Taxes are a part of life. And for a small business owner, they are a major part of running a business. Sometimes taxes, especially the fear of penalties, feel like they’re zapping all your strength in successfully running what you created from the ground up. Despair is not the answer.
Let’s look at some issues that important to know, as Terry Sheridan outlines in this article.
- Healthcare Credit
- Payroll Tax Debt
- Retirement Plan Penalties
- Home Office Simple Deduction
- Unemployment Taxes That Can Increase
“It can be challenging for a small-business owner to remain compliant and stay on top of ever-changing tax laws,” said Jamal Ayyad, vice president of service delivery at SurePayroll. “Especially when it comes down to the wire, and the focus is on their company’s sales rather than tax season.”
Healthcare credit — There is a break for small business owners through the Affordable Care Act. This applies if you have less than 25 full-time employees and their incomes average less than $50,800 and you offer health insurance through the Small Business Health Options Program.
Payroll tax debt — There is an installment plan to business owners who owe less than $25,000 in tax, interest, and penalties and who filed all their returns. The debt must be repaid within 24 months or before the Collection Statute expires.
Retirement plan penalties — These penalties can be hefty. You’re looking at up to $15,000 in penalties if you don’t file with the Form 5500 series. If a fine is outstanding, a Department of Labor program can help cut or eliminate penalties completely.
Home Office Simple Deduction — There is a new option for a home office deduction helps with the calculating and recordkeeping requirements. A nine-point checklist compares the simple and regular methods, and only two are the same for both. One of these on the list is a “deduction for home office use of a portion of a residence allowed only if that portion is exclusively used on a regular basis for business purposes.”
Unemployment Taxes — Unemployment taxes might increase, depending on the state you live in. If the state you live in obtains a loan from the Federal Unemployment Trust Fund to pay its unemployment benefit liabilities and the loans are not paid off by November in a two-year debt period, then it becomes a credit reduction state. In turn, there’s a credit cutback against the full tax rate, and employers owe higher taxes on their Form 940.