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Don’t Tax Yourself on Getting Taxes Together

January 16, 2013 by Thomas Leave a Comment

It is that time of year that just about everyone other than tax accounts dread.

Yes, time to gather up all those papers and try and figure out if you will be getting a gift from Uncle Sam, or perhaps giving him a little something instead. Either way, doing your taxes can be quite taxing, pardon the pun if you will

So, how can the average worker avert the desire to bang their head up against the wall until they render themselves unconscious?

Let’s start by categorizing workers into two groups – full-time employees and contractors.

If you find yourself in the former, the best advice is to:

* Check with your employer if your tax document is late or if the numbers do not add up. Given the move to 2013, many workers noticed a change in their paychecks earlier this month. A payroll tax increase has led to many workers cutting back on expenses for the time being, that being the culmination of a two-year cut on taxes which fund Social Security. For those unaware, the tax jumped back up to 6.2 percent from the previous 4.2 percent. Keep in mind that your employer is required to finalize your W-2 to report wages, tips, and other compensation you received during the last year by Jan. 31;

* Already think about next tax season – As you are either preparing to or currently working on your taxes for the 2012 work year, pay attention. You may want to make some changes going forward this year to assist you with your 2013 taxes. Whether you want to change certain deduction amounts or how many people can be claimed, review the last 12 months to see if you can change your paycheck to better benefit you over time.

Self-Employed Workers Need to Deduct What They Can

For those workers who are self-employed, they probably enjoyed not seeing taxes deducted from their checks or cash payouts these last 12 months. As most know, however, the time has come due to pay up.

While you have to pay federal, state and local taxes like many other folks, there are savings sitting there for you if you know where to look for them.

If you work from home, remember that you can deduct items like mileage, electricity, phone bill, any purchases that went towards your work efforts like a new computer, printer or fax machine, office supplies etc. You can also deduct travel expenses such as airfare, rental cars, hotels and more if they were accrued during your work time. Lastly, you may be able to deduct a portion of your rent, insurance, etc. if your home is the main base for any business you run and/or work you do for an employer.

The most important facet of all of this talk is making sure you have kept proper records over the last 12 months.

Are you one to save and organize receipts or are you the individual who will be scurrying around April 14 looking for such items?

Whether this tax season brings you a gift or not, be prepared to get your taxes done over the coming weeks, meaning that April 15 does not stare you down like a whole in the wall.

Photo credit: addictinginfo.org

About the Author: With 23 years’ writing experience, Dave Thomas covers a variety of business and consumer topics, including payroll outsourcing.

Filed Under: Business Life Tagged With: bc, employers, self employed, taxes, work from home

It Pays Off to Find the Right Payroll Outsourcing Firm

December 5, 2012 by Thomas Leave a Comment

If you own a small business, you undoubtedly find yourself with not enough time in the day to get everything done. As a result, attention to detail must be focused on the most important tasks at hand in order for your business to run smoothly.

So, where does paying your employees (where applicable) sit on that list of required items at your company?

One way to keep employees happy and giving you their best effort is to make sure they are paid properly and on time. If their payments are miscalculated and/or late, their desire to put in a good day’s work can seriously be impacted.

In order for the busy small business owner to meet this need, that sometimes means going outside their own office and hiring a payroll outsourcing firm, giving the business owner one less important responsibility to handle.

If you find yourself in this position, what are some things that should come into play when you discuss doing payroll in-house or outsourcing it?

Among the areas to focus in on include:

* Provider background – Just as you would spend the time to research any business you work with, extra attention should be given to any payroll providers you consider. Check to see their track record of working with other customers, if they have any history of complaints against them, and if they are financially stable. It is a good idea to get some referrals from other small business owners using such services that you are friendly with;

* Time saved on the job – If you got outside your company with payroll duties, you free up time for the individual or individuals (typically the HR department) who had previously handled this responsibility. When that is the case, that person or persons can then assist you with other duties. It also removes the pressure from such individuals for properly calculating pay, taxes to be withdrawn, and any benefit issues that can typically arise with payroll, including deductions towards health insurance and 401k plans;

* Taxes do matter – Especially in cases where you are outsourcing payroll, make sure you deal with a company that gets it when it comes to taxes. It is not at all uncommon for small businesses to get a letter in the mail from the IRS, specifically stating that they did not calculate their taxes correctly when doing payroll. When that happens, the company is subject to a potential financial penalty. You will also want them to handle preparing W-2s and 1099s at year’s end. Finally, make sure the payroll provider is bonded, meaning your small business has protection from liability when finances are incorrectly reported;

* Employee security – If you turn to payroll outsourcing, make sure they can promise security for you, specifically involving employee data. Information such as how much the worker is being paid, their Social Security number, home address etc. need to remain confidential. If you are transmitting the information via fax machines or even a computer software program, it is important to confirm that the data will be properly protected;

* Up to date with benefits – You not only want a payroll provider who can properly and efficiently handle payroll and taxes, but one that is also up to speed with requirements regarding things like health benefits and 401k plans. Some or many of your employees may be eligible to participate in both, so it is important that the correct amount of money is deducted each pay period for such items;

* Terms of contract – Lastly, make sure you have in writing exactly how much it will cost for the payroll provider to handle your needs. Will you have a one-year contract with them or a longer-term one? When trying out a new provider, it is wise to go with a shorter term deal so you have the ability to see what you do and do not like about their services.

As you head into the New Year, consider working with a payroll provider if you find doing payroll in-house is getting to be too taxing.

If it is, it pays to take the time and find the right payroll provider the first time around.

Photo credit: smallbusinessbranding.com

Dave Thomas covers small business topics for various websites.

Filed Under: Business Life Tagged With: bc, benefits, employees, paychecks, payroll outsourcing, taxes

Why Working Bloggers Should Hire a Personal Accountant

March 30, 2012 by Liz Leave a Comment

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Blogging is a great way to make extra income or to work from home. You get to set your own hours, write about what interests you, and control your earnings potential. However, this type of work does not make you immune from tax responsibility. No matter how much you make blogging, and no matter if blogging is your primary job or just something you do on the side, you will have to report your earnings and pay taxes on them.

Before you get out your tax forms and start filing yourself, consider these reasons why you should hire an accountant to help you instead:

You Have a Greater Responsibility

There are many overlooked benefits to working for someone else — namely, that a corporate employer pays payroll and social-security taxes on your behalf. If you earn more than $400 a year from your blogging work, you are considered “self-employed,” and you will have to pay your own payroll taxes and a self-employment tax. Depending on the type of work you do and how much you earn, you may have other tax obligations. An accountant can help you understand all of your responsibilities and ensure that you are being compliant with the law.

Deductions are Available

You know how so many large companies and the millionaires who run them are able to minimize the amount of taxes they pay? They hire accountants to help them find deductions. You can do the same.

Working for yourself entitles you to a number of deductions, which may include your cell phone bill, Internet service, computers and other equipment, part of your rent, items to give away on your blog, and more. An accountant can educate you about all the deductions to which you are entitled and help you minimize your tax obligation, helping you to keep more of your earnings.

Small Business Guidance

Accountants have expertise in the tax code and can offer guidance about the intricate laws that govern small businesses. If you hire an accountant, you can get advice about best business practices as you grow. For example, you may learn that you need to improve your record-keeping practices, or maybe you’ll learn that buying a computer with energy-saving technology can entitle you to credits. Not only will an accountant help you shape the best tax situation in the current year, but he or she can also help you ensure the best financial health of your business going forward.

Audit Advice

Did you overlook reporting earnings one year? Or did you incorrectly report some deductions? If previous reporting errors have resulted in an audit, an accountant can offer you advice on dealing with the IRS and on what your rights and responsibilities are. An audit can result in serious fines and other legal trouble. Hiring an accountant can ensure that you have someone working with you to fight for your interests and minimize the repercussions. If you hire an accountant to help you file your taxes, you are usually entitled to free assistance if an audit of that tax year is conducted.

No matter how much money you make blogging, you are required to report your earnings to the IRS and to pay the appropriate taxes. An accountant can offer you guidance and expertise to minimize your tax responsibility while still ensuring that you are in compliance with all the rules and regulations regarding your business.

__________
Author’s Bio:
Heather Green is a freelance writer for several regional magazines in North Carolina as well as a resident blogger for onlinenursingdegrees.org. Her writing experience includes fashion, business, health, agriculture and a wide range of other topics. Heather has just completed research on health care admin degrees and online physical therapy aide degrees

Thank you, Heather!

–ME “Liz” Strauss
Work with Liz on your business!!

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Filed Under: Business Life, Successful Blog Tagged With: bc, blogging, LinkdIn, LinkedIn, taxes

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