Employer Identification Number (EIN) is via the Internet.62 - . Here’s why: It’s as simple as directing your Internet browser The system is available 24x7 No registration is required to use this system No paper needs to be sent to the IRS The number is issued immediately to www.irs. Start your search at http://www.gov . New business owners or their tax professional representative can apply and obtain their EIN via the IRS website. the I-EIN is the permanent Federal Employer Identification number for that business. All Internetassigned EINs begin with 20 regardless of the actual business location. No registration is required to use the system and the number is issued immediately. and 7 days a week. Application for Employer Identification Number.irs.Form 17 IRS Web Site Offers Identification Numbers for Businesses IRS now allows businesses to obtain employer identification numbers directly from its Web site. This practice ensures the IRS does not issue duplicate numbers.
other than wages. IRAs. if you provide health insurance for your employees. To determine if you need an NSEI. or Alcohol. you may need a National Standard Employer Identifier (NSEI) for your electronic health transactions. except certain grantor-owned revocable trusts. paid to a non-resident alien? YES NO Do you have a Keogh plan? YES NO Are you involved with any of the following types of organizations? Trusts.Form 18 Employer Identification Number (called here “EIN”) Employer ID Numbers (EIN) - Do You Need an EIN? You will need an EIN if you answer "Yes" to any of the following questions. refer to the Department of Health and Human Services' NSEI frequently asked questions . 20. Tobacco and Firearms? YES NO Do you withhold taxes on income. 21 and 22 . Exempt Organization Business Income Tax Returns Estates Real estate mortgage investment conduits Non-profit organizations Farmers' cooperatives Plan administrators YES NO Forms 19. Do you have employees? YES NO Do you operate your business as a corporation or a partnership? YES NO Do you file any of these tax returns: Employment.63 - . Additionally. Excise.
again go to irs. Form 21-----Annual Summary and Transmittal of U. Information Returns IRS Form 1096 See irs.gov. S.IRS form for listing Expenses for Business Use of your Home.pdf .gov and see the Forms & Publications on that site. Form 20 W-3 & W-4 To see the IRS Form W-3 and W-4. Go to this web site for the form: http://www. called IRS form 8829 Go to irs. go to the web site of the IRS.gov/files/form/I-9.Form 19 W-2 To see a sample of the W-2. It is irs.64 - . Form 23 I-9 is a form you must use to verify your employees eligibility to work for you.S. Then go to Forms & Publications and scroll down through the myriad of forms there.uscis.gov Form 22-. Department of Justice. This form is put out by the U.gov to get this form and the instructions for it.