Tax season is one of the most nerve-wracking times of the year. From putting together all of the necessary tax documents to finding the right accountant, taxes can be time-consuming, frustrating, and a major challenge. Add in a home-based business and taxes can be downright overwhelming. However, there are some things you can do to make your tax season a breeze.

Choose your accountant wisely

One of the most important decisions you’ll make as a business owner is who you will choose to help you with your bookkeeping and accounting needs. Research accountants in your area and look for one that specializes in small business taxes. Ask if they will prepare both corporate and personal returns if needed. Make sure your accountant is clear on how they charge for their time – especially for questions over the phone.

I once worked with accountants who worked with large corporations. They were used to having very little contact with their clients, however with a new corporation I had many questions about how things worked. Needless to say it didn’t go well. Our current accountant specializes in small businesses and is available by phone or email if I have a question.

Set up your business accounts properly

I was told early in my business career that I must make sure to keep my business accounts and personal accounts separate. When I first began running my own business I simply added a second checking account to use for business purposes. There was no cost to do so I was able to set my income aside in this separate account.

I also set up a savings account to set aside my taxes each month. This was a big help at the end of the year knowing that all of my taxes were set aside and I could relax instead of scrambling to come up with the money.

Keep good records

Another way to keep tax season stress-free is to keep business receipts throughout the year. I keep a separate file in the filing cabinet next to my desk just for this purpose. This way I have everything in one place when tax season arrives. If you don’t have room for a filing cabinet, consider an expandable folder categorized A – Z. That way you can still divide up the taxes by topic, and won’t have to do that come tax season.

Keep records of your business expenses throughout the year. Request a list of items from your accountant or tax professional, so that you will know what items to track. Be sure to ask what counts as “business expenses.” There are certain deductions that you can take for your home, car, and utilities. Consult your tax professional about these deductions.

Know Your Tax Facts

It’s important to know the date that your taxes are due. Many S corporations are surprised when they discover that some of their tax forms need to be filed by March 15th and not April 15th. Another surprise to some home-based businesses is that if you pay subcontractors over $600.00 a year, you need to send them a 1099 by the end of January.

There are many places online to find more information about taxes. One great place to find more information is the Internal Revenue Service (IRS) website at www.irs.gov. They have sections with helpful information on both personal and business taxes. They also list contact information for local IRS offices where you can also find help.

Don’t ignore the taxes involved with running a home-based business and hope it will all work itself out. It takes planning and effort to be prepared for tax season. Do your homework when it comes to taxes and find an accountant that you trust to guide you through the tax maze. With the right preparation and help your tax season can be stress-free.

Jill Hart
http://www.articlesbase.com/home-business-articles/tax-tips-for-the-homebased-business-owner-114280.html

Trying to get a handle on the complex world of small business taxes? There are plenty of good resources available, both online and offline, for free and not-so-free.

I’m assuming you want to postpone spending any money on a topic you may prefer not to touch with a ten-foot pole let alone a ten-dollar bill. So let’s review some of the least expensive tax resources available. Is free a good price for you?

Believe it or not, the IRS has a plethora of free resources for the business owner. The place to start is the Small Business and Self-Employed Tax Center at www.irs.gov/businesses/small/index.html.

Now before you go there and start clicking away until your head spins, let me give you a heads up on how to best navigate the IRS web page. First, you need to know what type of business entity you own: sole proprietorship, S corporation, C corporation, limited liability company or partnership.

Once you have that basic piece of information in mind, click on the link “A-Z Index for Business” and you’ll be taken to a page that is organized by the various types of business entities listed above. Under the heading “Business Types”, click on your particular business type and you’ll be taken to a page that provides just about everything you need to know about taxes for that entity.

For example, let’s assume you are a sole proprietor. So you click on the Sole Proprietor link and you’ll be taken to a page that contains a chart for all the major income tax forms you’ll need, organized according to the type of tax. For income tax, there are links for forms Form 1040 and Schedule C. For Self-Employment Tax, there’s a link to Schedule SE. If you have employees, there are links to the various employment-related tax forms (Forms 941, 940, W-2, etc). This is a very handy chart because it gives you the big picture for all the main types of business taxes and their associated tax forms.

Below this chart is the heading “References/Related Topics”. Under this heading is a clickable list of several excellent resources that you can view online or download as free PDF files. Two of the best IRS small business publications are listed here: Publication 334: The Tax Guide for Small Business (for Individuals Who Use Schedule C) and Publication 583: Starting a Business and Keeping Records. Pub 334 is 53 pages and Pub 583 is 27 pages, so you’ll get plenty of information at a bargain-basement price.

After checking out the resources applicable to your particular entity, you can return to the Small Business and Self-Employed Tax Center and find dozens of other useful articles, updates and publications. Be sure to check out the Online Learning and Educational Products link. Here you’ll find both audio and video presentations by IRS staff on a number of small business tax topics.

Take advantage of these free tools and benefit from your tax dollars at work. For the small business owner who prefers not to spend a dime on tax advice, the IRS website is a great place to start.

Wayne M Davies
http://www.articlesbase.com/business-articles/small-business-tax-tips-where-to-find-free-tax-information-707103.html

That’s right, you can take advantage of the IRS tax code and save a lot of money that you’d otherwise send to Uncle Sam by doing what you love.

The secret is to simply set yourself up as a small business and take tax deductions for related expenses! This is very easy and inexpensive to do. You can then turn many personal expenses into business one that you can deduct!

It doesn’t matter if you are retired (in fact this is a perfect time) or just getting started in life. You can start doing a business in virtually any niche or subject that you love or have a passion about.

For example, if you are passionate about photography, there are multiple ways to offer a product or service to others for a fee, commission or whatever. I have a retired client that loves to travel to Italy. In fact they are on their way there as I write this for an extended trip.

Wouldn’t it be nice if the IRS would make virtually all of their travel expenses deductible?

There are multiple ways they could accomplish this in return for a little effort. They could write a travel guide to the particular region they will be staying in with reviews on restaurants, museums, stores, things that are a “must” see or do and other things that are worth skipping and why.

It could be just published as a $19.95 e-book. Don’t want to write anything? What about organizing a trip for others with you as their “guide”. Simply organize a trip with friends from church, old schoolmates, etc.

You can either become a travel agent or work with one to put together a trip making a profit on the
difference between the costs the airlines and hotel charge and the “package” that you offer it for.

If you love horses, you might be able to offer rides for a fee at birthday parties or church events.

I could go on and on with potential ideas of taking something that you love to do and making it into a business to enable you to save thousands of dollars on your taxes. But let’s discuss how this works in general terms of taking your “expenses” and deducting them from your tax return.

But first you have to set up your business. Yes, you can incorporate (or set up an LLC) and I would highly encourage you to do so.

In some states you have to go to the court house and fill out a form known as a “DBA”. That’s for “Doing Business As”. So you could say… Jane Doe (your name) doing business as Tax Saver and Associates.

Your business does NOT have to make a profit in order to legally take those deductions…. but it does need to have a “profit motive”! Under the IRS rules, a profit motive is presumed if you earn ANY net income during any 3 out of 5 tax years.

In fact, your business need NEVER actually be profitable to keep your business deductions going as long as you can keep proving a profit motive. Did you know that Amazon.com has yet to show a profit after all these years and billions of dollars in sales? But nobody could successfully argue that they don’t have a profit objective.

There are a number of tests or standards that would indicate that there is the goal to be profitable which nclude the manner in which you conduct your business, the effort and time that you can prove that your devout to uour business, your expertise in that field. Do you have business cards and letterhead? Are you keeping accurate records, have an outline of a business plan written down?

Then, you will be able to deduct most or all of your expenses directly related to your business or “hobby for profit”. If you have a home office, you’ll have a number of other partial potential tax deductions such as: office furniture and equipment, deprecation, homeowner’s insurance, utilities and more.

Like to travel? How would you like for the IRS to help you pay for some or all of your travel expenses? On ANY type of business or niche there are many conventions, conferences, functions or similar businesses that you can meet and learn from — all over the WORLD – that you can go to.

On any given day there are literally hundreds of seminars and such on going on. If you are a little bit creative, you can “justify” why your business made the decision to invest the money to attend to learn and network with others in your field.

If you follow the IRS rules, you can deduct all or much of your travel expenses to get there, your hotel, your food, cab fare and so on. Where and when do you want to go? Just look for something going on that might make sense for your business and let the IRS help you pay for it!

Start a business and slash your taxes today!!

Mark J. Orr, CFP
http://www.articlesbase.com/business-articles/slash-income-taxes-by-doing-what-you-love-127850.html

In order to stimulate the green sector of the economy and get companies started when that sector of the economy was at it’s worst incentives helped to keep companies in it in business and at best help the country come closer and closer to environmental sustainibility for all the resources we use.

Here are two situations where the answer is “yes”: (1) The green products produce positive externalities that are not factored into either the production or purchasing decisions. If, for example, a greener production process lessens water pollution, then an incentive equal to the value of those externalities could be given. Similarly, on the consumer side, if use of the good produces positive externalities that are not captured by the user, then the price of the good can be subsidized (or a tax break given). Tax breaks are given in some states (e.g., Oregon) for energy efficient appliances. (2) If non-green companies or products generate negative externalities but no tax or disincentive is levied, then you could either tax those firms, or give incentives to the green firms. This is an attempt to get the “mix” of green/non-green industries correct. In the absence of either (1) or (2), giving incentives can lead to inefficient resource uses. It IS possible to “overdo a good thing”. Some believe, for example, that the incentives given for ethanol production will eventually be shown to have led to some major inefficiencies and a worsening of “environmental sustainability”.

The Pella Corp. reports that sales are beginning to rise as a result of the energy efficient windows tax credit currently available to consumers who upgrade to super efficient windows.

A spokeswoman for the company, Kathy Harkema, said that despite layoff of 37 workers earlier in the fall, the company is nearly at full production.  The company employs 8,600 throughout the country and is Iowa-based. It is one of the major green businesses that manufacture energy efficient windows in the United States.

One element of the recession has actually helped Pella Corp.: fewer people are moving and more are getting to home improvement jobs in their current homes.  Naturally, homeowners want to install the most energy efficient windows and doors because of the long-term savings in energy and dollars expected from this improvement, and the government is currently offering incentives to help make that possible.

The energy efficient windows tax credit that was expanded in the 2009 Stimulus Package offers a reason for home owners to get to the “to do” job jar now. Windows and doors installed and “placed in service” between January 1, 2009 and December 31, 2010 are eligible if they are certified energy efficient. The credit is only for renovation of primary residences and does not apply for second homes or for new homes.  The credit covers 30% of the costs up to $1500. 

Green Research Council

Every business should become familiar with the resources in the DSIRE database, and particularly the information included on the pages for programs in the business’s state.  As an example, here’s the data in the DSIRE database Iowa page applicable to green businesses in Iowa.

There are two separate Production Tax Credit programs initiated in 2005 and available to companies that generate and sell power through eligible wind energy generators and other renewable energy facilities, including biomass and solar.  To qualify for the credit, a wind energy facility must be approved as eligible by the IUB. There are no specific ownership criteria for individual projects; however, facility owners may not own more than two eligible facilities, and must have an executed power purchase agreement or interconnection agreement except when the electricity is used for on-site consumption.  The DSIRE page gives the contact information with the Iowa Utilities Board for more information.

Iowa also offers an excise tax exemption for Commercial, Industrial, Residential generators of energy through methane digesters and wind, and there is a reduced rate for large hydro power generators.

The state allows Commercial, Industrial, Agricultural and Residential properties to be assessed at a lower rate for local property taxes when wind power is self-generated. This statute allows any city or county to pass an ordinance assessing wind energy conversion equipment at a special valuation for property tax purposes, beginning at 0% of the net acquisition cost in the first assessment year and increasing annually by five percentage points to a maximum of 30% of the net acquisition cost in the 7th and succeeding years.

There is also a local property tax exemption for facilities that produce methane gas for energy use through a landfill, anaerobic digestion or biomass.  For non-public facilities the exemption applies between for facilities that are not located at publicly-owned sanitary landfills, the exemption may only be claimed if the facility is placed in service between January 1, 2008 and December 31, 2012.

For Passive Solar Space Heat, Solar Water Heat, Solar Space Heat, Solar Thermal Electric, Photovoltaics, Wind created for use of facilities in Commercial, Industrial, Residential, Agricultural sectors there is also an Iowa property tax exemption available for the first five years of use, according to the Iowa page in the DSIRE database.

Businesses and residential users also receive a break in sales tax when they purchase wind generation equipment. This type of equipment is exempt from sales tax.

There is a long-standing alternative energy research grant program administered through the Iowa Energy Center at Iowa State University available commercial, industrial, nonprofit groups, transportation agencies, agricultural interests, or institutional organizations.  Areas of research must be related to Passive Solar Space Heat, Solar Water Heat, Solar Space Heat, Solar Thermal Electric, Photovoltaics, Landfill Gas, Wind, Biomass, Hydroelectric, Renewable Transportation Fuels, or Municipal Solid Waste. This grant program is not open to private individuals.

Iowa State University also administers the Alternative Energy Revolving Loan Program, which also provides capital with up to 50% of loans available at 0% interest up to $1,000,000. Non-rate regulated programs have some special restrictions on amount and how often they can apply for funds.  There is also a loan program for non-profits, state and local government agencies and institutions for the installation of the following types of technologies: Lighting, Lighting Controls/Sensors, Chillers, Furnaces, Boilers, Heat pumps, Air conditioners, Caulking/Weather-stripping, Building Insulation, Doors, Passive Solar Space Heat, Solar Water Heat, Solar Space Heat, Solar Thermal Electric, Photovoltaics, Wind, Biomass, Hydroelectric, Renewable Transportation Fuels, and Geothermal Heat Pumps.

The DSIRE database Iowa page also lists the specific utility rebate programs available to Iowa commercial enterprises. 

For Iowa green businesses the DSIRE database is the place to start in researching the green tax credits available through the state of Iowa, its cities and utilities.

Green Research Council

California State, local governments and utilities offer a number of green building incentives programs and energy incentives to commercial and industrial businesses. California has one of the most extensive energy programs in the country.  Several cities and counties have defined specific programs for builders and businesses that decide to build green.

In Marin County businesses that exceed Title 24 (California Building Energy Efficiency Standards) requirements by 20%, or install an on-site renewable energy system that produces a minimum of 75% of the annual energy use for the building can receive an energy fee waiver, fast-tracked permits, and free green building consulting. 

In San Bernardino County businesses and builders that commit to building green will receive fast-tracked plan review, priority inspections, design assistance, and recognition for all qualified projects. Green building incentives are available for approved programs include the LEED building system, California Green Builder standards or the San Bernardino County’s Green Building Basics Checklist.

Energy incentives and green building incentives are also available in San Diego County.  This county offers a Green Building Incentive Program designed to promote the use of green building materials, water conservation and energy efficiency in new or renovated commercial buildings. San Diego County will reduce building permit and plan check fees by 7.5% and grant accelerated plan checks.

Santa Monica has specific guidelines for businesses and residents for installing solar power.  They also encourage the construction of sustainable buildings by allowing priority plan checks for USGBC LEED building projects.

There are also a wide variety of other energy incentives open to California businesses including:

• Loan and rebate programs in several California communities;
• Production Tax Incentives for businesses that create their own renewable energy;
• Contracts with utilities for sale of excess self-generated renewable energy;
• Energy efficiency financing program;
• Utility loan and rebate programs for energy efficiency and green buildings.

Green building incentives and energy incentives help California businesses to mitigate the up front costs of building and renovating using green building practices.

Green Research Council

LIHTC, or the low-income housing tax credit is an indirect subsidy from the Federal Government that can be used to finance affordable rental housing for those with a low income. Local housing and community development programs can use these tax credits to increase the amount of affordable housing in their local community.

How It Works

The program is based on Section 42 of the IRS Code, and was first enacted in 1986 in order to give incentive for private markets to invest in affordable housing.  The credits are awarded to the developers for qualified projects, and then they are sold to investors in order to raise capital for the project. Since the debt load is shouldered by the developer in low income housing unit projects, they can afford to offer their units as a cheaper rental rate.

The investors then receive a dollar-for-dollar credit each year over the following ten years, which they can use to reduce their federal tax liability. The amount of the credit awarded depends on the amount that was originally invested in affordable housing projects.

Allocation of Tax Credits

Every year the IRS allocates the LIHTC to designated agencies in each state. These agencies then award the credits to qualified developers. The tax credit limit per state is $1.75 per resident, per year. Beginning in 2003 this amount is adjusted annually for inflation, and you can visit the U.S. Department of Housing and Urban Development website for more information on tax credits available by state.

Each state has two years to use their tax credits allocated annually, after which time the credits will be returned to the national pool to be re-allocated. The state agency will award tax credits based on a competitive process to find projects that serve the lowest income families and are structured to remain affordable for as long as possible. Ten percent of tax credits must be allocated to non-profit groups.

Determining Eligibility

Each proposed project must adhere to certain guidelines to be considered eligible:

1)      The project must be a residential rental property.

2)      It must commit to one of a possible two low-income occupancy requirements.

3)      The completed project must restrict rent and utility charges.

4)      The building must operate under rent and income restrictions for at least 30 years.

Low-income tax housing credits can be awarded to developers of existing buildings, as long as the building has not changed ownership in at least 10 years prior to acquisition and has not been in service for the same period of time.

Rent and utility costs on an eligible building must not exceed the applicable limits set by the LIHTC, and must remain within these limits for thirty years.

Green Research Council

The federal government offers solar incentives for green businesses when they convert to solar heat and air conditioning systems.  The specific program is called the Federal Solar Tax Credit. Whether your business has bought a new building or is simply considering a remodel of an existing facility it is worth considering a switch to solar energy and application for a Federal Solar Tax Credit.

Those who own or lease commercial buildings can also collect the Federal Solar Tax Credit by converting their business to solar energy, as long as the new system saves at least 50% of the building’s energy requirements. These new systems qualify for solar incentives of up to $1.80 per square foot.

Additionally, other improvements to the building which reduce its energy needs can be used to claim up to $0.60 per square foot tax credit. These improvements include changing to heating, cooling or insulation, such as replacing a furnace or putting in double-paned windows.

With the large value of solar incentives through the Federal Solar Tax Credit it is even more cost effective for businesses to convert to solar power and solar heating.  Solar power saves money in heating and cooling costs every month, and reduces the carbon footprint of the building for the benefit of the environment in general.

 Green Research Council

If your company is planning to make the change to renewable energy then it would be advantageous to look into the Production Tax Credit that is contained in the American Recovery and Reinvestment Act of 2009. The incentive offers tax credits of 2.1 cents per kWh for the first ten years when companies make the switch to energy systems that generate wind, solar, geothermal or closed-loop bio-energy.

Other technologies are also eligible for a tax credit of 1 cent per kWh for ten years, including open-loop biomass, incremental hydropower, irrigation, landfill gas and solid waste systems. Each of these types of energy systems has to be put into place by the end of 2013, except for wind energy systems which have to be implemented by the end of 2012.

For companies who are unsure of the production capacity of their new energy system it may be more advantageous to make use of the 30% installation tax credit instead. This tax credit is offered in lieu of the Production Tax Credit in order to entice businesses to convert to renewable energy sources.

There is also a grant system in place which is offered by the Treasury Department, which gives the owner back 30% of the value of the installed system for wind, biomass, geothermal and solar energy systems. Other systems can receive a grant of up to 10% of the system’s value. The grant is offered in places where a tax credit wouldn’t be utilized to its full potential, such as for businesses with low taxes.

It is hoped that by offering this range of incentives for renewable energy systems that there will be a two-fold benefit of increased reliance on renewable energy systems as well as an improvement in the health of the economy with increased capital spending. On four separate occasions the PTC was set to expire – in 1999, 2001, 2003 and 2005 so it is likely that at the end of this period there will be no more renewals unless a long-term policy is introduced.

Business owners across the United States should get started now on converting to a new energy system before they miss out on a big opportunity to save money. With the availability of the Production Tax Credit, 30% tax credit on new systems and the grant offered by the Treasury department it is more affordable than ever to switch to greener energy at the office.

Green Research Council