Tax Return Preparation - Some Useful Tips To Help

Now that the festive season is out of the way, you can no longer put off completing your tax return. The 31st January is not just the deadline for filing online tax returns and paying the balance of tax owed but also a good chance to review your overall tax affairs.

All self assessment taxpayers must pay HMRC the balance of any tax owed by 31st January, or risk being charged daily interest after the deadline (currently at 5.5%). Taxpayers may also be asked to make their first 'payment on account' for the current tax year.

Preparation is Key

Leonie Kerswill, tax partner at PricewaterhouseCoopers LLP, gave the following advice:

“You probably find that getting your tax return in tends to slip down the priority list over the festive period but after the expense of Christmas it would be a shame to incur a £100 fine for not getting your tax return in on time, so the sooner you get the form in the better.

“Preparation is key so get your information together before you start and if you need help, ask HMRC or a qualified tax adviser. And do remember that you have to pay your tax – plus any payment on account due – it’s not just about getting the form in.

“The eve of the new year is also a great time to think about some New Year tax resolutions – such as checking tax codes, thinking about tax efficient investments and benefits, inheritance tax planning and generally that you'll take tax seriously!”

Top Tax Return Tips

Here are PwC's top tips for completing your tax return this year:

DO

• read all the questions carefully;
• get all relevant paperwork together – such as P60s and P11Ds - before starting;
• make sure the benefits listed tie up to the P11D (Benefits Statement) and that appropriate expense claims are made;
• remember that not all benefits are taxable. Although State Pensions and Job Seekers Allowance are, benefits such as Child Benefit are not;
• include personal pension contributions from post tax earnings;
• list Gift Aid payments and any other charitable donations and enter the amounts that were actually given;
• make sure the bank or building society interest received plus the tax that has been deducted (usually 20%) add up to the gross amount;
• register for the HMRC online filing system by the 22 January to ensure the activation pin is sent out in time.
  

DON’T

• miss out any questions that are set;
• enter income from ISAs or PEPs;
• leave it until the last minute - mistakes are more likely to be made if the process is rushed. The online filing system also gets very busy during the last two weeks before the deadline;
• include pension contributions to an employer’s pension plan deducted directly from pre tax earnings;
• forget to complete all the relevant supplementary pages eg employment or land and property sheets;
• forget to tick the box if a repayment is due and include the bank account details where the money should be sent to;
• forget that any tax owed needs to be paid by 31 January – it’s not just a case of getting the form in.
  

Source : http://www.bytestart.co.uk/

Italy energy firms banned from passing on new tax

ROME, June 25 (Reuters) - The Italian government has banned energy firms from passing on a new tax to their customers, the text of the law showed on Wednesday.

Economy Minister Giulio Tremonti has dubbed his hiking of the main tax on company profits (IRES) to 33 percent from 27.5 percent as a "Robin Hood" tax as the extra revenues will be taken from wealthy companies and spent on the needy.

Energy companies initially protested but have since played down the impact of the tax. Fulvio Conti, chief executive of power utility Enel (ENEI.MI: Quote, Profile, Research) said the tax would be "easily absorbed" by his group.

Media had speculated that the tax on oil, gas and electricity companies, would mean an extra burden to consumers already facing higher costs due to rising oil prices.

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'File your tax returns in time or face action'

NEW DELHI: Brace up for a call from the Income Tax (I-T) department if you are not filing your returns every year. This time, taxmen have an express instruction from the government to drag you to courts, if the need so arises, to ensure compliance.

With Finance Minister P Chidambaram hopeful of collecting an ambitious Rs 4 lakh crore in direct taxes in the current financial year, the authorities have been instructed to take up as many surveys as possible besides conducting raids on suspect big evaders to meet the target. Soon after inaugurating the two-day conference of chief commissioners and directors-general of Income Tax on June 9, Chidambaram had said that the department had already taken up 15 cases of 'non-filer' (those who have never filed a return) and 'stop-filer' (those who have stopped filing returns) for prosecution.

Hinting at stern action against wilful evaders, the FM had announced that a general direction had been given to taxmen that if during a survey or a search a person is found that he had never filed a return (non-filer) or has stopped filing return (stop-filer) in the last three years, steps must be taken for his prosecution. According to existing provisions of the I-T Act, failure to file returns may land a person in prison for a term extending up to seven years in case he is found to have evaded tax of more than Rs 1 lakh, or a penalty of Rs 5,000 for those on whom tax dues are found but returns are not filed.

Though the law on filing mandatory returns has been in existence for a long time, the very reiteration of the fact indicates the government's intention to invoke its provisions to catch wilful evaders.

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No tax deduction at source on service tax?

You have been advising that payment to a service provider, which is inclusive of service tax, would require tax deduction at source on the entire amount, inclusive of service tax. In view of the Board’s Circular No. 4 of 2008 dated April 28, 2008, your answer would require revision. The Circular may be publicised for the benefit of readers.

The Central Board of Direct Taxes in Circular No. 4 of 2008 dated April 28, 2008, has responded to a request for clarification as to whether service tax should be included in rent for tax deduction at source under Sec. 194-I in the following words:

“3. Service tax paid by the tenant does not partake of the nature of “income” of the landlord. The landlord only acts as a collecting agency for the Government for collection of service tax.

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‘Tax base needs to be raised by 30 to 40%’

Chairman Federal Board of Revenue, Abdullah Yousaf, on Friday said there was a global change in the tax system, and policy of tax exemption was being discouraged. Ratio of tax may be lowered to bring the people in the tax net, rather than to give tax exemptions and stressed for increasing the tax base by 30 percent to40 percent.

Addressing the business community in Islamabad Chamber of Commerce and Industry (ICCI) the FBR chairman said, “ Presently there are about two million tax payers in the country and this number needs to be increased.”

Chairman proposed that Islamabad should a model tax payee city, so as to replicate this model in other cities to expand the tax base. He said that ratio of taxes has been gradually reduced which were high in the past, which helped in increasing the number of tax payers.

He appreciated the proposal of president ICCI of imposing one percent to two percent investment tax to encourage local investment, without asking the source of investment. He said that FBR would consider this proposal and would see how it could be practically implemented. On the suggestion of ICCI, Yousaf said Sales Tax form would be made simpler and would also be considered to print it in Urdu language. The FBR was encouraging e-filling and currently 25,000 people were registered for e-filling, out of which 14,000 had filed the e-returns and expected for increase in this number.

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Tax preparation businesses keep up with the latest tax rules

For area tax professionals like Mike Martin, experience may be the best teacher when it comes to understanding the lively practice of tax preparation.

Martin launched Independence-based Mike Martin & Associates Inc. after working nearly two decades as an executive for H&R Block Inc.

Despite competition from new tax preparers and do-it-yourself software, Martin and his staff typically realize a steady increase in the number of new faces that come in every year for tax services.

“We usually experience an 18 to 20 percent increase in new clients, which replaces the number that pass away or move away,” Martin said. “This year, we’re already seeing a 22 to 23 percent clip in new business.”

Numerous Kansas City accounting firms and bookkeeping services posted significant increases in the number of individual and business returns they completed in 2007, compared with the previous year.

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Tax advisor shortage: US returns prepared in India

As many as 360,000 US tax returns were prepared in India in 2006, according to a report prepared by Pune-based ValueNotes, a leading provider of business intelligence and research.

The report says that at least 1.6 million returns will be prepared in India by 2011, but adds that this estimate is quite conservative and the potential is much larger at 22 million returns per year by 2011.

Actual offshoring could be limited by CPA firms' (US's Certified Public Accountant) inhibitions about outsourcing the work to India, but competitive pressures could force many more firms to offshore, the report says.

Glen Keenan, president of Xpitax, a facilitating outfit, says: "The whole outsourcing business requires a shift in thinking for the CPA firms, so comfort factor has to be really high in order to do that."

The accounting and audit services are relatively new in offshoring and are gradually gaining maturity with each passing tax season. Unlike other services, which are traditionally outsourced due to cost pressures, the demand for tax returns offshoring stems from the lack of accountants and excessive workload during the 'tax season.'

The number of CPAs and other qualified accountants in the US are just not enough to meet the increasing demand from increasing tax compliance, Sarbanes--Oxley related work, estate planning, advisories, et cetera. The demand-supply mismatch has led to severe competition for experienced accountants and salaries are skyrocketting, even at starting levels.

CPA firms are discovering that offshored tax returns are not only turned around faster, but are also 40% to 60% cheaper. CPA firms after initial success with tax returns preparation is slowly sending more work offshore: bookkeeping, financial statements analysis, etc.

ValueNotes CEO Arun Jethmalani says: "The industry will quickly move beyond 1040s. Both the vendors and buyers are at an inflection point on the maturity graph, and we expect tax returns preparation will drive penetration into a wider range of offshored professional accounting services."

The Indian offshore services provider landscape consists of captives of the Big Four audit firms (KPMG, PricewaterhouseCoopers, Deloitte and Touch, and Ernst & Young), American facilitating firms / agencies (Xpitax, SurePrep, CCH, IFR), Tier-1 multi-service BPOs (MphasiS, Datamatics, OPI), Tier-2 BPOs (PB Tech Impact Solutions, Cosmic Internet Technologies) and F&A BPOs owned/ controlled by Indian chartered accountants (GKM Management Services, Business Accounting Services, Accountant Anywhere, Enablizer).

Pratibha K, analyst at ValueNotes, feels that "facilitators like Xpitax and SurePrep are best positioned to service CPA firms, while Indian CA BPOs are well placed to operate as complete back-offices for accounting firms."

Based on the analysis that included extensive primary research, ValueNotes picked three winners from the current crop of vendors: Xpitax, GKM Management Services and Business Accounting Services.

Karthikeyan, managing director, GKM Management Services, says, "As chartered accountants, we feel our biggest advantage is that we can speak the global language of accounting with the CPAs. We feel this is a good differentiating factor for us compared to the large corporate vendors. CPAs are bound to trust us more than the tech companies because of our common accounting background."

The ValueNotes report 'Offshoring Tax Return Preparation to India' -- said that tax return preparation will also set the stage for other accounting services to be sent to India.

Source: http://www.offshoringtimes.com/

TAX ALERT: Remember Your Deduction for Long Term Care Insurance Premiums

As April 15 nears, tax-time frowns may be accompanied by smiles for many aging Americans. Deductible amounts for long term care insurance premiums are going up. For the 2006 tax year they're higher than in 2005; and for 2007, they'll be even higher. "Be sure to claim your deduction if you qualify," says Cameron Truesdell, CEO of LTC Financial Partners LLC, the nation's most experienced long term care insurance brokerage.

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Ten Commonly Missed Tax Deductions For Businesses

There is nothing worse than preparing Income Taxes and finding that there were many deductions we didn't keep track of. Not keeping track of deductions can be very costly come tax time. It is very important to keep good records all year round.

For every dollar you don't deduct, you could be paying up to 35% back to Uncle Sam. If the dollar has been spent, taxes shouldn't have to be paid on it. Think of the productivity of your business if you could put 35% of your income back into your business rather than in the hands of politicians. What kind of advertising campaign could you do with 35% extra cash flow every month. With a little organization and planning this can be possible.

Most business owners remember to take the big obvious deductions such as cost of goods sold, materials, tools, supplies, and employee expenses. But often times it is the small seemingly insignificant deductions that can make or break a company. Lone Peak Business Solutions has the 10 most commonly missed business deductions.

1. Advertising - Business cards, newspaper ads, information packets you hand out, free samples, flyers, product testing, videos and CD's.
   
   
2. Children - Money paid to children for helping with such things as delivering flyers, product, stuffing envelopes, cleaning office and car, etc.
   
   
3. Dues and Subscriptions - Dues to professional organizations and magazines that have to do with your trade or business.
   
   
4. Educational Expense - Classes or seminars that you take to improve your business.
   
   
5. Gifts - Gifts to clients and associates.
   
   
6. Laundry and Cleaning - This includes uniforms and Protective clothing and also your clothing when you are out of town.
   
   
7. Travel - Hotels, airfare, cab fare, parking, cleaning while away from home, trip log.
   
   
8. Home Office - A home office must be a separate room in your home to do business and accounting. Part of your living room or bedroom will not count. A percentage of utility Bills, home owners insurance, property tax, mortgage interest, refinance fees, repairs and maintenance, cleaning supplies, office decor, etc. are deductible. You find out the percentage by dividing the square footage of the office by the square footage of the entire house.
   
   
9. Mileage or Vehicle - There are two ways to take a vehicle expense. One is to take the mileage you use when picking up product, supplies, office supplies, meetings, handing out advertising or business cards, meals and entertaining clients, etc. The other way is to take the expense of using the vehicle: fuel, parts, mechanics, oil changes, etc. Along with taking expenses, you can also depreciate the vehicle.
   
   
10. Telephone - Cell phone, long distance calls on home phone, extra phone lines into home for business, fax or Internet.
    

Items such as paper clips, bank charges, credit card charges and home office expense seem small and unimportant at the time, but multiply those little things over a year or two and then multiply it times 35% and it can add up to quite a bit of money that should be in your pocket rather than in the government's pocket.

Along with keeping track of expenses it is important to evaluate your income and expenses on at least a quarterly basis. This allows you to determine if too much is being spent any one place. It allows you to determine if all the deductions that can be are being claimed. It allows you to determine how to better increase sales and decrease costs.

Christopher Anderson is part owner of Lone Peak Business Solutions, Inc. He wants to share his success as a business owner with others who desire to own their own business. He also believes that the economy is stronger with more business owners, and as a result, he is focused on helping business owners succeed.

Article Source: http://www.article-directorysite.com

Why Have Both?

Good reasons to have both: a bookkeeper and a tax pro

It's tempting for small-business owners to want to handle their own bookkeeping and tax preparation. After all, there is a lot of excellent accounting software out there to help them.

And many business startups begin with a few partners who do everything, hiring outside contractors only when absolutely necessary.

But just because you can do something doesn't mean you should. There are indirect costs involved with everything that falls into the do-it-yourself category. These include the time you spend doing it yourself instead of tending to other business matters, and the possible missed opportunities that come with not having something handled by a full-time expert in that task.

At some point early on, most small businesses need to hand off their tax preparation, and at least some of their bookkeeping, to professionals.

Here's why, and here are three things to keep in mind when hiring this outside help.

1. Good tax professionals are more than just preparers.
   
   Full disclosure here: I'm a tax pro myself. Besides being a tax preparer, a good tax pro should be able to advise you on:
   
   • How to reduce your overall tax bill;
   
   • Options for setting up retirement plans for you and your employees;
   
   • How the latest federal or state tax legislation affects your business;
   
   • How to coordinate your business and personal tax returns and issues;
   
   • Setting up benefits plans; and even
   
   • Whether you should consider changing the legal form of your business in the wake of evolving tax laws.
   
   
   While people tend to think of a tax pro as someone to interact with during tax season, you'll get the most out of a tax pro if you're able to talk with him about planning issues outside the crush of the preparation season.
   
   Similarly, issues such as how much to spend on new business assets, whether to lease or purchase vehicles and other equipment, and what your reasonable compensation should be as owner of a business, can and should be reviewed and discussed during the year. A good tax pro is going to be a helpful planner as well as a preparer.
   
   
2. Keeping good books is a business necessity (and, in these times, could keep you out of jail).
   
   You also need a good bookkeeper, either someone on your staff or an outside pro. The key question is: Do you have someone within your staff, aside from you, who has the skills and can handle the demands of the job? Someone who understands such matters as double-entry bookkeeping and how to make journal entries? If not, look outside.
   
   A bookkeeper is going to be focused on properly recording the day-to-day financial activities of your business. This may sound simpler than the review, planning, and tax-return preparation activities that your tax pro engages in.
   
   But without good bookkeeping, and good books, tax pros can't properly do their job. In fact, many tax pros won't even take on a business client if the client cannot produce an accurate balance sheet and is unwilling to hire someone who will get his books in proper order.
   
   Good bookkeepers will record all your receipts and expenses, track accounts receivable and payable, and in the course of entering all your financial transactions also create a balance sheet for the business. Some bookkeepers also handle payroll services for their clients; others prefer to work with dedicated payroll companies. Depending on the size of the business, a bookkeeper may work with a client a couple of days a week, weekly, or even just once a month.
   
   
3. Your bookkeeper and tax preparer need to work together on your behalf.
   
   There's definitely some overlap between the two. A professional tax preparer such as a CPA or enrolled agent may also offer bookkeeping services. However, most tax practices that offer bookkeeping will turn that portion of your needs over to a staffer who is primarily a bookkeeper. That makes sense — you shouldn't be paying tax pro rates of $125 or $175 an hour for bookkeeping services that can be had for $50 an hour.
   
   Tax pros and bookkeepers should and will work together for the benefit of their clients. For example, a bookkeeper won't necessarily know how a company's assets are being written off or depreciated. The tax pro is responsible for providing that information so that proper depreciation adjustments can be made to the company's books.
   
   Sometimes, small businesses will handle their own bookkeeping while retaining a tax pro to review the books annually as part of overall tax preparation and planning. Again, this can work if the business has someone with the skills and the time to devote to this important task. Otherwise, get an outside pro.
   
   Bookkeepers and tax pros serve two purposes for small-business owners: They help keep the business out of trouble by accurately recording and reporting the business's financial information, and they allow the business owner to focus on his or her primary job — running the business — while they focus on their financial specialties.

Joseph Anthony
Joseph Anthony is a tax professional in Portland, Ore., who writes about finance and tax issues affecting small businesses. Send Joseph an e-mail.

http://www.microsoft.com/smallbusiness/resources/finance/tax_advice/good_reasons_to_have_both_a_bookkeeper_and_a_tax_pro.mspx

Get Tax Deductions

Are you a small business owner who is planning on preparing your own taxes this year? If you are, you may want to know about the business deductions that you can claim. You may be happy to know that there are a number of deductions that you may be eligible for. Just a few of those deductions are touched on below.

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Three things you should know about tax

Employer's Pension Contributions

The rules regarding tax relief on employer pension contributions in particular for owner/manager businesses have, since A-Day, been somewhat clouded by the Revenue’s interpretation of the wholly and exclusive rules. The tax planning industry concern has been in connection with the Revenue’s approach with regard to the commerciality of an individual’s total remuneration package.

Thankfully, a recent addition to Revenue & Customs’ Manual provides some extra clarity and states “where the controlling director is also the person whose work generates the company’s income then the level of the remuneration package is a commercial decision and it is unlikely that there will be a non-business purpose for the level of the remuneration package”.

So effectively, the commercial value of a controlling director, in remuneration terms, is deemed to be inextricably linked to the success/profitability of the company assuming that their input is pivotal to that success. Accordingly, full tax relief should be granted on pension contributions up to the annual allowance of £225,000.

Offshore Disclosure Facility
The Revenue’s deadline approaches for the so-called tax amnesty for those who have income arising from offshore accounts for which no UK tax has been declared or paid.

The Revenue’s aim has been to get the majority who have avoided paying UK tax to accept the inevitable with the carrot of a fixed 10% penalty.

The intention to disclose needs to be notified to the Revenue by the 22nd June 2007, a full disclosure and payment of taxes due, to include interest and the 10% penalty, must be made by the 26th November 2007.

With the Revenue having obtained details of offshore account holders, one can expect investigations to commence shortly after the 22nd June for those who have not fully disclosed. In particular, it is rumoured that the Revenue intends to name and shame high profile celebrities.

Offshore Investment Bonds
For those looking to defer or mitigate tax legitimately is through an investment in an offshore investment bond. This can include a wide ranging investment strategy from cash deposits, fixed deposits, guaranteed products or a full range of investment collectives to include exchange traded funds. This legitimate long-term deferral can add substantial benefits to an investor’s portfolio for a minimal cost.

By John Robson & Andrew Selsby at RH Asset Management Limited, as published in the Onassis Newsletter, a fortnightly newsletter that gives insight into the investment markets.

For more from RHAM, visit http://www.rhasset.co.uk/

Cost Benefit Analysis-Whether you should outsource your Bookkeeping to Professional Book Keeper

What is a role of a bookkeeper in your organisation :
BOOKKEEPERS keep complete, up-to-date, and accurate records of accounts and financial arrangements. Bookkeepers verify and enter information into journals and ledgers or into a computer. They periodically balance the books and compile reports and financial statements. Bookkeepers also receive, record, bank and pay out cash. They balance checkbooks with monthly bank statements. They may calculate employee wages from plant records or time cards and issue payroll checks. Some of the other work they may do includes posting accounts receivable and payable, prepare and make bank deposits, record payrolls, maintain inventory records, purchase supplies, prepare purchase orders and do expense reports. Bookkeepers may also make schedules, sort documents, and file bills. These type of jobs are found in every industry and may have various job titles, such as accounts payable clerk, accounts receivable clerk or assistant bookkeeper.

Cost of a Bookkeeper :
The pay for these jobs depends upon experience, clerical skills, the level of responsibility and the job location. Beginning salaries go from minimum wage to $ 15 per hour. Experienced Bookkeeper can make $ 20 an hour. After having worked for three years with the same firm, a Bookkeeper can earn at $ 25 per hour. A Bookkeepers usually work 40 hours a week; sometimes it may be necessary to work overtime. Some employers have fringe benefits such as paid vacations and sick leave, life and health insurance, and bonuses. Other benefits that the employer may include are participation in a credit union, or retirement and profit sharing plans.

Advantage of outsourcing Bookkeeping work to a professional bookkeeper :
There are several distinct advantages to outsourcing your bookkeeping functions. First and foremost is saving money. You get what you pay for and if you don't pay for quality than you won't have quality service. However, you can save money by outsourcing because you won't be paying for employer payroll tax expense, workman's compensation and general liability insurances, vacation time, sick time, health insurance and other benefits a good full time bookkeeper will expect from his/her employer. Just remember, however, that these costs will be built into the consultant's hourly rate and their fee will reflect these costs. Any bookkeeping consultant who has not taken these costs into consideration is not a bookkeeper you want - if they don't know enough to include these costs into their fees, then they don't know enough to be a help to your business. You should expect to pay at least three times what you would pay an experienced full charge bookkeeper.

And just how do you save money by paying three times the amount you would pay an employee? Well, let's see. There will be no recruiting, interviewing and training costs for start. And if you should find yourself unhappy with the services there will be no additional recruiting, interviewing and training to replace your bookkeeper. Also, you will not have to be concerned about law suits such as sexual harassment, unlawful firing, age discrimination, sexist, etc. Or an increase in your unemployment rates because you laid off an employee that you really wanted to fire but had no lawful cause to do so. So right away we have less time and money spent and potentially less hassle if things don't go well.

And of course you will not be paying workman's compensation and general liability insurance premiums. Also any worthy bookkeeper will expect at least two weeks vacation, coverage for sick time, health and dental insurance and even perhaps more benefits.

Most professional bookkeepers will have their own offices saving you space within your office. So you will not be buying that extra desk, calculator, computer and computer software. Your bookkeeper will be providing all of that as part of his/her fee. No software updates, computer maintenance, training costs, etc. Of course should you prefer to have your computerized bookkeeping records available to you at your office, a small investment in software installed on your computer makes this possible. Also no office supplies to be paid for. You will be amazed at just how much pens, pencils, and paper can be used by a bookkeeper. Your consultant bookkeeper will either ask you to drop off the work at their office, will pick it up at your office or some may even offer remote bookkeeping service. And by having your bookkeeping done off site, your bookkeeper will be able to work more efficiently and accurately because her/his office will most likely offer less distractions than your busy office. All of this is saving you money.

And the best reason for outsourcing is that you control the amount of money spent on bookkeeping. What I mean by this is that the person you hire to do your bookkeeping will be doing just that - not answering the phone, dealing with drop-bys, chatting to other employees, etc. Also you can start with just a few hours a month and add on when you need to and then adjust downward again should it be necessary. Can you imagine finding an employee to start with only four hours a month, then asking them to put in 20 hours a week for awhile and then back down to four hours a month again. I don't think you would keep them for very long, but a free lance bookkeeper is able to work around these variables and even more importantly expects to work with flexible schedules.

So have I convinced you yet? If so, then just remember "you will get what you pay for". Go for top quality because your financial records are the core of your business and without great bookkeeping you cannot expect to succeed no matter what type of business you have. After all don't you think you are worth it ?

Mr.Bhaskar Thakkar is a qualified Chartered Accountant and professional bookkeeper from India. He is a president of M/s. BT Associates, Chartered Accountants. The said firm provides Book keeping, Accounting, Auditing and Tax preparation services to various Chartered Accountants in UK, US and Canada. The firm is also specialized in preparation of VAT returns, Payroll Processing. Visit 1. btassociate.com,. A division of said firm provides various outsourcing solutions please visit 1. jobs2india.

Article Source: http://www.1ArticleWorld.com

The Tax Benefits of Corporations

There are three standard types of legal business entities. The proprietorship, the partnership, and the corporation. Each entity has pros and cons. The tax benefits of corporations are one advantage to incorporating.

Corporations are taxed differently than the other business entities. Proprietorships and partnerships are taxes after the earnings pass through to the business owners, thus appearing on the owner personal taxes. Where as a corporation is treated as its own entity and thus is it files its own tax return and pays its own income taxes based on profits.

Under the law a corporation is a separate legal entity separate from its owners who are the shareholders. The company is responsible for taxes and files it’s taxes like it were a person. It is responsible for taxes on the net profit after all business deductions have been taken from the gross income.

A corporation can legally reduce the amount it owes in taxes by taking valid business expense deductions. A valid business expense is any expense that a corporation incurs in the pursuit of making a profit. Some examples of business expenses are wages, rent, mortgage, utilities, vehicle expenses, and the cost of product to name just a few.

A corporation is required to file a corporate tax return and pay taxes at the corporate tax rate. Corporations are required to estimate what they will owe for the year and make their payments quarterly in advance of when the taxes are actually due.

Salaries and bonuses of all employees is a valid business expense that can be deducted form the gross income. If you are the owner and you work for the company your salary is also a legitimate deduction because you will pay the tax due on this income when filing your personal income tax.

If a corporation pays dividends to its shareholders the corporation must pay taxes on this money and so must the shareholder when they claim it on their income tax. What this means is that dividends are actually taxed twice.

Reporting and paying taxes on a corporation is time consuming but the benefits far outweigh the additional time it takes for the bookkeeping. We’ll look at a few of the common benefits but there are several and you should consult a tax expert to ensure you are getting all the deductions you are entitled to.

Many times a corporation want to retain some of its profits in the business at the end of the year so that they have the working capital for future growth. When a corporation does this it is taxed at the lower corporate tax rates which saves a great deal of money. If the business was a proprietorship or partnership even though the money was left in the business the owners would be taxed at the regular personal income tax rate on this money as if they had personally drawn it out.

Another benefit is that the owners or shareholders of a corporation are sheltered from any liability the corporation might incur. Because the corporation is seen legally as it’s own entity shareholders and owners can not be held responsible for debt incurred, unless they sign a personal security bond. This means your personal assets such as your home, vehicles, or bank account are not at risk should your business fail.

There are many tax benefits of corporations. The tax benefits you will qualify for will depend on many factors and it is always a wise idea to discuss deductions with your accountant to make sure you are getting the maximum benefit and are only taking deductions you are entitled to.

Deon Melchior is the Editor and Publisher of Article Click. For more FREE articles for your ezine and websites visit ArticleClick.com. Article Click is a free content article directory. This means that as a publisher you may reprint the articles that are included in our site, as long as the article is unedited and the author box is included with it's live hyperlinks.

Small business accounting simplifies handling of business

It is not about the size of the business, rather it is about the efficiency with which you manage your business that counts in the end. Now if one starts a business venture whether it is a small sized business, mid sized business or a large scale business undertaking you want to earn profit and earn lots of it. The crucial element that determines the success of any business is the manner in which the accounting and other financial transaction of the business are dealt with. So if you are running a small business, you need to handle the accounting work of your business efficiently. Small business accounting may seem to be easy to handle initially, but gradually you will realize that the task is not so easy. Ultimately you will have to resort to either hiring a professional accountant to handle your small business accounting work or buy software that make the whole process easy.

Any business irrespective of their size has different requirement and all business strategy are designed on those lines. Small business accounting must also be tailor made to suit your business needs and if you happen to be one of those business owners who have perfect knowledge of accounting and bookkeeping, rest easy your business can grow by leaps and bounds. Running a small business can become overwhelming at times and this is why it will be better for you in the long run if you get small business accounting software installed to ease up the whole process. However we also know that most of the small business owners or for that matter any other business owner are not qualified accountants, and that is why they need to hire the services of a professional to handle this.

There are accounting professionals and CPAs who specialize in providing small business accounting services to clients. The only thing you need to do here is find out a CPA or an accounting firm that provides this service to clients and hire their services for your business. The accountant will handle the small business accounting work of your business; just make sure that from time to time you oversee things. As the business owner, you will like to be informed about all the work that is being done with regard to accounting and bookkeeping of your business, so that you know where your business is heading and if you are making any profits or not.

The importance of having well maintained accounts increases all the more when you approach the tax paying season. Everyone has to pay taxes and you must make sure that you have all the calculations done properly before the season approaches. Surely you do not want to hurry things in the last moment and in the process end up doing major blunders. The whole purpose of having a professional handle the small business accounting of your business is to make things easier for you, so that you pay your tax on time. Besides taxes, the accountant also keeps a transparent record of all the financial transactions that has been undertaken for your business, so that you can implement newer business strategies.

Alvis Brazma gives advice to business owners about how to manage their business efficiently without any hassles. To know more about Accounting outsourcing services,Small business accounting,Real estate accounting,Retail accounting, Small business accounting

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Benefits of Bookkeeping Outsourcing Online for Accounting Firms

Bookkeeping is a monotonous task for accounting firms. It takes long and tedious hours to maintain the accounts properly. On the other note, this can be a very expensive matter as it involves giving high amount of salaries with add-ons to your accountants. A variety of companies have trained accountant for bookkeeping. But their cost to the company is so high that it becomes impossible for the firm to continue with them. For small business ventures, hiring a proper staff for bookkeeping can be an option that will fit perfectly within the budget.

An increasing amount charged by hired bookkeeping employees has forced the companies to outsource them. These companies have been giving a part or the entire bookkeeping work to the outsourcing company. The companies benefit a lot with outsourcing their bookkeeping work. They are able to give time to other sections of their business to earn profits and expand their business. Apart from this, there are lots of benefits of bookkeeping outsourcing online. Online services save your valuable time, which would have been otherwise wasted in roaming around the offices of professional bookkeeping firm.

Benefits of bookkeeping outsourcing online includes cutting down of the actual cost of keeping a trained bookkeeping staff in your company. It is because the company has to invest a huge amount of money in hiring an accountant. It will help you to lower your capital expenditure and run the business within the budget. This is not just the culmination point of the benefits involved. The unleashing of benefits has just started. Saving money will enable you to invest in some other important areas of your business. This will give a tremendous boost to your business.

Improved efficiency of work is also a part of the list of benefits of Bookkeeping Outsourcing Online. Usually, it happens that a person or a company is not able to give its best in the time of emergency. The reason behind this can be overload of work on them. In this case, your business is bound to suffer loss. So, it is always better and safer to outsource your bookkeeping work to other accounting firms. The professionals at the outsourcing bookkeeping firms lay great emphasis in doing any work professionally. Many of the accounting firms have specialized softwares for managing your accounting transactions.

Outsourcing bookkeeping work is beneficial for many companies, especially small scale business ventures. It is because they have to take each and every step very carefully, without spending any extra penny. They already invest so much in other areas and outsourcing will be a cooling effect on their heated expenses. Putting some of your workload on others will help you to perform efficiently in other areas of your business. Moreover, you will save the maintenance cost of the accountant, the insurance benefits, general liability insurance and many more.

Saving on computer maintenance cost, training cost and stationary costs also form an integral part of the benefits of bookkeeping outsourcing online. Many of the bookkeeping outsourcing companies, especially online ones, charge nominal rates for providing efficient services. In fact, they do the work in much less time than your hired accountants. It is because the professionals at specialized outsourcing bookkeeping firms can concentrate only on maintaining your accounts. Outsourcing bookkeeping work is always a money-saving option for all types of business ventures.

Michelle Barkley is a CPA working for IFRworld.She specializes in Accounting Outsourcing ,Bookkeeping Outsourcing Online and tax returns preparation outsourcing. http://www.ifrworld.com

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Bookkeeping Services Must Be Perfect To Be Successful

Bookkeeping is a name given to the task that is undertaken to maintain records of the transactions that are done on a daily basis. Any type of business, whether it is large scale, medium scale or small scale, will not be successful if small things like bookkeeping records are not maintained properly. All these may appear to be small and trivial to some people, but business owners know that this is an important aspect of their business and must be handled carefully by experts. Bookkeeping services provided by several firms can help business to run smoothly by taking care of all their bookkeeping works.

Bookkeeping is one aspect of the business that is really time consuming and difficult to handle. However, this needs to be taken care of and that too very well. In fact, bookkeeping is the source through which one can come to know about the exact position of the business. Bookkeeping services are of two types. First is manual bookkeeping and second is computerized bookkeeping. If you run a small business, then you can manage your business through manual bookkeeping. However if you have a medium sized or large business undertaking, opting for computerized bookkeeping will be ideal for you to handle your business.

Through bookkeeping services, you can maintain any finance related thing of your business properly. You must keep a record of all the income and expenditure related to your business. All these records will be vital for maintaining the bookkeeping of your business properly. Make sure that you have updated records about all that is going on in your business. To maintain all your records properly, you must hire bookkeeping services from the best companies that provide the service.

It is advisable to opt for computerized bookkeeping services due to the several advantages it has. Even if you run a small scale business, in the long run it will be helpful for your business if you have computerized bookkeeping services. There is certain software available in the market which can make this entire process of bookkeeping very easy to maintain. The software is customized for all types of businesses like small, big and medium scaled business. You can get software that will suit your business needs perfectly. If you hire bookkeeping services from a good company, you can handle the financial aspect of your business with ease.

Outsourcing bookkeeping services is a widely used option by several business houses to manage their records and also to cut costs. You can reduce the overhead cost of your company through outsourcing. Other then companies that provide bookkeeping services, you can also find several freelancers who do the work. By outsourcing bookkeeping services, you not only reduce costs but also free up the staff of your organization. You can make use of these resources to focus on other core sectors of your business. You will make a very wise choice for the progress of your business if you outsource bookkeeping services from any source. Through outsourcing bookkeeping service you will not compromise on the quality of work as well.

About Author

Michelle Barkley is a CPA working for Ifrworld.She specializes in Bookkeeping outsourcing, Finance accounting outsourcing and Tax Returns Online.To know more about Accounting outsourcing services and to use the services visit www.ifrworld.com

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