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Great quick info for LLC Owners or Prospective

Posted on 24 February, 2016 at 10:14 Comments comments (0)
How to Choose a Tax 
Structure for Your LLC

In the vast business landscape, a limited liability company (LLC) offers lots of options and flexibility. An important decision LLC owners can make involves choosing how they want the IRS to treat their business entities from a tax standpoint.  In IRS lingo, this critical decision is known as the entity classification election. Due to the many tax rules and regulations put on small businesses by the IRS, it’s essential to weigh your ECE options and learn how the specific tax structure of an LLC can significantly impact its financial standing from an accounting perspective.

Tax Structures of an LLC:

LLCs can be categorized under several different structures in terms of taxes. These structures include S corporation status, C corporation status, sole proprietorship status and partnership status. Choosing the appropriate tax structure for your business is based on several factors, such as the number of business owners involved and where the business is registered. The election can be made when a business owner files Form 8832: Entity Classification Election with the IRS.

S Corporation Election: If you opt to have your LLC taxed using S corporation status, your business will not be taxed at the corporate level. Instead, all shareholders invested in the company split all business-related taxes on their personal income tax returns. But there is a corporate tax return (Form 1120S) that must be filed to report business activities, even though taxes are not levied at the corporate level.

C Corporation Election: Unlike LLCs arranged as S corps, those that are structured as a C corp are taxed at the corporate level as a separate business entity. This means there is a separate business income tax return (Form 1120) to be filed with the IRS. Business activities do not pass through to an owner’s personal tax obligations.

Default Structures; The default tax structure of an LLC is a sole proprietorship for one owner (single-member LLC) and a partnership for multiple owners (multi-member LLC). In such cases, LLC taxes are passed directly through to their owners’ personal income tax returns. This is similar to the S corporation structure of an LLC.  Keep in mind that the default LLC tax structure often results in higher tax rates and fewer deductions, so opting for a corporate tax structure is highly recommended.

When to make your entity classification election …There is a time frame on when the entity classification election must be made after officially opening the doors to an LLC. If you do not elect a tax structure within the first 75 days of launching an LLC, your company’s tax structure will default to either sole proprietorship or partnership status. However, don’t forget that you can make this election starting Jan. 1 of each year, through March 15.Overall, the entity classification election for an LLC is imperative to putting such a business on the right tax track — and for the best chance at future prosperity and sustainability.

Do an End-of-Year Planning Refresh

Posted on 3 November, 2013 at 10:31 Comments comments (2)
Do an End-of-Year Planning Refresh
by Tim Berry, Guest Blogger
  • Created: October 29, 2013, 1:13 pm
  • Updated: October 29, 2013, 1:31 pm
It’s that time of year: changing colors, chill air, thoughts of holidays coming, the shock of another year ending. Does your business slow down during December, like my business planning software business always does, and so many other do? If so, then this becomes a good time for a planning refresh.
My business has always had slowdowns in the end of November and December. We recognized the pattern years ago and started to work with it. December became our time for pulling away from the business, looking out at the horizon, talking to customers and potential customers, evaluating potential new products, checking in with major clients, and so forth. We called it a planning refresh.Here are some important elements of a good planning refresh:
.  First, your long-term goals: Review your definition of success. That could be fame and fortune, or maybe just independence and peace of mind, or time for other things. Has it changed? Are you making progress? Have you forgotten where you’re trying to go?
2.  Second, your SWOT: Review strengths, weaknesses, opportunities and threats. Have they changed in the last year? Does your strategy reflect your SWOT? Is it time to revise strategy, or stick to the same thing?
3.  Third, your target market: Are you still focused well and on the right potential buyers? Have market developments changed the strategic value of one segment over another? Does your market focus match the opportunities and your business offering?This is an especially good time to refresh your sense of the customers. How often do you talk to them? Are you in touch with what customers are thinking and saying about your business? Has it changed? One of the best things you can do is talk to a few random customers, in depth, provided of course that you can find customers to talk to you. Market knowledge is critical to business success, and it’s too easy to get lost in the routine and not realize that the situation has changed. 
4.  Fourth, review your competition. Think broadly about competition, looking not just for the competition you know, but also for new competition that you don’t realize is out there. Maybe customers are discovering new ways to solve the problems and fill the need that your business offering is supposed to – and you haven’t realized it. 
Just as an example, competition for business plan software includes courses, classes, books, magazine articles, television shows and consultants – not just other business plan software.When it’s about autumn leaves, snow, spring blossoms, or summer heat, we call it the change of seasons. When it’s business, we call it seasonality. The two are not too different from each other. Both can be used as automatic reminders of change and cycles.

About the AuthorFounder and Chairman of Palo Alto Software and bplans.com, on twitter as Timberry, doing social media business planning atsmbplans.com, and blogging at timberry.bplans.com. Stanford MBA. Married 42 years, father of 5. Author of business plan software Business Plan Pro and www.liveplan.com and books including The Plan As You Go Business Plan, published by Entrepreneur Press, 2008.

Term of the Day

Posted on 26 July, 2013 at 12:38 Comments comments (0)
Term of the Day
Pre-tax net sales minus cost of salesAlso called gross profit.

Usage Example



Tax Tips if You’re Starting a Business

Posted on 5 July, 2013 at 11:26 Comments comments (7)
Tax Tips if You’re Starting a Business
If you plan to start a new business, or you’ve just opened your doors, it is important for you to know your federal tax responsibilities. Here are five basic tips from the IRS that can help you get started. 
1. Type of Business.  Early on, you will need to decide the type of business you are going to establish. The most common types are sole proprietorship, partnership, corporation, S corporation and Limited Liability Company. Each type reports its business activity on a different federal tax form.
2. Types of Taxes.  The type of business you run usually determines the type of taxes you pay. The four general types of business taxes are income tax, self-employment tax, employment tax and excise tax.
3. Employer Identification Number.  A business often needs to get a federal EIN for tax purposes. Check IRS.gov to find out whether you need this number. If you do, you can apply for an EIN online.
4. Recordkeeping.  Keeping good records will help you when it’s time to file your business tax forms at the end of the year. They help track deductible expenses and support all the items you report on your tax return. Good records will also help you monitor your business’ progress and prepare your financial statements. You may choose any recordkeeping system that clearly shows your income and expenses.
5. Accounting Method.  Each taxpayer must also use a consistent accounting method, which is a set of rules that determine when to report income and expenses. The most common are the cash method and accrual method. Under the cash method, you normally report income in the year you receive it and deduct expenses in the year you pay them. Under the accrual method, you generally report income in the year you earn it and deduct expenses in the year you incur them. This is true even if you receive the income or pay the expenses in a future year.

Contact me for Webinar information

Posted on 18 June, 2013 at 10:41 Comments comments (2)
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2013

Posted on 25 January, 2013 at 14:01 Comments comments (11)
The IRS will begin processing most individual income tax returns on Jan. 30 after updating forms and completing programming and testing of its processing systems. The IRS anticipated many of the tax law changes made by Congress under the American Taxpayer Relief Act (ATRA), but the final law requires some changes before the IRS can begin accepting tax returns.The IRS will not process paper or electronic tax returns before the Jan. 30 opening date, so there is no advantage to filing on paper before then. Using e-file is the best way to file an accurate tax return, and using e-file with direct deposit is the fastest way to get a refund.Many major software providers are accepting tax returns in advance of the Jan. 30 processing date. These software providers will hold onto the returns and then electronically submit them after the IRS systems open. If you use commercial software, check with your provider for specific instructions about when they will accept your return. Software companies and tax professionals send returns to the IRS, but the timing of the refunds is determined by IRS processing, which starts Jan. 30.After the IRS starts processing returns, it expects to process refunds within the usual time frames. Last year, the IRS issued more than nine out of 10 refunds to taxpayers in less than 21 days, and it expects the same results in 2013. Even though the IRS issues most refunds in less than 21 days, some tax returns will require additional review and take longer. To help protect against refund fraud, the IRS has put in place stronger security filters this filing season.
Hypnotherapy coming soon!!!!!!!