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Financial News & Advice

IRS Sets Date to Kick Off Tax Season

Tax season officially starts on Monday, Jan. 27, 2020. This is the first day that the IRS will begin accepting and processing 2019 returns.

 

The deadline to file 2019 tax returns and pay tax owed is Wednesday, April 15, 2020.

 

The IRS has also reminded taxpayers that they don’t have to wait until late this month to start their return or to contact a preparer.

Keep your Personal and Business Finances Separate

Simple Steps to keep your personal and business finances separate:

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1) Make your business a separate, legitimate entity

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If you haven’t already done so, incorporate your business or establish it as a limited liability company (LLC). Then, you’ll need to apply for an Employer Identification Number (EIN) through the IRS’ website—it takes only minutes to do. Your EIN is like your business’ Social Security number and is critical for taxes and other legal issues.

 

2) Open a business checking account

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The best way to keep your personal and business expenses separate is to use a business checking account to pay for all business transactions. At first, keeping two or more accounts may seem a little cumbersome, but if you're diligent, it will give you a clear and complete picture of your business expenditures. When tax time arrives, you’ll simply need to review your account statements. You should talk to a reputable and trusted CPA to make sure you have a clear understanding as to what is and isn’t considered a business expense.

Open and use a business credit card

If you need to purchase business supplies, inventory, or maybe pay upfront costs for a larger item, using a business credit card is a great option. And, if you make your payments on time, you'll develop a strong business credit profile that will boost your borrowing power over time. As with a business checking account, a business credit card makes it easy to review your business expenditures at tax time and keep better records of your bottom line.

 

3) Pay yourself a salary

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While you may think this sounds silly (you own the business after all), it's important for you to write yourself a check each month from your business checking account and deposit it into your personal checking account. Or, you can simply transfer this amount from your business checking account to your personal checking account.

 

Then, try to live within that salary.

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4) Keep track of personal items used for business

 

As a small business owner, it's highly likely you're driving the same car to the grocery store as you do to a client's office. The same goes for your mobile device and any other personal items you use for business as well. It's important that you talk to your CPA to find out what's tax deductible and how to keep the right records.

 

 

 

So, why is it important to keep business and personal expenses separate?

 

Simply stated—it makes your tax experience much better. Unless you're a sole proprietor, you're required to file a separate tax return for your business. Keeping your business and personal expenses separate makes this much easier to do. And, if you're ever audited by the IRS, you'll have the records needed to show why you did what you did—and that your business isn't just a hobby.

 

Keeping your personal finances separate from your business also gives you a stronger professional image. When you pay for supplies or other needs using business accounts or credit, your suppliers, vendors and even customers may feel more comfortable doing business with you.

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***Courtesy of BB&T

Payroll Options for your Small Business

Payroll considerations

Payroll is more than just making sure your employees get paid on time. It also includes:

  • Abiding by current employment, wage and tax laws—from employee withholding to the payment of payroll taxes

  • Updating and tracking employee sick time and vacation time

  • Adjusting payroll for employee raises (or pay cuts)

  • Providing wage garnishments when necessary

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The payroll function includes any required compensation-related issues. If you can't perform these services accurately or on time, you should consider outsourcing some or all of it. Most payroll service providers offer two types of payroll processing: full service payroll or in-house payroll services. Let's take a closer look at each type.

 

Full service payroll provider

The beauty of outsourcing your entire payroll function is that everything is done for you. You don't have to think about a thing. For a monthly fee, you simply forward employee information and other required details to your payroll service provider, and they do the rest. Here are some of the typical services you may get from a full service payroll provider:

  • Preparing and filing taxes electronically and providing you with tax notifications (such as 1099 and W-2 forms)

  • Providing online and mobile access to employment reports and other information—you and your employees can download directly

  • Preparing and cutting paychecks and then mailing or submitting them for direct deposit payment

  • Preparing and making tax deposits and payments for your business

  • Providing garnishment payment services

  • Providing human resource management tools and managing time and labor reports (including new hires)

  • Keeping State Unemployment Insurance (SUI) updated and incorporated into your payroll checks and other records

 

Most payroll service providers will assign a full-time payroll specialist to assist you with any questions you may have.

 

In-house payroll

Your small business may have only a few employees, or it may just be you. In this case, a full service payroll provider may not make much sense. But many small business owners use a portion of the services offered by full service providers to cover the things of greatest importance to them—for a small monthly fee. Here are a few things you may hire a payroll service provider to help you with:

  • Keep track of tax payments and forms online so you don't miss any important details or deadlines

  • Get quarterly reminders when tax payments are due and electronically submit payroll taxes as well

  • Receive signature-ready tax forms to fill out and submit either electronically or by mail

  • Pay your employees by direct deposit or create and print your own payroll checks

  • Review payroll reports online and then export them to your small business software

 

Choose the best option for you

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Be sure to shop around for the right payroll service provider for your business—not all providers are equal. Focus your search on three top considerations: the services you need, accessibility and cost. Talk to your CPA (or others in your industry who use payroll service providers) for recommendations. Whichever option and provider you choose, outsourcing payroll will allow you to focus on running your business each day—and not payroll.

 

 

**Courtesy of BB&T

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