Tax Savvy for Small Business

By Attorney Frederick W. Daily, Nolo Press

Venue:

Description:

The essential tax-strategy book for entrepreneurs who call themselves "boss."

Knowing the ins and outs of the tax code is vital to the health of every small business. Virtually every decision a business makes has tax consequences that can affect its bottom line -- and the IRS is always watching.

Tax Savvy for Small Business provides valuable strategies that will free up your time and money for what counts -- running your business, and running it effectively.

It explains how to:

• deduct current and capitalized expenses
• write off up to $105,000 of long-term assets each year
• compare the advantages of LLCs, corporations, sole proprietorships and more
• take advantage of fringe benefits
• keep records that will head off trouble with the IRS
• get tax breaks from business losses
• deal with payroll taxes
• negotiate payment plans for late taxes
• handle an audit
• get IRS penalties and interest reduced
• maximize retirement funds
• use retirement funds as a tax break

Completely updated, the 11th edition of Tax Savvy for Small Business provides the latest tax breaks, rules, forms and publications.

Table of Contents

I. Introduction

• A. Taxes for Small Businesses and the Self-Employed
• B. How Tax Law Is Made and Administered: The Short Course
• C. Sources of Tax Law
• D. Marginal Tax Rate and Tax Brackets
• E. The Alternative Minimum Tax (AMT)

Part 1: The Basics

1. Deductible Expenses

• A. What Is a Deductible Business Expense?
• B. Is It a Current or Future Year Expense?
• C. Top 25 Deductions for Businesses
• D. Vehicle Expenses
• E. How and Where to Claim Expense Deductions
• F. What Is-And Isn't-Income?

2. Writing Off Business Assets

• A. When Various Expenses May Be Deducted
• B. Section 179: Expensing Business Assets
• C. Depreciating Business Assets
• D. Tax Basis of Business Assets
• E. Leasing Instead of Buying Assets
• F. When You Dispose of Business Assets: Depreciation Recapture Tax
• G. Tax Errors in Depreciation

3. Bookkeeping and Accounting

• A. Why You Need a Bookkeeping System
• B. Should You Hire a Bookkeeper?
• C. Manual or Computer System?
• D. What Kinds of Records to Keep
• E. How Long Records Should Be Kept
• F. Bookkeeping Methods of Tracking Income and Expenses
• G. Timing Methods of Accounting: Cash and Accrual
• H. Accounting Periods: Calendar Year or Fiscal Year

4. Business Losses and Failures

• A. Unincorporated Business Losses
• B. Incorporated Business Losses

5. Tax Concerns of Employers

• A. Taxpayer Identification Numbers
• B. Payroll Taxes
• C. Classifying Workers: Employee or Independent Contractor?
• D. Misclassifying Employees as Independent Contractors
• E. IRS Filing and Payment Requirements for Employers
• F. Record Keeping for Service Providers

Part 2: The Structure of Your Business

6. Sole Proprietorships

• A. Business Expenses
• B. Profits Left in the Business
• C. How Sole Proprietors Report Taxes
• D. Estimated Tax Payments = Pay as You Go
• E. Employment Tax Rules
• F. Record Keeping
• G. Outgrowing a Sole Proprietorship
• H. Ending the Business
• I. Death and Taxes

7. C Corporations

• A. Types of Corporations
• B. How C Corporations Are Taxed
• C. Tax Benefits of C Corporations
• D. Incorporating Your Business
• E. The Importance of Issuing Section 1244 Stock
• F. Taking Money Out of a C Corporation
• G. Tax Pitfalls of C Corporations
• H. Dissolving a C Corporation

8. S Corporations

• A. An Overview of S Corporations
• B. Should You Choose S Corporation Status?
• C. Tax Reporting for S Corporations
• D. How S Corporation Shareholders Are Taxed on Income
• E. Social Security and Medicare Taxes
• F. Electing S Corporation Status
• G. Revoking S Corporation Status
• H. Dissolving an S Corporation

9. Partnerships

• A. Partnership Tax Status
• B. Tax Reporting by Partnerships
• C. Tax Obligations of Partners
• D. Partnership Losses
• E. Partnership Contributions
• F. Getting Money Out of a Partnership
• G. Partnership Expenses
• H. Selling or Transferring a Partnership Interest
• I. Ending a Partnership

10. Limited Liability Companies

• A. Taxes
• B. Comparing LLCs With Other Entities
• C. Forming and Operating a Limited Liability Company (LLC)
• D. Terminating a Limited Liability Company

11. Personal Service Corporations

• A. Personal Service Corporations
• B. Taxes
• C. Fringe Benefits
• D. Potential Tax Problems
• E. Transferring Shares
• F. Dissolving a Personal Service Corporation

Part 3: Thinking Small

12. Family Businesses

• A. The Legal Structure of a Family Business
• B. Income Splitting to Lower Taxes
• C. A Spouse in the Business
• D. Preserving a Family Business After Death

13. Micro businesses and Home-Based Businesses

• A. Business Expenses Incurred at Home
• B. Deducting Part of the Cost of Your Home
• C. Calculating Your Home Office Deduction
• D. Tax After Selling Your Home
• E. A Micro business as a Tax Shelter

Part 4: Fringe Benefits

14. Fringe Benefits

• A. How Fringe Benefits Save Taxes
• B. Retirement Benefits
• C. Motor Vehicles
• D. Meals
• E. Travel and Lodging
• F. Clubs and Athletic Facilities
• G. Association Dues and Subscriptions
• H. Health Benefits
• I. Day Care Benefit
• J. Education Benefits
• K. Gifts, Rewards, Discounts, and Free Services for Employees
• L. Adoption Assistance
• M. Special Benefits for C Corporation Employees Only

15. Retirement Plans

• A. Advantages of Retirement Plans
• B. Overview of Retirement Plan Types
• C. Details About Each Type of Retirement Plan
• D. Where to Go for a Retirement Plan
• E. Potential Tax Problems With Retirement Plans
• F. Withdrawing Money From Retirement Plans
• G. Closing Your Business

Part 5: Buying or Selling a Business

16. Buying a Business

• A. Buying the Assets of a Business
• B. Buying Shares of Stock
• C. Assigning a Price to Business Assets
• D. State and Local Transfer Taxes

17. Selling a Sole Proprietorship

• A. Selling Assets of a Sole Proprietorship
• B. The Importance of an Arms-Length Deal
• C. How to Protect Yourself From IRS Challenges

Part 6: Dealing With the IRS

18. When You Can't Pay Your Taxes

• A. If You Owe Less Than $25,000
• B. Getting More Time to Pay
• C. Paying in Installments
• D. What to Expect When the IRS Gets Serious
• E. Dealing With a Monster Tax Bill
• F. When the IRS Can Take Your Assets

19. Audits

• A. Who Gets Audited?
• B. How Long Do You Have to Worry About an Audit?
• C. How the IRS Audits Small Businesses
• D. The Auditor's Powers
• E. Should You Get Audit Help?
• F. Preparing for Your Audit
• G. What to Bring to an Audit
• H. Don't Rush a Field Audit
• I. What Auditors Look for When Examining a Business
• J. How to Behave at an Audit
• K. How to Negotiate With an Auditor
• L. Your Options After Getting an Audit Report
• M. When Your Audit Is Final

20. Appealing IRS Audits

• A. IRS Appeals
• B. Contesting an Audit in Court

21. Penalties and Interest

• A. Common Reasons for Penalties
• B. Interest on Tax Bills
• C. Understanding Penalty and Interest Notices
• D. How to Get Penalties Reduced or Eliminated
• E. How to Get Interest Charges Removed
• F. Designating Payments on Delinquent Tax Bills

22. Help Beyond the Book

• A. Finding Answers to Tax Questions
• B. Finding and Using a Tax Pro

23. Answers to 25 Frequently Asked Tax Questions

Glossary

Appendix

• Form 2553, Election by a Small Business Corporation
• Form 4506, Request for Copy of Tax Return
• Form 4797, Sales of Business Property
• Form 7018, Employer's Order Blank for Forms
• Form 8594, Asset Acquisition Statement
• Form 8821, Tax Information Authorization
• Form 8822, Change of Address
• Form SS-4, Application for Employer Identification Number
• Form W-4, Employee's Withholding Allowance Certificate
• Form W-9, Request for Taxpayer Identification Number and Certification
• Form 1040, Schedule SE, Self-Employment Tax

Index