Archive for the ‘Tip Of The Day’ Category

Special Blogger Deduction

I’m a writer and that means I get to take advantage of a special writer’s deduction when I calculate my taxes. I get to write off anything that is related to something I am researching for a future article or book. Let’s say I decide to write a travel book and go to Tuscany to ...

Avoid this Stupid Mistake That Can Cost You the Deduction for People You Pay

If you have someone working for you, they are either an employee or an Independent Contractor. If they are an employee, that means you need to deduct payroll taxes from their checks and you need to pay that and additional payroll taxes to local, state and federal authorities. Plus you have monthly, quarterly and annual ...

What’s Taxable if the Bank Holds Your Money

In the last tax tip, we talked about how cash basis and accrual basis for tax returns worked. Most small businesses file their tax returns using the cash basis. It gets a little complicated for businesses that accept credit cards. Many merchant service providers will require a deposit, particularly if there are a lot of ...

Use the Right Business Code on Your Tax Return

Your business tax return has some very innocent questions that could have big consequences if you don’t pay careful attention. One of those questions is what your business code is. Innocent sounding…but very important. The IRS uses those codes to compare your business’s numbers against similar businesses. For example, let’s say you have an Internet ...

Are You Cash or Accrual?

There’s a bunch of questions you’re going to have to answer when it comes time to start your first business. Some people don’t get around to deciding this until they file their first tax return, and maybe even rely on reading a blog like this one to make up their mind. There are two basic ...

What’s the Best Business Structure for Your Online Business?

There are a number of things to look at when you are looking for the best business structure. Here are a few: What state will your business be in? Do you expect to have taxable income soon? What is your personal income tax rate now? What is your IRS audit risk tolerance? How important are ...

Cross-Streaming Strategies for Internet Businesses

Years ago, we talked about upstreaming strategies to move income from a flow-through entity to a C Corporation. It could also be used to move income from a home state to tax-free state like Nevada or Wyoming. The rules to safely do this are very strict though. That’s how it was. Law changes over the ...

Income Tax Nexus Issues for Online Business

Over the past few tax tips, we’ve talked about the cross-border tax grab and the dangers to your business. The issue is nexus, the connection, that other states say you have with them. Today we’re talking about the toughest nexus issue – income tax nexus. If you have income tax nexus, you have to file ...

Sales Tax Nexus Issues for Online Business

Nexus means connection. If you have a connection (nexus) to another state, that could mean you will have to collect and pay sales tax to that state. The challenge is that every state gets to set the rules for what constitutes nexus. Hosting your computer in one state could mean nexus or even working one ...

Look Out For the Cross-Border Tax Grab

For many businesses, especially online businesses, the IRS is the least of their tax problems. There is a cross-border tax grab going on right now. You may live in your home state, work from your home state and even though you don’t work from a neighboring state, suddenly find out you owe them a bunch ...