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TOP TAX ISSUES FOR SMALL BUSINESS What Will Affect Your Next Return (and Beyond)?. Updated Nov. 11, 2013. Cutting Through the Complexity. 2013 Survey by the National Small Business Association: Most small companies spend more than 40 hours a year dealing with federal taxes

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top tax issues for small business what will affect your next return and beyond

TOP TAX ISSUES FOR SMALL BUSINESSWhat Will Affect Your Next Return (and Beyond)?

Updated Nov. 11, 2013

cutting through the complexity
Cutting Through the Complexity
  • 2013 Survey by the National SmallBusiness Association:
    • Most small companies spend more than40 hours a year dealing with federal taxes
    • 38% spend more than 80 hours a yearon tax compliance
small business health care tax credit
Small Business Health Care Tax Credit
  • Small businesses can qualify for a credit basedonhealth insurance premiums paid if they:
    • Have fewer than 25 FTE employees
    • Pay an average annual wage of lessthan $50,000
    • Contribute 50% or more to employeehealthinsurance premiums
small business health care tax credit1
Small Business Health Care Tax Credit
  • For tax years beginning in 2014, the credit is 50% of premiums paid(35% for small tax-exempt employers)
  • Credit will apply only to participants in the Small BusinessHealth Options Program (SHOP) Marketplace
  • SHOP opens to companies with up to 50employees; expected to expand in 2016
health care law and larger employers
Health Care Law and Larger Employers
  • Businesses with at least50 FTE employees mustoffer coverage to employeesor face a financial penaltyafter Jan. 1, 2015
  • Businesses need to startplanning now to avoid penalties
section 179 expense and bonus depreciation deduction
Section 179 Expense and BonusDepreciation Deduction
  • American Taxpayer Relief Act of 2012 (ATRA)
    • Extends the Section 179 deductionthrough 2013
    • Extends for one year the availabilityoffirst-year “bonus” depreciation
new tax rates on ordinary i ncome and capital gains
New Tax Rates on Ordinary Income and Capital Gains
  • For 2013 income, the highest individualincometax rate will be 39.6%.
  • The dividend income and long-term capitalgains tax rate also jumps from 15% to 20%for highest earners (23.8% if the new netinvestment income tax applies).
  • The dividend and long-term capital gainsratesfor other taxpayers remain the same,ranging from 0 to 15%.
new 3 8 tax on n et investment income
New 3.8% Tax on Net Investment Income
  • Applies to individuals withmodified AGI above certain thresholds:
    • $250,000 for married couplesfiling jointly
    • $200,000 for single taxpayers
  • Includes capital gains, interestand dividend income frominvestment assets
  • May also apply to rental androyalty income
home office deduction
Home Office Deduction
  • Part of a business owner’s personal residencemustbe used regularly and exclusively as eitherthe principal place of business or as a place tomeetwith patients, customers or clients.
  • Using an optional, new safe-harbor method(effective for tax years beginning in 2013),taxpayers can deduct $5 per squarefoot of home office space(up to 300 square feet).
choice of entity
Choice of Entity
    • Sole proprietorships
  • Flow-through entities have been very popular:
    • Partnerships
    • LLCs
    • S corporations
  • Why? To help mitigate double taxationand differences between the corporateand individual income tax rates.
  • New Wrinkle: The new 39.6% individualtax bracket and 3.8% net investment incometax could significantly erode tax benefits.
saving for retirement
Saving for Retirement

Options include:

  • IRA-based plans such as
    • Savings Incentive Matchfor Employees (SIMPLE)
    • Simplified Employee Pension(SEP) plans
  • Profit sharing plans
  • A variety of 401(k) plans
state and local tax concerns
State and Local Tax Concerns
  • Businesses that provide services,sell products or otherwise have apresence in more than one statemay be subject to tax withholding,filing and payment requirements inmany (although not necessarily all)of those states.
  • Sales tax rules vary widely state tostate and there may be differenceson the types of products or servicesto which they apply.
planning opportunities
Planning Opportunities
  • Although new tax laws add complexity,they also often open up new opportunities.
  • We can help you understand your taxsituationand determine the best stepsto address your tax challenges andany other financial concerns.