Business Record-keeping – Everything you ever wanted to know but were afraid to ask

What kind of Bookkeping system do you need?

Do you need to use a Double Entry system?

Is a set of books enough to satisfy the IRS or do you need more?

The answers might surprise you:

You don’t need any specific type of system.  But you do need to be sure to keep supporting documentation. 

Have you always wanted to know what kind of record keeping system the IRS requires? If so Take a look at this guide and for more detailed info this IRS guide to the subject

IRS Small Business and Self Employed Tax Info Page

The IRS has created a page on their web site that has they say is “a one-stop resource for information” for Small Business and Self-Employed.

You can find forms, find out how to apply for an Employer ID number (EIN), and learn about many topics that are relevant to starting and running a small business as a Sole Proprietor.

Hopefully they will keep it current and up to date.

Give us a call if you have any questions about what you read.

Tips – You may want to brush up on the rules

The IRS issued a bulletin and Revenue ruling that might answer many questions you  have on tips.

For example:

Did you know that when a restaruant imposes a minimum tip that technically it is not a tip but a service charge?

That you (the employer) can get stuck if an employee fails to their report tips to you?

If you have a restaurant and want to brush up on the rules rearding tips you definitely want to read this

A slight reduction in Payroll Taxes

It isn’t a lot but every little bit helps.

The Federal Unemployment Tax Act surcharge of 0.2%, which was originally enacted in 1976, expired on June 30, 2011.

This means that the FUTA rate for employers went to 6.0% starting on July 1, 2011.

The IRS says that they are currently working to revise Form 940, Employer’s Annual Federal Unemployment Tax Return, to accommodate the two different rates for 2011 and they say that the form will be available before the Jan. 31, 2012, due date.

The expiration of the surcharge will not affect current or future unemployment benefits but slightly reduces what employers have to pay.  That is always good news!

New 1099 Requirements Repealed

We previously reported that new and very onerous requirements would be added beginning in 2012 for business 1099 reporting. We thought at the time that the law looked likely to be repealed and indeed it has been repealed.

According to the IRS website: The Comprehensive 1099 Taxpayer Protection and Repayment of Exchange Subsidy Overpayments Act of 2011 eliminated new information reporting requirements that were created by previous legislation. You can read it at the IRS website.

The relevant part is that only existing information reporting requirements remain in effect ie:   Payments of $600 or more for nonemployee compensation made in the course of a trade or business are generally required to be reported on Form 1099-MISC. Certain payments to corporations are required to be reported. See the Instructions for Form 1099-MISC for more information.

Good news for small business owners!

States are continuing to increase their efforts to collect Use Tax

States are continuing to increase their efforts to collect Use Tax on items that individuals buy from out of state sellers. When an individual buys stuff on the internet or mail order and the seller is from another state Sales Taxes are often not paid by the buyer or collected by the Seller. For many years, despite the law in many states, people have considered it to be a discount. Enforcement still seems to be a problem for the states but they are getting more and more active because of the increase in on line purchasing. You might have noticed that for the last few years I and other Tax Preparers have been routinely asking abut out of state purchases. This is just something to keep in mind. Any perceived discount for out of state buying is really a bit of a risk. Here is what California Hs to say About it.

You may be eligible to receive Free Tax Help

The IRS has two programs that provide tax preparation assistance for free.

One of them is for people who have income below $49,000.00 and the other is for people over 60. It is a shame that the tax laws are so complex that people need help at all, but they are.

We  just want people to know that they do not necessarily have to pay a professional for help.

Continue reading “You may be eligible to receive Free Tax Help”