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Eric Tyson. Small Business Taxes For Dummies
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More Bestselling For Dummies Titles by Eric Tyson. Investing For Dummies®
Mutual Funds For Dummies®
Personal Finance in Your 20s For Dummies®
Home Buying For Dummies®
Real Estate Investing For Dummies®
Small Business For Dummies®
Small Business Taxes For Dummies® To view this book's Cheat Sheet, simply go to www.dummies.com and search for “Small Business Taxes For Dummies Cheat Sheet” in the Search box. Table of Contents
List of Tables
List of Illustrations
Guide
Pages
Introduction
About This Book
Foolish Assumptions
Icons Used in This Book
Beyond the Book
Where to Go from Here
Understanding Small Business Taxes
Small Business Taxes 101
Valuing Year-Round Tax Planning
Factoring taxes into small business decisions
Checking out common tax mistakes
Seeking advice after an important decision
Failing to withhold or submit enough taxes
Missing legal deductions
Forsaking retirement accounts
Not owning real estate
Neglecting the timing of events you can control
Not using tax advisors effectively
Noting How Corporate and Individual Tax Reform Impacts Small Business
Checking out corporate income tax rate reduction and simplification
Reducing individual income tax rates
Noting 20 percent deduction for pass-through entities
Enjoying better equipment expensing rules
Increasing maximum depreciation deduction for automobiles
Limiting interest deductions
Reducing meal and entertainment deductions
Eliminating the health insurance mandate
Revising rules for using net operating losses
Considering the SECURE ACT of 2019 and COViD-19 Relief Tax Acts
Contemplating Potential Upcoming Tax Law Changes
Understanding the Different Types of Taxes You Pay and Your Tax Rates
Defining total taxes and taxable income
Your marginal income tax rate for federal income taxes
State income taxes
THE ALTERNATIVE MINIMUM TAX
Corporate income tax rates
Employment (payroll) taxes
Sales taxes
Making Important Business Decisions
Choosing Your Business Entity
Sole proprietorships
Understanding the “solo” advantages
SIDELINE BUSINESSES, TAX WRITE-OFFS, AND THE HOBBY LOSS RULES
Weighing the disadvantages of operating “solo”
Deciding whether to incorporate
Getting a handle on liability protection
Investigating liability insurance
Understanding corporate taxes
Examining other incorporation considerations
SHOULD YOU INCORPORATE IN DELAWARE, NEVADA, OR WYOMING?
Knowing where to get advice
One step further: S corporations
S corporation tax specifics
S corporation requirements
Partnerships
Limited liability companies (LLCs)
Valuing Employee Benefits
Retirement plans
Health insurance plans
Looking at plan attributes
Making sense of the impact of healthcare reform
Buying health insurance
Noting other ways to save on healthcare spending
Other benefits
Benefits that are deductible for corporation owners
Retirement Accounts and Investments for Small Businesses
Beginning with Retirement Account Basics: Tax Breaks, Penalties, and Saving Guidelines
Instant rewards: Upfront tax breaks
Ongoing tax breaks on your investment earnings
Additional tax credits for lower-income earners
Retirement account penalties for early withdrawals
Guidelines for saving (but not excessively)
Surveying Your Retirement Account Options
Maximizing your retirement plan’s value
Checking out your choices
SEP-IRAs
SIMPLE plans
Individual 401(k)
401(k) plans for “larger” small companies
DEFINED BENEFIT PLANS FOR HIGH-INCOME EARNERS
403(b) plans for nonprofit organizations
Deciding amongst your plan options
Developing Realistic Investment Return Expectations
Estimating your investments’ likely future returns
Bond returns
Stock returns
Real estate returns
Compounding your returns
Selecting Top-Notch Investments for Your Retirement Account
Considering fund advantages
Maximizing your chances for fund investing success
Understanding the role of risk in evaluating performance
Scrutinizing fund management experience
Minimizing fund costs
Understanding and using index funds
Considering exchange-traded funds
Using asset allocation in your retirement fund portfolio
Selecting the best stock funds
U.S. stock funds
International stock funds
Investing in the best exchange-traded funds
Balancing your act: Funds that combine stocks and bonds
Finding the best bond funds
The dangers of yield-chasing
Recommended short-term bond funds
Recommended intermediate-term bond funds
Recommended long-term bond funds
Real Estate and Your Small Business
Deciding Whether to Work out of Your Home
Researching local ordinances and issues
WEIGHING THE IMPACT OF THE COVID-19 PANDEMIC SHUTDOWNS
Controlling costs
Separating your work life from your personal life
Doing a cost comparison
Leasing Space for Your Business
Leaning toward leasing
Leasing burdens of retail businesses
Negotiating a lease
Buying Business Property
Taking stock of your financial situation
Doing a rent-versus-buy analysis
Evaluating leases as a real estate investor
Lease transferability and analysis
Making sense of commercial leases
Estate Planning
Determining Your Estate’s Tax Concerns
Understanding the federal estate tax exemption
Figuring out your taxable estate
Examining federal estate tax rates
Surveying state estate tax rules
Surveying special estate tax treatment afforded small businesses
Reducing Expected Estate Taxes with a Few Strategies
WHERE THERE’S A WILL THERE’S AN EASIER WAY
Giving away your assets
Knowing what you should/can give
Making gifts greater than $16,000 per year
Leaving all your assets to your spouse
Buying cash-value life insurance
Agent conflicts of interest
Rare instances when life insurance can help with estate taxes
Setting up trusts
Living trusts
Charitable trusts
Getting advice and help
Ongoing Tax Jobs
Keeping Track of Your Small Business Revenues and Costs
Establishing an Accounting System for Your Business
Separating business from personal finances
Documenting expenses and income in the event of an audit
Keeping current on income, employment/payroll and sales taxes
Reducing your taxes by legally shifting income and expenses
Keeping Good Tax Records for Your Small Business
Ensuring a complete and accurate tax return
Setting up a record-keeping system
Deciding when to stash and when to trash
Watching out for state differences
Replacing lost business records
Form 1040 Filing Options
Sizing Up the New and Improved Form 1040
CAN YOU ITEMIZE YOUR DEDUCTIONS?
Tackling the Income Lines
Line 1: Wages, salaries, tips, and so forth
Line 2a: Tax-exempt interest
Line 2b: Taxable interest
Lines 3a and 3b: Qualified dividends and ordinary dividends
Lines 4a and 4b: IRA distributions and taxable amount
Lines 5a and 5b: Total pensions and annuities
Lines 6a and 6b: Social Security benefits
Line 7: Capital gain (or loss)
Line 8: Other income from Schedule 1, line 9
Line 11: Adjusted gross income
Line 12a: Standard deduction or itemized deductions (from Schedule A)
Line 13: Qualified business income deduction
Schedule 1: Additional Income and Adjustments to Income
Line 3: Business income (or loss)
Line 4: Other gains (or losses)
Line 5: Rental real estate, royalties, partnerships, S corporations, trusts, and so on
Line 6: Farm income (or loss)
Line 7: Unemployment compensation
Line 8: Other income
Adjustments to Income
Line 11: Educator expenses
Line 12: Certain business expenses of reservists, performing artists, and some government officials
Line 13: Health savings account deduction
MOVING EXPENSES NO LONGER GENERALLY DEDUCTIBLE
Line 15: Deductible part of self-employment tax
Line 16: Self-employed SEP, SIMPLE, and qualified plans
Line 17: Self-employed health insurance deduction
Line 20: IRA deduction
Line 21: Student loan interest deduction
Nonrefundable Credits: Schedule 3
Line 1: Foreign tax credit
Line 2: Credit for child and dependent care expenses
Line 3: Education credits
Line 4: Retirement savings contributions credit
Schedule C: Profit or Loss From Business
WHAT HAPPENED TO SCHEDULE C-EZ?
Detailing Schedule C
Getting the Basics Down
Accounting methods
Material participation
Part I: Income
Line 1: Gross receipts or sales
Line 2: Returns and allowances
Line 4: Cost of goods sold
Line 6: Other income
Part II: Expenses
Line 8: Advertising
Line 9: Car and truck expenses
Standard mileage rate or actual expenses?
No help from Uncle Sam with commuting expenses
Travel to a second job
Travel to a temporary job site
Line 10: Commissions and fees
Line 11: Contract labor
Line 12: Depletion
Line 13: Depreciation
The $1,050,000 deduction (section 179 depreciation)
IRS depreciation percentages
Line 14: Employee benefit programs
Line 15: Insurance (other than health)
Line 16a: Mortgage interest
Line 16b: Other interest
Line 17: Legal and professional services
Line 18: Office expense
Line 19: Pension and profit-sharing plans
Lines 20a and b: Rent or lease
Line 21: Repairs and maintenance
Line 22: Supplies
Line 23: Taxes and licenses
Lines 24a and b: Travel and meals
Line 25: Utilities
Line 26: Wages
Line 27: Other expenses
Line 30: Form 8829
Lines 32a and b: At-risk rules
Startup expenses
Operating loss
The Business Use of Your Home
Checking Out the New, Simplified Home Office Deduction
Filling Out Form 8829
Recognizing who can use Form 8829
Measuring the part of your home used for business
Figuring your allowable home office deduction
Determining your home office’s depreciation allowance
Line 37: Your home’s value
Line 38: Land not included
Line 39: Basis of building
Line 40: Business portion of your home
Line 41: Depreciation percentage
Line 42: Depreciation allowable
Carrying over what’s left
Understanding the Downsides to Home Office Deductions
Audit risk and rejection of repeated business losses
Depreciation recapture when selling a home with previous home office deductions
Estimated Taxes, Self-Employment Taxes, and Other Common Forms
Form 1040-ES: Estimated Tax for Individuals
Comparing the safe harbor method to the 90 percent rule
Completing and filing your Form 1040-ES
Paying estimated taxes on or through the IRS website
Keeping Current on Your Employees’ (and Your Own) Tax Withholding
Form W-4 for employee withholding
Tax withholding and filings for employees
HOUSEHOLD EMPLOYMENT TAXES: SCHEDULE H
Schedule SE: Self-Employment Tax
Form 8889: Health Savings Accounts (HSAs)
Understanding how HSAs work and who can use them
Completing Form 8889
Getting Help
Dealing with Notices and Audits
Understanding the Basics You’ll Find on an IRS Notice
Assessing Assessment Notices
Income verification and proposed changes to your tax return: Forms CP2501 and CP2000
Request for your tax return: Forms CP515 and CP518
Backup withholding notice
WHY SOME TAX ADVISORS FILE A RETURN WHEN IT’S NOT REQUIRED
Federal tax lien notice: Form 668(F)
Handling Non-Assessment Notices
Paying interest on additional tax
Receiving a delinquent tax return notice
BEWARE OF IRS PHONE SCAMS
What You Should Know about Audits
Surviving the four types of audits
Correspondence audits
Office audits
Field audits
Random statistical audits
Prepping for an audit
Winning your audit
Understanding the statute of limitations on audits
Correcting IRS Errors
Keeping your correspondence short and sweet
Sending a simple response to a balance due notice
Getting help from a taxpayer advocate
Understanding what your local taxpayer advocate does
Meeting the criteria for a taxpayer advocate case
Knowing what happens if the taxpayer advocate takes your case
Contacting your local taxpayer advocate
Amending a Return
More expenses than income (net operating losses)
The tax benefit rule
Taking Action Even When You Can’t Pay Your Taxes
Reducing Your Chances of Being Audited
Declare all your income
Don’t itemize
Earn less money
Don’t cheat
Don’t cut corners if you’re self-employed
Double-check your return for accuracy
Stay away from back-street refund mills
Keeping Up with and Researching Tax Strategies and Rules
The Benefits of Preparing Your Own Return
Using IRS Publications
Buying Software
Accessing Internet Tax Resources
Going right to the source: The IRS
Utilizing tax preparation sites
Checking out TaxTopics.net
Finding out more through research sites
Hiring Help
Paying for Tax Help
Deciding to Hire Tax Help
Unenrolled preparers
Enrolled agents
Certified public accountants
Tax attorneys
Who’s best qualified?
Finding Tax Advisors
Interviewing Prospective Tax Advisors
What tax services do you offer?
What are your particular areas of expertise?
What other services do you offer?
Who will prepare my return?
How aggressive or conservative are you regarding interpreting tax laws?
What’s your experience with audits?
How does your fee structure work?
What qualifies you to be a tax advisor?
Do you carry liability insurance?
Can you provide references of clients similar to me?
The Part of Tens
Ten+ Useful Apps and Software Packages for Small Business Tax Issues
Tracking Expenses with Expensify
Processing Sales with Square
Managing Transactions with EMS+
Marking Miles with MileIQ
Managing Your Accounting with QuickBooks
Handling Accounting and Invoicing with FreshBooks
Preparing Taxes with TurboTax Self-Employed
Completing Taxes with H&R Block Tax Preparation and Filing Software
Ten Often Overlooked Tax Reduction Opportunities
Invest in Wealth-Building Assets
Fund Some Retirement Accounts
Contribute to a Health Savings Account
Work Overseas
Calculate Whether a Deduction Is Worth Itemizing
Trade Consumer Debt for Mortgage Debt
Consider Charitable Contributions and Expenses
Scour for Self-Employment Expenses
Married Couples Should Crunch the Numbers on Filing Separately
Tax Breaks for Minority Owned Businesses and Those in Low-Income Areas
Ten Resources to Turn to After Reading This Book
To Develop a Good Business Plan and Improve Your Small Business
To Whip Your Finances into Shape
To Select the Best Business Entity
To Set Up an Accounting and Financial Management System
To Hone Your Investment Savvy for Your (and Your Employees’) Retirement Funds
For Help with Payroll Regulations and Employee Tax Withholdings
To Dig Deeper into IRS Rules and Regulations
To Deal with IRS Collection Efforts
For More Detailed Advice about All Aspects of Your Income Tax Return
For Assistance in Preparing Your Income Tax Return
Index. A
B
C
D
E
F
G
H
I
J
L
M
N
O
P
Q
R
S
T
U
V
W
Y
Z
About the Author
Author’s Acknowledgments
WILEY END USER LICENSE AGREEMENT
