July, 2022

QSBS

Small Business

Tax Tips

Featured Articles

QuickBooks Tips

Any accounting, business or tax advice contained in this communication, including attachments and enclosures, is not intended as a thorough, in-depth analysis of specific issues, nor a substitute for a formal opinion, nor is it sufficient to avoid tax-related penalties. If desired, we would be pleased to perform the requisite research and provide you with a detailed written analysis. Such an engagement may be the subject of a separate engagement letter that would define the scope and limits of the desired consultation services.

  • Should You Be Using Quickbooks’ Custom Fields?
  • 1202 Regulations

    Don't Break the Law: Comply with 1202 Regulations

    [caption id="attachment_2213" align="alignright" width="300"]1202 Regulations 1202 Regulations[/caption] As a small business owner, you are responsible for complying with all laws and regulations, including 1202. As an employer, it is important to be in compliance with all labor laws. The 1202 regulations specifically govern the hiring of foreign workers. These regulations state that an employer must not hire a foreign worker if the hiring would adversely affect the wages and working conditions of U.S. workers. This article will briefly outline what 1202 is and how it affects you as an Amazon seller. The 1202 regulations were created in order to protect the wages and working conditions of American workers. The 1202 regulations specifically govern the hiring of foreign workers. If you violate the 1202 regulations, you may be subject to civil and/or criminal penalties. As a small business owner, it is important to be aware of these regulations and to make sure that you are in compliance. The employer must ensure that the foreign worker is not working in a job that has been designated as hazardous by the U.S. Department of Labor. The employer must pay the foreign worker the same wages and benefits as U.S. workers. Violation of the 1202 regulations can result in civil and/or criminal penalties.

    How do the 1202 Regulations Affect Small Business Owners

    Small business owners need to be aware of the 1202 Regulations and how they may affect their business. The regulations are in place to protect the wages and working conditions of U.S. workers. These regulations affect small business owners who hire foreign workers. Under the 1202 regulations, an employer cannot hire a foreign worker if the hiring would adversely affect the wages and working conditions of U.S. workers. This includes workers who are already employed by the employer. The regulations also state that an employer must not displace a U.S. worker by hiring a foreign worker. The regulations are designed to protect U.S. workers from being replaced by foreign workers who are willing to work for lower wages. The regulations also ensure that foreign workers are not hired to fill positions that could be filled by qualified U.S. workers.

    What are the Consequences for Violating the 1202 Regulations

    Small business owners who violate the 1202 Regulations can face significant consequences, including fines and jail time. Fines can range from $1,000 to $10,000 per violation. Jail time is possible for up to one year per violation. These penalties can be increased if the employer is found to have knowingly violated the regulations. You can also be required to pay back wages to any workers who were adversely affected by the violation. The best way to avoid these penalties is to ensure you are in compliance with the 1202 Regulations. The 1202 regulations are important for small business owners to be aware of. These regulations can have a significant impact on your business if you are not in compliance. Make sure you understand the regulations and how they apply to your business. This will help you avoid any penalties and keep your business in compliance.
    Qualified Small Business Stock Inc https://www.google.com/maps?cid=14731372876203948838
    14855 S 46th St., Phoenix, AZ 85044
    (480) 734-3758

  • Small Startup Company Stocks

    What to Watch Out for When Investing in Small Startup Company Stocks

    [caption id="attachment_4505" align="alignright" width="300"]Small Business Investment Small Business Investment[/caption] When investing in stocks, it's important to do your research first. You want to make sure you're getting a good return on your investment, and not taking too much of a risk. When investing in small startup company stocks, there are a few things you need to watch out for. Many of these companies are unproven and may not be around for long. Their stocks may be overvalued, and you could end up losing money if the company goes under. Make sure you know what you're doing before you invest, and don't put all your eggs in one basket. When you're looking to invest in a small startup company, it's important to be aware of the risks involved. Many small startups don't have the solid financial backing or management team that larger companies do, which can make them more volatile and prone to failure. That said, there can also be big rewards for investors who are willing to take on the risks. Here are a few things to watch out for when considering investing in a small startup company:
    1. The company's financials: It's important to take a close look at the company's financial situation before investing. Make sure they are not overvalued and that there is a solid plan in place for how the company will make money.
    2. The management team: A strong management team is essential for any company, but it's especially important for startups. Make sure the team has a good track record and is experienced in running a business.
    3. The product or service: What is the company offering, and is there a market for it? Make sure you understand the product or service and believe in its potential before investing. This is especially important for tech startups, as many products never make it to market.
    4. The risks involved: Investing in a small startup is a risky proposition, so make sure you understand the risks involved before putting any money down. Be prepared to lose your investment, and don't invest more than you can afford to lose.
    5. The exit strategy: What is the company's plan for eventually selling or going public? Make sure you understand the exit strategy and are comfortable with it before investing. This is important because many startups never make it to an exit.
    6. The competition: What other companies are offering similar products or services? Make sure you understand the competitive landscape and believe the company has a chance to succeed. This is especially important for tech startups, as many new products or services fail to find a market.
    Investing in small startup companies can be a risky proposition, but there can also be big rewards for those who are willing to take on the risks. Be sure to do your research and understand the risks involved before investing. And don't forget, always diversify your portfolio to minimize the risk of losing money. By understanding the risks involved and doing your research, you can increase your chances of success when investing in small startup companies. Be sure to diversify your portfolio to minimize the risk of losing money, and always remember that there is no guarantee of success when investing in any stock, no matter how small the company may be.
    Qualified Small Business Stock Inc https://www.google.com/maps?cid=14731372876203948838
    14855 S 46th St., Phoenix, AZ 85044
    (480) 734-3758

  • 1202 Stock Requirements

    The Basics of 1202 Stock Requirements for a Small Business

    [caption id="attachment_4504" align="alignright" width="300"]Small Business Services Small Business Services[/caption] A 1202 stock requirement is a way of ensuring that your small business has the inventory necessary to continue operations. This requirement mandates that you maintain a specific level of inventory, usually in the form of raw materials or finished goods, in order to keep your business running smoothly. There are a few different ways to comply with a 1202 stock requirement, but the most common is to maintain a minimum level of inventory on hand at all times. This ensures that you have the materials necessary to meet customer demand and keep your business running smoothly. When starting a small business, there are many things to keep in mind in order for it to be successful. One of the most important is having the proper 1202 stock. This type of stock is essential for businesses that want to go public, as it allows them to do so with less paperwork and hassle. Additionally, it can also help businesses secure loans and other forms of financing. If you're thinking of starting a small business, make sure you are familseciar with the basics of 1202 stock requirements. To be eligible for 1202 stock, a company must be organized as a C corporation and have less than $50 million in assets. The company must also use the 1202 stock for qualified small business purposes, which include purchasing, constructing, or improving qualified property. Qualified property must be used for the active conduct of a trade or business, and it must be depreciable or amortizable under 1202 tax code. Finally, the company must have a valid stock option plan in place. There are a few things to keep in mind when complying with a 1202 stock requirement. First, you will need to maintain accurate records of your inventory levels. This includes both the quantity of inventory on hand and the value of that inventory. Second, you will need to have a plan in place for how you will replenish your inventory as it is sold. This may include setting up a system for reordering inventory from suppliers or manufacturing goods on-site. Finally, you will need to monitor your inventory levels closely to ensure that you are meeting the 1202 stock requirement.  This may involve regular inventory counts or using software to track inventory levels. By following these tips, you can ensure that your small business is in compliance with the 1202 stock requirement. If you're not sure whether your company meets all of the eligibility requirements for 1202 stock, it's a good idea to speak with an accountant or tax advisor. They can help you determine whether your company qualifies and, if so, how to take advantage of this opportunity. 1202 stock can be a great way to reduce the paperwork and hassle associated with taking your small business public. If you're thinking of starting a small business, make sure you are familiar with the basics of 1202 stock requirements. With a little planning and preparation, you can ensure that your business is compliant with all the necessary regulations.
    Qualified Small Business Stock Inc https://www.google.com/maps?cid=14731372876203948838
    14855 S 46th St., Phoenix, AZ 85044
    (480) 734-3758

  • 1202 IRC

    1202 IRC for Small Business: What is It and How can I Use It?

    [caption id="attachment_4503" align="alignright" width="300"]Accounting Services Accounting Services[/caption] Small businesses can use 1202 IRC to reduce their income tax liability. 1202 IRC is a small business program that offers income tax credits for businesses that invest in research and development. To qualify, businesses must spend money on research and development projects in Canada, and the work must be new, innovative, and have a scientific or technological basis. This article will provide an overview of what 1202 IRC is and how small businesses can use it.

    What is 1202 IRC?

    1202 IRC is a section of the Internal Revenue Code that allows small businesses to claim a deduction for certain qualified expenses. 1202 provides an incentive for non-corporate taxpayers to invest in small businesses. The section 1202 capital gains exclusion from federal income tax on the sale of small business stock is the underlying purpose of this IRC section. A small business stock held for at least five years before selling will have a portion or all of its realized gains excluded from federal tax. Businesses must meet the requirements specified in order to obtain this benefit. The 1202 IRC allows small businesses to deduct up to $5,000 of their research and development (R&D) expenses. It is important to note that the $5,000 deduction is per tax year, and not per project. This means that if a small business has multiple R&D projects underway, they can deduct up to $5,000 for each one. The 1202 IRC also allows businesses to carry forward any unused deduction to future tax years.

    Why should small businesses care about it?

    Small businesses should care about 1202 IRC because it offers tax credits for investing in research and development. This can be a valuable way to reduce your income tax liability. 1202 IRC is a small business program that offers income tax credits for businesses that invest in research and development. The 1202 IRC was created to encourage businesses to invest in research and development projects in Canada. This is because research and development can lead to new and innovative products or services, which can have a positive impact on the economy.

    How can small businesses use 1202 IRC?

    Small businesses can use 1202 IRC to reduce their income tax liability. The 1202 IRC can be used by small businesses to offset the cost of research and development projects in Canada. This can be a great way to reduce your income taxes, and it can also help you fund new and innovative projects. Your business must meet certain criteria to qualify for 1202 IRC. 1202 IRC is a small business tax credit that can be used to offset income tax liability. If you are looking for ways to reduce your income tax burden, consider investing in research and development projects that meet the requirements of 1202 IRC. By doing so, you can take advantage of this tax credit and improve your bottom line. If you have any questions about IRC 1202 or how to qualify for it, be sure to speak with a qualified tax professional. They can help you determine if your business is eligible and how to maximize the credit.
    Qualified Small Business Stock Inc https://www.google.com/maps?cid=14731372876203948838
    14855 S 46th St., Phoenix, AZ 85044
    (480) 734-3758

  • 1202 Tax Code

    The Pros and Cons of the 1202 Tax Code for Small Businesses

    [caption id="attachment_4498" align="alignright" width="300"]Small Business Accounting Small Business Accounting[/caption] The 1202 tax code offers small businesses a way to avoid some taxes on the sale of qualified small business stock. This can be beneficial for businesses who are looking to invest in themselves or expand their operations. However, there are some drawbacks to this tax code as well. Let's take a look at the pros and cons of this tax code so you can decide if it's right for your small business. Small businesses rejoice! The 1202 tax code is finally in effect and it offers a number of benefits for small businesses owners. This new code allows small businesses to deduct up to $5,000 of their income taxes per year. This deduction is available for both sole proprietorships and S-Corporations. This is great news for small businesses who are struggling to make ends meet. However, there are some drawbacks to the 1202 tax code.

    PROS:

    1. The 1202 tax code can help small businesses save money on taxes. This is because small businesses can deduct up to $5,000 of their income taxes per year. Your business will save money on taxes if you are able to deduct this amount.
    2. The 1202 tax code is available for both sole proprietorships and S-Corporations. This means that more small businesses will be able to take advantage of this tax deduction. Your business does not have to be a certain size or structure in order to qualify.
    3. The 1202 tax code can help small businesses invest in themselves. This is because the deduction can be used to offset the cost of buying new equipment or expanding operations. You can use the money you save on taxes to reinvest in your business.
    4. The 1202 tax code can help small businesses create jobs. This is because businesses can use the money they save on taxes to hire new employees. This can help to boost the economy and create new jobs.
    5. The 1202 tax code can help small businesses attract new investors. This is because businesses can use the deduction to offset the cost of issuing new stock. This can help to attract new investors and raise capital for your business.

    CONS:

    1. The 1202 tax code has some restrictions. For example, your business must have been in operation for at least five years in order to qualify. This can be a problem for businesses that are just starting out.
    2. The 1202 tax code is only available for businesses that sell qualified small business stock. This means that businesses that do not sell this type of stock will not be able to take advantage of the deduction.
    3. The 1202 tax code has a maximum deduction of $5,000. This means that businesses will not be able to deduct more than this amount. This can be a problem for businesses that have high tax liability.
    4. The 1202 tax code is only available for a limited time. The deduction will only be available for tax years 2018 through 2025. This means that businesses will need to plan ahead if they want to take advantage of the deduction.
    5. The 1202 tax code may not be beneficial for businesses that are not profitable. This is because businesses can only deduct the amount of taxes they owe. If your business is not profitable, you will not be able to take advantage of the deduction.
    As you can see, there are both pros and cons to the 1202 tax code. You will need to decide if the benefits of this QSBS deduction are worth the restrictions. Only you can decide if the 1202 tax code is right for your small business.
    Qualified Small Business Stock Inc https://www.google.com/maps?cid=14731372876203948838
    14855 S 46th St., Phoenix, AZ 85044
    (480) 734-3758

  • Three Tips for Getting an Accurate Business Valuation

    If you're conscientious about financial reporting, you may already have a sense of your company's worth, but in some instances, you might need a formal business valuation, such as:

    • Certain transactions: Are you selling your business? Planning an IPO? Need financing?
    • Tax purposes: This includes estate planning, stock option distribution, and S Corporation conversions.
    • Litigation: Often needed in cases like bankruptcy, divorce, and damage determinations.

    While there isn't a single formula for valuing a business, there are generally accepted measures that will give you a valid assessment of your company's worth. Here are three tips that you can use to give your business a more accurate valuation:

    1. Take a Close Look at How Your Business Operates

    Does it incorporate the most tax-efficient structure? Have sales been lagging, or are you selling most of your merchandise to only a few customers? If so, consider jump-starting your sales effort by bringing in an experienced consultant who can help.

    Do you have several products that are not selling well? Maybe it's time to remove them from your inventory. Redesign your catalog to give it a fresh new look and make a point of discussing any new and exciting product lines with your existing customer base.

    It might also be time to give your physical properties a spring cleaning. Even minor upgrades such as a new coat of paint will increase your business valuation.

    2. Tangible and Intangible Assets

    Keep in mind that business valuation is not just an exercise in numbers where you subtract your liabilities from your assets. It's also based on the value of your intangible assets.

    It's easy to figure out the numbers for the value of your real estate and fixtures, but what is your intellectual property worth? Do you hold any patents or trademarks? And what about your business relationships or the reputation you've established with existing clients and in the community? Don't forget about key long-term employees whose in-depth knowledge about your business also adds value to its net worth.

    3. Choose Your Appraisal Team Carefully

    Don't try to do it yourself by turning to the Internet or reading a few books. You may eventually need to bring in experts like a business broker and an attorney, but your first step should be to contact an experienced tax professional with the expertise you need to arrive at a fair valuation of your business.

    If you need a business valuation for whatever reason, please don't hesitate to call and speak to a tax and accounting professional who can help.

    gototop

  • What’s New for IRS Form 1040 This Year

    If you've gathered your tax documents and are ready to tackle your tax return, there's one more step you should take: becoming familiar with what's new on the 2021 Form 1040. While the format of Form 1040 and its schedules remain similar to 2020, there are several changes. Many of these changes can be attributed to the American Rescue Plan Act of 2021 (ARP).

    Some are more familiar to taxpayers, including charitable contributions, advance child tax credits, and economic impact payments (mentioned above). Others might not be as well-known. Let's take a look at nine of them:

    1. Virtual Currency Question

    If you engaged in a transaction involving virtual currency during 2021, you will need to answer "Yes" to the question on page 1 of Form 1040 or 1040-SR. The question, At any time during 2021, did you receive, sell, exchange, or otherwise dispose of any financial interest in any virtual currency?, must be answered by all taxpayers - not just taxpayers who engaged in a transaction involving virtual currency. Do not leave this field blank.

    cautionImg

    Taxpayers who filed a 2020 return may remember answering this question last year; however, the wording for 2020 was different in that it used "acquire" instead of "dispose of."

    2. Premium Tax Credit Expanded (PTC)

    ARP expanded the PTC by eliminating the limitation that a taxpayer's household income may not exceed 400% of the Federal Poverty Line and generally increases the credit amounts. In addition, in 2021, if you receive unemployment compensation, you are generally eligible to claim the PTC if you meet the other requirements.

    3. Changes to Schedule 8812, Credits for Qualifying Children and Other Dependents

    Because of the changes made by ARP, a detailed discussion of the child tax credit and how to figure your child tax credit and credit for other dependents (previously part of these instructions) has been moved to the Instructions for Schedule 8812 (Form 1040). Also, instead of one page, Schedule 8812 is now three pages long. Part III now includes calculations for any additional tax due because of excess advance child tax credit payments.

    Complete Schedule 8812 if you are claiming the nonrefundable child tax credit, refundable child tax credit, additional child tax credit, or credit for other dependents, and attach it to your Form 1040 or 1040-SR.

    4. EIC: Special Rules for Taxpayers Without a Qualified Child

    Special rules apply if you claim the EIC (Earned Income Credit) without a qualifying child. In these cases, the minimum age has been lowered to age 19 except for specified students who must be at least 24 years old at the end of the year. However, the applicable minimum age is lowered further (to age 18) for former foster youth and qualified homeless youth. Additionally, you no longer need to be under age 65 to claim the EIC without a qualifying child.

    5. Forgiveness of Paycheck Protection (PPP) Loans

    The forgiveness of a PPP Loan creates tax-exempt income, so you don't need to report the income on Form 1040 or 1040-SR. You do, however, need to report certain information related to your PPP Loan. Please call if you need more information about how to report information related to your PPP Loan.

    6. Direct Deposit Now Available for Late Filed Tax Returns

    Even if you file your 2021 return after November 30, 2022, you are still able to receive a direct deposit of your refund.

    7. Alternative Media Preference, Form 9000

    Beginning in 2021, taxpayers with print disabilities can use Form 9000, Alternative Media Preference, to elect to receive notices from the IRS in an alternative format, including Braille, large print, audio, and electronic. You can attach Form 9000 to your Form 1040 or 1040-SR, or you can mail it separately.

    8. Extension and Expansion of Sick and Family Leave Credits

    Under ARP, certain self-employed individuals can claim credits for up to 10 days of "paid sick leave" and up to 60 days of "paid family leave" if they are unable to work or telework due to circumstances related to coronavirus. Self-employed individuals may claim these credits for the period beginning on April 1, 2021, and ending September 30, 2021.

    9. Tuition and Fees Deduction No Longer Available

    Finally, as a reminder, the tuition, and fees deduction, which was worth up to $4,000, is no longer available starting in 2021. Instead, the income limitations for the lifetime learning credit have been increased. Please call if you need more information about this valuable education-related tax credit.

    It Pays To Be Prepared

    Don't hesitate to call if you have questions about these and other tax law changes affecting individual taxpayers.

    gototop

  • Non-Profits: Electronic Filing of Form 1024

    Starting January 3, 2022, nonprofit organizations applying for recognition of exemption must submit Form 1024, Application for Recognition of Exemption Under Section 501(a) or Section 521 of the Internal Revenue Code, electronically online at Pay.gov. Form 1024, which was previously filed using a paper version, has been revised by the IRS to allow electronic filing. There is, however, a 90-day grace period during which the IRS will continue to accept paper versions of Form 1024 (Rev. 01-2018) and letter applications.

    The revised Form 1024 is part of the IRS’s ongoing efforts to improve service for the tax-exempt community and make it easier to complete an application for tax-exempt status while reducing errors and reducing processing time. Electronic filing will also shorten the time it takes the IRS to process these forms.

    Organizations requesting determinations under Section 521 are now also able to use the electronic Form 1024 instead of Form 1028, Application for Recognition of Exemption Under Section 521 of the Internal Revenue Code.

    The required user fee for Form 1024 remains $600 for 2022. Applicants must pay the fee through Pay.gov when submitting the form, and payment can be made directly from a bank account or by credit or debit card.

    In addition, applications for recognition of exemption under Sections 501(c)(11), (14), (16), (18), (21), (22), (23), (26), (27), (28), (29) and 501(d) can no longer be submitted as letter applications. Instead, these requests must be made on the electronic Form 1024.

    Accordingly, organizations that are described in Section 501(c) (other than 501(c)(3) and (c)(4)) and 501(d) applying for tax-exempt status must now use the electronic Form 1024. Section 501(c)(3) organizations must continue to use Form 1023 or Form 1023-EZ, and Section 501(c)(4) organizations must continue to use Form 1024-A. Those forms also must be filed electronically.

    Please contact the office if you need assistance applying for IRS recognition of tax-exempt status or have any other questions about applying for tax-exempt status.

    gototop

  • What is IRS Letter 6419?

    Taxpayers should have started receiving IRS Letter 6419, 2021 advance CTC, in January. The advance child tax credit payments letter helps taxpayers get the remainder of their 2021 tax credit. It includes the total amount of advance child tax credit payments taxpayers received in 2021 and the number of qualifying children used to calculate the advance payments.

    Do not throw this letter away. The letter will help taxpayers and their tax preparers reconcile and receive all the 2021 child tax credits to which they are entitled on your 2021 tax return. Families who received advance payments need to file a 2021 tax return and compare the advance payments they received in 2021 with the amount of the child tax credit they can properly claim on their 2021 tax return.

    Eligible families who did not receive any advance child tax credit payments can claim the full amount of the child tax credit on their 2021 federal tax return. This includes families who don't normally need to file a tax return.

    Taxpayers who received the advance payments can also check the amount of their payments by using the CTC Update Portal available on IRS.gov. If you have any questions about this and other COVID-19-related tax relief, help is just a phone call away.

    gototop

  • Should You Be Using Quickbooks’ Custom Fields?

    QuickBooks does not include custom field creation in the Basic Customization and Additional Customization windows, although your new fields will appear in the Additional Customization window. Rather, you go to the Customer Center, Vendor Center, or Employee Center, depending on what kind of records you want to change. You can add up to 15 custom fields for those three types of records (no more than seven per type).

    Open the Customers menu and select Customer Center. Make sure the Customers & Jobs tab is highlighted. Double-click on any record to open its Edit Customer window and then click on Additional Info. In the lower right corner, click Define Fields. The window that opens displays four columns. In the first, Label, you'll enter the names of your new custom fields. Click in any or all of the next three columns to indicate which records should contain them: customer, vendor, or employee.

    Figure 2: You can create up to 15 custom fields in QuickBooks Pro and Premier, but you're limited to seven per record type.

    Think carefully about what custom fields you want to create before you start. Once you've defined them and started using them in records and transactions, you won't want to change them.

    Adding Custom Fields to Items

    You can also add up to five custom fields to your item records. Open the Lists menu and select Item List. Select an item and double-click it to open its Edit Item window, then click Custom Fields over to the right. In the window that opens, click Define Fields. This feature works like the one that was just explained for adding custom fields to contact records. You enter the Label name and click in the Use column to create a checkmark.

    Using Custom Fields

    It's easy to enter information in the custom fields you’ve created in your customer, vendor, and employee records. You go through the same process you did to create them. Open a record and click Additional Info. You'll see your new fields in the column to the right. Just enter the information in each record and click OK.

    Figure 3: It's easy to find the custom fields you've created and enter the appropriate information in each record.

    As was said earlier, the custom fields you've created will be available to add to the appropriate form templates when you customize them. You'll also be able to choose them as filters when you generate reports.

    Dealing with Limitations

    Obviously. QuickBooks' custom fields have some shortcomings. You can probably work within limits placed on contact records, but you may want to track more targeted information than the software's limits allow when you're dealing with items. If you sell t-shirts and you have a large inventory in different sizes and colors, for example, you'll have to create an item record for each configuration rather than using custom fields.

    You chose - or may be planning to choose - QuickBooks because it can work for so many types of businesses. Custom fields are one way the software provides to personalize its features. But there may come a time when you outgrow its capabilities. You might need to install an add-on application to deepen specific functional areas like inventory, or you may need to upgrade your edition of QuickBooks entirely. If so, it may be time to contact a QuickBooks professional. If you need help with the program's custom fields, or it's time for you to expand your current accounting system, don't hesitate to call.

    gototop