From : U.S. Small Business Administration
Location : Washington , DC
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Question :
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We are out of time, so I'll have to sign off. Thanks to you all for your questions. It's been a great chat! Tom
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From : Lisa N.
Location : , WA
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Question :
Could you explain to us how our FUTA tax will be affected if we choose for our officers to remain exempt from unemployment benefits? Also, can you help us understand that if we write up a sale in October as taxed then find our it should have been nontaxable in November, but now we just paid taxes on the sale in October does it come off if we credit that invoice & rewrite it the next month as nontaxable?
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If I understand the question, you seem to be asking a sales tax question. It would appear that you would have a credit in the subsequent month for the sales taxes paid in the prior month.
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From : Mary
Location : NR , New York
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Question :
I have a small bookkeeping business my husband is an IT consultant. He and myself was thinking about combining both companies, not sure if it should be an LLC or a Corporation, what would be more beneficial for a us as far as tax reporting goes.
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previously answered
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From : Marie
Location : ,
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what is basis of S-corp at beginning when converted from C-corp. is it just basis of share capital or share capital plus equity or in this case deficit. I have negative basis
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Shareholders’ equity is carried over, but not sure how you get a negative C corp basis. You certainly can’t have a negative S corp basis. Need more info.
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From : Marie
Location : ,
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Question :
son owns house and rents and manages but mom owns house and mortgage. Son pays all expenses and mortgage and gets income. mom reports nothing. How to report for son?
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The facts are a little uncertain from your question. If the mom owns the home and has the mortgage, she can't assign the income and deductions to her son under the tax law, regardless of any agreement between mom and son. He might be able to get the deduction if he co-signs on the loan. They need get the facts straight and see an adviser to try to get the results they wish.
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From : May
Location : New Rochelle , New York
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Question :
I have a small bookkeeping business (Sole P) my husband is an IT consultant. He and myself was thinking about combining both companies, not sure if it should be an LLC or a Corporation, what would be more beneficial for a us as far as tax reporting goes.
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Generally, the LLC works better for most people because it gives you the same liability protection as a corporation but does not require you to file a corporate return. In fact you can satisfy the filing requirement but filing a Schedule C with your regular form 1040 if one of you is an employee rather than an owener or, in some cases, two schedule C's if husband and wife own the busienss together - although this rule was intended to apply to a single business.
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From : Virgil Dissmeyer
Location : Edina , mn
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If a taxpayer owns an LLC with his wife, it appears they have three choices for deducting health premiums. Please clarify if they can triple dip. #1 they can deduct health costs on Sch. A, #2 - they can deduct premiums for an HSA on line 25 by attaching a Form 8889, and #3 - they can provide for their own health costs as a self-employed person on Line 29 of the 1040. What is the best way to go?
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There would not be a situation of triple dipping. In general, the husband and wife would generally not be permitted to take a deduction for more than the total cost of health insurance for both spouses combined.
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From : Russ Koca - Accounting & Advisory Services, P.A.
Location : Overland Park , KS
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Happy Holiday's Tom O'!
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Thanks, same to you.
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From : Virginia
Location : , Montana
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Question :
I have a question about the new law last year about husbands and wives being able to file 2 schedule Cs on a joint venture, rather than filing a general partnership return. My husband and I have had a general partnership since 2003, because we both have college degrees in our profession and we jointly work on all projects. We have only hired employees for a month on a large project. I would love the ease and straight-forwardness of filing schedule Cs, rather than dealing with monsterous partnership returns. I called and spoke with two irs employees last year, but they were unable to give me any information beyond the page or 2 about meeting the requirements to file 2 schedle Cs.
The instructions say to divide every item by the percentage of ownership, or by what each individual supplied. How do you split employees across 2 schedule Cs? How do you split depreciable items like office furniture? How do you convert from a general partnership to two schedule Cs?
The only reason I have been told to remain a partnership is due to limited liabilty, if we become a limited liability partnership. Yet, when I research limited liability partnerships, the limited liability only protects from the parts of projects you are not directly responsible for. If my husband and I work all parts of every project there does not seem to be any benefit to becoming a limited liability partnership. Is there any other reason, from a federal income tax view, to remain a general partnership rather than switch to filing two schedule Cs?
Thank you for your assistance.
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Since you mention that the reason for having a partnership related to your concerns with professional liability, this might be the issue you would want to be clear on first. Since liability issues vary from state to state I would first recommend that you get an opinion from an attorney in your state on the extent of your personal exposure related to the type of consulting work you and your husband perform.
Once you are clear on the extent of your liability you can address the entity question and also whether you have adequate professional insurance.
The basic tax issues should be no different whether operating as a partnership or two Schedule C returns. Equipment, rent, employee salaries should just be divided equally between you. If you have an employee for whom you are paying payroll taxes here I would only file one payroll tax return for both of you (chosing which EIN you prefer to use and be consistent), but the expenses can just be evenly split between the two returns. Similarly, keep one depreciation schedule, but split the expense between the two Schedules.
Since you have been filing a partnership return, conversion to a qualified joint venture will be deemed a partnership liquidation and you will need to file a final partnership return in 2006 or 2007, whichever you prefer (amended if 2006). Then for 2008 or 2009 file the Schedules C.
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From : Carol
Location : Bradenton , FL
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What can small businesses do to help mitigate the skyrocketing state unemployment tax rates - best practices?
Thank you.
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Since unemployment rates are based at least in part on a business’ past experience, good hiring and retention practices should help lower a business’ rate. Use of temporary employees also may be helpful. Another method some businesses may try is the use of independent contractors instead of employees. Caution needs to be used here to ensure the individuals actually are independent contractors or the IRS may reclassify individuals as employees. There currently is an extensive list of factors to be considered in determining the proper classification.
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From : Day Titcombe
Location : ,
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Question :
RE: IRA conversion. You mentioned that it would be an optimum time to convert to a ROTH if the stock market remains depressed in 2010. Can you expand on that?
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In 2010, you can convert a regular IRA to a Roth regardless of your level of income. Until then, you can't convert if your AGI is over $100,000. In 2010, you can convert, paying half the taxes that you deferred in the IRA in 2011 and half in 2012. On the one hand, you're paying taxes earlier than you would have to on a regular IRA, but on the other, all future distributions would be tax free. This is important to consider now, because you want to keep the maximum amount in the Roth IRA and should start saving now to pay the taxes in 2011 and 2012 so that you won't have to withdraw from the IRA to pay the tax. Hope this helps.
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From : GSI Complete Glass Inc.
Location : Deer Park , WA
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Can you explain to us how our FUTA tax would be affected if we were to keep our officers exempt on unemployment benefits?
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The Federal Unemployment tax is 6.2 percent of the first $7,000 paid to each employee during the calendar year. Exemption on state unemployment benefits does not appear to be a factor.
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From : Richard
Location : ,
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Can I expense things that I bought last year? We were just starting the business last year, but we did not start getting income until this year. All the expenses were in anticipation of this year.
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You do not state whether you began actual business operations this year or last year. If you did not begin operations until after January 1, 2008, then you could take the depreciation deductions this year. However, if you began operations last year, you would have to amend your 2007 tax return. Even if you are unable to expense your asset puyrchases you are still permitted to take the regular depreciation deductions.
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From : Jodi Davis
Location : ,
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I launched my sole proprietorship this year. However, I have not received any payments for services and I am in debt due to the expenses used to launch the company. What kinds of credits or payments (penalties) am I privy to?
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If you started the business but just haven't gotten paid yest then you can claim business deductions. Under thecircumstance you describe, the deductions will generate a loss that can be carried foreward to offset the income you recieve when the payments do come in. The answer is more complicated to the extent the expenses were incurred before you "opened the doors" to begin your business. In that case, the expenses are considered start up expenses subject to special rules that limit the immediate deduction.
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From : Day Titcombe
Location : ,
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Thank you for the AMT exemption levels - Is this a patch or will this be what the taxpayers can expect in future years? I noticed that the exemptions are higher than last year. Is that an inflation factor or was it voted on?
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It is just a patch subject to possible renewal each year.
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From : Patricia Triplett
Location : Wayne , WV
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Question :
Hello ihave a ticket to work paticipent wanting to start my own business startou online i have contacted amazon and ready to start my store, i also have a website set up to start earning commissions from sale items on it with amazon, do ineed a business lisence for web stores individually or not i also will be making money from my blog.Eventually i would like to have a store in wayne county with my own merchandise. But i was told that the best way to receive funding for a business is to run one for somene else to get experience.I also am a certificate holder from the SBA from their online course.exactly what do ineed to do to go forward
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Sorry, we're handling tax questions in this webcast, not more general business startup issues.
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From : Carl Johnson
Location : Napa , CA
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Want to figure out the possible tax ramifications of a store sale. I am presently an S Corp. The sale will entirely be used to pay down an existing loan through the same loan company that funds the sale. Is it a "true sale," and are taxes still owed, etc.
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When any business asset is sold, the fact that the proceeds are to be used to pay off a loan related to buying the asset does not change the basic tax issues involved. What is important is whether the loan being paid off is a personal loan or a loan that is on the books of your business. So in this case it is the S Coporation selling the store, with you as a shareholder being impacted depending on your ownership percentage of the S Corporation and your basis in your interest in your S Corporation.
In the facts you present you do not say whether the store you are selling is the only asset of the S Corporation or one of several locations and you also do not mention if this sale is a complete sale of all the assets of the S Corporation. You also do not mention if you are the sole shareholder of the S Corporation, but for these purposes I will assume you are.
I will assume that you are selling the store to an unrelated person, and that you are not just shutting this particular location. Before even discussing a price you need to be able to determine the Fair Market Value of your business and that means reviewing the value of all your business assets. This will include determining the value of all business assets including furniture and fixtures, inventory (I assumed you were a retailer of some kind), whether there is an existing lease that can be transferred, the value of the customer list, the location, even the stores name.
A portion of the sales price must be allocated to each asset, and you must also be able to determine whether there is a gain or loss on each asset, unless you decide it would be easier to sell all the assets in one group sale, called an asset acquisition.
Since these assets are owned by the S Corporation any gain or loss will be reported on the S Corporation return and distributed to you in proportion to your ownership interest.
The tax ramifications of the sale are impacted because of how your business is organized as an S Corporation, and it is important that you follow the applicable rules for an S Corporation. So using a qualified CPA who is not just familiar with your type of business but also with how to structure transactions in an S Corporation.
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From : sonamagani
Location : ,
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I would like to start a business creating a spicifically unique all purpose sauce competing with Lea & Perrin sauce. It is for Fish, Chicken & Steak sauce.
Where do I get financing and how would I go about expensive patenting or copyrighting?
Please help.
Sonamagani
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Speak to a patent/copyright attorney first to try to get an estimate of the time frame and cost involved in obtaining a patent/copyright. That will give you a better ballpark number (in addition to the other costs of opening the business such as manufacturing-related, rent, insurance, payroll, other professional fees, etc.)) for the loan discussion. You might consider checking with your local Bar Association for a referral to an attorney. For financing, check with SBA, local banks, or resources that might be available from your state or county.
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From : Denise
Location : St. Paul , Minnesota
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How does the special tax rules for Real Estate Brokers who own rentals work, if the realtor has experianced losses for three straight years.
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This is a complicated matter but the GENERAL answer is, if you are a real estate professional, then losses you experience from your real estate activity can offset your "other" income But two things you have to be careful of - 1.) the definition of real estate professional and 2.) the default presumption that rental activity is passive in nature and therefore generally cannot offset other income. You should consult a professional tax adviser who can apply your specific facts to the tax rules.
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From : Henry
Location : ,
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We are an s-Corporation and are considering converting to an LLC are there any major tax disadvantages to accomplish this?
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Of course the conversion would mean a liquidation of the S corp so you want to be very careful in making sure that the owners wouldn’t have gain on the liquidation of their stock and that the assets in the corp have all depreciated, not appreciated, especially if the S corp has a C corp history in the last 10 years. Depreciable lives would all be restarted but depreciation recapture with ordinary income consequences would have to be considered.
Also, if you become an LLC and you have more than one owner (including husband and wife unless you qualify for the very narrow Qualified Joint Venture provision for husbands and wives), you will need to file a partnership return which is more complicated than an S return. You should also check with your state(s) to compare organizational and annual filing fees. Also, the IRS will require a new EIN for the LLC if an EIN is needed.
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From : Karam Shakir
Location : Gautier , MS
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As a new contractor can you give me a list of what is new in taxes , I"am a paint contractor.
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Tax changes for 2008
$250,000 Expensing election
In 2008 any small business can expense up to $250,000 in business assets. This can include office equipment such as computers, printers, software, desks, etc. While there is little time left this year so long as you sign a contract or better yet use a credit card to pay for the purchases, even if they arrive after the end of the year you can get the deduction for this year.
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From : M.E. Gamble
Location : Charleston , West Virginia
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What are three of the most important points you suggest SBDC's share with clients about tax advice in these lean times?
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The business still needs to consider: (1) whether he is keeping proper books and records; (2) using a CPA as a tax and financial advisor; (3) and make sure they stay current with any applicable payroll tax deposits due over the course of the year.
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From : Cherylle Morrow
Location : Kaneohe , HI
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Whena single member LLC claims the home office deduction and the member owns the home, does the LLC follow the same rules as a sole proprietor, or is it treated as rent expense to the LLC abd rental income personally to the member?
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The default for a Single member LLC is treatment as an individual so the same "home office" rules apply as if the business were not incoporated as an LLC.
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From : Brian Perkis
Location : Brooklyn , NY
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Question :
Can you recommend any year end strategies to accelerate expenses or defer income for income tax purposes?
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Tax changes for 2008
$250,000 Expensing election
In 2008 any small business can expense up to $250,000 in business assets. This can include office equipment such as computers, printers, software, desks, etc. While there is little time left this year so long as you sign a contract or better yet use a credit card to pay for the purchases, even if they arrive after the end of the year you can get the deduction for this year.
For deferring income you could hold off on sending out your invoices for the month until after January 1, 2009
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From : Tom Anderson
Location : Kansas City , MO
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As a new business owner I need some direction on the kinds of things I can do now at years end to get my business ready for tax season. What things should I start to gather now?
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You should get together your financial statements (income statement and balance sheet) and if applicable, your company’s audit/compilation/ review. You will need your bank statements and a listing of all your expenses, such as salaries, rent, utilities, equipment such as computers, auto business use mileage and depreciation. Depending on the form of business, if you are self-employed, you should look at the expenses allowed on the Form 1040 Schedule C and, if applicable, a home office deduction, and gather your documentation for those expenses. If you are incorporated, look at the Form 1120. If you are an S corporation, look at the Form 1120-S, and if you are partnership, look at the Form 1065.
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From : Day Titcombe
Location : ,
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Seeking information on Alternative Minimum Tax brackets.
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For 2008 the Alternative Minimum Tax exemptions levels are:
$69,950 if you are married filing a joint return or a surviving spouse.
$46,200 if you are single.
$34,975 if you use married filing separate.
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From : Katie
Location : Collegeville , Pa
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I have an LLC which is classified as a disreguarded entity. What are the filing requirements, other than income taxes?
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If the business is owned by an individual, you would report income and expenses on Form 1040, Scedule C. (If the business is owned by a corporation, income and expenses would be reported on the appropriate lines of the Form 1120.)
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From : Robert Bomba
Location : , New Jersey
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Husband and wife team. Both work at the LLC company full time. Generally speaking from a tax standpoint which would be more tax friendly, a IRA from sharebuilder or a SEP.
We have no tax deductions except business related.
We work out the home office and the home is paid for.
The 1099 we will get from Landstar Systems (LSTR) will show almost 100,000 to the business.
Husband is 53
Wife is 46
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Consider a Keogh plan but definitely speak with your CPA because there are lots of retirement planning options available to you.
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From : Cherylle Morrow
Location : Kaneohe , HI
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When a multi-member LLC does a conversion to a corporation and uses the same FEIN, is the corporation treated as a new entity or the same entity with a new filing status.
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When a partnership incorporates, several things happen, including liquidation of the partnership. Therefore the resulting corporation is a new entity and a new EIN would be required. The transfer of assets to the corporation is not taxable if the requirements of section 351 are met.
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From : Day Titcombe
Location : ,
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Any special changes to IRAs with regard to early withdrawal or converting to ROTH?
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Congress has made the conversion to a Roth IRA easier. First, you can make the converstion if you're AGI is less than $100k this year or in 2009 and, in 2010, you can convert regardless of your income. Even better, if you convert in 2010 you get to pay the tax on the conversion in equal intallments in 2011 and 2012. Secondly, you can convert directly from any qualified plan to a Roth. Under prior law you had to first convert the qualified plan to a regular IRA then convert the Regular IRA to the Roth. Key to all this is that you will owe tax (not penalties or interest) on the conversion. But, if the stock market remains depressed in 2010 (I certainly hope not) it would be an optimum time to convert.
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From : Day Titcombe
Location : ,
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Resubmitting since I sent before the session started. What are the rules for Alternative Minimum Tax this year?
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For 2008 the Alternative Minimum Tax exemptions levels are:
$69,950 if you are married filing a joint return or a surviving spouse.
$46,200 if you are single.
$34,975 if you use married filing separate.
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From : Virgil Dissmeyer
Location : Minneapolis , MN
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Question :
For a self employed business, I am confused by lines 25, Health Savings Acct, and line 29, Self Employed health insurance deduction. Are they mutually exclusive? or can a taxpayer use both?
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The health savings account deductions and the self-employed insurance deductions are not mutually exclusive. The heath savings account deduction can be claimed as long as the individual is not covered by any other health plan which is not a high deductible health plan.
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From : Cecilia
Location : , NY
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Question :
Do nonprofit organizations need to charge sales tax to retail customers buying on a wholesale basis if sales are taken over the phone or online?
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You really have three questions: do nonprofits have to collect sales taxes, do you have to collect taxes on sales to wholesalers, and how are telephone sales handled. Most of these are governed by state law, and you should check within your state.
1. Nonprofit orgs are responsible for sales taxes on sales to end users. Otherwise, a lot of business could be channeled through them, and for-profit orgs would be at a disadvantage.
2. If you sell to a wholesaler, the wholesaler is responsible for collecting sales taxes from end-users, and you do not have to. However, you should document that your purchaser is buying for resale, and your state may have special requirements for this documentation. 3. You need to check the rules for your state regarding telephone sales—if it’s in your state, you probably have to collect sales taxes. Your state may also have mutual agreements with other states to collect taxes on sales to individuals in the other states. If you have no “nexus” with another state—e.g., no office, no employees, no stored inventory, etc.—you may not have to collect sales tax.
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From : VICTOR H. MUSSENDEN
Location : MIAMI , FLORIDA
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Question :
PLEASE CAN YOU TELL ME IF WE ARE GOING TO HAVE A ECONOMIC STIMULUS PAYMENT THIS COMING YEAR
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Congress is certainly discussing different ways to stimulate the economy and they are considering many alternatives. However, no decisions have been made and it is likely that nothing will be decided until after tne new Congress and new Administration take power in January.
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From : Olivia
Location : Birmingham , AL
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Question :
What are some tax savings tips of which many small business owners are unaware?
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Tax changes for 2008
$250,000 Expensing election
In 2008 any small business can expense up to $250,000 in business assets. This can include office equipment such as computers, printers, software, desks, etc. While there is little time left this year so long as you sign a contract or better yet use a credit card to pay for the purchases, even if they arrive after the end of the year you can get the deudciton for this year.
With other limitations business vehicles and leasehold improvements also come in for special tax treatment for 2008.
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From : Alethia Henderson
Location : ,
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Question :
This is my first year in business. What are going to be my largest deductions? I have no employees currently.
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It depends on the type of business. Obviously, if you are in retail sales, inventory is likely to be an important consideration. Beyond that, setting up your business location (rent including a deposit), furniture and equipment (inc. computers), phone system, etc. A couple of other important considerations should be (1)insurance (liability, business interuption, fire), (2) professional advisors such as a CPA or attorney to help get you off to a good start.
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From : Richard Ray
Location : San Antonio , TX
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Question :
When hiring my first employee, how do I calculate the total cost of employment, such as SS taxes and the like? I am an S corp. with just a CEO and myself as a CIO. Do most CPA’s handle employee tax’s?
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Go to the IRS web site and pull down "schedule E" that will give you charts that will tell you how much to withhold for federal income and payroll taxes. Most CPAs should be able to help you with employee taxes.
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From : Jessica England
Location : Garden Grove , CA
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Question :
It seems as if tax preparers and the SBA cannot seem to agree on the issue of whether or not a person should file taxes of revenue made from a hobby business if they are under $1,000. Is there an actual rule of thumb, so to speak, that could offer a designated minimum pecuniary figure? What amount does business tax laws kick in at and what would be the best route to take in filing such things?
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There is no de minimis rule for reporting income from a hobby. All income should be reported. You may, however, have offsetting expenses that can be deducted. Expenses that are specifically related to the hobby and are deductible regardless of whether or not they relate to a business (for example, real estate taxes) are deductible from the hobby income first; these deductions would be itemized deductions on your return. To the extent the income from the hobby exceeds any such deductions, other expenses related to the hobby can be deducted as miscellaneous itemized deductions; the total of all your miscellaneous itemized deductions, however, are deductible only to the extent that they exceed 2% of your adjusted gross income.
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From : Kayla King
Location : Hutchinson , Kayla
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Question :
Wondering what business structure to choose as I am in the planning stages of opening a small business (Nutrition consulting). It will be only myself, no employees, no sales. I plan on keeping my FT job for the next 6-12 mo and doing this on the side. Do I need to choose a structure before I start my classes? LLC or S Corp? Should I just go sole proprietorship then choose a corp later after I know my profits? I was also told I could just do a DBA for now with sole pr. Do I have to get an EIN# if it's just me? Thanks for any advise.
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You should consider organizing as an LLC. The LLC has the advantage of limiting your liability to the assets of the LLC. You would have personal liability if you use the DBA designation. The advantage of the LLC over the S corporation is that, since you would be the sole owner of the
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From : Paul Holmes
Location : Jonesboro , Arkansas
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Question :
If there is one tip that you would give small business to owners to reduce their 2008 tax bills, what would it be?
| Reply :
Tax changes for 2008
$250,000 Expensing election
In 2008 any small business can expense up to $250,000 in business assets. This can include office equipment such as computers, printers, software, desks, etc. While there is little time left this year so long as you sign a contract or better yet use a credit card to pay for the purchases, even if they arrive after the end of the year you can get the deudciton for this year.
With other limitations business vehicles and leasehold improvements also come in for special tax treatment for 2008.
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From : Sung Kim
Location : ,
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Question :
Hi, I live in NYC. I plan to form an LLC in 2009 and purpose of the LLC is to invest in foreign rental properties. Is it good idea to form the LLC in Wyoming even though I live in NYC for tax advantage reasons? If any.
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You may be thinking that Wyoming does not have a state income tax and that, if you register the LLC in Wyoming, you will escape state tax. That is not the case, however. As an owner of the LLC you will be taxed in the state of your residence regardless of where the LLC is registered.
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From : Marie J. Shepard CPA
Location : Cheney , WA
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Question :
Some of my clients are new S-corps and because of difficulties gettting loans for the corp, they buy vehicles and other assets in their own names. For example, a vehicle, bought personnally but used 100% for business, what would be your best approach at getting the best tax advantage for the taxpayer. If it had been bought by the corp I could take 100% of cost as S. 179 (because it is a specialty painting vehicle) but not since it is not owned by corp, is there a way to transfer it in without altering the loan issues (and title) or do we need to take mileage reimbursement only or should we lease to corp, but the latter I think would not allow the same S. 179 write off... this happens often with small corps for loans and asset acquisition.
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Section 179(d)(1)(C) is not entirely clear as to whether an S corp that does not own the vehicle can take 179. I would like to tell you the S corp can take the deduction, but without more research, I would give you the safe answer that generally only the owner can take 179. You’ve got to be careful with a lease between the s corp and the shareholder as 179 restricts deductions between related parties. The ideal here is, of course, to transfer title to the S corp and restructure the loan in such a way as to have the corporation liable to the shareholder for repayment so that the owner can receive debt basis for the loan to the corporation. Possibly do this by having the shareholder forward the bank loan proceeds to the corporation and then have the corporation pay the shareholder monthly and the shareholder repay the bank loan. If the bank will allow the loan to remain with the shareholder (using alternative collateral perhaps) than this may work.
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From : dewanda
Location : sf , ca
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Question :
i colse my business cause i was spending more then i was making. so how well that work for me. do i have to pay ant taxes.
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sounds like you had losses so you would not owe any income taxes. If you had employees you would have responsibility for the employer's portion of the payroll taxes.
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From : Chibuzo
Location : Aba , Abia
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Question :
How can one be successful in business.
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This is not a tax question, but a good idea, a business plan, professional advice, hard work, and a little luck!
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From : Jerry Chautin
Location : ,
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Question :
Please provide a few guidelines to when a small-business owner can needs a CPA compared to saving money by using a bookkeeper.
Thanks,
Jerry Chautin
SCORE volunteer business counselor
“Counselors to America’s small business”
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At a minimum, it’s a good idea for a small business owner to work with a CPA when the business is being set up so that the basic tax and accounting issues regarding the most beneficial structure and manner of operation for the business can be analyzed and implemented. After those issues have been dealt with, the small business owner may want to use a bookkeeper during the course of the year and consult with the CPA from time to time as specific issues arise and at tax time.
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From : R McDougal
Location : Jacksonville , FL
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Question :
If two of three members of an LLC increase their Capital Contribution in December of 2008, does it change their ownership percentage for the entire year of 2008 or just for the last month of the year for K-1 fililing?
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The K-1 only reflects beginning and year end percentages. A member can have varying percentages throughout the year. A transaction at any given time throughout the year that depends on partner capital or basis to determine gain/loss, etc should be determined using the percentage at the time of the transaction.
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From : Melanie Cameron
Location : Fairfax , VA
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Question :
Mr. Ochsenschlager,
Thank you for taking the time to answer our questions. Quarterly taxes in 2008 for small businesses are based on the gross income reported in 2007. I know the nasty penalties for not paying these taxes are necessary. If you make more than that amount in 2008, do those penalties apply if you do not pay the additional at the quarterly due dates? If you make less in 2008 than you did in 2007, are you obliged to pay the quarterly taxes that were based on 2007 earnings? Will you still be penalized at the end of the year?
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You will not be penalized on estimated tax payments if your estimate for this year is at least equal to 100% of the tax paid last year. So if your income does go up you must pay the extra tax when your return is filed but you will not receive any penalty.
If your income is lower than last year the other safe harbor you can use to avoid a penalty is that so long as your estimates equal 90% of your current years taxes there is no penalty. You can lower your estimates but if you go below this 90% of current taxes, you can be penalized.
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From : U.S. Small Business Administration
Location : Washington , D.C.
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Question :
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Hello, everyone. I am happy to be with you today hosting this SBA small business tax chat. It looks as though we have some great questions, so let's get started.
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