Home Foreclosure - What Will It Do to Your Tax Bill?

The following link is a very good article I came across on PRNewswire.com that explains what a home foreclosure could do to your tax bill.

Home Foreclosure - What Will It Do to Your Tax Bill?

Missing Your Refund Or Stimulus Payment?

I read in my weekly NATP newsletter that the IRS has $266 million in undelivered refunds and stimulus payments. If you are one who is missing a federal refund or stimulus payment, you may want to make sure you mailing address is current with the IRS. If you have moved since you filed your last tax return, you can file Form 8822, Address Change Request.

Small Business Bailout?

I believe that small business is, and always has been, the backbone of the US economy. Don't believe that? Look at this Fact Sheet prepared by the National Federation of Independent Business.

Now we small business owners have to get through this mess that some our our big business leaders have created. The mindset of many of these big business leaders is just mindboggling. The way I see it greed and stupidity of some big business leaders have tore apart our economy. Here are a couple of examples:

• Leham Brothers were giving out millions in bonuses 4 days before they went under.

• Less than a week after the federal government committed $85 billion to bail out AIG, the company paid more than $440,000 for the a retreat for executives, including nearly $200,000 for rooms, $150,000 for meals and $23,000 in spa charges.

I've seen a few articles titled - Whose going to bailout small business? I don't think that requires an answer as small business owners know the answer. Obviously, we small business owners are on our own.

Since we are on our own, I want to pass along a great small business resource I read about in the AccountantsWorld Daily Headline News. Buzgate.org focuses on helping individuals to learn about, connect with, and utilize the resources they require to succeed in small business. As a non-commercial, educationally focused gateway, buzgate.org provides a reliable, trusted network where users can build knowledge and establish productive business-to-business relationships.

Bargain Books

I generally try and use the public library for books I want to simply read, but don't want to keep. Everyone so often I will come across a book that I want for my personal library. If you are looking for a resource to buy books for your personal library, try searching BookCloseout.com . They offer over 5 million remainder books at discount prices. The books are generally 50% or more off the original list price.  I have also found good bargain books on Amazon.com and Ebay.

Entity Review - S and C Corporations

C Corporations and S Corporations are the two main types of corporations. There are several differences between S and C Corporations but the main two differences relate to shareholders and taxes.

S Corporations are generally used by small businesses, offer limited personal liability, and limited to 100 shareholders. C Corporations do not have a shareholder limit and is the preferred entity if a business owner has aspirations of going public (selling publicly traded shares on the stock market).

Regarding taxes, S Corporations do not pay corporate taxes. The profits and losses of the corporation pass through to the individual shareholder's personal income tax returns. Unlike sole proprietorships and general partnerships, profits that pass through to the individual shareholders are not subject to self-employment tax (social security and medicare tax). Self-employment tax cannot be completely avoided since the IRS states that shareholders that provide services on behalf of the S Corporation should be paid a reasonable wage that is subject to social security and medicare tax.

A C Corporation is a taxpaying entity with the profits being subject to double taxation. Double taxation occurs as profits from a C Corporation are subject to income taxes at the corporate level and again at the individual shareholder level when profits are distributed as taxable dividends.

Entity Review - LLC (Limited Liability Company)

LLC's (Limited Liability Company) have become very popular as they generally protect their owners from personal liability and can be less complicated when compared to a corporate entity. As an LLC is a legal entity (there is not a specific tax return for an LLC entity), member(s) can make an election on how they want to be taxed. If a tax election is not made, a single member LLC will be taxed as a sole proprietor and a multi-member LLC will be taxed as a partnership.

Please note that LLC laws are state specific with each state having different requirements. Please review your state laws prior to setting up.

Entity Review - Sole Proprietorship

Sole Proprietorships are the most simple and least complicated form of business entity. You don't need to do much to be a sole proprietor - just "hang out a sign" that you are in business. I would generally only recommend a sole proprietorship if you aren't making a lot of money, have no employees, and your business liability risk is low. If you do decide to be a sole proprietor, get some business insurance.

A risk with being a sole proprietorship is unlimited liability. What this generally means is that if your business is sued, your personal assets are wide open if a lawsuit is brought against your business. This makes your business entity decision very important as it seems that many people like to file lawsuits when they are wronged.

Pick up the phone

John Jantsch of Duct Tape Marketing (highly recommended, by the way) wrote a great article recently regarding technology and meetings. With gas prices and time being so valuable, small business owners need to start thinking outside the box with respect to meetings.

Although face-to-face meetings are sometimes warranted, it is my experience that many meetings could generally be held over the phone. Think about it - let's say you have a 1/2 hour meeting schedule across town to discuss a new idea. If it is a 15 minute drive to the meeting you might leave a 1/2 before the meeting so you're not late, hold your 1/2 meeting, then drive back to your office. For that 1/2 meeting, you just burned 1 1/4 hours, not to mention the gas burned to get there and back from the meeting. You have to ask yourself - was it that critical to meet face-to-face? There is plenty of inexpensive technology resources available, such as Zoho Meeting and FreeConference.com, if additional resources are needed for a meeting.