Accessing Your Small Business Success
A couple of years ago, I decided to abandon a long, unsuccessful job search. After many months of desperately looking for the perfect job, I chose to start a home based business. Because I’d never been an entrepreneur before, I was more than a little anxious. I was excited as well. Thankfully, I’ve enjoyed success in my new business venture. At the end of every month and year, I carefully analyze my revenues. Because I have a background in accounting, I know how to calculate various financial statement ratios that help me determine how my business is doing on many different levels. If you’re a struggling small business owner, consider hiring an accountant to help you access the success of your business. On this blog, you will learn the types of consulting services an accountant can offer a small business owner.
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In the first year that you are running your own small business, there are likely many times that you feel as if you are in over your head and do not know what to do to keep your small business afloat. After all, there are many different factors and considerations that will be your responsibility including all of the finances and bookkeeping for your new small business. Get to know some of the ways that you can better handle your small business finances in the first year so that you and your business can stay afloat and become successful going forward.
Many employers are required to file a federal unemployment tax return. The federal tax is in addition to any state unemployment tax. Employers in some states may be required to pay a higher federal tax rate if their state has not fully repaid certain federal loans related to unemployment claims.
The federal unemployment tax is paid entirely by the employer, so there is no withholding from employee wages. There is a threshold at which a return must be filed by an employer.
Machines and equipment are usually purchased by a business as needed, with only secondary concern for the tax consequences. Some assets cannot be deducted in a single year. Small business owners must begin to depreciate new depreciable assets based on when the assets are placed in service during the year.
Depreciation is a tax deduction for the gradual decline in value of an asset. Assets with a useful life greater than one year must be depreciated over additional years.
A homeowners association is a taxable entity and must file an annual tax return with the IRS. Even though a return is required, much of the income is often exempt from taxation. Officers of homeowners associations may file an income tax form specifically intended for homeowners associations.
Form 1120-H is used to report revenue received from homeowner assessments, along with other potential sources of income. The form also reports association expenses.
Many people start sole proprietorships, or transition their hobbies into a sole proprietorship business. The problem with new sole proprietorships is that many just don't know how to correctly handle the finances associated with them. This tends to lead to all kinds of mistakes. Here are a few of them.
1. Not Understanding that As a Sole Proprietor, You're Solely Responsible
The first thing any sole proprietorship needs to do is learn the rules associated with being a sole proprietor.