If you are a small business owner, whether you hire people as independent contractors or as employees will impact how much taxes you pay and the amount of taxes you withhold from their paychecks. Additionally, it will affect how much additional cost your business must bear, what documents and information they must provide to you, and what tax documents you must give to them.
Here are the top ten things every business owner should know about hiring people as independent contractors versus hiring them as employees.
Business owners have many computer systems in place in their company, managed by an employee as part of his job or managed by a third party who may not be really qualified to manage a business software system.
Builders have available to them a little known deduction called the Domestic Manufacturing Deduction or called by its code section “The 199 Deduction”. The deduction is available to builders who have profits and payroll.
The 199 deduction is allowed to all taxpayers—individuals (shown on Form 1040 line 35), and C corporations (shown on Form 1120 line 25). The 199 deduction for partnerships and S corporations (reported on Form K-1 in box 13) flows through to the owner’s individual tax return.
Understanding the difference between markup and margin, as used in estimating, is essential to the success of your construction company. Understanding margin allows you to easily make financial decisions and gauge their impact on your bottom line. Bankers and accountants commonly speak of margin, not markup.
The U.S. Department of Labor updated the rules for paying overtime, and the changes take effect December 1, 2016. Under the new rules, salaried employees who earn less than $913 per week ($47,476 per year) will be eligible for overtime pay.
If you conduct qualified research activities, you may be eligible to claim a federal income tax credit known as the "research and development" credit.
The death of a spouse is emotionally and financially devastating. Making decisions of any kind is difficult when you're vulnerable and grieving, but having a plan to follow may help. Here are suggestions for dealing with financial tasks. Read more.
If you are conservation -minded and own real property, you may be able to claim a charitable deduction by placing conservation restrictions on the property, while you continue to use the property and enjoy it. This can be done through a "qualified conservation contribution." Here's how it works:
To qualify, you must grant an easement on the property in perpetuity to a charitable organization or governmental unit that is committed to protecting the gift's conservation purpose and has the resources to enforce the restrictions. Conservation groups generally qualify.
The Work Opportunity Tax Credit, known as WOTC, can reduce your federal income tax liability dollar-for-dollar when you hire certain workers.
Prepaid debit cards, also known as stored-value cards, can be useful when you lack a traditional checking account. In an increasingly plastic-dependent world, these cards can be substituted for cash, and you can use them to pay for airline tickets, hotel stays, electronics, and groceries. Money is transferred, or "loaded," to the card and is yours to spend until the card runs out of funds or is reloaded. Read more.
Questions on how to claim deductions for expenses you incur in connection with your employment? The expense include those for local transportation (other than commuting), business meals and entertainment (at 50% of cost), travel away from home, supplies, educations, etc.
According to a recent survey conducted on behalf of a consumer finance information service, nearly 80% of 18-34 year-olds have concerns about filing income tax returns.
We are often asked “What are tax consequences of renting out our vacation home for part of the year?”
The tax treatment depends on how many days it's rented and your level of personal use. Personal use includes vacation use by your relatives (even if you charge them market rate rent) and use by nonrelatives if a market rate rent is not charged.
December 31 is the last day you can benefit from certain retirement tax breaks. For example, if you haven't put the maximum amount allowed in your 401(k) – $18,000 in 2016 – increasing your contributions can save you money.
Did you make contributions to a traditional or Roth IRA, a myRA, or a SEP or SIMPLE plan in 2015?
According to the 2016 Summary of Annual Reports by the trustees, the major source of funding for the Social Security and Medicare programs is the payroll tax you and your employer pay, or that you pay as a self-employed worker.
Is retention of good employees a priority for your business? Consider conducting "stay" interviews.
It’s critical for an enterprise periodically to review the status of its workers and see if they are properly classified. An enterprise must withhold federal income tax, social security taxes, and federal unemployment taxes on wages it pays workers who are employees. It also may have to provide them with the same fringe benefits and retirement plan coverage available to its other employees. There may be state tax obligations as well. By contrast, these responsibilities don’t apply for workers who are independent contractors. The business simply cuts them a check for their services and sends them a form 1099-misc.
If you're age 50 or older, tax law has a permanent provision that lets you make extra contributions to your retirement plans. These "catch-up" contributions vary depending on the type of retirement plan. For example, if you participate in a SIMPLE, you can make a catch-up contribution of up to $3,000 in 2016, over and above the maximum $12,500 salary reduction contribution. For IRAs, both Roth and traditional, the 2016 catch-up contribution is $1,000.
Consider these planning ideas:
Sell stocks currently held at a loss. You can write off the first $3,000 of those losses as an ordinary loss and the excess capital loss can be used to offset capital gain.
When it comes to money and retirement, it differs for each of us when considering what “enough” will look like. For some, a universal definition might be having roughly the same amount of money available per month as they currently do after adding in their social security benefits. Due to many unknowns, experts predict that one cannot completely rely on the availability of social security benefits once reaching retirement age.
When reviewing and evaluating your bank loans make sure that you, your controller, CPA or attorney review all loan documentation in detail and consider the following matters:
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For construction businesses organized as C corporations, the most significant changes are the reduction in the corporate tax rate, the 100-percent bonus depreciation deduction, the elimination of the corporate AMT, modifications of rules for use of certain accounting methods, and the limitations on interest expense deductions.
From lowered income tax rates and doubled standard deductions, to caps on mortgage interest and state and local deductions, Americans may feel a significant impact as a result of the new tax law. Here are the top 10 things individual taxpayers need to know.
With the new rules regarding the fiduciary responsibilities of retirement plan trustees, it makes sense to request at least annually a complete detail of your plans administrative, custodial and management fees.