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Posts Tagged ‘Small business’

QuickBooks Training Workshop (Raleigh, NC) – Tues, May 8th 2012

http://qbworkshopmay2012.eventbrite.com/

Brush up on your QuickBooks skills or learn new ones! Join our Certified QuickBooks ProAdvisor for this interactive and informative QuickBooks training class. This will be a four hour “crash course” that will cover the basics and provide live working demonstrations so you can  quickly learn to use QuickBooks to manage your accounting data.

Topics to be covered will include:

  • Setting up your Company File and Chart of Accounts
  • Working with Lists, Items, and Classes
  • Customer Transactions: Sales Receipts, Invoicing, and Receiving Payments
  • Vendor Transactions: Writing Checks, Entering and Paying Bills
  • Recording Bank Deposits and Credit Card Transactions
  • Preparing and Understanding Reports

Additional content may be covered if time permits.  Every participant will receive a free training packet that will include step-by-step student lessons and other useful information for future reference and support.  Bringing your own laptop to follow along is optional but not required. Light Refreshments will be available.

Time: 1:00-5:00PM.  

Ticket Price: $99.00

Hurry, seating is limited!

Venue Info: Team Nimbus Center – 3801 Computer Dr.  Suite 101  Raleigh, NC 27609

Presented by: netWorth Bookkeeping & Payroll Services of Cary, NC – www.netWorthBookkeeping.com

216 E Chatham St, Suite 102, Cary, NC 27511

For more information: 919-249-6200 or info@netWorthBookkeeping.com

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It’s almost tax time! Tips to Streamline Your Year-End Processes.

It’s December already and we wanted to provide some helpful reminders in order to help you streamline your year-end and tax return processes for 2011.

S-Corp Owners Health Insurance Reportable on W-2 – From the IRS: “Heath and accident insurance premiums paid on behalf of the greater than two percent S corporation shareholder-employee are deductible and reportable by the S corporation as wages for income tax withholding purposes on the shareholder-employee’s Form W-2. These benefits are not subject to Social Security or Medicare (FICA) or Unemployment (FUTA) taxes. The additional compensation is included in Box 1 (Wages) of the Form W-2, Wage and Tax Statement, issued to the shareholder-employee, but would not be included in Boxes 3 and 5 of Form W-2.”

For more information, including information about sole shareholder/employee situations, please see: http://www.irs.gov/businesses/small/article/0,,id=203100,00.html

NC County Business Property Tax Listings – “Any individual(s) or business(es) owning or possessing personal property used or connected with a business or other income producing purpose must file a county business property listing by January 31, 2012 unless an extension is filed.” For more information on registering for an account and to obtain forms for filing, please visit the following county Triangle, NC County websites as they apply to you.

Wake County – http://www.wakegov.com/tax/forms.htm
Durham County – http://www.co.durham.nc.us/departments/txad/Business_Personal_Property_Taxation.html
Orange County – http://www.co.orange.nc.us/assessor/BusinessPersonalProperty.asp

NC Employment Security Commission Notices – NC ESC will be sending out notices through the end of the year to address any changes in your unemployment insurance rate for 2012. Be sure to provide these to your payroll service provider to update their systems.

1099 Forms Due 01/31/12 – If you have paid or will pay subcontracted vendors more than $600 in non-employee compensation in tax year 2011, you will need to have a W-9 form on file for each of them in order to issue their 1099 form. The W-9 form will allow you to obtain the information needed to determine 1099 eligibility, their taxpayer ID number, and a current address for mailing. The deadline to submit 1099 forms to the taxpayer is January 31st and the deadline to submit to the IRS their copy is February 28th. Failure to file on time can result in penalties.

The W-9 form can be downloaded here: http://www.irs.gov/pub/irs-pdf/fw9.pdf.

Please also see the following IRS Publication http://www.irs.gov/pub/irs-pdf/i1099msc.pdf.

IRS Virtual Tax Workshop – If you would to obtain more information about your tax requirements, the IRS offers a free virtual workshop for small business owners and self-employed individuals at http://www.irsvideos.gov/virtualworkshop/

Steps For Adding Payroll Services To Your Business

If your small business is growing, and it’s time to add an employee, you may be wondering just where to start to begin this process (our focus for this blog is NC because that’s where we are located, your state requirements may differ). Most of the time, your payroll service provider will give you a checklist and packet of forms to complete in order to add employees to your payroll. There are three major components that will be needed to set your company up for payroll services.

First, you will need a Federal EIN, otherwise known as an Employer Identification Number. You may have already received this when you started your business but if you are a sole proprietor, you may need to apply for a new number:

http://www.irs.gov/businesses/small/article/0,,id=97860,00.html

Secondly, you will need a State Withholding Tax Id Number. If you already collect and file Sales and Use Tax, the number will be the same and you just need to call the state and add withholding tax to that existing number.  To apply for a new NC withholding account number, you can apply online here:

http://www.dornc.com/electronic/registration/index.html

Third, you will need a new NC Unemployment Security Commission account number to collect and remit state unemployment insurance withholding:

https://www.ncesc1.com/business/web604/web604Main.asp

Now that the main peices for the employer portion are out of the way, let’s take a look at what forms the employees will need to provide in order to receive payroll wages. The employer must retain these documents for their records for each employee:

W-4 Form (Withholding Allowance)

I-9 (Employment Eligibility Verification)

NC-4 (State Employee’s Withholding Allowance Certificate)

In NC, employers must also provide New Hire Information to the state. A form can be mailed or you can report your new hires online at www.NCNewHires.com.

For more information about whether a worker is an Employee or Independent Contractor, see: Employee or Independent Contractor?

Contact netWorth Bookkeeping Services for more information about our  easy, affordable, online payroll services

President Obama Signs 1099 Repeal

via President Obama Signs 1099 Repeal | PropertyCasualty360

President Obama late Thursday signed into law legislation repealing the 1099 reporting provision enacted as part of the healthcare reform bill.

Several insurance industry trade groups issued statements lauding the president’s decision.

The bill is H.R. 4, the “Comprehensive 1099 Taxpayer Protection and Repayment of Exchange Subsidy Overpayments Act of 2011.”

The repealed provision would have required all business entities to file a 1099 form with the Internal Revenue Service for each vendor for whom they have cumulative transactions of $600 or more. It would have gone into effect in January 2012.

The legislation also repeals an additional Form 1099 reporting requirement imposed on owners of rental real estate.

The 1099 provision was expected to contribute $19 billion toward paying for healthcare reform. The repeal legislation makes up the shortfall by making consumers repay all of their insurance subsidies under the healthcare law once their income rises beyond 400 percent of the federal poverty line.

House Democrats called that a tax increase on the middle class.

In signing the bill, President Obama said he looks forward to continuing to work with Congress to improve the tax credit policy in the legislation and is “eager to work with anyone with ideas about how we can make healthcare better or more affordable.”

Jimi Grande, senior vice president of federal and political affairs for the National Association of Mutual Insurance Companies (NAMIC), says, “With the repeal of this provision, small businesses can now worry a little less about Washington red tape and continue to focus on creating jobs and rebuilding our economy.

He adds that NAMIC hopes Congress and the president “will continue to look for ways to improve government regulation by removing needless burdens on American businesses.”

Robert Rusbuldt, president and CEO of the Independent Insurance Agents  Brokers of America (IIABA), says, “In a strong show of bipartisan cooperation, the president and Congress have done the right thing by standing up for small businesses and repealing the 1099 reporting mandate.

“Our thousands of small business members and their clients will breathe easier knowing this ill-advised provision will not take effect.”

Are You Ready to Turn Your Skill into a New Business?

Are you GREAT at what you do?  Do you have years of experience in a particular trade or field and are now an expert?  Maybe now you are thinking “Hey, I might start a business and make a living out of this.”  Your expertise and hard work are only half the battle.  Now comes the hard part.

Entrepreneurship can be a great source of income, pride and accomplishment.  It can also be quite challenging to run and maintain “the business side” of a business.  This is a common source of confusion and frustration for many new business owners, even for small, single owner operations and they often become sad statistics of startup failure.   It’s important to take steps to make sure you set yourself up to succeed from the beginning.

Here are some common snafu areas for many business owners which can make or break your new venture:

1.  The Business Plan – I know, I know.  You’ve heard it a million times but it’s all written down in your head.  Not only do you need one, you need to revisit it once a year and make sure that is consistent with helping you meet your objectives and goals.  I also recommend writing a “Vision Statement”, which is where you see yourself in 5 years, written in present tense.  For example:  We are the largest supplier of buttons in our metro area of _____ with revenues of_____ per year.  You get the idea. Only a concrete, well thought out goal can be obtained and be able to withstand any challenges.

2.  Taxes and Legal Compliance – Understanding your tax obligations and making sure you are in legal compliance is crucial.   From Federal to State level, there are income taxes, annual filings and reports (if you are incorporated), state Sales and Use Taxes, and Payroll Taxes just to name a few.  Even simple mistakes in any of these areas can lead to stiff penalties and fines, in some cases enough to force you to close your doors.  Even something seemingly as innocent as misclassifying an employee or contractor can have expensive consequences. Don’t get caught off-guard!  Consult an Accountant and/or an Attorney to plan your business, pick the right legal structure and get off to a good start.  You can also start with this FREE Virtual IRS Small business tax workshop available online, anytime.  Oh, and don’t forget about protecting yourself with good insurance!

2.  Accounting and Record Keeping – Not knowing where you stand financially is not only a common cause of business failure but frustration in general.   Having your data organized and keeping track of income and expenses can give you the tools you need to make decisions to steer your business in the right direction.  This will also help save you money at tax time by making sure you don’t miss any allowable deductions.  A good bookkeeping system can also help you with fraud detection and monitoring for theft (if you carry inventory).  This is definitely an area that you will want to hire a professional to help you with from the beginning.  If you weren’t an accountant before you started your business, you won’t be one after.  “Flying blind” will cost you far more in the long run than you’ll pay your bookkeeper.

4.  Marketing – Okay, so you’re awesome at what you do but who else knows it?  How will you reach new customers and let them know how awesome you are?  Have you taken into consideration an advertising budget to get your brand off the ground?  This is also an area where you may need to hire a marketing expert to help you.  With so many new online media streams to promote yourself, it’s important to have a brand or “image” and a consistent marketing message.  This could include everything from your business cards to your website (don’t even THINK about not having one), your social media campaigns on Twitter and Facebook, etc.,  and your blog (like this one I am writing).  There are also many free and inexpensive ways to get customers which are time consuming but necessary.  Word of mouth referrals and good old face-to-face networking are tried and true methods to meet potential clients and build relationships.  Remember, business is personal and these contacts will be key to your long-term growth and success in surprising and unexpected ways.

5.  Pricing Services or Products Correctly – This is a tricky one because so many variables come into play.  Your costs, your volume, and your competition should all be considered when trying to get to that “sweet spot.”  A break-even analysis will be an invaluable tool in helping you understand what you need to charge for each item or service and how many you need to sell just to cover your costs.  You need to know if your pricing structure is both viable and sustainable.

6.  Don’t Reinvent the Wheel – Chances are that whatever your business model is, someone else is already out there doing it and doing it well.  Take some time to talk to some folks who are already in the field and learn from them.  If their business is successful, it’s because they are doing something right.  You can always add your own uniqueness or improve upon “tried and true” formulas to make it your own.  It’s also equally important to use this learning opportunity to figure out what NOT to do and avoid costly mistakes.

Hopefully, you  have been doing research about starting your own business and haven’t been scared off or deterred so far.  Don’t be afraid to ask for help! If you are willing to accept that your dream of business ownership may come with some serious (but manageable) responsibilities, then you are on your way to having a successful future filled with unlimited possibilities.

Business Entity Types Explained

December 30, 2010 1 comment

Overview of Different Business Entity Types

If you are thinking of starting a new business, or restructuring or incorporating an existing one, you may be somewhat perplexed as to which corporate entity type to choose.  Since each type has its own pros and cons, let’s take a look at those to help provide some insight.

Sole Proprietor: A sole proprietorship is owned and operated by one person. This is the simplest and least expensive business structure to form. Many start-up companies choose this form until it becomes practical to enter into a partnership or to incorporate. As the sole owner, all profits go to you, as do the losses! Your business profit and loss is recorded and is transferred to your personal tax form.

Pros:

  • Easy to form, hardly any restrictions and very few forms to fill out.
  • Control of profits.
  • Control of decision making and flexibility.
  • Less government control and simpler taxation.

Cons:

  • As a sole proprietor, you are responsible for 100 percent of all business debts and obligations.
  • The death, physical impairment, or incapacitation of the owner can result in the termination of the business.
  • It is typically more difficult for sole proprietors to raise operating cash or arrange long-term financing.

General Partnership: General partnerships are formed by two or more legal entities (any kind of legal entity can be partner), and each of those entities are individually responsible for the partnership. Each partner is personally liable for the partnership’s debts and legal liabilities. For tax purposes, all partners are considered self-employed and claim their share of the partnership’s income on their individual tax.

PROS:

  • Combined assets and expertise and flexible decision making.
  • Partners, not partnership, taxed at the individual level.
  • Business expenses deductible.
  • Ease of formation and low startup cost.
  • All the income generated by the business flows through to the owners.

CONS:

  • Partnership terminates on death or withdrawal of any partner.
  • Each partner is individually liable for agreements made by any partner.
  • The partners are held personally liable for business debt or damages.
  • Both income and management is shared among all the partners.

Limited Partnership: A limited partnership is much like a general partnership in structure. The main difference is that in a limited partnership, there are two different kinds of partners: general and limited. A limited partner does not take part in the management of the partnership and is not liable for any more than his individual capital investment.

Pros:

  • Limited partners are not personally liable for the partnership’s debts and obligations.
  • Partnership does not dissolve with death of limited partner.
  • Number of partners/owners unlimited.

Cons:

  • Transfer of interest usually requires general partner approval.
  • Complete and separate paperwork filings.
  • Limited partners have little, if any, control over daily operations.

Limited Liability Company: A limited liability company (LLC) is essentially a hybrid of a corporation and a partnership. An LLC provides the same kind of tax and liability benefits as a corporation, but has the same management structure as a partnership.

Pros:

  • Lacks the formalized requirements of a C-Corp but has the same liability protection.
  • Taxed on your personal income only.
  • No limit on the number of LLC members, and anyone can be an owner.
  • Under IRS “check-the-box” rules a limited liability company may choose whether to be taxed like a partnership or a corporation.
  • Members are compensated using either distributions of profit or guaranteed payments.
  • Possible to convert an LLC into a corporation.

Cons:

  • LLCs cannot go public or issue stock.
  • Active members are subject to self-employment tax for Social Security and Medicare.
  • It cannot raise money through the sale of stock.
  • Each member’s pro-rata share of profits represents taxable income–whether or not a member’s share of profits is distributed to him or her.
  • As a member of an LLC, you are not allowed to pay yourself wages.
  • Some states do not allow the organization of LLCs for certain professional vocations.

S-Corporation: An “S” corporation is much like a “C” corporation in that it is also its own legal entity, protects its shareholders from legal liability, and requires a significant amount of effort and money to start and maintain. However, an “S” corporation allows shareholders to claim their share of the corporation’s income directly on their personal tax return.

Pros:

  • The profits and losses of the business pass through to the corporation owner’s personal income tax. Like a Limited Liability Company, the tax “pass through” allows you to avoid “double taxation”.
  • Reduce Taxable Gains: Selling your business can be part of your retirement strategy. An S corporation could have reduced taxable gains when the business is sold.
  • S corporations offer protection against liabilities. However, liability protection is not complete protection.

Cons:

  • One Class of Stock: Not having the ability to issue different classes of stock affords a business less control over the company and limitations on the stock value.
  • Passing income through to shareholders can be a disadvantage in some instances. If the business is profitable, shareholders will be required to pay income tax on their share of the profits, even when not distributed to them.
  • Even though losses pass through to shareholders in an S-Corporation, those losses aren’t deductible by shareholders who don’t materially participate in the business.
  • May not own subsidiaries, which can make expansion difficult.

C-Corporation: A “C” corporation is a standard state-formed corporation. It is a legal entity once it is formed, so it files its own taxes and is responsible for its own dealings. A “C” corporation can have unlimited numbers of shareholders, and those shareholders can be any kind of legal entity. Corporations are the most expensive kind of business to begin and maintain.

Pros:

  • Ideal for a business trying to attract public acquisition and venture capital.
  • Can have an unlimited number of shareholders.
  • Shareholders are protected from the corporation’s liabilities.
  • Health insurance premiums and group life insurance up to $50,000 in benefits are fully deductible by the corporation and not taxable to the employees.

Cons:

  • C-corps have to abide by many requirements, such as holding meetings of a board of directors and keeping minutes, maintaining bylaws, and filing formal paperwork.
  • Taxed as a separate corporate entity, so in addition to your personal income taxes, you will have to pay corporate taxes.
  • Double taxation-the corporation pays taxes on its income and the shareholder pays taxes on dividends.
  • Shareholders cannot deduct the losses of the corporation.

If you are unsure which type is right for you, speak to a qualified accountant, consultant, or tax professional to help you make the right decision for you and your business.