Businesses must prepare themselves for the annual tax season, and this means being aware of the constant changes which are occurring regarding taxation. Keeping abreast of these developments will keep your taxes lower and less onerous. Always consult your Certified Public Accountant, if you have any concerns about your taxation matters.
New Things To Expect This Year
Some of the things that you will want to pay attention to this year include health reimbursement arrangements, research credits and work opportunity credits. For the health reimbursement arrangement employers who are not applicable (with 50 or more full time employees) who chose to reimburse your employees for individual health coverage, you don’t have to worry about penalties.
For research credits, startup companies which participate in research and development but which have not received any profits can save money on taxes. This credit for research can be utilized to offset the taxes employers have to pay for Social Security, for a maximum of $250,000.
In regards to work opportunity credits, as an employer, if you have hired someone in 2016 who was out of work for a minimum of twenty-six weeks and receiving government benefits, you might be able to receive a tax credit for their first year of wages.
Maintain Accurate Records To Maximize Deductions
It is important for business owners to make sure their records regarding expenses and income are frequently updated and a reflection of all their business activities. Transactions should be entered and credit card and bank statements should be reconciled. No tax returns can be properly submitted until this has been done. Receipts and invoices are also essential as they will help you complete your return.
Expenses which are related to entertainment, business gifts or travel will not be subject to deductions unless you have required substantiation. It is recommended for employers to generate a tax file which highlights expense accounts, charitable donations or receipts that can allow you to monitor your expenditures over the course of the year.
Don’t Forget Tax Elections
Some expenses offer you choices in how you want to perform write-offs. For instance, regarding equipment purchases you might be eligible to expense the cost to as much as $500,000 and claim a depreciation of 50 percent. Those who operate a home based business may be able to deduct certain expenses for the home regarding business space for as much as $3 per square foot, up to 500 square feet.
Vehicle usage is another important aspect of tax elections. There is a cost involved with driving a vehicle, and if it is done for your business you may be eligible for a deduction by using the costs you pay out of pocket or the IRS standard mileage rate.
When attempting to use these elections, it is critical to select the guidance of a tax professional first. It is also important to make sure you’ve filed the information returns as required. For example, if your business used independent contractors, you will have to file the Form 1099-MISC. If you have a health reimbursement arrangement, you would need to issue the 1095-B Form.