The Executive Suite: Self Employment Taxes

Showing posts with label Self Employment Taxes. Show all posts

Tuesday, January 21, 2014

Business Plan Tips: What to Include in Your Service or Product Line Section

A Description of Your Product / Service

Include information about the specific benefits of your product or service – from your customers' perspective. You should also talk about your product or service's ability to meet consumer needs, any advantages your product has over that of the competition, and the current development stage your product is in (e.g., idea, prototype).

Details About Your Product’s Life Cycle

Be sure to include information about where your product or service is in its life cycle, as well as any factors that may influence its cycle in the future.

Intellectual Property

If you have any existing, pending, or any anticipated copyright or patent filings, list them here. Also disclose whether any key aspects of a product may be classified as trade secrets. Last, include any information pertaining to existing legal agreements, such as nondisclosure or non-compete agreements.

Research and Development (R&D) Activities

Outline any R&D activities that you are involved in or are planning. What results of future R&D activities do you expect? Be sure to analyze the R&D efforts of not only your own business, but also of others in your industry.

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Wednesday, January 1, 2014

Starting A Contractor Business in PA

According to Pennsylvania's Home Improvement Consumer Protection Act (HICPA), a home improvement project includes but isn't limited to the installment, replacement, repair, remodeling or construction of the land attached to a private residence. If you intend to start a contractor's business in Pennsylvania and earn more than $5,000 a year providing these types of home improvement services, your need to get registered with the state.

Suggestions

Decide on a specialty. As a home improvement contractor you can specialize in the types of projects you want to work on. For instance, you may choose bathrooms, kitchens, attic renovation, flooring and so on. According to "Starting a Business as a Remodeling Contractor" on the Entrepreneur website, green remodeling could be a popular niche for contractors. This would involve using nontoxic building material and making homes more energy efficient.
Register your business with the state of Pennsylvania. You may register as a sole proprietorship, a partnership, a limited liability corporation or a corporation. A tax or business professional will be able to help you determine the best business status depending on your situation. Once you're ready to register, you can do so through the Online Business Registration Interview webpage.
Obtain insurance. Before you can file your contractor's registration you'll need at least $50,000 in property damage coverage and another $50,000 in personal injury liability coverage. You'll be able to find insurance agents through any major search engine like Google or Bing.
File a home improvement contractor registration. You may obtain a registration form by calling (717) 772-2425. Once you receive the form you'll need to include information about your business structure and any previous contractor's licenses you've held, along with a description of your new business, information on previous bankruptcies or criminal convictions, and proof of insurance. As of June 2011, an application fee of $50 was required with your registration.
Include your contractor's number in all advertisements, estimates, proposals and contracts. Although there's no rule dictating where you have to put this number, it must be prominently showcased in your customer documents, once you receive it.

Tip

Failure to register your contracting business in Pennsylvania could result in civil penalties of $1,000 or more.

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Thursday, May 9, 2013

Making Your Home Office Tax Deductible

Having a separate office space in your home is a winner in more than one way! You cut down commuting time, save money on gas or transport, spend quality time with your family, reduce stress levels, make your little contribution to saving the environment and best of all, reduce your tax payments. Here are some tips on how to make a home office tax deductible.

Qualifying Criteria

As per Internal Revenue Service (IRS) guidelines, people running a home-based business or employees working from home are eligible for tax deductions, provided a separate area is converted as office space. Any expenses which you incur as part of your business or work requirements, including general upkeep and maintenance of the business space, utilities, mortgage repayments, insurance costs and depreciation can be deducted from income assessed for taxes.

The general qualifying criteria and conditions which must be satisfied are listed below:

Deduction of business expenses on a home office does not depend on ownership status of the property, i.e. owners, renters or lessees, all are eligible for the deduction.
The home office can be located in any type of constructed property, such as independent houses, apartments or even mobile homes!
The first qualifying condition is ‘regular and exclusive use’ – the space earmarked for business must be exclusively used for only that purpose. For example, a study or basement space set aside for business must not be used for any other purpose, such as entertainment area or storage space, unless it is business inventory or records.

The second qualifying condition is that this home office must be your ‘principal place of business, i.e. the place where a significant amount of your business or work is conducted. For example, client consultations carried on in your home office or space used as for administration and record-keeping, while you use a separate warehouse for storage.

If you work as a salaried employee and a significant portion of your work is done in a separate home office, in addition to meeting the two conditions mentioned in (3) and (4), you must be able to prove that, (a) the home office is primarily to facilitate your employer/company’s business; and (b) the space should not be rented or leased to the employer and then you work in that space as an employee.
If the home office is used mainly for your personal convenience, for example, working mothers who work from their homes in order to provide childcare, cannot claim a tax deduction.

Calculating the Home Office Deductible

Estimate the percentage of space which is used as a home office as against the total space in your home – either by dividing area of the home office by the total area of the house; or where rooms or sections of the house are of similar or equal dimensions, the number of rooms or sections used for business by the total number of rooms/sections.
If the home office was in operation only for part of the year, then business expenses incurred only during that part are eligible for deduction.
Expenses for which deduction can be claimed include property taxes, mortgage insurance premiums, mortgage interest, casualty losses, depreciation, rent, repairs and maintenance charges, utilities and security systems.

Detailed information on how to calculate the deductible amount is available in the publications section of the IRS web site (refer to publication # 587) at irs.gov.