The post Understanding Guaranteed Payments: Impact On Business And Personal Taxes first appeared on Reinspired Books, LLC.

Why Knowing Deadlines Matters:

Being aware of the sales tax due dates is critical for direct-to-consumer sellers since it directly impacts your business's financial health and reputation. Failing to meet tax deadlines can lead to penalties, fines, and even legal troubles. On the other hand, staying compliant showcases your commitment to ethical business practices and builds trust with your customers.

Key Dates and Requirements:

It's important to remember that each US state has unique sales tax laws and regulations. To remain compliant with these laws, you must stay informed about the specific sales tax filing dates for each state where you conduct business. Some states require monthly, quarterly, or annual filings, while others may have varying thresholds before you need to register for sales tax. Keeping track of these dates will ensure you never miss any deadlines.

Here are a few essential tips to ensure you meet sales tax requirements:

a. Register for Sales Tax: As a direct-to-consumer seller, you must register for sales tax in each state with a sales tax nexus. A nexus refers to a significant presence in a state, which includes having a physical location, employees, or exceeding a certain sales threshold.

b. Keep Accurate Records: Maintaining organized and accurate records of all sales transactions, including sales tax collected from customers, is crucial. Reliable records make the tax filing process much smoother and help avoid discrepancies or audit issues.

c. Utilize Tax Automation Tools: Consider utilizing tax automation software that integrates with your online selling platforms. These tools can help calculate and collect the correct sales tax, saving time and effort. Some reputable sales tax automation software options include Avalara and Quickbooks. They also provide notifications if you've triggered sales tax nexus in any state.

Sales Tax Filing Dates Per State:

Below is a simplified breakdown of sales tax filing frequencies for some states:

• California: Quarterly filing (April 30, July 31, October 31, January 31)
• New York: Monthly filing (by the 20th of the following month) Quarterly filing by the 20th of the month following the end of the previous quarter.
• Texas: Quarterly filing (April 20, July 20, October 20, January 20)
• Florida: Monthly filing (on the first day of the following month)
• Illinois: Monthly filing (by the 20th of the next month)

It's important to note that the above dates may change. Verifying the latest deadlines with the respective state tax authorities is essential.

As a direct-to-consumer seller, understanding and complying with sales tax due dates are fundamental to the success and reputation of your business. By staying informed and implementing the tips provided, you can confidently navigate the complexities of sales tax.

If you need any assistance with sales tax matters, contact us! We're here to help you succeed.

The post Sales Tax Deadlines Made Simple: Stay Compliant, Avoid Penalties first appeared on Reinspired Books, LLC.

You may have seen a lot of buzz about the Section 179 deduction on social media. But there's one factor that often goes unmentioned - depreciation recapture. This occurs when writing off the entire value of your assets and then selling them after utilizing the Section 179 deduction or retiring the asset before its useful life. Understanding recapture and its impact on asset expensing is key to making the best decisions as a business owner.

What is Section 179 and How Does it Affect Your Business?

Section 179 is a provision that allows small businesses to deduct the entire purchase price of qualifying equipment or software from their gross income. This encourages taxpayers to invest in their businesses by purchasing necessary equipment while alleviating some of the tax burdens that small businesses face.

What does the IRS consider qualifying property or software?

Per IRS Publication 946, a qualifying property has to have the following:

• The property is tangible, such as machinery and equipment. The TCJA was amended to include improvements to nonresidential tangible property that would typically be capitalized such as roofs, air conditioning units, and fire and security alarm systems.
• Must be owned by the taxpayer and used in their regular course of income-producing business
• A determinable useful life that is over 1 year.

Tangible property includes physical assets like vehicles, buildings, and equipment that last over a year. The IRS has set standard useful life spans for nearly all assets. Some examples are furniture and equipment's useful life of 5-7 years and buildings up to 27.5 years. The max deduction is $1M, with a phase-out limit of $2.5M.

Depreciation Recapture

Depreciation recapture is when the IRS asks you to pay taxes on the amount you claimed as a deduction but didn't actually deduct over time. For example, if you bought a vehicle over 6,000 lbs for $100,000, deducted it under section 179, and sold it after a year, you might owe taxes on $80,000.

While leveraging the Section 179 deduction can offer tax savings and facilitate business investment, it's crucial to understand the potential tax consequences associated with selling the asset prematurely. The gains from such sales are taxed based on one's current income level. If income has substantially risen since the asset was put into service, the benefits of the initial tax savings may be outweighed by the recapture amounts. By carefully considering the asset's useful life and reinvesting the proceeds into a qualifying asset, you can minimize depreciation recapture and sustain your business growth.

Sometimes the best move could be to depreciate the asset using the primary depreciation method, MACRS.

There's so much more to take into consideration when deciding how to treat your assets and potential disposals. If you need a hand, we're more than happy to help you out! Just drop us a line and let's take a look at your tax situation together. Don't hesitate to contact us!

The post Is Electing Section 179 Right For Your Business? first appeared on Reinspired Books, LLC.

The end of the year is approaching. What does this mean for business owners? It's time to start getting those books ready for tax time! As a business owner, do you know the types of expenses you can deduct for your company?

Every industry is different. Every business in each industry is different. What one company can deduct for the year does not mean it's deductible for a different company. All qualified expenses have one thing in common. According to the IRS, all expenses must be incurred in the pursuit of profits and not for personal reasons. Deductible expenses must be ordinary and necessary, meaning it's appropriate for the business under normal circumstances.

Here's a brief list of qualified business expenses:

• Advertising
• Car & Truck Expenses
• Depreciation
• Employee compensation and benefits
• Insurance
• Interest
• Legal Fees
• Office Expenses
• Rent
• Repairs & Maintenance
• Supplies
• Travel
• Utilities

All deductions must be reasonable amounts and be a for-profit activity to qualify.

Non-qualified expenses

Just as are there are allowable expenses, the IRS has guidelines on deductions that are not allowed. These expenses include penalties, fines, and illegal purchases and activities. Businesses selling cannabis, a schedule 1 drug, can only offset their gross income with the cost of the goods sold.

Expenditures not fully deductible during the tax year incurred are instead generally capitalized if the expense has a useful life of over one year.

Here's a brief list of examples of capitalized expenditures:

• Buildings
• Machinery & Equipment (over specified threshold)
• Similar properties such as trucks and cars
• Leasehold improvements (Direct & Indirect costs)
• Furniture & Fixtures

The post Business Deductions first appeared on Reinspired Books, LLC.