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OTHER TAXING MATTERS

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  1. OTHER TAXING MATTERS With Jack Cohen, CPA IncSmart.biz Inc

  2. 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

  3. Payroll Reporting • 940 FUTA • 941 Federal Withholding and Social Security • State Withholding • State Unemployment • State Disability • Others

  4. Tax Tip • Use Payroll company

  5. State and Local Taxes • Sales tax • Use tax • Personal property tax • Business license or permit

  6. 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?

  7. 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 seller the transaction the activity The state may require out-of-state vendors to provide Information.

  8. 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

  9. NexusContinued • Employee Visits Phillip Crosby Associates, Inc. (Alabama-1996) Management Consulting Business Telemarketing sales; in-person visits 26/year Did 69 projects and training over three years Nexus 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 month Supervisors hired 4 employees each trip Argued presence was not regular but sporadic Nexus upheld-ruled regular means repeated

  10. NexusContinued • Representative’s Nexus Out of State Mail orders Independent Sales Rep Some 800 phone numbers Telemarketers ruled as independent sales reps • Printer’s Nexus Applies to out-of-state companies establishing Nexus By storing paper at the printer’s location By visitations to the instate printer • Instate deliveries - How many? • Drop Shipments

  11. New Business Expenses • Start-up expenses • Organizational expenses • Web site expenses

  12. 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

  13. Business Travel • Client calls • Market research • Plan your vacation around business

  14. Tax Tip • Maintain Good Records • Receipts with business reason. • Diary – Kept Contemporaneously. • Primary reason for trip. • Ordinary & Necessary Expense

  15. Annual Board Meeting • Fully deductible • Find a creative location • Successful people travel

  16. The Big Deduction Sec. 179 This year: $125,000 up to purchase of $500,000

  17. Family Members as Tax Deductions • Children: lower tax deductions • Spouse on payroll • Employee benefits • Retirement planning

  18. Employee Education Expenses • Seminars • Conferences • College tuition

  19. Employee Benefits • Medical • Child Care • Life Insurance • Dental • Long Term Care • Chiropractic

  20. Business Retirement Plans • Pension, Sep 401K • Profit Sharing • Defined Benefit Plans

  21. Retirement $ The Ultimate Safe

  22. Final Thoughts • It’s Your $ • Plan, Plan, Plan … • Take Action

  23. Alternative Minimum Tax • Background • Tax Preference Items • Sch. ‘A’ Taxes • Accelerated Depreciation • Capital Gains • To Avoid – Keep deductions on page 1 of return.

  24. 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

  25. Thank You For more information, visit IncSmart.biz Inc