OTHER TAXING MATTERS
With
Jack Cohen, CPA
IncSmart.biz Inc
After Selecting an EntityWhat am I about to Receive?
Income Tax Reporting Forms Payroll Tax Reporting Forms State Tax Reporting Forms Sales and Use Tax Forms Personal Property Tax Forms Others
Payroll Reporting 940 FUTA 941 Federal Withholding and
Social Security State Withholding State Unemployment State Disability Others
Tax Tip
Use Payroll company
State and Local Taxes Sales tax Use tax Personal property tax Business license or permit
Where People Get In TroubleTrying to Avoid Sales Tax
Who is responsible for collecting the tax? What if I purchase merchandise out of
state? What is a resellers certificate?
NexusWhat is it and how is it determined?
United States Supreme Court has held that states can only impose tax or collection responsibility when:There is a substantial physical presence between the state and:
the sellerthe transactionthe activity
The state may require out-of-state vendors to provideInformation.
NexusContinued
Substantial physical presence includes:
• Owning or leasing real estate or tangible personal property
• Maintaining a business location or inventory• Having resident or nonresident employees
work within the state• Incorporating or qualifying to do business• Using the company’s own trucks and
personnel to make deliveries into the state on a regular basis
NexusContinued
Employee VisitsPhillip Crosby Associates, Inc. (Alabama-1996) Management Consulting Business
Telemarketing sales; in-person visits 26/yearDid 69 projects and training over three yearsNexus upheld-considered regular and repeated
B.L. Key, Inc. (Utah-1997)MFG sent 3 supervisors to Utah on 8 trips lasting a week to a monthSupervisors hired 4 employees each tripArgued presence was not regular but sporadicNexus upheld-ruled regular means repeated
NexusContinued
Representative’s Nexus Out of State Mail orders
Independent Sales RepSome 800 phone numbersTelemarketers ruled as independent sales reps
Printer’s NexusApplies to out-of-state companies establishing Nexus
By storing paper at the printer’s locationBy visitations to the instate printer
Instate deliveries - How many? Drop Shipments
New Business Expenses
Start-up expenses
Organizational expenses
Web site expenses
Start Up Expenses
Money advanced to corporation = loan Deductible upon start of business Start – When apartment is available When open for business When searching for business Capital Expense Until Start
Business Travel
Client calls
Market research
Plan your vacation around business
Tax Tip
Maintain Good Records Receipts with business reason. Diary – Kept Contemporaneously. Primary reason for trip. Ordinary & Necessary Expense
Annual Board Meeting
Fully deductible
Find a creative location
Successful people travel
The Big Deduction Sec. 179
This year:$125,000 up to purchase of
$500,000
Family Members as Tax Deductions
Children: lower tax deductions
Spouse on payroll
Employee benefits
Retirement planning
Employee Education Expenses
Seminars Conferences College tuition
Employee Benefits
Medical Child Care Life
Insurance
Dental Long Term
Care Chiropractic
Business Retirement Plans
Pension, Sep 401K
Profit Sharing
Defined Benefit Plans
Retirement $
The Ultimate
Safe
Final Thoughts
It’s Your $
Plan, Plan, Plan …
Take Action
Alternative Minimum Tax
Background Tax Preference Items Sch. ‘A’ Taxes Accelerated Depreciation Capital Gains To Avoid – Keep deductions on page 1 of
return.
Pension Contribution Changes
Defined Benefit Plan Max. Compensation Used = $225,000 Smaller of 100% of compensation or $45,000 401K $15,500 & $5,000 catch up SEP – Lesser of 25% Income or $45,000 Traditional IRA – Lesser of Compensation or $5,000
Thank You
For more information, visitIncSmart.biz Inc
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