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Should My Business Be an LLC?

Many small businesses are considering becoming LLC's, and even large companies, like Chrysler and Fidelity Investments, are formed as LLC's. A discussion of benefits and drawbacks of LLC formation might help your decision.

More Information on Business Types
US Business Law / Taxes Spotlight10

7 Things You Need to Know About Employer Shared Responsibility under Obamacare

Wednesday April 16, 2014

1. The Employer Shared Responsibility (ESR) requirement (AKA employer mandate) starts in 2015 for larger employers (with over 100 employees) and in 2016 for employers with between 50 and 100 employees. All employers with 50 or more employees must begin collecting date in 2014.

2. ESR is for employers with 50 or more full-time equivalent employees. What does this mean? A full-time employee, for this purpose, works an average of 30 hours a week. If your business has 50 full-time employees, or if you have a combination of full-time and part-time employees equaling 50, your company is subject to the ESR payment requirement. There are some exceptions for seasonal workers and some other requirements. It's too complicated to detail here.  (How to calculate FTE's)

3. Required coverage. Employers subject to ESR (that is, with 50 or more FTE employees) "must offer affordable health coverage that provides a minimum level of coverage to their full-time employees (and their dependents)," (my emphasis here) OR make ESR payments. BUT,

4. No ESR payment is required unless at least one full-time employee receives a premium tax credit for "purchasing individual coverage on one of the new Affordable Insurance Exchanges, also called a Health Insurance Marketplace (Marketplace)."  The IRS will let employers know of employees receiving premium tax credits.

4. If you own more than one small business, your businesses may be combined for ESR purposes. The IRS says,

[I]f an individual owns 80% or more of two businesses that are separate legal entities, the total number of full-time employees of that employer is based on the full-time employees (including full-time equivalents) in both businesses combined together.

5. If your business is subject to the ESR requirements, you will need to file an annual return, beginning in 2015, reporting whether and what health insurance you offered employees. You must include:

  • the amount of the employee's monthly health insurance coverage,
  • the employee's share of the lowest-cost monthly premiums for self-only insurance

The return will be based on 2014 data. The report form 1095-C is still in draft. I'll provide more information when this form is finalized.

7. Transition relief is available to help employers get up to speed on ESR requirements. But it's complicated.  Read more about transition relief from the IRS.

Still confused? Yes, it's a difficult complex deal, but it's important to know if your business will be affected by ESR requirements. Read more from the IRS: Questions and Answers on Employer Shared Responsibility

2014 Changes to Obamacare for Businesses

Obamacare: Does it Help or Hurt Small Businesses?


Before You File - A Last Minute Checklist for Business Taxes

Friday April 11, 2014

Before you file that business tax return (along with your personal income taxes), stop and check:

  • Do you have the correct tax return for your business type?
  • Do you have the correct Social Security Number or EIN on your tax return?
  • Did you include information about any 1099-MISC forms you received for work you did as an independent contractor?
  • Did you include self-employment tax calculations on Schedule SE?
  • Did you calculate your tax correctly, from the tax tables, or with tax preparation software?
  • Did you double check all computation and math errors?
  • Did you place withholding and estimated tax payments on the right line?
  • Did you enter the correct information for e-filing and direct deposit?
  • And, most important, did you sign and date your return?

More common tax filing errors

Common Filing Errors list from the IRS

Spring is Garage Sale Time - Taxes, Licenses, Permits You Need to Know About

Wednesday April 9, 2014

After a long cold winter, everyone is cleaning up - and cleaning out. Or maybe you want to open a booth at a flea market or farmer's market this summer. Being aware of regulatory issues in your community and your state can save you money and hassle.

Before you begin, find out requirements in your (a) city or town, (b) county, and (c) state:

Permits and licenses. For just one garage sale? Yes, you may need a permit. It depends on your locality. Check with both your city and county to see if a permit is required.

Income taxes. If you make a profit on the sale, you must pay federal and state income taxes. But, in most cases, you are selling at a loss - just to get rid of the stuff, right? - so there's no profit. If you sell craft items, though, and you're making a profit over the cost of the items, you should keep track of the cost and your expenses. You may have to file a Schedule C as a business.

Sales taxes. Most states are not going to worry about "casual" sales, like a one-time garage sale. But if you're selling at a market, you will have to deal with sales taxes. Each state has different regulations regarding sales taxes. Check with your state's taxing authority just to be sure.

More on Garage Sale/Yard Sale Taxes, Licenses, and Permits

More on Selling at a Flea Market or Farmer's Market

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Paying Your Business Income Taxes - Use Your Business Account

Monday April 7, 2014

Which checking account should I use to pay business income taxes? Use your business checking account, not your personal account, or a business credit card or debit card. Use your business account:

  • To pay estimated taxes
  • To pay your tax preparer, tax software purchase, or fee for online tax payments. For example, I write my CPA two checks for his work on my income taxes. One check is for the Schedule C for my business and the other check is for the 1040 for my personal taxes.
  • To pay your tax bill, in a check or online.

Why use my business account? It's always important to keep business and personal expenses separate, no matter what type of business you are running.

Can I pay my taxes with a credit card? Yes, but be sure you use your business credit card, not a personal credit card. If you are filing Schedule C with your personal tax return, you may want to use your personal credit card. But, for record keeping purposes. split up the bill so part of it is noted as a business expense. Your credit card company may be able to do this, or check with your accountant.

FoxBusiness says that paying business expenses - business income taxes, for example - with a personal credit card "could lead to financial trouble down the road."

Can I pay my business taxes electronically? Yes. Here are some e-pay options from the IRS. But again, use a business credit card or  bank account for this transaction.

More on why you need to keep business and personal finances separate

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