taxes Irvine

Irvine Tax Expert Reports The Top Business Tax Deductions

–The 2018 tax code has changed some allowable deductions and Robert Borish, CPA, an Irvine tax expert, has summarized the allowable business deductions. “This summary is a guideline to help business owners know what kinds of records to keep,” said Borish.

The list presented here are guidelines to help business owners prepare for filing 2018 and 2019 tax returns. Borish encourages everyone to discuss any deductions, personal or business, with a tax professional.

  • First and foremost, the new tax law allows self employed persons and pass-through entities (such as shareholders of S-Corporations and Partnerships) to deduct 20% of business income. There are complications to this rule but this can be a tremendous tax savings for many businesses.
  • Vehicle expenses for business purposes can be deducted in two ways. The most common is to deduct 54.5 cents per mile. Some choose to keep itemized records of vehicle maintenance, tires, repairs, fuel, and to depreciate the cost of the vehicle. A tax accountant, such as Robert Borish, the Irvine taxes professional can provide the best advice for how to deduct vehicle expenses.
  • Salaries, wages, and benefits paid to employees, including bonuses, commissions, and taxable fringe benefits are deductible.
  • The cost of employee benefit programs, such as education assistance and dependent care assistance, as well as contributions to employees’ qualified retirement plan accounts, are deductible. For self-employed individuals, contributions to their own qualified retirement plan accounts are personal deductions claimed on Form 1040.
  • Contract labor, such as payments to independent contractors, is deductible. Be sure to issue Form 1099-MISC to these individuals if they have been paid $600 or more.
  • Supplies including office supplies, cleaning supplies, postage, and other items are deductible. The cost of equipment such as computers can be deducted or taken as a depreciation deduction over time.
  • Depreciation is an allowance for the cost of buying property for your business, and can include deductions for equipment purchases up to a certain dollar limit. The depreciation category also includes some limitations and bonus depreciation allowances. Be sure to discuss depreciation, and any other business expense deduction, with a professional such as the Irvine taxes accountant.
  • Rent on business property and home office is deductible. The cost of renting space an office, storefront, factory, or other type of facility such as storage, is fully deductible. A portion of expenses of a home office are deductible as a business expense if the home is used regularly and exclusively as the principal place of business, a place to meet or deal with clients or customers, or as a separate structure used in the business. The deduction includes both direct costs such as painting and repairs and a percentage of rent or mortgage interest and real estate taxes that reflect the percentage of business use of the residence.
  • Utilities, including electricity, telephones and mobile phones are deductible, but there may be some limitations for a home office.
  • Taxes, license and regulatory fees, and payroll taxes are deductible. There are some limitations on some deductions based on the business structure.
  • The costs of most business insurance such as a business owner’s policy, malpractice coverage, flood insurance, liability coverage, and business continuation insurance are all fully deductible. In terms of health coverage, small business may qualify to claim a tax credit for up to 50-percent of the premiums paid for employees (a better tax break than a deduction). Also the cost of health coverage for self-employed individuals and certain S corporation shareholders is not a business deduction. Those premiums are deducted on the owner’s personal tax return.
  • The cost of ordinary repairs and maintenance are deductible, while costs that add to the property’s value are usually recovered through depreciation. There are various safe harbor rules that allow for an immediate deduction as well.
  • Commissions and fees are fully deductible and may require reporting on Form 1099-MISC. Commissions paid in connection with buying real estate are not deducted, but are added to the basis of the property and usually are recovered through depreciation.
  • If any employee or the owner travel on business the costs of transportation and lodging are fully deductible.
  • Ordinary advertising costs are fully deductible. Legal and accounting fees are fully deductible. Fees paid to lease or rent items used in your business are fully deductible.
  • Meals are deductible business expenses up to 50-percent, although there are some meal costs that are fully deductible. As of 2018 entertainment costs are no longer deductible.
  • Interest on business debt and business property mortgages is deductible. However, the allowable deductions are complicated. The deductible percentage of interest on debt depends on business gross receipts. Interest on loans to buy a business is treated differently and depends on whether the deduction is distinguished as owner’s investment interest or passive activity interest. Businesses that own real estate can fully deduct mortgage interest.

Deductible expenses help businesses of all sizes with the costs of running a company. The allowable deductions are relatively the same regardless of how the business is structured. Even though these deductions can be claimed by a sole proprietorship, C corporations, S corporations and limited liability companies (LLC) the IRS rules may apply different depending on the business structure. Be sure to discuss all business expense deductions with a qualified tax professional.

Robert Borish CPA, Inc.
6 Venture #120
Irvine, CA 92618
(949) 951-5002 x101

This press release is by Irvine SEO company Access Publishing, 806 9th Street, #2D, Paso Robles, CA 93446, (805) 226-9890.

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taxes Irvine

Robert Borish, Certified Public Accountant And Irvine Tax Expert Reports Tips For Streamlining Payroll

–Timely and accurate payroll and tax filings are often rated the highest headaches for businesses. Robert Borish, CPA and an Irvine tax expert has some tips that can help businesses get the payroll headache under control.

Even small business owners with only a few employees complain about getting payroll out accurately and on time. Employees being late with time cards, questioning expected overtime pay or vacation time are some of the more common issues. Multiply these issues by 50 or more employees working for larger companies and it’s easy to see where the headaches come from. Add on the demand for accurate and timely tax reporting and the jokes about buying stock in an aspirin company are no longer funny.

Businesses have to file and pay income tax, local and state taxes, and payroll taxes, along with paying employees. Even though the Irvine tax expert can help with any tax issues, the topic here is streamlining payroll so that employees and payroll taxes are processed accurately and on time.

Here are the guidelines that help streamline payroll:

  • Know the laws
  • Keep accurate records
  • Establish written payroll procedures
  • Automate payroll
  • Ask the expert

Know the laws

Laws overseeing payroll and payroll deductions include establishing regular pay periods, record keeping, how hourly and salaried pay is processed, how overtime and commissions are calculated and paid, how vacation time, sick time, or personal time is allocated and managed, and how and when payroll taxes are deducted and paid.

Knowing these laws, and keeping up with any changes, is going to help the payroll process run smoothly and avoid any possible legal issues from disgruntled employees or the government.

Keep accurate records

Keep accurate employee records including the original employment application, the offer letter, rate of pay, benefits, time cards and payroll detail, anything bearing the employee’s signature, and even awards and disciplinary records. Payroll is one of those cases where there is no such thing as too much information.

Establish written payroll procedures

Not only is it important to pay employees on time, it is the law. No one needs be caught between an upset employee and the local labor board. Regular pay periods are required so be sure they are established and that the employees know the payroll cycle.

Labor laws put the responsibility of accurate payroll on the shoulders of the employer, but we all know that problems come up.

Timecards that are not turned in on time, or hours that are not approved can mean that someone may not be paid accurately.

Employees and supervisors need to know the payroll cycle. When are they getting paid? When do their hours have to be submitted and approved? When do pay periods start and end?

What are the consequences if hours are not turned in on time? Employees have to be paid their base pay on time, however a delay in reporting overtime might mean that overtime or commissions might not be included on the regular paycheck.

When everyone, including those responsible for processing payroll, know what the procedures are the chances of problems are reduced.

Automate payroll

Automated payroll saves time and stress even for only a few employees. With the payroll service offered by Robert Borish, CPA you will enjoy these time saving benefits:

  • Direct deposit available, this means no longer writing payroll checks.
  • Payroll tax payments are made electronically, automatically (you will be notified in advance).
  • Payroll data can be downloaded into Quickbooks. If you utilize the Borish cloud service for Quickbooks, this will be performed automatically.

Considering the record-keeping requirements, the time involved, and the risk of errors, it is less expensive for small businesses to hire a payroll service, or install accounting software, than it is to try to write and keep track of your payroll.

Ask the expert

Don’t hesitate to talk to a payroll and tax expert. Contact the Irvine tax and payroll professionals for help with setting up a payroll process or troubleshooting an existing system.

Robert Borish CPA, Inc.
6 Venture #120
Irvine, CA 92618
(949) 951-5002 x101

This press release is by San Luis Obispo SEO company Access Publishing, 806 9th Street, #2D, Paso Robles, CA 93446, (805) 226-9890.

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Individual Shared Responsibility Provision

The Affordable Care Act includes the individual shared responsibility provision that requires you, your spouse, and your dependents to have qualifying health insurance for the entire year, report a health coverage exemption, or make a payment when you file.

Who is subject to this provision?

All U.S. citizens living in the United States, including children, senior citizens, permanent residents and all foreign nationals are subject to the individual shared responsibility provision.

Children are subject to the individual shared responsibility provision.

  • Each child must have minimum essential coverage or qualify for an exemption for each month in the calendar year. Otherwise, the adult or married couple who can claim the child as a dependent for federal income tax purposes will generally owe a shared responsibility payment for the child.

Senior citizens are subject to the individual shared responsibility provision.

  • Both Medicare Part A and Medicare Part C (also known as Medicare Advantage) qualify as minimum essential coverage.

All permanent residents and all foreign nationals who are in the United States long enough during a calendar year to qualify as resident aliens for tax purposes are subject to the individual shared responsibility provision.

  • Foreign nationals who live in the United States for a short enough period that they do not become resident aliens for federal income tax purposes are not subject to the individual shared responsibility payment even though they may have to file a U.S. income tax return.
  • Individuals who are not U.S. citizens or nationals and are not lawfully present in the United States are exempt from the individual shared responsibility provision. For this purpose, an immigrant with Deferred Action for Childhood Arrivals status is considered not lawfully present and therefore, is eligible for this exemption even if he or she has a social security number. Claim coverage exemptions on Form 8965, Health Coverage Exemptions.
  • U.S. citizens living abroad are subject to the individual shared responsibility provision.
  • However, U.S. citizens who are not physically present in the United States for at least 330 full days within a 12-month period are treated as having minimum essential coverage for that 12-month period. In addition, U.S. citizens who are bona fide residents of a foreign country or countries for an entire taxable year are treated as having minimum essential coverage for that year.
  • All bona fide residents of the United States territories are treated by law as having minimum essential coverage.

Please call if you have any questions or need more information.

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Health Care Law

If you haven’t signed up for health insurance this year, do so now and avoid or reduce any penalty you might be subject to. Depending on your income, you may be able to claim the premium tax credit that reduces your premium payment or reduce your tax obligations, as long as you meet certain requirements. You can choose to get the credit immediately or receive it as a refund when you file your taxes next spring. Please contact the office if you need assistance with this.

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End of year tax planning

Tax planning for the year ahead presents similar challenges to last year due to the unknown fate of the numerous tax extenders that expired at the end of 2014.

These tax extenders, which include the mortgage insurance premium deduction and the sales tax deduction that allows taxpayers to deduct state and local general sales taxes instead of state and local income taxes, may or may not be reauthorized by Congress and made retroactive to the beginning of the year.

In the meantime, let’s take a look at some of the tax strategies that you can use right now, given the current tax situation.

Tax planning strategies for individuals this year include postponing income and accelerating deductions, as well as careful consideration of timing related investments, charitable gifts, and retirement planning.

General tax planning strategies that taxpayers might consider, include the following:

  • Sell any investments on which you have a gain or loss this year. For more on this, see Investment Gains and Losses, below.
  • If you anticipate an increase in taxable income in 2016 and are expecting a bonus at year-end, try to get it before December 31. Keep in mind, however, that contractual bonuses are different, in that they are typically not paid out until the first quarter of the following year. Therefore, any taxes owed on a contractual bonus would not be due until you file a tax return for tax year 2016.
  • Prepay deductible expenses such as charitable contributions and medical expenses this year using a credit card. This strategy works because deductions may be taken based on when the expense was charged on the credit card, not when the bill was paid.For example, if you charge a medical expense in December but pay the bill in January, assuming it’s an eligible medical expense, it can be taken as a deduction on your 2015 tax return.
  • If your company grants stock options, you may want to exercise the option or sell stock acquired by exercise of an option this year if you think your tax bracket will be higher in 2016. Exercise of the option is often but not always a taxable event; sale of the stock is almost always a taxable event.
  • If you’re self-employed, send invoices or bills to clients or customers this year to be paid in full by the end of December.

Caution: Keep an eye on the estimated tax requirements.

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