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Corporate Income Tax in New York: A Complete Guide for 2022

Map of New York with tax icon, representing corporate income tax information for the state

Corporate Income Tax in New York: A Complete Guide for 2022

January 1, 2023

Map of New York with tax icon, representing corporate income tax information for the state

peakreliance

Accounting, Bookkeeping, Taxes

Are you running a business in New York and looking for information about corporate income tax in 2022? You’ve come to the right place! New York has a complicated tax system, and it can be overwhelming to understand all the rules and regulations, but fear not – this article provides all the essential details you need to know about corporate income tax in New York in 2022. We’ll start with a brief overview of the state’s tax structure, then go into the specifics of what’s applicable to your business. We’ll also provide insight into how New York’s corporate income tax compares to other states, as well as what tax credits and deductions are available to businesses. Finally, we will provide tips to ensure you’re in compliance with the law and paying the correct amount of tax. So, if you’re ready to learn everything you need to know about corporate income tax in New York in 2022, let’s get started!

Overview of New York State Tax Structure

New York has a progressive tax structure that consists of three levels – state, county, and local. For the state level, New York’s income tax is based on the federal income tax system. At the county level, there are no local income taxes, but there’s an alternative minimum tax that applies to certain types of businesses. Finally, local taxes vary significantly, and there’s no standardized system for calculating them. As a result, it’s very important to check with your city or county to determine exactly how much you’ll owe. There are a number of deductions and credits available to help individuals and businesses lower their tax burden, and taxpayers can also claim New York’s tax rate reduction credit.

Corporate Income Tax Rates in New York in 2022

The New York corporate income tax rate is 8.82%. Corporate tax rates are applied to the taxable income of a corporation. The taxable income is determined by subtracting any allowable deductions from the federal taxable income. To calculate the New York corporate income tax, you must use taxable income, which is different from gross income. Gross income is the amount of income a business receives before any deductions are taken. For example, if a company has a net profit of $100,000, gross income would be $100,000. When a company pays out salaries and benefits to employees, they are reducing gross income. Taxes are also subtracted from gross income. So if a company pays $25,000 in taxes, the gross income is reduced to $75,000. Taxable income is calculated by taking gross income and subtracting deductions.

How New York’s Corporate Income Tax Compares to Other States

New York’s tax rate is significantly higher than average, which might cause businesses to look for alternatives. However, a high tax rate can also be a positive factor, as it demonstrates that the state has a robust economy and the ability to invest in important programs like education. Furthermore, New York’s tax rate reduction credit, which we’ll outline in a moment, can help businesses offset the cost of the state’s corporate income tax. 

Tax Credits and Deductions Available to Businesses in New York

New York offers businesses a variety of tax credits and deductions to help lower their tax burden. For example, the New York State Research and Development Tax Credit provides an incentive for companies to conduct research and development activities in the state. Another tax credit available to businesses in New York is the Empire State Manufacturing Credit. This credit encourages manufacturers to create new jobs in New York. There are also a number of deductions available to help businesses lower their taxable income. For example, you may be able to deduct any applicable equipment and machinery, as well as the cost of energy used for operation and maintenance. There are a number of other deductions you can claim as well. By taking advantage of all the credits and deductions available, along with the New York state tax rate reduction credit, businesses can significantly reduce their tax burden.

Filing Requirements for Corporate Income Tax in New York

If you operate a corporation in New York, you’re required to file Form IT-201, Corporate Income Tax Return, by the last day of the fourth month after the end of the fiscal year. This means that for fiscal years ending on December 31, 2022, the due date is April 15, 2023. If you fail to file your taxes on time, you’ll receive a non-filing penalty. To avoid paying this penalty, you can pay what you owe plus interest, file an extension, or request a waiver of the penalty. As a corporation owner, you’re also required to file an owner’s withholding allowance certificate. If you fail to do so, you could receive a penalty of $50 or 10% of the amount that should have been withheld. Furthermore, you may be required to provide a certified copy of your federal income tax return.

Tips for Compliance with Corporate Income Tax in New York

Now that you have a good understanding of New York’s corporate income tax rules, you can take steps to ensure compliance. Here are a few tips to help you stay on track:

  • Review the tax rules for your industry. If you run a small business, it can be challenging to stay on top of all the tax rules. This is particularly true for industries that have special tax rules, such as insurance, real estate, and health care. Reviewing the rules for your industry can help you stay informed and avoid costly mistakes. Stay on top of your accounting
  • Poor record-keeping can lead to mistakes, and these mistakes can result in additional taxes. If you fail to report a business expense, you may not be able to claim it on your tax return. Also, if you fail to report income, you may end up owing more than you need to.
Conclusion

The New York corporate income tax rate is significantly higher than the average state rate. Additionally, the state has one of the highest rates among the largest economies in the country. Although a high tax rate can be troublesome for businesses, New York has a robust economy and the ability to invest in important programs like education. Fortunately, there are a number of tax credits and deductions available to help businesses lower their tax burden. Additionally, corporations are required to file Form IT-201, Corporate Income Tax Return, by the last day of the fourth month after the end of the fiscal year. Now that you have a good understanding of New York’s corporate income tax rules, you can take steps to ensure compliance. Remember, your tax situation will likely change over the next few years. Be sure to stay informed on any new tax laws or regulations, and take steps to ensure compliance.

Need help with your corporate income taxes in New York? Contact us at +1 (718) 218-5558 or [email protected] to learn more about our services and get expert assistance with your tax obligations.

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Georgia Corporate Tax Changes for 2022: A Quick Reference Guide

Map of Georgia with person in corporate setting, representing corporate tax changes for the state in 2022

Georgia Corporate Tax Changes for 2022: A Quick Reference Guide

December 31, 2022

Map of Georgia with person in corporate setting, representing corporate tax changes for the state in 2022

peakreliance

Accounting, Bookkeeping, Taxes

The state of Georgia is making some major changes to its corporate tax laws in 2022, and you need to know what this means for your business. The changes are designed to make it easier for businesses to operate in the state, as well as simplify the corporate tax filing process. You’ll need to understand the new rules and how they’ll affect your business in order to stay compliant and take advantage of the benefits. This article will provide an overview of the upcoming changes and what you need to know in order to make sure you’re in the know.

Who will be affected by the changes?

All corporations that operate in Georgia and make more than $50,000 in annual income will be impacted by the upcoming changes. The new laws will affect both for-profit and nonprofit companies, as well as any corporation that is registered as a S-Corp or LLC. 

What are the new rules and regulations?

The following is a breakdown of the new rules and regulations that have been put into place in 2022:

  • Taxes will no longer be calculated monthly.
  • Taxes will be collected on an annual basis instead, making the filing process simpler for business owners.
  • Taxes will be calculated based on total income.
  • The corporate tax rate will be calculated based on the total amount of income the business made over the course of the year.
  • Taxable income will no longer include bonuses and equity.
  • Bonuses, equity, and other non-regular wages will no longer be included in the taxable income of the business, making it easier for employees to earn a living.
  • Franchise tax will be replaced with a gross receipts tax.
  • A gross receipts tax will replace the state franchise tax, making it easier for businesses to pay taxes.
  • Simplified accounting methods.
  • The new rules will simplify the accounting methods used to calculate taxes and will make it easier to calculate taxes.
How will the changes affect my business?

The changes to Georgia’s corporate tax laws are positive for businesses operating in the state. As mentioned, taxes will be calculated based on total income and will replace the current system that relies on a monthly revenue stream. This means taxes will be calculated based on the overall profit of the business, rather than the amount of money coming in each month. This will simplify the tax filing process, making it easier for business owners to calculate what they owe. Taxes will be collected on an annual basis, making it even easier to file taxes and stay compliant with state laws. In addition to making it easier for businesses owners to file taxes, the new rules will also simplify how businesses account for the money they make. Specifically, the new tax laws will make it easier to calculate what you owe and will simplify the methods businesses use to account for their revenue and expenses. Overall, the changes will make it easier to operate in the state and will make it simpler for businesses to stay compliant and pay taxes.

What are the benefits of the changes?

The changes to Georgia’s corporate taxes will simplify the tax filing process, making it easier for businesses to pay taxes and remain compliant. In addition, the new rules will make it easier for businesses to calculate what they owe and will simplify the methods used to account for revenue and income. Overall, the new changes make it easier to operate in the state and will make it easier for businesses to take advantage of the benefits offered by the state.

Need help with your corporate income taxes in Georgia? Contact us at +1 (718) 218-5558 or [email protected] to learn more about our services and get expert assistance with your tax obligations.

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Corporate Income Tax Rate in Illinois: A Comprehensive Guide for 2022

Map of Illinois with person in corporate setting, representing corporate tax changes for the state in 2022

Corporate Income Tax Rate in Illinois: A Comprehensive Guide for 2022

December 30, 2022

Map of Illinois with person in corporate setting, representing corporate tax changes for the state in 2022

peakreliance

Accounting, Bookkeeping, Taxes

If you are planning to set up a business in Illinois, you need to know about the corporate income tax rate for 2022. Knowing this information is vital for businesses to stay within the legal framework and remain compliant with the applicable laws. This article will provide you with all the necessary information you need to know about the corporate income tax rate in Illinois for 2022. You will find out about the corporate income tax rate, the taxable income brackets, and other important details that are important to be aware of. With this information, businesses will be able to plan their finances and be aware of how much they will need to pay in taxes when they set up their operations in Illinois.

Overview of Corporate Income Tax in Illinois

The corporate income tax rate in Illinois is 9.5%. This rate is applied to the corporate net income of companies operating in Illinois. This rate is applicable when an individual sets up a business in Illinois or when a company chooses to operate from Illinois. In this case, the business will need to pay the corporate income tax rate in Illinois. The corporate income tax is a tax that is levied on the income of companies. The rate of tax that is levied on this income will depend on the type of business and the state where the business is operating from. The corporate income tax rate in Illinois is one of the highest rates in the US. This means that companies will need to pay more taxes compared to other states where the rate is lower. Companies that operate from Illinois will also need to pay this tax on the profit that they earn from operations in other states.

Taxable Income Brackets for 2022

The taxable income brackets for Illinois in 2022 are as follows:

Single Filers:

  • $0 – $10,000: 4.75%
  • $10,001 – $100,000: 4.90%
  • Over $100,000: 4.95%

Married Filing Jointly:

  • $0 – $20,000: 4.75%
  • $20,001 – $200,000: 4.90%
  • Over $200,000: 4.95%

Head of Household:

  • $0 – $15,000: 4.75%
  • $15,001 – $150,000: 4.90%
  • Over $150,000: 4.95%

It’s important to note that these income brackets and rates may be subject to change each year. It’s always a good idea to stay up-to-date on the latest tax laws and rates.

How to Calculate Corporate Income Tax

First, you need to know what the corporate income tax is. The corporate income tax is a tax that is levied on the income of companies. The rate of tax that is levied on this income will depend on the type of business and the state where the business is operating from. The corporate income tax rate in Illinois is one of the highest rates in the US. This means that companies will need to pay more taxes compared to other states where the rate is lower. Next, you will need to identify what type of business you are operating from Illinois. This will help you determine the rate of corporate income tax that you need to pay. After identifying the type of business you are operating from Illinois, you will need to calculate the net income of your business. To do this, you need to add all of your business expenses and then subtract your revenues. The amount that remains is your net income.

How to File Corporate Income Tax in Illinois

Businesses that operate from Illinois and have a net income of more than $300,000 will need to file corporate income tax in Illinois. The businesses will have to file a corporate income tax return within the due date of the return. The due date is based on the type of business and the tax year that the business is operating from. If a business files their corporate income tax after the due date, they will have to pay a penalty. The penalty is 5% of the amount that is due. If a business files their corporate income tax after the due date, they will have to pay a penalty. The penalty is 5% of the amount that is due. To file the corporate income tax in Illinois, businesses will have to use Form IL-105. The form will ask you to provide information about your business, such as the type of business, the net income of your business, and the amount of tax that you owe to Illinois. To know what information you need to provide, you can go through the Form IL-105.

Resources to Help Businesses Calculate Corporate Income Tax

  1. The Illinois Department of Revenue: The state’s official revenue agency has a webpage dedicated to corporate income tax, with information on how to calculate and pay your tax, as well as forms and instructions.

  2. Tax software: There are many tax software programs that can help businesses calculate their corporate income tax. Some popular options include TurboTax and H&R Block.

  3. Accountants and tax professionals: If you’re uncertain about how to calculate your corporate income tax, consider seeking the advice of a professional. Accountants and tax attorneys can provide expert guidance and help ensure that you’re paying the correct amount of tax.

  4. Tax calculator: You can also use an online tax calculator to help estimate your corporate income tax. Just be aware that these calculators may not take into account all the specific tax laws and rules that apply to your business, so they should be used as a rough guide only.

Conclusion

The corporate income tax rate in Illinois is 9.5%. This rate is applied to the corporate net income of companies operating in Illinois. This rate is applicable when an individual sets up a business in Illinois or when a company chooses to operate from Illinois. In this case, the business will need to pay the corporate income tax rate in Illinois. The corporate income tax is a tax that is levied on the income of companies. The rate of tax that is levied on this income will depend on the type of business and the state where the business is operating from. The rates for the previous years were 3.0% on the first $50,000 in taxable income, 5.25% on taxable income between $50,000 and $100,000, and 5.9% on taxable income exceeding $100,000.

Need help with your corporate income taxes in Illinois? Contact us at +1 (718) 218-5558 or [email protected] to learn more about our services and get expert assistance with your tax obligations.

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New Jersey Self Employment Tax Guide for 2022: What You Need to Know

New Jersey Self Employment Tax Guide for 2022: What You Need to Know

December 29, 2022

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Accounting, Bookkeeping, Taxes

If you’re a self-employed individual or small business owner in New Jersey, you may be wondering what you need to know about self-employment tax in 2022. Self-employment tax is a type of tax paid by individuals who are self-employed, such as freelancers, independent contractors, and small business owners. It’s a combination of Medicare and Social Security taxes that must be paid on any net income earned from self-employment. In New Jersey, the self-employment tax rate is 15.3%. Understanding the details of self-employment tax, including the filing requirements and deadlines, can help ensure that you don’t face any surprises when it comes time to file your taxes. Read on to learn everything you need to know about self-employment tax in New Jersey for 2022.

What is Self-Employment Tax?

Self-employment tax is a tax that is paid by individuals who are self-employed. It consists of both Medicare and Social Security taxes, and it must be paid on net income earned from self-employment. In other words, self-employed individuals pay themselves a salary that includes both the amount they should be paid for the work they do and taxes on that income. They then pay taxes on the amount they themselves declared as income. While the name sounds like it’s only for entrepreneurs, it can also apply to work in the freelance economy. Self-employed individuals must pay both the employee and employer portion of the Social Security and Medicare taxes. When you calculate the amount of self-employment tax you owe, you will need to account for both the employer’s and the employee’s portion of the Self-Employment Tax. The amount of self-employment tax you owe is determined by your net self-employment earnings and your net profit from the business. You can use the Self-Employment Tax Calculator to figure out how much you owe.

Self-Employment Tax Rate in New Jersey

The self-employment tax rate in New Jersey is 15.3%. This rate applies to individuals who have earned $600 or more from self-employment in a given tax year. The self-employment tax rate in New Jersey is identical to the combined Social Security and Medicare tax rate for employees in the state (15.3%). The self-employment tax rate in New Jersey applies to all individuals who are self-employed, including freelancers, independent contractors, and small business owners.

Who Needs to Pay Self-Employment Tax?

Anyone that earns $600 or more from self-employment in a given tax year must pay self-employment tax. This includes freelancers, independent contractors, and small business owners. Self-employed individuals must pay both the employee and employer portion of the Social Security and Medicare taxes. When you calculate the amount of self-employment tax you owe, you will need to account for both the employer’s and the employee’s portion of the Self-Employment Tax. The amount of self-employment tax you owe is determined by your net self-employment earnings and your net profit from the business. You can use the Self-Employment Tax Calculator to figure out how much you owe.

Self-Employment Tax Deduction

One benefit of paying self-employment tax is that it’s deductible when calculating your taxable income. To claim a deduction for the self-employment tax you paid, you must itemize your deductions on Form 1040, Schedule A, or Form 1040NR, Schedule A. If you paid only the employer’s portion of the Social Security and Medicare taxes, you cannot claim a deduction for self-employment taxes unless you are in business by yourself. You can claim a deduction if you paid both the employer’s and employee’s portions of the Social Security and Medicare taxes. You can deduct the amount of self-employment tax you paid as an above-the-line deduction on Form 1040 or Form 1040NR. However, this means that you must itemize your deductions.

How to Calculate Self-Employment Tax

To calculate the amount of self-employment tax you owe, you first need to calculate your net self-employment earnings. To do this, you will need to subtract any expenses you incurred while working self-employed from any income you earned while self-employed. Once you have calculated your net self-employment earnings, you can use the Self-Employment Tax Calculator to figure out how much you owe. You can also use the chart below to help you calculate self-employment tax more quickly. Net Self-Employment Earnings Calculate your net self-employment earnings by subtracting any expenses you incurred while working self-employed from any income you earned while self-employed. Social Security and Medicare Taxes Calculate the amount of Social Security and Medicare taxes you owe by multiplying your net self-employment earnings by the current Social Security tax rate (6.2%) and the current Medicare tax rate (1.45%). Self-Employment Tax Add the amount of Social Security taxes you owe and the amount of Medicare taxes you owe together to calculate the total amount of self-employment tax you owe.

Self-Employment Tax Filing Requirements

If you owe self-employment tax, you must report it on Form 1040 or Form 1040NR. You must also complete Schedule SE and attach it to your tax return. The deadline to report self-employment tax and file your return is the same as the deadline for employees and self-employed individuals who are not due a tax refund, which is April 15, 2022. If you file an extension to file your tax return, you also have to file an extension to report your self-employment tax. If you owe self-employment tax, be sure to pay the tax by the extended due date. If you don’t, you may face penalties and interest on the amount you owe. There are several payment options available to make payment of your self-employment tax as convenient as possible. You can pay online, by phone, by mail, or in person at a local IRS office.

Self-Employment Tax Deadlines

If you owe self-employment tax, you should file your tax return by the due date, which is April 15, 2023. However, it is best not to wait until the last minute to get your taxes done. In order to give yourself ample time to file your taxes, you should start preparing for them as soon as you have all of your information. If you owe self-employment tax, be sure to pay the tax by the extended due date. If you don’t, you may face penalties and interest on the amount you owe. There are several payment options available to make payment of your self-employment tax as convenient as possible. You can pay online, by phone, by mail, or in person at a local IRS office.

Conclusion

Self-employment tax can be complex, but the more you know about it, the better you can manage your finances. One way to reduce the amount of self-employment tax you owe is to claim deductions where possible. Another way to reduce the amount of self-employment tax you owe is to increase your income by taking on more freelance work or growing your small business.

Need help with your self-employment taxes in New Jersey? Contact us at +1 (718) 218-5558 or [email protected] to learn more about our services and get expert assistance with your tax obligations.

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Ohio’s Corporate Income Tax: A Comprehensive Guide for Business Owners

Illustration of Ohio map and tax filing icon representing corporate income tax in Ohio

Ohio’s Corporate Income Tax: A Comprehensive Guide for Business Owners

December 27, 2022

Illustration of Ohio map and tax filing icon representing corporate income tax in Ohio

peakreliance

Accounting, Bookkeeping, Taxes

Ohio’s corporate income tax can be a complex topic, but it’s important for all business owners to stay informed and up to date. With the new year quickly approaching, now is the perfect time to review Ohio’s corporate income tax laws and regulations. Understanding Ohio’s corporate income tax can be beneficial for businesses of all sizes, and it’s important to know what exemptions and deductions are available. This guide will provide an overview of the Ohio corporate income tax, including the corporate tax rate, filing requirements, and how to calculate taxes. Whether you are a small business owner or responsible for taxes for a large corporation, this guide can help you understand the nuances of Ohio’s corporate income tax laws and ensure your business is compliant.

Overview of the Ohio Corporate Income Tax

The Ohio corporate income tax is a state tax on businesses that earn income in Ohio. The corporate income tax is one of the most common business taxes in the United States. State corporate income taxes are imposed at various rates, and they are due on a semi-annual basis. Many states have changed their corporate income tax rates over the last few years as part of their yearly budget processes. Most recently, in October, Ohio’s corporate income tax rate was reduced from 4.33 percent to 2.75 percent. This reduction was part of a budget plan to generate additional tax revenue. Ohio’s corporate income tax is imposed on all domestic and foreign corporations that have a taxable income in Ohio. The taxable income is based on the federal taxable income, but there are some modifications. There are also special computations for insurance companies, financial institutions, and railroads. Corporations that have been assessed a tax under Chapter 5739 are also subject to the corporate income tax.

Corporate Tax Rate

The corporate tax rate in Ohio is 2.75 percent for calendar year 2022. This is significantly lower than the rate taxpayers paid at the beginning of the year, and the rate that owners paid in previous years. Ohio’s corporate income tax rates have changed a few times over the last several years, and the new rate of 2.75 percent is subject to change as well. Although it is unclear whether the corporate tax rate will be changed again, it is important to understand the rate each year. The 2.75 percent rate will remain in effect until July 2021. After that, the rate may be updated or changed.

Filing Requirements

The corporate income tax filing requirements depend on the amount of taxable income your business earns in Ohio. Corporations that earn $300,000 or less in taxable income will have to file the Ohio IT-330, the Ohio IT-331, and the Ohio IT-332. Corporations that earn more than $300,000 in taxable income will have to file Ohio IT-330, Ohio IT-331, and Ohio IT-332 as well as Ohio IT-333. Corporations that earn more than $10 million in taxable income will have to file Ohio IT-330, Ohio IT-331, Ohio IT-332, and Ohio IT-333 as well as Ohio IT-1188. Corporations that earn less than $10 million in taxable income will not have to file Ohio IT-1188. If you are unsure what filing requirements apply to your business, a tax preparer can help.

Calculating Taxes

The amount of corporate income tax you owe for the year is calculated by multiplying the taxable income by the rate that applies to your business. Note that the taxable income is based on the federal taxable income. Corporations that earn less than $300,000 in taxable income will have to pay taxes based on the Ohio tax rate of 2.75 percent. If you earn more than $300,000 in taxable income, you will pay taxes based on the Ohio tax rate of 2.75 percent plus the surcharge that applies to your industry. The surcharge is an additional tax that is imposed on corporations in a particular industry.

There are four different surcharges based on the industry your business falls under.

  • Manufacturing surcharge (1.25 percent)
  • Natural gas surcharge (0.4 percent)
  • Health care surcharge (1.25 percent)
  • Financial services surcharge (1.25 percent)
Exemptions and Deductions

In addition to the standard deductions and exemptions, the Ohio corporate income tax allows businesses to claim a number of credits. Businesses can claim a credit for the carbon dioxide emissions created by the business. The businesses can claim this credit on an annual basis, and the amount is based on the amount of carbon dioxide emitted. Another notable exemption is related to energy credits. Businesses can claim a credit for the amount they spend on energy efficiency, renewable energy, and/or carbon dioxide reduction projects. Alternative fuel suppliers can also claim a credit for the amount they spend on ethanol or methanol production facilities. Other credits and exemptions that may apply to your business include research and development credits and the Ohio Job Creation Tax Credit. The Ohio Job Creation Tax Credit is a refundable credit that was implemented to benefit businesses that create new jobs in Ohio.

Tax Credits

In addition to the exemptions and deductions, businesses can claim credits against the amount of taxes they owe. Credits can help lower the amount of taxes a business owes, and some credits are refundable. The Ohio Job Creation Tax Credit is a refundable credit, which means it can reduce the amount a business owes in taxes to zero. The Alternative Fuels Tax Credit is another notable tax credit for businesses in Ohio. This credit is available to businesses that purchase alternative fuels, such as propane, natural gas, and electricity obtained from renewable energy sources. The size of the credit depends on the type of fuel purchased and the amount of fuel purchased.

Payment Options

Ohio’s corporate income tax is due at the end of the year. The deadline for the second quarterly installment is the last day of February, the third is the last day of August, and the fourth is the last day of December. Corporations that earn more than $10 million in taxable income will have to pay the tax quarterly. Corporations that earn less than $10 million can choose to pay their tax quarterly or annually. The minimum amount that corporations will have to pay as a quarterly installment is $50. If you can’t pay the full amount at once, there are a few payment options available. You can use a credit card, personal check, or money order. Alternatively, if you are unable to pay the full amount, you can consider filing for an installment agreement.

Resources for Businesses

Keeping up with Ohio’s corporate income tax laws can be difficult, even for business owners that are fluent in tax law. To make it easier, The Ohio Department of Taxation has created resources to help business owners understand their taxes. These resources can help you understand everything from filing your taxes to calculating your taxes. The resources can also help provide answers to frequently asked questions. The Ohio Department of Taxation’s online resources are a great way to keep up with the latest tax laws, such as the new corporate tax rate. The Ohio Department of Taxation also has a selection of publications for businesses. Publications are useful for quick reference materials, and they can help you stay informed and up to date with tax laws. Publications are available in both paper and digital formats.

Penalties for Non-Compliance

The penalties for non-compliance with Ohio’s corporate income tax laws are based on the amount of taxes a business owes.

The penalties are as follows: 

  • If a business owes less than $2,500, the penalty is 5 percent of the amount owed.
  • If a business owes $2,500 or more but less than $25,000, the penalty is 10 percent of the amount owed.
  • If a business owes $25,000 or more, the penalty is 15 percent of the amount owed.
Conclusion

In conclusion, Ohio’s corporate income tax is an important topic for business owners to stay informed about. Understanding the laws and regulations surrounding this tax can help businesses of all sizes stay compliant in the new year. By reviewing the corporate tax rate, filing requirements, and how to calculate taxes, businesses can be prepared to pay the correct amount of corporate income tax in Ohio. Whether you are a small business owner or responsible for taxes for a large corporation, this guide can help you navigate the complexities of Ohio’s corporate income tax laws and ensure your business is in compliance for 2022.

 

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What are the most overlooked tax deductions?

Scissors with a dollar sign representing tax deductions that may be overlooked

What are the most overlooked tax deductions?

December 25, 2022

Scissors with a dollar sign representing tax deductions that may be overlooked

peakreliance

Accounting, Bookkeeping, Taxes

There are many tax deductions that individuals and businesses may overlook when filing their taxes. Here are a few common ones:

  • Charitable donations: Charitable donations are a common tax deduction that many people may overlook when filing their taxes. Donations to qualified charitable organizations are tax deductible, but it’s important to keep track of your donations and have proper documentation. This includes receipts for cash donations and a record of any non-cash donations, such as clothing or household items.

    In order to claim a charitable donation on your taxes, the organization must be a qualified charitable organization as determined by the IRS. This includes religious, educational, scientific, and other charitable organizations that are tax exempt under Internal Revenue Code Section 501(c)(3).

    There are different types of charitable donations, including cash donations and non-cash donations. Cash donations can include things like monetary gifts, checks, and credit card donations. Non-cash donations include items such as clothing, household items, and vehicles.

    For cash donations, it’s important to keep a record of the donation, including the date, the amount, and the name of the organization. A receipt from the charity or a bank record, such as a cancelled check or credit card statement, can serve as proof of the donation.

    For non-cash donations, it’s important to have a detailed record of the items being donated. This should include a description of the items, the date they were acquired, and their original cost. It’s also a good idea to get a receipt from the charity for the value of the items being donated.

    There are limits on the amount of charitable donations that can be claimed on your taxes. Generally, you can deduct charitable donations up to 50% of your adjusted gross income for the year. However, there are limits on donations of appreciated property, such as stocks or real estate, and there are also limits on donations made to certain organizations, such as private foundations.

    It’s always a good idea to consult with a tax professional or refer to the IRS guidelines to determine what charitable donations you may be eligible to claim on your taxes. Charitable donations can be a great way to give back to your community and make a positive impact, and they can also provide a tax benefit for individuals and businesses.

  • Student loan interest: Student loan interest is a tax deduction that many people may be eligible to claim when they file their taxes. If you have student loans and are making payments, you may be able to deduct the interest you paid on your taxes. This deduction can help reduce your tax liability and provide some relief for the cost of higher education.

    To claim the student loan interest deduction, you must meet the following criteria:

    • You must be legally obligated to pay the interest on a qualified student loan.
    • The loan must be for you, your spouse, or a dependent for whom you claim an exemption on your tax return.
    • The loan must have been used to pay for qualified education expenses, such as tuition, fees, and other related expenses.

There are limits on the student loan interest deduction. The deduction is limited to $2,500 per year and is subject to income limits. The deduction is also phased out at certain income levels. It’s important to refer to the IRS guidelines to determine if you are eligible for the deduction and what the limits are for your specific situation.

To claim the student loan interest deduction, you will need to file Form 1040 and attach Schedule 1. On Schedule 1, you will enter the amount of student loan interest you paid during the tax year. You will also need to have a Form 1098-E, Student Loan Interest Statement, which will be provided to you by your lender. This form will show the amount of interest you paid during the year.

It’s important to note that the student loan interest deduction is an “above-the-line” deduction, which means you can claim it even if you don’t itemize your deductions on your tax return. This makes it a valuable tax break for many people who may not be able to itemize their deductions.

In summary, the student loan interest deduction is a tax break that can provide some relief for the cost of higher education. If you have student loans and are making payments, you may be eligible to claim this deduction on your taxes. It’s important to refer to the IRS guidelines and consult with a tax professional to determine if you are eligible and what the limits are for your specific situation.

  • Home office expenses: If you work from home and use a dedicated space in your home as your primary place of business, you may be able to claim a deduction for home office expenses. This can be a valuable tax break for those who work from home, as it allows you to deduct a portion of your rent or mortgage, utilities, and other expenses related to the use of your home as an office.

    To claim the home office deduction, you must meet the following criteria:

    1. You must use a dedicated space in your home exclusively for business purposes.
    2. You must use your home as your principal place of business or as a place where you regularly meet with clients or customers.
    3. You must not use the space for any personal activities.

There are two methods for claiming the home office deduction: the regular method and the simplified method.

The regular method involves calculating the actual expenses related to the use of your home as an office. This includes a portion of your rent or mortgage, utilities, insurance, and other expenses. You will need to calculate the percentage of your home used for business and apply that percentage to your eligible expenses to determine your deduction.

The simplified method allows you to claim a flat rate of $5 per square foot of your home used for business, up to a maximum of 300 square feet. This method can be simpler and less time-consuming, but it may result in a lower deduction than the regular method.

It’s important to keep good records of your home office expenses, including receipts and documentation of the expenses you are claiming. You will need to file Form 8829, Expenses for Business Use of Your Home, to claim the home office deduction.

It’s always a good idea to consult with a tax professional or refer to the IRS guidelines to determine if you are eligible for the home office deduction and which method is best for your specific situation. The home office deduction can be a valuable tax break for those who work from home and use a dedicated space in their home for business purposes.

  • Medical and dental expenses: 

Medical and dental expenses can be a significant cost for individuals and families, and the good news is that you may be able to claim a deduction for these expenses on your taxes. The medical and dental expense deduction allows you to deduct qualifying expenses that exceed a certain percentage of your adjusted gross income (AGI).

To claim the medical and dental expense deduction, you must meet the following criteria:

    1. The expenses must be for medical care or dental care as defined by the IRS. This includes things like doctor’s visits, prescription medications, and insurance premiums.
    2. The expenses must be paid during the tax year for which you are claiming the deduction.
    3. The expenses must not be reimbursed by insurance or another party.

There are limits on the medical and dental expense deduction. You can only claim expenses that exceed 7.5% of your AGI. This means that if your AGI is $50,000 and you have $5,000 in medical and dental expenses, you can only claim a deduction for the amount that exceeds $3,750 (7.5% of $50,000).

To claim the medical and dental expense deduction, you will need to file Form 1040 and attach Schedule A, Itemized Deductions. On Schedule A, you will enter the total amount of your medical and dental expenses for the year and the amount that exceeds 7.5% of your AGI. You will also need to have documentation of your expenses, such as receipts or explanations of benefits from your insurance provider.

It’s important to note that the medical and dental expense deduction is subject to change and may not be available to everyone. It’s always a good idea to consult with a tax professional or refer to the IRS guidelines to determine if you are eligible for the deduction and what the limits are for your specific situation.

In summary, the medical and dental expense deduction allows you to claim qualifying expenses that exceed a certain percentage of your AGI on your taxes. This can be a valuable tax break for those who have significant medical and dental expenses. It’s important to keep good records of your expenses and consult with a tax professional to determine if you are eligible for the deduction.

  • Professional development: Professional development, such as conferences, workshops, and continuing education courses, can be an important investment for individuals looking to advance their careers or stay up-to-date in their fields. The good news is that you may be able to claim a tax deduction for these expenses.

    To claim a deduction for professional development expenses, you must meet the following criteria:

    1. The expenses must be for education that is directly related to your current job or business.
    2. The education must maintain or improve the skills required in your current job or business.
    3. The education cannot be required as a condition of employment or necessary to meet the minimum requirements of your job or business.

There are limits on the professional development expense deduction. You can only claim expenses that are considered “ordinary and necessary” for your job or business. This means that the expenses must be common and accepted in your field and must be helpful to your business or profession.

To claim the professional development expense deduction, you will need to file Form 1040 and attach Schedule C, Profit or Loss from Business. On Schedule C, you will enter the total amount of your professional development expenses for the year and the amount that is considered ordinary and necessary for your job or business. You will also need to have documentation of your expenses, such as receipts or invoices.

It’s important to note that the professional development expense deduction is subject to change and may not be available to everyone. It’s always a good idea to consult with a tax professional or refer to the IRS guidelines to determine if you are eligible for the deduction and what the limits are for your specific situation.

In summary, the professional development expense deduction allows you to claim qualifying expenses on your taxes. This can be a valuable tax break for those who invest in their professional development and seek to improve their skills and knowledge in their fields. It’s important to keep good records of your expenses and consult with a tax professional to determine if you are eligible for the deduction.

It’s important to note that these deductions are subject to change and may not be applicable to everyone. It’s always a good idea to consult with a tax professional or refer to the IRS guidelines to determine what deductions you may be eligible for.

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6 Essential Small Business Accounting Tips for Maintaining Balanced Books

A woman working on accounting documents at a desk, with a tips icon on the right side.

6 Essential Small Business Accounting Tips for Maintaining Balanced Books

December 21, 2022

A woman working on accounting documents at a desk, with a tips icon on the right side.

peakreliance

Accounting, Bookkeeping, Taxes

As a small business owner, it’s important to prioritize accounting in order to ensure the success of your business. Maintaining balanced books allows you to better understand your past financial performance, including where you made and lost money, which can help you make more accurate financial forecasts. Here are some key accounting tips to keep your small business on track:

  1. Stay on top of your receivables

    Managing your receivables is crucial for the success of your business. Instead of letting them accumulate, it’s important to track them as they come in. This will prevent you from being overwhelmed at tax time with many customer deposits to reconcile or, even worse, no payment at all. Being proactive in managing your receivables can save you time, money, and hassle in the long run. It’s important to remember that revenue doesn’t always equal cash.

  2. Make cash flow statements

    A cash flow statement can give you a clear picture of the cash moving in and out of your business. By creating cash flow statements on a regular basis, such as weekly or monthly, you can better anticipate expenses and allocate income effectively. Regular cash flow statements can also help you plan for the future financial trajectory of your business.

  3. Keep track of expenses

    It’s important to record every business purchase you make. One way to do this without adding extra work is to use one credit card for all business expenses. Another option is to take pictures of receipts and store them in a designated location. By keeping track of your expenses, you can avoid surprises or uncertainties about charges on your bank statement and prevent various cash flow, accounting, and tax issues.

  4. Keep personal and business accounts separate

    Many small business owners use the same bank account and credit card for both personal and business expenses. However, this can make it difficult to track important business transactions. To make it easier to manage your finances, it’s recommended to have separate bank accounts and credit cards for your personal and business expenses. This can help you, your bookkeeper, and your accountant clearly see how you’re spending your money.

  5. Hire a tax professional

    Nobody enjoys tax season, but it’s important to pay taxes properly. While doing your own tax preparation may seem like a good idea, it can end up costing you a lot of money in the long run if you make mistakes. Unless you are a tax expert, you may miss out on deductions or pay more or less in taxes than what you actually owe. Tax laws are constantly changing, so it’s important to stay up-to-date to avoid income tax penalties. Consider hiring a tax professional to help you navigate the process and ensure that you are paying the correct amount of taxes.

  6. Stay in regular communication with your accountant and bookkeeper

    Even if you are busy, it’s important to maintain regular communication with your accounting team. Treat them as trusted business advisors who can provide valuable guidance and answers to any questions you may have about taxes, cash flow, budgeting, and more. Do not hesitate to ask for clarification if you receive an email or document with a term you do not understand. Power comes from knowledge!

At Peak Reliance, we specialize in helping small businesses like yours succeed. Our business accounting services are tailored to meet your specific needs and can include historical cleanup, bill pay, actuals-to-budget reporting, grant account management, 1099 processing and filing, and more. For more information on how we can help with your small business accounting needs, please visit our pricing page or give us a call at +1 (718) 218-5558. You can also send us an email at [email protected] with any questions or inquiries you may have. We look forward to assisting you!

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Tax Season: 3 Tips for Small Businesses

Tax Season

Tax Season: 3 Tips for Small Businesses

December 20, 2022

Tax Season

peakreliance

Accounting, Taxes

It is common for small business owners to put off thinking about taxes until the last minute. However, starting to prepare for tax season early can help you reduce your tax burden, increase deductions, and avoid the stress of trying to complete everything at the last minute. By getting a jump on tax season, you can take proactive steps to minimize your tax burden and ensure that you are well-prepared for the upcoming filing deadline.

  1. Keep employee and independent contractor information up-to-date

    As a small business owner, it is important to keep track of all your independent contractors and employees. If you work with independent contractors who are not employees or an incorporated business, you will need to submit a 1099 form to report any payments of $600 or more. To ensure you have the most accurate contact information for your contractors, you may request that they fill out a W-9 form, which will provide you with their business tax identification number and contact information.

    To prepare for tax season, it is also important to make sure that you have updated contact information for all your employees. You should request that all employees log into your payroll system and update their information before the end of the year. By January 31, each employee should receive a W-2 form. By starting early and ensuring that you have accurate and up-to-date information for all your contractors and employees, you can avoid last-minute issues and ensure a smooth tax season.

  2. Boost Your End-of-Year Deductions

    As the end of the year approaches, it is a good idea to consider ways to minimize your tax bill. Here are a few ways you can do this:

    • Buy Necessary Equipment: If you need to purchase new computer equipment or office furniture, you may be able to deduct the cost of these items on your taxes. Under Section 179, small businesses are allowed to take a tax deduction of the full purchase price for certain qualifying property, such as business equipment and supplies like computers and office furniture, rather than depreciating the cost over time.
    • Provide Donation to a Qualified Charitable Organization: Donating cash or in-kind (property or equipment) to a qualified charitable organization can help you reduce your tax burden. Your deduction limits will depend on your business’s organizational structure.
    • Give your employees year-end bonuses: If your business has had a successful year, consider giving bonuses to outstanding employees before the end of the year. Bonuses given before December 31 can help minimize your tax burden.
    • Organize a Reasonable Holiday Party: Your holiday party expenses may be deductible if they meet certain criteria established by the IRS. For example, the IRS may allow you to deduct 100% of your holiday party expenses if the event promotes employee goodwill and is limited to all employees (not including the owner) and their spouses. No contractors, vendors, or business contacts are allowed to attend in order to qualify for the full deduction. Additionally, the event must be reasonable in relation to your annual revenue and not considered extravagant. 
  3. Gather documentation

    To minimize your tax burden, it is important to have accurate and well-organized documentation for all your expenses and deductions. This may include receipts, invoices, and other documentation. You may want to make copies or electronically scan paper receipts and other hard-to-read documents to ensure that you have access to them when you need them.

Start collecting receipts and invoices for items that are often overlooked, such as cloud-based subscription services like Dropbox, domain names and web hosting, and online shopping services like Amazon Prime or membership programs like Costco, if they are used exclusively for your business. You should also review business credit card accounts, current year bank statements, or last year’s tax returns to identify any forgotten expenses. Don’t forget to gather receipts for any paid professional services, such as attorney fees, membership dues, or business-related publications. If you attended any conferences or trade shows this year, make sure to gather receipts for the event registration fee and related expenses like parking or toll fees.

It is a good idea to start organizing your documentation as early as possible, rather than waiting until the end of December. This will help you avoid last-minute scrambling to find receipts and get your documents to your tax professional in a timely manner. Consider setting up an easy-to-use filing system to help you keep track of all your documents and files.

Don’t let tax season stress you out! Let Peak Reliance help you navigate the complexities of small business tax preparation. Our team of experts will ensure that you receive all the deductions and credits you’re entitled to, and help you file your taxes accurately and on time. To learn more about our services and pricing, visit our pricing page or give us a call at (718) 218-5558. You can also email us at [email protected] with any questions or to schedule a consultation.

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How Long Does it Take for an Accountant to Complete My Taxes?

How Long Does it Take for an Accountant to Complete My Taxes

How Long Does it Take for an Accountant to Complete My Taxes?

December 19, 2022

How Long Does it Take for an Accountant to Complete My Taxes

peakreliance

Accounting, Taxes

As tax season approaches, you may be considering whether to hire an accountant to prepare your taxes. In addition to the cost of hiring a professional, you may also be wondering about the turnaround time for tax preparation. In general, if you have a complicated tax situation, such as an inheritance, small business taxes, or other significant life changes, it may be worthwhile to hire a certified public accountant (CPA) to handle your taxes. On the other hand, if your taxes are relatively straightforward, you may be able to save time and money by completing them yourself.

What is the average turnaround time to wait for an accountant to do my taxes?

The turnaround time for an accountant to prepare your taxes can vary depending on the complexity of your return and how promptly you provide them with the necessary documents and information. It’s a good idea to plan ahead and ask an accountant for an estimated timeline before the tax filing deadline. There are also steps you can take to speed up the process, such as gathering all relevant documents and information in advance and communicating clearly with your accountant.

What is the cost of preparing a tax return and how long will it take?

There are a few factors that can impact the time it takes to file your taxes, some of which are within your control.

First, it’s important to have all necessary documentation and forms ready for your tax preparer. This includes income statements like W-2s and 1099-NECs for independent contractor earnings, as well as forms like the 1098 for mortgage interest and insurance premiums.

If you plan to itemize deductions rather than take the standard deduction, you’ll need to have receipts for eligible expenses such as medical and dental expenses, mortgage interest, and state or local property tax. Make sure to organize these receipts and provide them to your tax preparer.

Remember to also consider any deductions or credits that you may be eligible for, as these can significantly reduce your tax liability and may affect the complexity of your return.

How do small businesses prepare taxes?

As a small business owner, your tax situation may be more complex due to the various deductions and credits you may be eligible for. It’s important to keep track of receipts and other documentation throughout the year to claim these deductions and credits. Online accounting software can be helpful in managing your business income and expenses.

The cost of tax preparation and filing can vary depending on the complexity of your return. More complex returns may require higher fees, but these fees may be offset by any tax refund you receive. If you choose to work with a local accounting firm that specialized in tax preparation, you may pay more for their services, but they can offer expertise and knowledge of tax law and code to ensure you receive all available deductions.

At Peak Reliance, we offer a range of plans to meet the tax needs of businesses of all sizes. Our accounting team is knowledgeable about tax law and can assist you with tax planning to minimize your tax expenses in the future.

How much time do you spend preparing your tax returns?

If you have filed your own tax returns in the past, you may have spent a considerable amount of time and effort ensuring that everything was filled out correctly. This may have involved gathering all necessary tax forms and expense records, checking to make sure you included every applicable form, such as form 1040, and handling more complex situations like capital gains or business deductions. You may have even had to itemize your deductions due to large medical expenses, further adding to the complexity of your tax return. Despite your efforts, you may still have had doubts about the accuracy of your return. In such cases, it may be beneficial to hire a professional to handle tax preparation for you. Not only can they ensure that everything is done correctly, but they can also help prevent common errors that could slow down the filing process.

Do You Need an Accountant to Do Your Taxes?

If you need help preparing your taxes, it’s best to hire a qualified tax preparer. There are three main types of qualified tax preparers: enrolled agents (EAs), certified public accountants (CPAs), and tax lawyers. These professionals have the education and experience to handle complex tax situations. Retail firms may also offer tax preparation services, but the individuals working there may not have specific tax training.

Hiring a qualified tax preparer can save you time, energy, and potentially even money. They are familiar with the IRS tax code and must stay up-to-date on any changes. They also may be aware of deductions that you may not know you qualify for.

If you own a business, it’s likely that you’ll need the services of a tax preparer. Business taxes are often more complex than personal tax returns, and may require expertise in areas such as employee taxes, equipment, and investments. Tax consulting services can help ensure that your business tax return is completed correctly.

To ensure a smooth and efficient tax filing process, it’s important to keep all of your tax-related documents organized and stored throughout the year. This will help you to quickly locate any information that you need when it comes time to file your taxes.

If you are a small business owner or have more complex tax needs, it may be helpful to consider using a professional tax preparer like Peak Reliance. These services can save you time and money, especially if your tax return is complicated. Contact Peak Reliance for expert assistance with your small business tax needs. To learn more about our services and pricing, visit our pricing page or give us a call at (718) 218-5558. You can also email us at [email protected] with any questions or to schedule a consultation.

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How to Properly Keep IRS Receipts for Tax Deductions

How to Properly Keep IRS Receipts for Tax Deductions

How to Properly Keep IRS Receipts for Tax Deductions

December 18, 2022

How to Properly Keep IRS Receipts for Tax Deductions

peakreliance

Accounting, Taxes

Are you a business owner trying to understand the IRS receipt requirements for tax purposes? Don’t worry, you don’t need to keep a massive collection of physical receipts in order to meet the expectations of the Internal Revenue Service. While it is important to keep track of your expenses, the IRS does not require you to keep physical copies of every single receipt as proof of your deductions. In fact, the IRS receipt requirements are not as strict as you may think.

A simple guide to tax deductions for your business

As a business owner, you are required to file income tax returns with the IRS and pay any taxes owed based on your business’s earnings. However, you can reduce the amount of taxes you owe by claiming tax deductions for qualified business expenses.

For example, if you purchase a new desk and computer for your business, you can subtract the cost of those items from your earnings when you file your taxes. Tax deductions lower your income and therefore decrease your tax obligation.

There are numerous opportunities for tax savings through deductions, as long as you have the necessary documentation. Some common deductible expenses include:

  • Transportation expenses for business travel
  • Meals or lodging expenses from company trips
  • Office furniture
  • Technology
  • Marketing expenses
  • Contractor fees

It’s important to note that simply having a receipt is not enough to prove that an expense is deductible. The IRS requires expenses to be “ordinary, necessary, and reasonable” for business purposes. Therefore, that luxurious vacation may not qualify as a deductible expense.

How does a business tax receipt work?

A business tax receipt is a record that provides documentation of business expenses that are included as deductions on a tax return. This includes information about what was purchased, the amount paid, and the date of purchase. Business tax receipts may be required by the Internal Revenue Service (IRS) in the event of questions about a tax return or during an audit. It is important to note that a business tax receipt is not the same as a permit allowing a business to collect sales tax in a particular state, which may also be referred to as a business tax receipt.

What receipts should I keep? How about other documents?

It is important to keep supporting documents that provide itemized proof of purchase for business expenses. This may include receipts, credit card statements, bank statements, canceled checks, itemized invoices with digital payments, and real estate closing statements. It is also important to document income by keeping receipts of income such as cash register tapes, receipt book stubs, invoices with digital payments, cleared or canceled checks, bank statements, and IRS 1099 forms. 

These documents may be in physical or digital form and should be kept for the duration of the tax year. It is important to properly store and organize these documents to make them easily accessible when needed.

What is the best way to organize and manage my business tax receipts?

To effectively manage and organize your business tax receipts, it is best to go digital. This means storing electronic copies of bank statements, purchase history, credit card statements, and online banking records. These records will often be automatically tracked, making it easier for you to stay organized and prepared for a potential IRS audit. If you do have physical receipts, such as for large cash purchases, there are financial apps that can convert them to digital copies for electronic storage.

To store these digital records, you can simply download them and save them in categorized folders. It can be helpful to regularly organize your expenses to make it easier to locate relevant deductions come tax time. However, you may need to pay more attention to documentation for cash transactions and reimbursements. In these cases, it is important to keep thorough records in order to properly account for these expenses during tax season.

Receipts must be kept for how long?

In general, it is recommended that you keep business receipts for at least three years. However, in certain situations, the IRS may require you to retain your receipts for up to six years. For example, if you underpaid your taxes by more than 25%, you will need to have records on hand for a longer period of time.

You may be able to find documentation from previous years through online bank records or merchant websites, but it is not guaranteed that these older documents will be available. Additionally, you will not have access to records on accounts that you have closed or stores that have closed or changed their websites.

To properly store receipts, it is best to download digital PDF copies (if available) and save them in a folder for each month and year. You can also scan paper receipts using a digital receipt app. It is important to ensure that these folders are backed up or saved in a secure, easily accessible location so that you can access them as needed in the future.

How do I deal with reimbursements?

It is common for business owners or employees to use their personal credit cards or bank accounts to make purchases on behalf of the company and then be reimbursed from the business account. These types of reimbursements are common in large organizations and are completely legal. However, it is important to keep thorough documentation of these transactions, including details about what was purchased, when, and for how much, as well as information about the original payment method and the reimbursement amount. This documentation will be necessary to properly account for these expenses during tax season.

How do I deal with cash purchases?

It can be challenging to track and document cash purchases, as there is no automatically generated statement like there is with credit card transactions. It is important to carefully record and track your use of cash to ensure that all business-related expenses are properly accounted for during tax season. It is also good practice to obtain itemized receipts for large cash expenditures, as these can be helpful for tax purposes. However, it is worth noting that the Cohan rule allows for some flexibility in terms of documentation for smaller cash purchases. This rule allows taxpayers to claim business expenses even if receipts are lost or misplaced, as long as the expenses are considered “reasonable and credible.” Therefore, if you have lost the receipt for a small cash purchase, it may not necessarily be a problem.

How can Peak Reliance help?

Are you struggling to keep track of your business tax receipts and documentation? Let Peak Reliance help you stay organized and prepared for tax season. Our team of experts can assist you with implementing a system for tracking and storing your receipts digitally, as well as providing guidance on how to properly document cash transactions and reimbursements. To learn more about our services and pricing, visit our pricing page or give us a call at (718) 218-5558. You can also email us at [email protected] with any questions or to schedule a consultation. Contact us today to learn more about how we can support your business.

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