Tax Responsibilities for Business Owners

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With tax season around the corner, Generations Federal Credit Union and SCORE Mentors presents, "SCORE: Tax Responsibilities for Business Owners" on 11/20/14. David Plemons, CPA walks small business owners through the ins and outs of business owner responsibilities for tax season.

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  • 1. Tax Responsibilities forBusiness Owners

2. SCORE SAN ANTONIOHipolito F. Garcia Federal Bldg615 E. Houston St. Ste 293San Antonio, TX 78205210-403-5931http://sanantonio.score.org 3. Tax Responsibilities forBusiness OwnersDavid PlemonsDavid Plemons CPA, Inc. 4. Agenda Types of business organizations Bookkeeping Systems and Accounting Methods Record Keeping Employment Taxes Tax Withholding Filing Requirements as an Employer Information Returns Methods of Filing Where to Get Help Useful Information4Tax Responsibilities for BusinessOwners 5. Types of BusinessOrganizations 6. Sole Proprietorship6Sole ProprietorshipSubject to local and county personal property TaxDepending on company industry, possibly subject to State andLocal Sales TaxFiles a Schedule C for the profit or loss of the business which isattached to the taxpayers 1040Subject to a 15.3% self employment taxNot subject to state franchise taxTax Responsibilities for BusinessOwners 7. General Partnership7General PartnershipGenerally not subject to State Franchise TaxSubject to Local and County Personal Property TaxDepending on company industry, possibly subject to State andLocal Sales TaxFiles a separate return, Form 1065Generally subject to a 15.3% self employment taxTax Responsibilities for BusinessOwners 8. Limited Partnership8Limited PartnershipSubject to State Franchise TaxSubject to Local and County Personal Property TaxDepending on company industry, possibly subject to State andLocal Sales TaxFiles a separate return, Form 1065General Partner is usually subject to a 15.3% self employmenttaxLimited partners are not subject to the 15.3% self employmenttaxTax Responsibilities for BusinessOwners 9. C & S Corporation9CCorporationSubject to State Franchise TaxSubject to local and county personalproperty TaxDepending on company industry, possiblysubject to State and Local Sales TaxFiles a separate return, Form 1120Entity pays its own tax not the ownersSubject to Double Taxation issuesSCorporationSubject to State Franchise TaxSubject to local and county personalproperty TaxDepending on company industry, possiblysubject to State and Local Sales TaxFiles a separate return, Form 1120-SSelf employment tax advantagesNot subject to Double Taxation issuesTax Responsibilities for BusinessOwners 10. Limited Liability Company (LLC)10LLCSubject to State Franchise TaxSubject to Local and County Personal Property TaxDepending on company industry, possibly subject to State and Local Sales TaxSingle owner LLC is treated as a Sole Proprietor. Multiple owners are treatedlike a partnership. Elections can be made to be taxed differentlyGenerally members are subject to the 15.3% self employment taxTax Responsibilities for BusinessOwners 11. Bookkeeping &AccountingMethods 12. Bookkeeping Systems12Single EntrySimplest to keepDaily and monthly summaryof business receiptsMonthly summary ofexpensesDisadvantage - Does notproduce a balance sheetDouble EntryBuilt in checks and balances Debits and CreditsTracks assetsEasy to generate balancesheetDisadvantage Higher costto maintainTax Responsibilities for BusinessOwners 13. Accounting Methods13 Set of rules used to decide when andhow to report income and expensesCash Accrual* Once selected you need IRS permission to changeTax Responsibilities for BusinessOwners 14. Recordkeeping Records must be sufficient to substantiateitems of income, deductions, and credits Accurate tax returns Source of receipt Documentation of deduction or credit Travel, transportation, entertainment, gifts Provide proof14Tax Responsibilities for BusinessOwners 15. Recordkeeping Records must be kept as long as theircontents are material to your tax situation Generally 3 years Exceptions: Employment tax record (4 years) Records relating to basis of assets (life ofasset) Change in accounting method (indefinitely) Non deductible IRA contributions15Tax Responsibilities for BusinessOwners 16. EmploymentTaxes 17. Employee vs. Contractor17TRICToolsDo you provide thetools for thetrade?RiskHow much risk isthe person taking?IntegrationIs the person anintegral part ofyour businessControlHow muchcontrol do youhave?Tax Responsibilities for BusinessOwners 18. Employment Taxes18 Employment taxes Withholdings from employee Employers share State unemployment taxes Form C-3 (quarterly) Paid to IRS Form 940 (annual) & 941 (quarterly) Employer Identification Number (EIN) Necessary for most employersTax Responsibilities for BusinessOwners 19. Tax Withholding 20. Tax Withholding Based on gross wages Secure W-4 form IRS Pub 919 Tipped employees Form 4070 (See Pub 1244) INS I-9 form Form found at www.uscis.gov20Tax Responsibilities for BusinessOwners 21. FilingRequirements 22. Filing Requirements as an Employer22Form 940 Used to pay Federal Unemployment Tax filed annuallyForm W-2 Required to be given to each current and former employee by January31st following the end of the calendar year coveredForm 1099 MISC For payments of $600 or more to independent contractorsForm 945 To report Backup WithholdingForm 941 Quarterly Federal Employment Tax ReturnTax Responsibilities for BusinessOwners 23. Filing Requirements Form 94123Tax Responsibilities for BusinessOwnersDue Dates for Filing Form 941Quarter Ends Due DateQ1 Mar 31 Apr 30Q2 Jun 30 Jul 31Q3 Sept 30 Oct 31Q4 Dec 31 Jan 31Form 941items to note: Do not file more than one per quarter If you cease to do business or pay wages you need to file a final return You incur your tax liability when you pay your wages, not when you file Do not confuse deposit requirements with filing requirements Small Businesses with liabilities of $1000 or less can file annually 24. Filing Requirements Form 941Semi-Weekly More than $50,000 Wed or Friday of following weekNext Day $100,00 or more Next Banking Day24Deposit Requirements for Employment TaxesWhen to Deposit/Pay Tax Liability Due DateMonthly $50,000 or less 15th of following monthTax Responsibilities for BusinessOwners See IRS Pub 15 for details 25. Information Returnsand Methods ofFiling 26. Information Returns26Form 1099-MISCPayments of$600 or more*Exclude corporations unlessreporting legal services to attorneysTax Responsibilities for BusinessOwnersWithhold 28% ifW-9 form notreceived 27. Information Returns27Form 1099-KSent fromMerchantServicesTax Responsibilities for BusinessOwnersExcluded from1099-MISC 28. Methods of Filing/Payment28Tax Responsibilities for BusinessOwnersForIndividuals &BusinessEFTPSElectronic FederalTax PaymentSystemCan pay allbusinesstaxesConvenientAutomaticallyenrolled withEIN 29. Methods of Filing/Payment E-file Individual, corporate, partnership, andemployment tax returns (forms 940 and 941) Automatic extensions to file Forms 1099 Forms W-2 thru Social Security website -http://www.socialsecurity.gov/employer/ File paper forms29Tax Responsibilities for BusinessOwners 30. Additional Taxes30Texas Franchise TaxGross SalesCost of goods soldorPayroll X 1% = Total tax dueTax Responsibilities for BusinessOwnersNo tax due ifgross sales areless than $1M 31. Additional Taxes31Personal Property TaxTaxes onpersonalproperty ownedby businessTax Responsibilities for BusinessOwnersTax paid to taxassessor 32. Where to Get Help 33. SCORE www.score.org33Tax Responsibilities for BusinessOwners 34. IRS www.irs.gov34Tax Responsibilities for BusinessOwners 35. IRS www.irsvideos.gov/SmallBusinessTaxpayer35Tax Responsibilities for BusinessOwners 36. Other resources for help36www.sba.gov www.socialsecurity.govTax Responsibilities for BusinessOwners 37. Other resources for help37www.dol.gov www.business.usa.govTax Responsibilities for BusinessOwners 38. David Plemons, CPA www.plemonscpa.com38Tax Responsibilities for BusinessOwnersDavid B. Plemons, CPAFree 30 minute initialconsultations.Mon thru Friday 8:00am 5:00pm8207 Callaghan Rd. Suite 150210.615.9300 39. UsefulInformation 40. IRS Tax Map taxmap.ntis.gov/taxmap40Tax Responsibilities for BusinessOwners 41. SCORE SAN ANTONIOHipolito F. Garcia Federal Bldg615 E. Houston St. Ste 293San Antonio, TX 78205210-403-5931http://sanantonio.score.org 42. Thank YouDavid B. Plemons, CPA210.615.9300david@plemonscpa.comwww.linkedin.com/pub/david-plemons/a/b60/9a4 43. Get Connected & Learn Morewww.MyGenFCU.orgEmail: SmallBiz@MyGenFCU.org

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