small business tips | Nesteggg Accounting

Closing a Washington Business

If you are no longer doing business, you can close your account one of the following ways:

Online using My DOR, the fastest way to close your account.
By paper, using the Business Information Change Form.

Note: If you are dissolving a corporation registered to do business in Washington, you must contact the Secretary of State. You’ll need to provide them with a Revenue Clearance Certificate issued by the Department of Revenue.

You can also use a Business Information Change Form if:

Your business is still open and you want to close a business location only.
You want to cancel a trade name only.

The information you provide will be shared, if applicable, with the following Washington State programs:

Business Licensing (Business Licensing Service)
Unemployment Insurance Account (Employment Security)
Workers Compensation Insurance Account (Labor & Industries)

After you close your account:

Complete an excise tax return and pay all taxes owed within 10 days.
Pay use tax on inventory converted to personal use (if sales tax was not paid).
Keep your business records for five years.
Contact other Washington State agencies to close your account with them.

Out-of-state businesses

Out-of-state businesses with nexus and making retail sales in this state have a continuing sales tax collection obligation for the following calendar years after the calendar year in which they stop doing business in Washington.

Business and occupation tax applies to sales in Washington up until the end of the calendar year after the calendar year in which they stop doing business in Washington.

Federal Close of Business Requirements

Internal Revenue Services

You must file an annual return with the Internal Revenue Service (IRS) for the year you go out of business. If you have employees, you must file the final employment tax returns, in addition to making final federal tax deposits of these taxes. Consult the IRS Closing a Business Checklist.

Use CalGOLD, our online permit assistance tool, to help in identifying local, state, and federal regulating agencies that you may have obtained permits from to update records and renew your permits with them. Once in CalGOLD, input your city and type of business. If your business is not listed you can select “General Business Information.”

There are typical actions that are taken when closing a business. You must file an annual return for the year you go out of business. If you have employees, you must file the final employment tax returns, in addition to making final federal tax deposits of these taxes. Also attach a statement to your return showing the name of the person keeping the payroll records and the address where those records will be kept.

The annual tax return for a partnership, corporation, S corporation, limited liability company or trust includes check boxes near the top front page just below the entity information. For the tax year in which your business ceases to exist, check the box that indicates this tax return is a final return. If there are Schedule K-1s, repeat the same procedure on the Schedule K-1.

You will also need to file returns to report disposing of business property, reporting the exchange of like-kind property, and/or changing the form of your business. If you do not have a pre-printed envelope in which to send your taxes, refer to the Where To File page for a list of addresses. Below is a list of typical actions to take when closing a business, depending on your type of business structure:

Closing-a-Business-Checklist-_WA-DOR Download

Closing-a-Business-Checklist-_-Internal-Revenue-Service-2 Download

IRS updates guidance for deductible business, charitable, medical and moving expenses

The Internal Revenue Service today issued guidance for taxpayers with certain deductible expenses to reflect changes resulting from the Tax Cuts and Jobs Act (TCJA).

Revenue Procedure 2019-46, posted today on IRS.gov, updates the rules for using the optional standard mileage rates in computing the deductible costs of operating an automobile for business, charitable, medical or moving expense purposes.

The guidance also provides rules to substantiate the amount of an employee’s ordinary and necessary travel expenses reimbursed by an employer using the optional standard mileage rates. Taxpayers are not required to use a method described in this revenue procedure and may instead substantiate actual allowable expenses provided they maintain adequate records.

The TCJA suspended the miscellaneous itemized deduction for most employees with unreimbursed business expenses, including the costs of operating an automobile for business purposes. However, self-employed individuals and certain employees, such as Armed Forces reservists, qualifying state or local government officials, educators and performing artists, may continue to deduct unreimbursed business expenses during the suspension.

The TCJA also suspended the deduction for moving expenses. However, this suspension does not apply to a member of the Armed Forces on active duty who moves pursuant to a military order and incident to a permanent change of station.

Four common tax errors that can be costly for small businesses

A small business owner often wears many different hats. They might have to wear their boss hat one day, and the employee hat the next. When tax season comes around, it might be their tax hat.

They may think of doing their taxes as just another item to quickly cross off their to-do list. However, this approach could leave taxpayers open to mistakes when filing and paying taxes.

Accidentally failing to comply with tax laws, violating tax codes, or filling out forms incorrectly can leave taxpayers and their businesses open to possible penalties. The IRS encourages small businesses to explore using a reputable tax preparer – including certified public accountants, Enrolled Agents or other knowledgeable tax professionals – to help with their tax situation. Filing electronically can also help avoid common errors.

Being aware of common mistakes can also help tame the stress of tax time. Here are a few mistakes small business owners should avoid:

Underpaying estimated taxes
Business owners should generally make estimated tax payments if they expect to owe tax of $1,000 or more when their return is filed. If they don’t pay enough tax through withholding and estimated tax payments, they may be charged a penalty.

Depositing employment taxes
Business owners with employees are expected to deposit taxes they withhold, plus the employer’s share of those taxes, through electronic fund transfers. If those taxes are not deposited correctly and on time, the business owner may be charged a penalty.

Filing late
Just like individual returns, business tax returns must be filed in a timely manner. To avoid late filing penalties, taxpayers should be aware of all tax requirements for their type of business the filing deadlines.

Not separating business and personal expenses
It can be tempting to use one credit card for all expenses especially if the business is a sole proprietorship. Doing so can make it very hard to tell legitimate business expenses from personal ones. This could cause errors when claiming deductions and become a problem if the taxpayer or their business is ever audited.

What Can You Be Doing Now?

Of course, it feels as if there is too much shopping and visiting and eating to be done this time of year to do anything extra. But be kind to your future January-self and do these things now. A little 4^th Quarter maintenance now will go a long way toward a relaxing new year!

Worker Maintenance

If you employ workers and/or independent contractors do this now so in January all you have to do is process and mail, because deadline for W-2s and 1099s is January 31, 2020

Verify current mailing address for all your employees both current and former
Make sure you have a W-9 on file for all your independent contractors

Clean Books = Happy Owner

Get your business’ books up to date now for this year. Nothing worse than racing the clock in the beginning of the year to clean up from the year passed!

Reconcile all your bank and credit card accounts
Make sure all income and expenses are input correctly
Review reports to date to check for errors or omissions

Dream Big

What do you want your next business year to look like? Are you hoping to invest in new equipment, a new product line, hire more employees? If you know what you want to accomplish in 2020 then plan now.

Tax planning – do you need to show more income in 2019 or possibly less income, or use some carryover from a previous year? Now is the time to decide so that when filings are due you are not scrambling.
What are your goals for your company? What needs to change in the new year to meet those goals? New product, increased prices, raises for staff?
When planning the benefits for your employees and the goals for your company don’t forget yourself! The years keep swinging by apace, are your retirement savings keeping up? Maybe the new year means time to start or increase an automatic deposit into a retirement account.

Don’t just plan in your head, write it down! Something happens when you commit your ideas to paper. You are much more likely to follow a plan you have written down and perhaps shared with key employees or someone close who can check in with your progress throughout the year. The most important thing is do what you can now to prepare for the next year.

Small business owners should find out if they can benefit from claiming this deduction

The home office deduction can help small business owners save money on their taxes. Taxpayers can take this deduction when they file their taxes if they use a portion of their home exclusively, and on a regular basis, for any of the following:

As the taxpayer’s main place of business.
As a place of business where the taxpayer meets patients, clients or customers. The taxpayer must meet these people in the normal course of business.
If it is a separate structure that is not attached to the taxpayer’s home. The taxpayer must use this structure in connection with their business
A place where the taxpayer stores inventory or samples. This place must be the sole, fixed location of their business.
Under certain circumstances, the structure where the taxpayer provides day care services.

Deductible expenses for business use of a home include:

Real estate taxes
Mortgage interest
Rent
Casualty losses
Utilities
Insurance
Depreciation
Repairs and Maintenance

Certain expenses are limited to the net income of the business. These are known as allocable expenses. They include things such as utilities, insurance, and depreciation. While allocable expenses cannot create a business loss, they can be carried forward to the next year. If the taxpayer carries them forward, the expenses are subject to the same limitation rules.

There are two options for figuring and claiming the home office deduction.

Regular method: This method requires dividing the above expenses of operating the home between personal and business use. Self-employed taxpayers file Form 1040, Schedule C, and compute this deduction on Form 8829.
Simplified method: The simplified method reduces the paperwork and recordkeeping for small businesses. The simplified method has a set rate that is capped at $1,500 per year, based on $5 a square foot for up to 300 square feet.

There are special rules for certain business owners:

Daycare providers complete a special worksheet, which is found in Publication 587.
Self-employed individuals use Form 1040, Schedule C, Line 30 to claim deduction.
Farmers claim the home office deduction on Schedule F, Line 32.

IRS.gov resources help small businesses have big success

National Veterans Small Business Week is the perfect time for veterans who are business owners to check out the IRS’s online resources. Here are a few of the webpages that can help small businesses understand their tax responsibilities.

Self-Employed Individuals Tax Center
This a great resource for sole proprietors and others who are in business for themselves. This site has many handy tips and references to tax rules a self-employed person may need to know. Self-employed taxpayers will find info on topics including how to make quarterly payments and self-employed tax obligations.

Small Business and Self-Employed Tax Center
This page features links to useful tools and common IRS forms with instructions. Taxpayers can find help on everything from how to get an employer identification number online to how to engage with the IRS during an audit. A link to the IRS Tax Calendar for Businesses and Self-Employed also provides at-a-glance key tax dates for businesses.

Sharing Economy Tax Center
It provides fast answers to tax questions and links to forms and resources related to the sharing economy. People who are involved in the sharing economy are those who use online platforms to engage in businesses, such as renting a spare bedroom, providing car rides and providing other goods and services. Share this tip on social media — #IRSTaxTip: IRS.gov resources help small businesses have big success. https://go.usa.gov/xpgFV

Reminder: Recent Changes to Business Deductions and Expenses

The Tax Cuts and Jobs Act (TCJA) repealed some business deductions and made changes to others. In addition to some of the more commonly discussed changes, TCJA also repealed the deduction for domestic production activities (DPAD) and amended Section 162 to deny a deduction for any amount paid to or at the direction of a government entity in relation to the violation of a law unless an exception is met. See Notice 2018-23.

Small businesses can benefit from deducting vehicle costs on their taxes

Small businesses can benefit from deducting vehicle costs on their taxes

Businesses that use a car or other vehicle may be able to deduct the expense of operating that vehicle on their taxes. Businesses generally can use one of the two methods to figure their deductible vehicle expenses:

Standard mileage rate
Actual car expenses

For 2019, here are the standard mileage rates for calculating the deductible costs of operating an automobile for business, charitable, medical or moving purposes:

58 cents per mile driven for business use
20 cents per mile driven for medical or moving purposes
14 cents per mile driven in service of charitable organizations

Of course, business taxpayers always have the option of calculating the actual costs of using their vehicle rather than using the standard mileage rates. Here are some facts to help business owners understand the differences between the two methods of figuring their deductible vehicle expenses:

Businesses that want to use the standard mileage rate for a car they own must choose to use the standard mileage rate in the first year they use the vehicle. Then, in later years, they can choose to use either the standard mileage rate or actual expenses.
If a business wants to use the standard mileage rate for a car they lease, they must use this rate for the entire lease period.
The business must make the choice to use the standard mileage rate by the due date of their return, including extensions. They can’t revoke the choice.
A business that qualifies to use both methods may want to figure their deduction both ways to see which gives them a larger deduction.
Here are some examples of actual car expenses that a business can deduct:

o Licenses
o Gas
o Oil
o Tolls
o Insurance
o Repairs
o Depreciation – limitations and adjustments may apply

Businesses can see Publication 463, Travel, Gift and Car Expenses, for a full list of actual expenses and how to calculate them.

Year-End Tax Tips for Small Business

Year-End Tax Tips for Small Business

The holidays are upon us, and that means tax season is just around the corner. What records should you be gathering, and are there any tools on the market that can make organizing your finances easier? How will the new tax law changes affect the way you file? Should you expect to owe more in taxes this year, or will Uncle Sam be cutting you a bigger check?

What records you should be gathering to prepare for filing your 2018 taxes
When important deadlines are for filing business taxes
Highlights of the Tax Cuts and Jobs Act, and how it affects your taxes
What some commonly missed tax deductions are
What your options are in terms of tax preparation services
Plus more!

Contact us today for more information: (Phone) 1-888-987-NEST; ext. 108, (Fax) 1-866-902-0435, (Email) accounting@nesteggg.com

4 Accounting Tips for the end of 2018

As the timetable begins to move forward into 2019, and 2018 retreats into the back view reflect, you’re likely bustling adjusting an assortment of individual and expert goals. Juggling your business, gaining new clients, and extending what items and administrations you offer will involve loads of your opportunity in the upcoming new year.

All things considered, your assessments and bookkeeping issues will affect your business as 2018 gets in progress.

Making arrangements the for up and coming year are nearly as normal as the resulting breaking of them, yet goals for your business can have a considerably bigger effect than basically neglecting to respect that rec center participation you agreed to accept. Two of the most widely recognized inquiries I got over the occasions, and the initial couple of long stretches of 2018, were:

How precisely will the tax reform bill affect an independent venture?

What would entrepreneurs be able to do to manage these progressions?

I have some uplifting news: The tax reform bill that was marked into law toward the end of last year and beginning of 2018 ought not change how you work your business or serve your customers. The terrible news is that because of the tax reform bill , you may need to adjust changes to your business and individual tax returns in the meantime.

Let’s investigate some bookkeeping tips you can give something to do for your remainder of business this year:

1. Ensure your A/P is documented and sorted out.

There is unquestionably going to be a modification period for paying duties under the new assessment law. Put basically, monitoring this data is much more imperative than any other time in recent memory, particularly with the progressions to how go through pay will be dealt with.

Regardless of whether you’re a self employed entity, a specialist, or paying for work on a 1099 premise, having this data close by will help. With the finding or go through elements (which may be your business) at 20 percent, this isn’t something you should put off breaking down.

In particular, according to the recently passed charge change charge, each wellspring of qualified business wage should computed and representing autonomously. Feature decreases in rates are great, however the subtle elements can have the greater part of the effect.

2. Reconciliation of all financial related records.

There are couple of things more awful for a business person, either from an operational viewpoint or expense arranging perspective, than chaotic printed material. You and I both realize that printed material is normally the exact opposite thing you need to do, yet accommodating these records benefits you and your business from an operational and duty point of view.

One proviso to these assessment transforms I am seeing ignored is that a portion of the individual changes, and you are a person and also a business person, are transitory in nature.

Particularly with changes to home assessment edges, and credits for tyke impose credits terminating by 2025, or more restorative cost conclusions being dealt with on a retroactive premise through the finish of 2018, continuing following your assessable pay will be fundamentally essential.

3. Get your financing sorted out for 2018.

Most by far of private ventures fall flat. A significant number of those disappointments are because of an absence of capital or an absence of financing for progressing activities. Duties, evaluated assess installments, and knowing how to get an expense expansion are imperative – yet your business needs wellsprings of financing and funding to keep developing, creating, and making strides.

Tolerating Bitcoin or different digital forms of money may appear like an approach to get an edge, however remember – at any rate for 2017 exchanges – that the IRS regards cryptographic forms of money as property, not cash. You may wind up owing charges on any digital money resources you acknowledge as installment or use to work out your business.

You could likewise consider choices like crowdfunding or getting a SBA credit. Make certain to counsel with your CPA or fund proficient before participating in a capital crusade for your business.

4. Get a government and state impose ID.

With the majority of the progressions, and changes that will come, it is apparently more critical than any time in recent memory to acquire a proper assessment ID. Each business ought to acquire a government manager recognizable proof number (EIN), which empowers you and your business top open financial balances and Visa accounts.

Indeed, even with the IRS working under critical subsidizing cuts as expense change is instituted, this is a territory that will raise warnings when it comes time to document your individual and business charges. With hostile to extortion endeavors at the IRS enhancing each year, not acquiring appropriate documentation is a hindrance that can, and ought to be, stayed away from.

This may appear glaringly evident, however a considerable measure of business visionaries who have quite recently begun a side hustle are blending their assets – never a smart thought. Also, this EIN is likewise vital for paying expenses – unmistakably vital for your business as duty issues keep on dominating features moving into 2018.