Income Taxes:  Important Issues for the Small                     Business Owner
SBX 7450
Course Hours:  4

Objectives:
Upon successful completion of this course, the participant will be able to:

    -  Know the different business related taxes
 

    -  Understand tax requirements for employees and
       independent contractors
 
    -  Evaluate their choice of entity
 
    -  Consider tax planning strategies
 
    -  Understand how they can minimize tax liability


Content:

1.      Introduction to Business Related Taxes
         -  Tax rates (corporate vs. flow-through vs. individual
              concepts)

          -  Business Formation and Choice of Entity - Introduction
          -  Sole Proprietorship
          -  Flow-through entities – partnerships, S Corporations,
             LLC
          -  C Corporations
          -  Self-employment taxes
          - Estimated taxes
          -  Payroll taxes
          -  Filing requirements and due dates… general
          -  Tax return due dates… March 15 (Corporations) vs.
             April 15 (Individuals, Partnerships)
          -  Estimated taxes… 4/15, 6/15, 9/15, 1/15 (pay NC by
             12/31)
          -  Monthly payroll deposits… coupons, by the 15^{th
          -}  Quarterly payroll tax filings (inc. FUTA, SUTA)… by
             the 31^st
          -  Year-end… W2’s, 1099’s,
          -  NC requirements  

2.     Employees, Independent Contractors and payroll tax
        considerations
          -   Payroll taxes (vs. self-employment taxes)
          -   FICA & Medicare tax – 6.2%, 1.45%... paid by
              employee & equal amount paid by employer.
          -   SE tax – 15.3% paid by self-employed individuals
          -   Pay tax if… self-employed, net earnings from SE
               >$400, first $90K.
          -   Independent Contractors
          -   Proper classification, unemployment tax and
              workers comp ins.
          -   Not a matter of owner or worker choice
          -   IRS “20-factor” test – Control (behavioral, financial)
              and relationship
          -  Form 1099 filed annually by 1/31 to employee, 2/28
              to IRS

  

     3.     Choice of entity revisited  
          -  Primary reason for incorporating a business is not
              tax!
          -  Understanding flow-through taxation and K-1’s
          -  Pro’s and con’s of various entity
             formations (corporations, S elections, partnerships,
             LLC’s)
 

          -  Distributions, dividends, loans

4.     Business deductions
         -  Ordinary and necessary business expenses – are golf
            clubs deductible?
         -  Ordinary – common or accepted for this industry
         -  Necessary – appropriate or helpful to the business
         -  Using your automobile in the business
         -  Contemporaneous documentation (auto mileage,
            listed property, business meals, entertainment)
         -  Capital vs. expense
         -  Fixed assets, depreciation and 179 property
         -  Home office deduction
 

5.     Tax planning strategies – overview
         -  Cash vs. accrual basis accounting          
         -  Depreciation, Section 179, bonus depreciation
         -  Self-employment taxes and choice of entitle
         -  Retirement plans – SIMPLE IRA’s, SEP IRA’s, 401k’s
         -   Estimated tax payments – avoiding penalties &
             conserving cash
         -  Working with your tax advisor