6 Ways Small Businesses Can Benefit From Reputable Tax Services Providers

Having the right professionals working with you becomes paramount if you own a small business. Be on the safe side with your taxes to avoid conflicts with the authorities. Tax compliance is a major concern for business owners. You need proper guidance to keep your business running and productive. Working with business tax services providers, therefore, becomes beneficial. Tax service providers can benefit your small business in the following ways.

Helps With Documents and Contracts Review

As your business picks up, be ready to handle documents and contracts. While you might have a legal practitioner preparing the documents, a tax services provider will help review the requirements. You need to be keen on business agreements that include possible tax or accounting implications. You need an accountant to analyze the documents and advise on the next and best step. When you avoid the tax implications, you can protect your business and ensure it operates with ease in the market.

You Avoid Audit

Audits can be dreadful for any small business. You need to keep your venture in order, which calls for effective guidance. When you hire business tax services, you will understand the issues that need fixing and how best to meet your expectations. With proper guidance and counsel from an accountant, avoiding audits from the supervisory authorities becomes easier. Apart from mistakes in tax forms, you need to understand your accounts and business performance. Getting early guidance from professionals will help keep your business from statutory problems.

Helps Save Time and Resources

It is important to focus on running your business as an entrepreneur. While you need to solve tax issues fast, the chances of wasting time and resources are higher. The tax services provider you hire understands your business needs and the steps to take. They can highlight your issues and the best steps to take instantly. When you have an accountant handling your business and tax needs, extending your time, money, and resources in the right direction becomes easier. This is also an avenue to learn more about taxes and how they can affect your business productivity.

Helps Make Real-Time Decisions

You need tax service providers to help with immediate and future business needs. It is easier to understand the consequences and implications of your actions when an LLC tax filing professional guides you through the process in real-time. It is a mistake to hire a tax services provider after an incident. You need to find a tax expert early to get a better chance of handling your issues. You can easily budget, monitor your cash flow and go through different business hurdles when you make proper and real-time decisions.

You Enjoy Risk-Free Services

While you might have basic skills in taxes and related variables, the chances of making mistakes are higher. You need to avoid related risks to handle your business tax issues. When you hire a tax services provider, you get risk-covered consultancy. The experts understand what you must do to protect your business. They are proficient and can prepare tax statements without errors. They also cover any errors that might occur or have legal consequences. This means your business gets legal protection and audit assistance whenever needed.

Better Way to Improve Your Record Keeping

Record keeping and bookkeeping are among the services you must exploit after hiring business tax service providers. You need proper recordkeeping to increase your business tax deductions. Proper recordkeeping entails collecting and tracking expenses and cash flow in your business. When you hire a tax services provider, enjoying a safe, organized and accessible recordkeeping platform for your business becomes easy.

Handling tax issues can be a hurdle for small businesses seeking to grow and provide better services in the market. As a business owner, you need information and skills to handle your tax issues. Working with a reputable tax services provider can benefit your business, as explained above.

4 Tax Moves Small Business Owners Should Consider During Economic Downturn

By: Wendi Williams of Incfile

The last few months have served as a wake-up call for small business owners and a reminder that no matter how successful you are, your situation can change on a dime. As we approach the July 15 extended tax filing deadline, many small business owners wonder how they can offset their current losses and better prepare their finances for whatever surprises the economy has in store in the coming years.

On March 27, 2020, the U.S. Congress passed the Coronavirus Aid, Relief and Economic Security (CARES) Act to support American citizens, small business owners and employees in the midst of an unprecedented time in our history. The goal of the CARES Act is to provide fast relief to those left reeling from COVID-19. In meeting those goals, it also introduced a number of changes to current tax law that will benefit many business owners this year and in the future.

An important note: While the changes that accompany the CARES Act can benefit all types of business owners from solo-preneurs to independent contractors, they may not be applicable if your business has received funds through the Paycheck Protection Program. Always check your eligibility before attempting to claim a new tax credit. Read on for some tax moves you can make right now to maximize your benefits in 2020 and beyond.

Tax Move #1: Line Up Your Tax Team Now

An economic downturn is not the time to start DIYing your taxes. Spending more money amid a lagging economy may feel counterintuitive, but spending it on the right person – in this case, a qualified CPA – might be what sustains you through the worst of times. So how do you find the best person for the job? Here are some tips to keep in mind when looking for the accountant who’s the right fit for you:

·      Ideally, find someone who’s been around the block a few times. Many CPAs have seen clients through a variety of economic storms. They will be up to date on the latest tax law changes, know what deductions and credits will help your business the most, and add a layer of protection between your company and the IRS.

·      Understand whether you need to hire an internal accountant or an external consultant. Smaller businesses may only need the expertise of a qualified CPA at tax time, but larger, more complex companies could benefit from having an inside source on the staff.

·      Do your homework. If you aren't sure where to begin your search, you can check with the American Institute of Certified Public Accountants (AICPA). The organization's directory allows you to check a potential CPA's credentials and search for candidates with specialized certifications.

Tax Move #2: Always Do the Extra Credit Work

During disasters, crises, and times of economic hardship, the U.S. government and the Small Business Administration often step in to protect business owners and minimize interruptions to regular commerce. It can be difficult to stay on top of frequently evolving tax law, but the payoff can be huge. Sit down with your CPA and discuss which special tax credits will benefit your business. This year, Congress has passed numerous tax credits that could help entrepreneurs get back to business as usual. If you’re already planning for your 2020 filing, consider these potential credits:

·      Family and Sick Leave Credit: If your business has fewer than 500 employees, you’re eligible for this benefit, which helps to offset the costs employers incur in granting sick leave to employees impacted by the virus.

·      The Employee Retention Tax Credit: The ERTC rewards businesses for keeping people in the workforce during the economic downturn and enables employers to receive a 50 percent tax credit on wages up to $10,000 per employee.

·      Employer Payroll Tax Deferral: The government is extending the deferment period for payroll taxes, now allowing 50 percent to be paid by the end of 2021 and the remainder by the end of 2022.

Tax Move #3: Don’t Cut Your Losses; Use Them

If your business is suffering a loss right now, you’re not alone. However, changes to current tax legislation may mean you can leverage more of those losses to maximize your benefit. While current tax law already allows businesses to claim Net Operating Losses (NOLs) to offset taxable income in future years, the CARES Act has relaxed some of those restrictions. Here’s what you need to know when claiming your NOLs:

·      Business owners with losses from 2018 to present can now claim 100 percent of losses. Previously, only 80 percent of losses could be used to offset taxable income and only in future tax years.

·      Rather than leverage losses in future years, business owners can now carry them back as far as five years.

·      This change is important for business owners struggling to maintain cash flow and liquidity.

·      If you choose to carry NOLs forward, you can do so with losses from 2018–2020 for up to 20 years, but these will be subject to the 80 percent limit.

Tax Move #4: Deduct Your Debt

If you aren’t already claiming your business interest payments as a tax deduction, you’re missing a big opportunity. And now, if you’re planning for next tax season, there’s an even greater impetus to track and report your interest payments. Previously, business owners could deduct business interest up to 30 percent of adjusted taxable income. Here’s what you need to know about maximizing your deduction:

·      Recent changes contained in the CARES Act allows business owners to deduct 50 percent of debt interest, rather than 30 percent.

·      Qualifying debts include business loans, business credit cards and lines of credit, vehicle purchases, mortgages, etc.

·      The business owner must be the legal loan holder and may need to show proof of repayment.

·      You must have evidence that your funds are used as intended to deduct interest payments.

·      Any prepaid interest is not deductible at one time; it must be scaled for the life of the loan.

A word of warning: The changes and benefits resulting from the CARES Act may seem like a lifesaver, and for some businesses, they may be. However, it's wise to exercise caution and use only the benefits that will positively impact your business without negative future repercussions. For example, the CARES Act makes it easier to borrow against retirement savings, but it is not advised to start pillaging your 401(k)s and IRAs unless it's a last-resort scenario.

The tax landscape is always shifting, and in light of the current economic climate, it’s evolving at a dizzying speed. It’s more important than ever that small business owners have the support and expertise they need to take advantage of tax benefits that may sustain them through economic hardship and an unstable market. Using the tax moves outlined above can give you a starting point for getting your taxes in order this year and in the years ahead.

The Truth About IRS Debt Forgiveness

Tax time is an important time for many to collect documents and review expenses. If you end up owing money and you feel it is more than you can afford, there are options available to find a resolution and protect yourself without outside agencies. 

IRS Debt Forgiveness

Debt forgiveness is the Internal Revenue Service method of offering options to taxpayers who owe money but are unable to pay, or unable to pay all at once. Some of these options drastically reduce the amount of debt owed while others offer payment arrangement options to meet your needs but still fulfill your tax obligations and settle a debt. To best benefit from any of these options, it is best to work directly with the IRS rather than going through other agencies to protect your information, safeguard your identity, and avoid possible scams. 

What Is Debt Forgiveness Used for? 

The IRS debt forgiveness and debt relief options are intended to assist taxpayers during times of hardship to settle debts and resume their status as eligible taxpayers. The options seek to find a comfortable and manageable way for taxpayers to complete payments and maintain a quality life. 

Who Qualifies for Debt Forgiveness? 

To qualify for debt forgiveness, you need to be in good standing with the IRS and be willing to provide any requested documentation. The nearest form to debt forgiveness is called an "Offer in Compromise." An offer in compromise allows you to settle your obligation for pennies on the dollar and accruing any penalty fees. An important key to focus on is to quickly act before payments are due or fees begin to collect. There is a calculation tool available through the IRS website to help you determine your eligibility as well as a detailed booklet released by the IRS. 

This option, often the most desired, allows you to work with the IRS to settle your debt for less than you owe. You can do this by negotiating based on your ability to pay, by challenging the amount of actual debt, or by proving that paying the owed debt would place you in financial hardship in the future. 

Alternatives to Debt Forgiveness

IRS Forgiveness offered through tax agencies sound enticing, but full forgiveness and dissolving of your debt obligations is often not a reality. The IRS offers options to help you meet your obligations and maintain good standing while maintaining your quality of life and caring for your family and needs. Additionally, there are certain conditions that qualify you for assistance. If you are unemployed or underemployed, you can request to be listed under a specific status designated as "uncollectible." 

This delays any collection efforts and accrued interest as well as provides relief in the form of a type of freeze on your account. Other programs offer assistance to those filing for bankruptcy or starting the process. 

It is important to consider all your options when seeking to settle a debt owed and when trying to find a resolution in order to protect you and your family from potential fraud. Many who have worked with the IRS to find resolution find the process much friendlier than anticipated, and are able to harmoniously find a solution.