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Business Tax

Freyman CPA on Pitfalls of Sales Tax and Use Tax

Have you had any of these thoughts about your business’ sales tax or use tax obligations:

“I’m a service provider; I don’t need to collect and remit sales tax.”

“We were only in the state at a trade show for one week – we don’t have physical presence in the state, so we don’t have to collect sales tax.”

“I bought equipment for my company in another state, since they don’t have sales tax. I saved 6% by doing this!”

Sales and use taxes are a murky area with few clear-cut rules. As a result, you or your business may not be in compliance with states’ sales and use tax regulations.

Sales tax is a tax that is levied on the sale of goods or services. Unfortunately, states have differing definitions of what is included as a taxable good or service. A general rule of thumb is that the sale of tangible personal property (that is, physical assets that are movable) is taxable. The provision of services is generally not subject to sales tax unless a state has a regulation or law that specifically subjects the service to sales tax.

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Tax Scams – What to Look Out For

As a reminder during this tax season as well as throughout the year, it is important to keep in mind that the IRS will not contact you by phone or e-mail regarding tax liens or outstanding tax liabilities.  The IRS has strict protocols when contacting taxpayers regarding tax deficiencies, with letters of correspondence being their official method of first contact.

Phone key pad

How to identify a tax scam:

  • Demands immediate payment; extreme urgency to receive payments
  • Tries to make you pay taxes without giving you the option to research the debt or file an appeal for the amount you allegedly owe
  • Asks for payment using a credit or debit card especially over the phone
  • Threatens to arrest you for not paying

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29 / 01 / 2016 by Greg Freyman, CPA in Business Tax

Schedule C Hot Topics

With tax season upon us, we have compiled a list of hot topics the IRS has been known to closely examine with the filing of a Schedule C – Profit or Loss from Business.

The IRS’s primary concerns revolves around the reliability/duplication of information provided on the Schedule C as well as the methods used for recordkeeping and presentation in the following areas:

 

Gross Receipts

An increase in income within the business should be considered taxable.

If the payment of income would not have been received without the existence of the business, the income should be considered business income.  This includes IOUs, cash, etc. So remember, if the payment crosses the door of your business, that payment of income should be considered part of your business income.

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16 / 12 / 2015 by Greg Freyman, CPA in Business Tax

Should Our Farm Be On An Accrual Or Cash Basis Of Accounting?

Question
Our company owns a farm. According to IRS publication 225 most farmers use the cash basis of accounting since it is easier, but some farmers are required to use the accrual basis of accounting. Should our farm be on an accrual or cash basis? What should we use for our farm if we have an unincorporated business? Also, is the inventory method required?

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03 / 12 / 2015 by Greg Freyman, CPA in Business Tax

Does Our Company Need To Issue ACA Forms 1094 & 1095?

Question
Our companies employs 22 full time employees. Do we have to issue the new ACA Forms 1094 and 1095 to employees and the IRS under the affordable care act (ACA). I believe we are exempt, but I wanted to confirm if our company needs to issue these ACA forms.

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27 / 10 / 2015 by Greg Freyman, CPA in Business Tax

Do You Qualify For The Small Business Health Insurance Credit?

While the cost of health insurance continues to rise and employers have additional responsibilities in order to comply with the Affordable Care Act, there is still a tax benefit specifically for companies providing health insurance coverage. Specifically, employers may be eligible for the health insurance tax credit in 2015 for 50% of the cost of premiums contributed by a small business.

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21 / 10 / 2015 by Greg Freyman, CPA in Business Tax

Planning For The Section 179 And Bonus Depreciation 2015 Limits

In July 2015, the Senate Finance Committee voted 23 to 3 to extend bonus depreciation and the enhanced section 179 deduction through 2016. The full Senate has not indicated if or when it will act on this legislation and the House is not scheduled to take up extenders until the fall. Most practitioners expect it to be reinstated, but time will tell. How should you prepare?

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02 / 10 / 2015 by Greg Freyman, CPA in Business Tax

Are Condo Common Area Expenses Deductible?

A condominium is different from a house in many respects. For instance, condos typically do not have a yard or basement. Instead, condo owners share land, lobbies, elevators, stairs, pools, and other service areas. As such, owners generally pay dues or assessments to a special corporation that is organized to manage the common areas.

 

Are condo common area expenses deductible?

The short answer is that common area expenses are not deductible if the condo is being used as personal property. However, if the condominium association makes a capital improvement to the property, the owners can add their pro-rata share of the expense to their cost basis. It is important to save the supporting documentation detailing the nature of the improvement since it will be incorporated in your capital gains tax calculation when you eventually sell the condo.

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01 / 10 / 2015 by Greg Freyman, CPA in Business Tax

Determining The Weight For Depreciating A Van Or Truck

Question:
I’m not sure about the weight issue for depreciating a van or truck. Does the 6,000 pounds of “gross vehicle weight” mean loaded or unloaded weight for trucks and vans? Is that the same as GVWR (gross vehicle weight rating)?

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25 / 08 / 2015 by Greg Freyman, CPA in Business Tax

Estimated Corporate Taxes Are Due Soon!

Estimated corporate taxes for the 3rd payment of the 2015 tax year are due on September 15th.  This also applies at the state and local level. These taxes must be paid by the due date to avoid interest & penalties. Below are the specific details.

Requirement: Deposit the third installment of your estimated corporate income taxes to avoid interest, penalties & a big tax bill at the end of the year.

Who Must Pay: Corporations must generally make quarterly estimated tax payments if it expects the estimated tax for the year to be $500 or more for the tax year.

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