What Kind Of Accounting Records Does The Irs Require For Network Marketing Mlm And Other Stay At H

Two questions frequently asked by Network Marketers are What kind of business records do I have to keep for the IRS?, and Whats kind of record-keeping system should I use in my business?

Operating a business without paying attention to record-keeping is a recipe for disaster. You may be thinking who caresI hate bookkeeping and tax details, and if my business takes in enough money, it wont matter anyway Ill just pay someone else to clean up my record-keeping later!

Not so fast, my friend! A good record-keeping system is crucial for preparing your tax returns. And if you dont prepare your tax returns with care, youll not only pay too much in taxes, but also increase the risk of a dreaded IRS audit. If an auditor finds insufficient records or significant mistakes in your books, it can disallow deductions, plus impose hefty fines and penalties, possibly forcing you out of business and wiping out your life savings as well.

The good news is that the IRS doesnt prescribe one particular system of keeping records that must be used. No two businesses are alike, so theres not one uniform fashion when it comes to record-keeping. Any system is okay, just as long as it paints a true picture of your income and expenses.

You can keep your records either manually, or with a computer.

The manual system works fine for smaller home businesses and cost only $10 to $20 a year for a ledger book and some manila file folders. I recommend a Weekly Bookkeeping booklet, where you can record your income and expenses on a regular basis, and then update the year to date totals, by expense category, at the end of each week. This way you always have an up to date statement of Income and Expenses, or Profit and Loss report, at your fingertips. In addition to the weekly record book, keep a check register, an adding machine, a mileage log,and an accordion file close by for filing receipts. Organize your receipts by category; Advertising, Travel and Entertainment, Cell phone, and so on.

A computerized record-keeping system works on the same principles as the manual system, however, the computer automates the process. You can use spreadsheets to record your residual income and bonus checks, and use separate columns to categorize your expenses.

An even quicker way to categorize your expenses is to use a software program such as Quicken or QuickBooks. These programs work like a checkbook register, with each income and expense transaction typed in as you go. A Profit and Loss report can be printed in a snapassuming you do have some basic accounting knowledge. But beware. A software program is no substitute for a basic understanding of debits and credits. Often the year-end reports that I see produced from accounting software programs is best summarized by the statement Garbage inGarbage Out.

If youre comfortable at the computer and have basic bookkeeping expertise, good for you! But you dont need computer software to keep accurate records. At minimum, categorize your receipts (auto, office supplies, advertising, etc) in manila folders or an accordion file, and total them up by category at tax time. Staple the adding machine tape to each folder or stack of receipts. Either system is okay as long as it paints a true and accurate picture of your income and expenses.

Network Marketing business owners should get a copy of IRS Publication 583, Starting a Business and Keeping Records, for more details on IRS record-keeping requirements.

How To Minimize Small Business Taxes A Tax Professionals Guide

Knowing how to minimize small business taxes means you get to keep Uncle Sams hand from picking your pocket of hard earned money at tax time. If you are not taking advantage of every available, legal, tax loophole, your business profits are being handed over to the IRS.

The following tips will help you reduce small business taxes.

It is recommended to take full advantage of ones claim on Capital Cost Allowance. If you need to buy supplies, machinery, and technology, time it for maximum savings. If doing the math shows you will minimize your tax exposure deducting the expenses this year, do not delay. Using Capital Cost Allowance on your new property, you will still increase the CCA for the current year and will have increased CCA claims for the next year.

Consider postponing disposal of depreciable resources. Do not dispose of business equipment until the following year depending on which will better reduce the tax liability for your business.

Planning income deferments can also help minimize your business tax liability. Postponing or putting off income is recommended if business profit will be higher or if the tax rates in the following tax year are expected to be reduced.
Through smart tax planning managing your expenses to meet higher profits is another strategy for further minimizing tax. Let the tax implications dictate the timing of improvements, supply purchases and equipment upgrades.

Make the most of Registered Retirement Savings Plan (RRSP) payments possible as a means of minimizing small business taxes. Contribution of up to eighteen percent in any given year of the profit, along with a Registered Retirement Savings Plan (RRSP) payment is deducted from the income. An RRSP is advantageous to be considered for tax deduction for small businesses. Additional deductions you may or may not be taking full advantage of include write-offs for start-up expenses; office costs; furnishings; advancement through education; travel expense; insurance premiums; affiliations; and conferences.

Employ members of the family. The government is particularly understanding to family-run businesses when salaries are concerned. You are not required to provide payment for federal unemployment taxes if you employ in your business your husband or wife or parents. There is no need to hold back income taxes and Social Security if siblings work in your business. However, child labour laws are still applied even if they are your children so age restrictions must be considered. As employees they must receive proper salaries and must be assured that the company is benefited in order to be eligible for these exemptions that can help dramatically reduce small business tax exposure.

Employ independent contractors so you will not have to withhold state income taxes from their salaries. As the business owner, you will not have to provide withholding payment for the employers contribution for Social Security as well as Medicare taxes. There is also no need to provide unemployment benefits for independent contractors. However, make certain that the IRS does classify the independent contractor as your employee. If they do, you will be requested to provide payment for taxes including fines levied for any missed withholdings you may or may not have been aware of. Consult your tax expert before categorizing an individual as an independent contractor to be sure you are properly doing so.

Contributing to charity can help reduce small business taxes. Donating to non-profit groups that work to help others who need assistance is a great way to reduce tax liability. In this way, you will be able to decrease the tax exposure of your business. Tax incentives are offered by the IRS for businesses and individuals who give contributions, so why not take advantage of these opportunities that are mutually beneficial by creating a tax plan of donation to your favorite charities.

Prior to making a contribution, be sure the charitable organization qualifies for the deduction you seek. The IRS also requires you to document with the organization donations of $250 or more.

No one is exempt from paying taxes; however, executing a proactive, smart business plan to reduce the business tax exposure for your business is good business. Small deductions when added up, combined with a tax aware financial plan created with an experienced accountant can help not only to minimize your business taxes but grow the future you are working so hard to create.

Energy Incentives for Individuals in the American Recovery and Reinvestment Act

With 2010 almost over, the IRS reminds taxpayers to take advantage of the numerous tax breaks made available earlier this year in the American Recovery and Reinvestment Act (ARRA).

The recovery law provides tax incentives for first-time home buyers, people purchasing new cars, those interested in making their home more energy efficient and parents and students paying for college. But all of these incentives have expiration dates so taxpayers should take advantage of them while they can.

The American Recovery and Reinvestment Act provides tax incentives for individuals to invest in energy-efficient products.

Treatment of Alternative Motor Vehicle Credit as a Personal Credit Allowed Against AMT: Starting in 2009, the new law allows the Alternative Motor Vehicle Credit, including the tax credit for purchasing hybrid vehicles, to be applied against the Alternative Minimum Tax. Prior to the new law, the Alternative Motor Vehicle Credit could not be used to offset the AMT. This means the credit could not be taken if a taxpayer owed AMT or was reduced for some taxpayers who did not owe AMT.

Conversion Kits: The new law also provided a tax credit for plug-in electric drive conversion kits. The credit is equal to 10 percent of the cost of converting a vehicle to a qualified plug-in electric drive motor vehicle and placed in service after February 17, 2009. The maximum amount of the credit is $4,000. The credit does not apply to conversions made after December 31, 2011. A taxpayer may claim this credit even if the taxpayer claimed a hybrid vehicle credit for the same vehicle in an earlier year.

Plug-In Electric Vehicle Credit: The new law also creates a special tax credit for two types of plug-in vehicles certain low-speed electric vehicles and two-or three wheeled vehicles. The amount of credit is 10% of the cost of the vehicle, up to a maximum credit of $2,500 for purchases made after February 17, 2009, and before January 1, 2012. To qualify, a vehicle must be either a low speed vehicle propelled by an electric motor that draws electricity from a battery with a capacity of 4 kilowatt hours or more or be a two-or three-wheeled vehicle propelled by an electric motor that draws electricity from a battery with the capacity of 2.5 kilowatt hours. A taxpayer may not claim this credit if the plug-in electric drive vehicle credit allowable.

Plug-In Electric Drive Vehicle Credit: The new law modifies the credit for qualified plug-electric drive vehicles purchased after December 31, 2009. To qualify, vehicles must be newly purchased after December 31, 2009. To qualify, vehicles must be newly purchased, have four or more wheels, have a gross vehicle weight rating of less than 14,000 pounds, and draw propulsion using a battery with at least four kilowatt hours that can be recharged from an external source of electricity. The minimum amount of credit for kilowatt hours that can be recharged from an external source of electricity. The minimum amount of the credit for qualified plug-in electric drive vehicles is $2,500 and the credit tops out at $7,500, depending on the battery capacity. The full amount of the credit will be reduced with respect to a manufacturer’s vehicles after the manufacturer has sold at least 200,000 vehicles.

Residential Energy Efficient Property Credit: This nonrefundable energy tax credit will help individual taxpayers pay for qualified residential alternative energy equipment, such as solar hot water heaters, geothermal heat pumps and wind turbines. The new law removes some of the previously imposed maximum amount and allows for a credit equal to 30% of the cost of qualified property.

Residential Energy Property Credit: The new law increases the energy tax credit for homeowners who make energy efficient improvements to their existing homes. The new law increases the credit rate to 30% of the cost of all qualifying improvements and raises the maximum credit limit to $1,500 for improvements placed in service in 2009 and 2010.

The credit applies to improvements such as adding insulation, energy efficient exterior windows and energy-efficient heating and air conditioning systems.

A similar credit was available for 2007, but was not available in 2008. Homeowners should be aware that the standards in the new law are higher than the standards for the credit that was available in 2007 for products that qualify as “energy efficient” for purposes of this tax credit.

For property purchased before June 1, 2009, homeowners generally can rely on the manufacturers’ certifications and Energy Star labels that were available at the time for those products. Manufacturers have been advised that they should not continue to provide certifications for property that fails to meet the new standards. The IRS has issued a notice that will allow manufacturers to certify that their products meet the new standards. Please note, not all ENERGY STAR qualified products qualify for a tax credit. For detailed information about qualifying improvements, visit the U.S. Department of Energy’s Energy Star Web site.

What Remedies can Tax Lawyers Propose to Minor and Major IRS Tax Problems

The Internal Revenue Service (IRS) collects your taxes and executes the Internal Revenue Code. While taxes are generally used to enhance the country’s infrastructure and address many other national and worldwide issues, they can also give you a pretty severe predicament. The good news is, you can address your tax problems through IRS tax resolution firms.

IRS Tax Help

Since tax issues entail a considerable amount of time and money, lots of consumers are smothered by the mountain of operations and documents that they’ll need to go through only to get out of these major circumstances. A legal professional can help you out, specifically with more complex cases, like with wage garnishment release and lien removal.

Paycheck Garnishment Release. Tax debt can bring on garnishment– the process of salary deduction to atone the entire debt off– and it’s not a pretty picture. For many people with debt, garnishments aren’t useful because they just turn out with a paltry income. If you prefer to appeal to the IRS concerning the release of the garnishment, do this through a tax lawyer; it takes the stress out of having to go through this complicated process on your own.

Lien Removal. When you get to the dead end and are powerless to pay off your tax debt, a lien may worsen the break. In this context, liens give the IRS the civil liberty to retail your property or assets in order that your tax debts will be paid. It’s plainly an unfavorable option, but you can inhibit the IRS from submitting a lien, or you can persuade them to extract it by means of the help of trained and trustworthy IRS tax lawyers.

Offer in Compromise

When you can’t pay your tax debt considering that it’s awfully huge, you need to consider enrolling for an Offer in Compromise. This IRS program makes it possible for taxpayers to settle their financial obligations by paying off much less than they must pay back. Your personal lawyer can haggle with the IRS and verify your infirmity to pay off your debt due to extreme conditions, such as unemployment and low annual income.

Taking on your tax concerns without a legal representative similar to heading to battle without any protection on and without any weapons to hold. Every problem has a solution, so don’t let your tax obstacles swamp you. To learn more about IRS tax lawyers, go to ehow.com/how_2058207_get-irs-tax-lawyer.html