Dear Professor Bruce:
As a small business owner, what can I do at the start of the new year to stay in
good fiscal shape despite the fact that the fiscal cliff deal is still under debate and revision?
There are a number of ways that you can resolve to run a tight ship in the new year. To start, the Xero Partner Advisory Council, a group of accounting professionals and accounting industry experts from all over the U.S., suggests you should stay savvy to changes in 1099 filing requirements, know how your presence in different states affects your tax requirements and take advantage of the small business health care credit.
Streamline your 1099s: In 2012 changes were made regarding 1099 reporting. The amount of paperwork increased as did the penalties for not complying with new government regulations creating an arduous (and if done incorrectly) costly process. Employ a cloud-based accounting system that has 1099 capabilities and integrates with Track1099 (a vendor portal where vendors can log in and retrieve their 1099s and directly
e-file to the IRS). And because it’s cloud-based filing can happen anytime, anywhere on any device – directly diminishing the cost and workload for small business.
Know Your Nexus: Be sure your small business is filing in all
required states where the business nexus has been established. A nexus in tax
law describes a situation in which a business has a “nexus” or
presence in a state and is thus subject to state income taxes and to sales
taxes for sales within that state. With state coffers on the look-out for
additional tax revenue, many states have changed their nexus rules from a
location/brick-and-mortar concept, to a framework where the nexus can be
established simply by generating revenues from sales in a certain state (think
of revenue from e-commerce).
Healthy, Wealthy and Wise: Take advantage of the small business health
care credit. According to Jim Wilkinson, a member of the Xero Partner Advisory
Council and a CPA Shareholder at The Braver Group, if you are a small business
who employs 25 full-time workers, pay an average wage of less than $50,000 a
year, and pay at least half of employee health insurance premiums, then you are
eligible for a maximum credit of 35 percent and 25 percent for tax exempt
businesses (non-profits, charities).
For further information, please visit www.xero.com/