Institute For Leadership

http://www.pioneercredit.com/newsletters/articles/archive/tax_changes_2011_0203_2011.asp

Each year there are a number of changes introduced that may affect your particular tax situation. Here are a few you should watch for.

We will first start with the Income Tax Rates for 2011. The rates are the same from last year, but inflation has caused the brackets to increase.

Those who use a Flexible Spending Account (FSAs) to help pay for their medical expenses may no longer use the pre-taxed funds to purchase over-the-counter (OTC) medicines anymore, without a prescription from a doctor. Note though that insulin may still be purchased with FSA funds over-the-counter. No more using left over FSA funds to stock up on aspirin or cold medicine.

Crutches, contact-lens, glasses, and pregnancy tests are just some of the items that are still included. Refer to IRS Publication 502 to see what is and isn’t allowed to be covered by law.

2010 included a temporary two-percentage-point cut in the employee’s share of Social Security taxes, saving a maximum of ,136 per worker. There is no phase-out, and each partner of a married couple can get the rebate. This is set to expire at the end of 2011.

For most workers, this cut will come as an automatic adjustment to withholding. For the self-employed (whose tax rate falls to 10.4% from 12.4%), it will be built into a quarterly withholding worksheet.

Even though the energy tax credit was recently extended, it has been minimized and may not affect you if you have previously taken the credit. The amount of the credit is now 0 per taxpayer per lifetime. So, if you have previously taken the credit (a maximum of ,500) than you will be ineligible to claim it again. This is set to expire at the end of 2011, though there may be a proposal backed by home builders and remodelers to expand the credit or drop it.

The estate and gift tax received a makeover, as the top rate is now 35% and there is a one-time exemption of million per individual for estate, gift, and generation-skipping taxes. This may make it easier to move larger amounts of wealth. This provision is set to expire at the end of 2012.

The annual exclusion for tax-free gifts remains ,000 per donor. A giver may make an unlimited number of ,000 gifts, as long as they are to different individuals. Gifts of tuition and payments for medical care also are exempt.
The 0 (0 if married filing jointly) Making Work Pay Credit will expire.

The American Opportunity Tax Credit of up to ,500 for education expenses was renewed for 2011 and 2012. This will allow those eligible to qualify for the maximum annual credit of ,500 per student. The full credit is available to individuals whose modified adjusted gross income is ,000 or less, or 0,000 or less for married couples filing a joint return. The credit is phased out for taxpayers with incomes above these levels.

The Teacher Classroom Expenses deduction was recently renewed for 2011. If you are an eligible educator, you can deduct up to 0 (0 if married filing joint and both spouses are educators, but not more than 0 each) of any unreimbursed expenses [otherwise deductible as a trade or business expense] you paid or incurred for books, supplies, computer equipment (including related software and services), other equipment, and supplementary materials that you use in the classroom. This deduction is for expenses paid or incurred during the tax year.

Whatever type of business you own, you will have many accounting matters to look over. And it would surely not be possible for you to handle the management as well as the accounting department. And hence, you need to get the best Naperville accountant to help you with the issues.

 

When you are selecting the Naperville accountants, you need to be very careful and make sure that there you make no mistake in the decision. Even the smallest mistake made by you in the selection process could lead to many huge troubles. Hence, selecting the best accountant would be advisable so that the expert is able to solve the biggest problems. When you hiring the accountant, you would surely go for the professional who would offer his complete dedication and loyalty to the work. You have to select such an accountant who is trustworthy and you are assured that the person would be providing you the best services.

Then you need to check out the person’s experience. It is not a rule, but you should check if the person has experience in the field of your business. This is quite important so that you can know if he handled the issues related to your field in the past.

 

The advantage of hiring the Naperville accountants is the benefit of utilizing their accounting services. To calculate the profit or loss of the business, you need to have all your accounts cleared. Moreover, you need to make sure that the return on investment and all such returns are well estimated to know the annual income. The handling of accounts needs a lot of carefulness. They have to perform the tasks of noting the right balance sheet, handling the debit and credit statements, maintaining ledgers and many more important entries.

The professional you hire should be capable of solving all the tasks without much of an issue. And the work of accountant requires a lot of concentration and hard work along with accuracy.

 

You will find a number of Naperville accountants who are well experienced and skilled in the particular field. Just selecting one out of them would be the important task. You need to check out all the points before hiring any one out of the lot. Hopefully the above mentioned points would be helpful in guiding you to the best accountant. You can make a quick check online as there are many websites which would help you in a big way. 

 

A sales tax is a consumption tax charged at the point of purchase for various goods and services. The amount of tax is calculated by applying a percentage rate to the taxable price of a sale. Sales taxes are usually collected from the buyer by the seller, who remits the tax to a government agency. Tax rates vary widely by jurisdiction which ranges from less than 1% to over 10%. Sales tax does not apply to transfers of real property. In USA, sales taxes are administered at the state level. Sales tax audit and management can be a challenging process for the new entrepreneur. For this, they should avail the services of sales tax consultants like StatesSalesTax who has been providing excellent services as far as sales tax concerns, for more than seven years.

To file a Sales tax is a serious matter which payment is based on the volume of business that seller conducts.

Primarily, there are three steps to file sales tax in Unites States Of America:

1. Firstly, the state department of revenue should be conducted and a form should be taken. This form will be used to file sales tax that has been collected by an entrepreneur or a business firm on behalf of the state.

2. The use tax must be reported along with the sales tax. Use tax is a type of excise tax in USA which is levied on the item purchased on a wholesale basis but has been withdrawn from the business for personal use.

3. The tax form which you have already collected from the state’s revenue department should be duly filled and filed in the required time periods to avoid any kinds of penalty or interest.

Along with above mentioned way of filing sales tax returns, you can also file sales tax by electronic filing which is also known as e-filing. E-filing is very convenient, fast, accurate, safe and secure filing system in comparison to manual filing. E-filings are easier and fastest to process than traditional filing because you need not to calculate your sales tax manually; it’s calculated by the automated software at the time of filing as you fill-up all the details in the form online on the state’s official website. You should aware in filing the form that all the information is filled correctly and accurately. Calculation of sales tax will be generated on the basis of information filled by you in the form online.

If you find any difficulties in filing your sales tax returns, don’t hesitate to consult a sales tax consultant who has made a reputation in the market like StatesSalesTax to avoid any kinds of problems.

Usually unanticipated is that it is a harbinger of countless frustrating hours spent working on payroll and figuring out your payroll tax obligation.

Who Pays Payroll Taxes, Me or My Employee?

Payroll obligations and taxes come in two different varieties: those that your employee pays but that you are responsible for withholding and those that you pay and are responsible for withholding. The key here is that, no matter what, you as the employer are responsible (liable) for the proper collecting and submitting of payroll taxes and that responsibility is a serious one. Payroll taxes cannot be discharged in bankruptcy and your Uncle Sam is the last bill collector that you would every want to cross. So be very careful in learning your responsibilities and making sure that they are fully met!

What Payroll Taxes Am I Responsible For?

 

Federal Withholding is for most of us the biggest single deduction from the paycheck. Through a Form W-4 the employee informs the employer how much they must have withheld from each paycheck. It is the employer’s responsibility to use the W-4 to calculate how much should be deducted from the employee’s check and be remitted to the federal government.
FICA stands for Federal Insurance Contributions Act tax and basically it means Social Security and Medicare. The theory behind these taxes is that they are shared half and half by the employer and employee; 6.2% of wages for social security and 1.45% for Medicare. In addition, wages subject to Social Security (but not Medicare) taxes are limited by a Social Security Wage Base which is 6,800 for 2010 but is adjusted annually for inflation. This means that the maximum annual amount for Social Security in 2010 is ,621.10 each for employer and employee.
FUTA stands for Federal Unemployment Tax Act and is a tax paid by the employer; usually.8% of the first ,000 of income.
State and Local Taxes, as the name implies, vary greatly from state to state. Generally, each state will charge SUTA, or state unemployment, and mandate a withholding for state taxes.

 

Who do I have to pay payroll taxes on?

Payroll is a pain in the ass. It is complicated, time consuming, creates a potentially devastating liability and causes cash flow issues for the company. So why not just get around it? In the past it has been fashionable to characterize people who do work for you as independent contractors, pay them the cash and just issue an 1099-MISC at the end of the year. Not only have you freed up loads of valuable time that can be put to a productive use (for example, a three martini lunch) but you’ve also just saved yourself the FUTA and FICA taxes that you would normally be responsible for. The employee, er, independent contractor is also happy, because they get to take home the whole check without all those pesky taxes and withholdings taken from their check. Win-win, right? Well guess again, Buckaroo. The IRS has long been on to that trick and has lately launched a campaign against employers, er, contractors, that fail to properly classify those whom they hire. 

Who Is an Independent Contractor?

There are no bright lines or safe harbors to determine when it is safe to actually consider a worker an independent contractor or employee, but the spirit has to do with control over the worker’s time and services. Do you tell the worker when and where to be? Do you either demand exclusivity of their services, or have them work certain hours so that it would be difficult to work for someone else? Have you been paying them a consistent amount, in consistent intervals, over a protracted period of time? All are factors that, in the eyes of the IRS, may mean that your worker is actually an employee masquerading as an independent contractor.

All this is not to say that you should immediately convert that independent contractor into an employee, but you do need to be aware of the IRS position on this and to be wary of the potential consequences should you get audited.

What Compensation Is Subject to Employment Tax?

Compensation to employees can come in various forms and be called many different names. Whether you call it wages, salary, commissions, bonuses or something else really is irrelevant as far as determining employment taxes due; the rule of thumb is that is someone is being compensated for their time or their efforts then it is probably subject to employment tax. Some specific exceptions carved out by law include: vacation pay, reimbursement of expenses, employee benefits, and prizes or gifts. 

How Often Do I make Payments?

This depends entirely on how big your business is and how many employees are on your payroll. Very small firms with only one employee could possibly be required to pay quarterly but most employers pay either semi-weekly or monthly. Publication 15 (download on the IRS website) is your guide for all things related to employees, and can help you determine how often you will need to remit payments to the IRS 

How do I get Help!

If all this has your eyes rolling and your palms sweating then don’t despair, many entrepreneurs choose to outsource the drudgery that is payroll to specialists so that they can concentrate on what is really important, running a successful business. There are three main options, based upon your willingness to pay and the complexity of your payroll.

 

Using special software like Quickbooks Payroll – no, software can’t actually do the job for you but it can significantly save time and hassle by automatizing the process. The best packages also provide support so you have a resource when the inevitable oddball transaction comes up.
Hiring an accounting firm – most accounting firms (like me!) that specialize in working with entrepreneurs will also have a payroll outsourcing function that can take most of the dirty work off your hands. These usually specialize in small and medium size enterprises, under 100 employees.
Hiring a payroll outsourcing firm – Paychex is the big dog on this block with almost 40 years of experience handling payroll for medium and larger sized businesses. Generally the most expensive, and often the most complete, option available

Is doing your own taxes getting to be more and more of a challenge? Are you thinking of hiring someone to do it for you? Are you wondering if that will be worth the cost?
There are times in life when you really should turn to a professional for tax preparation. In addition to potentially saving you money, that professional can also help you gain a better understanding of your tax situation year after year.
When should you hire someone else to do your taxes? The basic answer is when you no longer feel comfortable doing them yourself. If you are going to buy a home or invest in real estate, if you are starting a business or entering into some kind of business partnership you really should have your taxes prepared by a professional.
Beyond those circumstances, are you starting a family? Are you getting married or divorced? Are you moving to a new state? These events can complicate your tax picture, and you will want to draw on the knowledge of a tax professional.
Why not just buy some software? Software has no experience. It cant replace the life experience, the insight, and the perspective of a good CPA. Some taxpayers think, Why should I go to a tax preparer? All s/he does is use the same software that I could buy for .99. In reality, s/he knows much more than how to use a software program. S/he has an understanding of the tax treatment of investments, capital gains, different kinds of business entities, W-2 and 1099 status, and other fine points. S/he has a knowledge base that you probably dont one that you may wish for if tax software asks you a question that you arent sure how to answer.
S/he knows not to claim a deduction that stretches credibility the kind that hopeful business owners sometimes take, the kind that the IRS finds very interesting. S/he can recommend adjustments to your deductions and suggest ways to save money this year and next.
As a CPA will tell you, the do-it-yourselfers sometimes end up being the ones who need the most help, either because they get stuck on some kind of question or ambiguity presented by the software or because they realize they are in over their heads.
Yes, the software is terrific so terrific that professionals use it. And if your taxes have grown more complicated, you want a professionally prepared return as a safety precaution. A tax professional who is an Enrolled Agent can even represent you before the IRS.1
Look for a good CPA or tax attorney. An experienced CPA or tax attorney can work hard to save you money and also help you make sense of short-term and long-term financial issues affecting your business and your life.

CPA are specially qualified accountant and they get this certificate after passing trough the examinations conducted by the colleges of certified public accountant. You can rely on them once you handover all the responsibility of maintaining your accounts and financial transactions.

Being a certified public accountant is not a easy job one have to pass through difficult examinations and perform well in those examinations. Even though its not impossible but not every person can be CPA as you need to have strong base in accounts if you willing to be one. If you are not friendly with numbers and weak in accounts and calculations you will not be able to pass the examinations of CPA. Prior preparations are very necessary in case you willing to be accountant in future.

Along with certificate of accountant from recognized institution it is very necessary to gain some years of experience in some firm or under well experienced accountant.

The role of accountant doesn’t gets over after achieving certificate by scoring well in examination even he has to keep himself regularly updated. It is the duty of accountant and one of the key secret to be successful certified public accountant that that he have full knowledge about the recent amendments in law. Accountants should be fully equipped with rules and regulations while preparing accounts for any firm or individual.

Every firm big or small or retailers or professionals keep record of their financial transactions and therefore the need of accountant always exists. Maintaining proper accounts is very essential as even small ignorance or mistake will lead to big loss. Accounts involve proper calculations and recording all money transactions is very important as the success of any business depends on keeping flawless records of expenses and incomes.

You can balance your income and expenses and accordingly control the waste of money or unnecessary expenses which is affecting your reserves.

Every country have different laws for accounts which is followed by each and every single resident of the country because going against such laws can lead to legal action or impose penalty. Being a certified public accountant it is your responsibility to keep knowledge of laws and amendments of even other countries this avoids the chances of any mistake in balance sheet.

Therefore certified public accountants are qualified and experienced enough which can bring great profits to your business even they are best advisor in financial matter. In time of need and crises these accountants helps you to get out of any financial problem which is affecting your business operations.