Tax Planning
Businesses are subject to various federal, state, and local taxes. Entrepreneurs should be familiar with tax laws and regulations and ensure that their business is in compliance. the LLC members report their share of the LLC's income on their personal tax returns and pay taxes based on their individual tax brackets. It's crucial to keep accurate and detailed records, maintain a business plan, and be able to demonstrate a genuine profit motive for your LLC. Consulting with a tax professional or accountant who is well-versed in tax laws and regulations will help ensure that you navigate these limitations correctly and comply with all applicable tax requirements.
Best Practices
- Have your due diligence completed by October
- Check-up on legislative updates by end of December to the 1st week of January
1042 s foreign entity
depreciable assets Depreciation is the allocation of the cost of a fixed asset over a specific period of time. Depreciation directly impacts your income statement and your balance sheet, and can indirectly impact your cash flow statement as well.
When your business purchases a big-ticket item such as a vehicle, a building, or equipment, you won’t be able to expense it immediately. Instead, you’ll want to depreciate the asset over its useful life.
Useful life: The amount of time that the asset is deemed to be of use in the business Cost: Includes all associated expenses such as sales tax and shipping and handling Salvage value: The value of the asset after the useful life has expired; can represent what you may be able to sell the asset for
1040 Computing Adjusted Gross Income (AGI)
gather income documents
- W2s (wages, salaries from employer)
- 1099s (freelancing work, consulting, commissions)
- Interest earned on bank accounts
- money from investments (capital gains)
PASS THRU INCOME
W-9
Collect W-9s Did you use ICs this year? If so, you’ll have to collect W-9 forms from them, which can be used as a paper trail to track your expenses for the IRS. Additionally, this is a way for the government to keep track of subcontractors and their income.
Form W-9 is a tax form used in the United States by individuals and businesses to provide their taxpayer identification number (TIN) to another party, typically a financial institution or an employer. The TIN can be a social security number (SSN) for individuals or employer identification number (EIN) for businesses.
The purpose of Form W-9 is to gather information necessary for tax reporting purposes. The party requesting the information, such as a bank or an employer, uses the details provided on the W-9 to generate various tax forms, such as Form 1099 for independent contractors or Form W-2 for employees.
The form itself requires the individual or business to provide their name, address, and TIN, along with a certification of the accuracy of the information provided. The completed W-9 form is not submitted to the Internal Revenue Service (IRS) but is kept for record-keeping purposes by the requesting party.
It's important to note that Form W-9 is not used for reporting income or tax liability. Its purpose is solely to provide the necessary information to the requesting party for tax reporting purposes.
1099
You’re required by law to fill out and send a 1099 form to every vendor you’ve spent $600 or more for services. In other words, payers need to provide a 1099 to non-employee recipients who are paid more than $600.
- non-compliance can result in fines, penalties, needing to withhold a percentage from vendor payments,
- collect W-9/W-8 when starting a new vendor relationship to ensure easy filing season
1099-NEC
1099-K for cryptocurrency transactions
$600 Threshhold going up to $5k
- For tax year 2024, the IRS plans for a threshold of $5,000 to phase in reporting requirements.
Pass-thru vs C-Corp?
Tax Claim
Form 6765
Form 3800 - General Business Credits
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if company is an S-Corp, the credit is distributed to shareholders pro rata
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taxpayers subject to AMT could not use the credit
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avg gross receipts for past 3 years is less than 50M
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"25/25" Rule new TMT = 25%(RTL - $25,000)
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identify all business components
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identify all research activities
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identify all individuals who did the research activity
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identify the information each individual sought to discover
Planning stage is to map out uncertainty
over 2 million taxpayers overpay every year by $1B
| Term | Definition |
|---|---|
| Gig Work | Gig work is certain activity you do to earn income, often through an app or website (digital platform), like: Sell goods online, Provide creative or professional services, Provide other temporary, on-demand or freelance work |
| examination | |
| Keogh Plan (Tax-deferred pension plans) | Keogh plans are tax-deferred pension plans—either defined-benefit or defined-contribution—used for retirement purposes by either self-employed individuals or unincorporated businesses |
| Taxable Income | You can receive income in the form of money, property, or services. This section discusses many kinds of income that are taxable or nontaxable. It includes discussions on employee wages and fringe benefits, and income from bartering, partnerships, S corporations, and royalties. |
| modified adjusted gross income (MAGI) | an individual's adjusted gross income (AGI) after taking into account certain allowable deductions and tax penalties. Important for qualifying for certain tax credits or deductions. |
| Marginal Tax Rate | a person's tax bracket based on progressive tax system |
| Itemized deductions | not schedule C, for personal tax return for people that have mortgage interest, property taxes, medical expenses, charitable contributions, etc. |
The Difference Between Marginal and Effective Tax Rates
The difference between marginal and effective tax rates is breaking your income into separately taxable chunks (for marginal) and calculating the average tax rate using all your taxes versus all your income (for effective).
In other words, you can zoom in on a specific portion of your income and see how it has a different tax rate than other parts according to the United States’ progressive tax system. Or, you can take your total taxes paid and compare them to your total taxable income to understand your effective tax rate.
Taxpayers who choose to itemize deductions may do so by filing Schedule A (Form 1040), Itemized Deductions. Itemized deductions that taxpayers may claim can include:
State and local income or sales taxes. Real estate and personal property taxes. Home mortgage interest. Personal casualty and theft losses from a federally declared disaster. Gifts to a qualified charity. Unreimbursed medical and dental expenses that exceed 7.5% of adjusted gross income.
Tax services
- Expatriate (non-resident) tax services
- IRS representation
- Personal tax
- Self-employed Schedule C tax
- Small business tax
- Tax advice
- Tax consulting services
- Tax preparation
- Tax services
- Tax setup
- Personal services
- Divorce accounting
- Estate & trust
- Personal financial planning
- Self employed and small business services
- 1099 filing
- Accounting
- Audits
- Bankruptcy
- Book cleanup
- Bookkeeping
- Business budgeting and forecasting
- Business plans
- Consulting
- Cost accounting
- Financial planning
- Financial reporting
- Financial services
- Forensic
- In-house CFO
- Inventory services
- IT consulting
- Payroll
- QuickBooks consulting
- QuickBooks Payroll
- QuickBooks setup
- QuickBooks training
- Startup consulting
- Sustainability audit
use proper bookkeeping for
- 1031 Exchange
- Augusta Rule
- Family Managed Companies
- S-Corp election
- Hiring children
- Business trip vacations
IP assignment of rights
sell from personal to the company for a discounted tax rate on this long term capital gain