If you run your business as an S corporation, you’re probably both a shareholder and an employee. As such, the corporation pays you a salary that reflects the work you do for the business — and you (and your company) must remit payroll tax on some or all of your...
The IRS may object to the compensation of a C corporation shareholder-employee. If it’s deemed too high — or not “reasonable” under the circumstances — the IRS could force you to make adjustments that increase taxes. This can be particularly troublesome for C...
Many businesses use independent contractors to keep payroll taxes and fringe benefit costs down. But using outside workers may result in other problems. The IRS often questions businesses about whether a worker should be classified as an employee or independent...
You can only deduct losses from an S corporation, partnership or LLC if you “materially participate” in the business. Without material participation, your losses are generally “passive” and can only be used to offset income from other passive activities. Any excess...
When the deductible expenses of a business exceed its income, a net operating loss (NOL) generally occurs. If you’re planning ahead or filing your income tax return after an extension request and you find that your business has a qualifying NOL, there’s some good...
Business owners may need capital to support growth, and the money in their IRA can be tempting. Nevertheless, the pitfalls can be steep, as illustrated in a recent Tax Court case (Thiessen v. Commissioner, 146 T.C. No. 7 [3/29/16]). Here, the court ruled that because...
You might be able to claim a deduction for the business use of a home office. If you qualify, you can deduct a portion of expenses, including rent or mortgage interest, depreciation, utilities, insurance, and repairs. The exact amount that can be deducted depends on...
Many businesses host a company picnic for their employees in the summer. It’s a fun activity for your staff. But more importantly, you may be able to take a larger deduction for the cost than you would on other meal and entertainment expenses. Meal and entertainment...
Small business owners should have an exit strategy - a plan for the time when they’re either unwilling or unable to keep running their company. That plan should include both a current business continuity plan for relatively young business owners and a future long-term...
If your small business claims deductions for meals, entertainment, auto and travel expenses, be aware that the IRS may closely review them. Too often, taxpayers don’t have the necessary documentation to meet the strict requirements set forth under tax law and by the...
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