If you have more than one place of business. If you drive to your main office daily but have to go to another site, you get to deduct those miles. You can deduct the miles driven between any number of job sites. But your drive to and from home to any work site is still nondeductible.

If you work from home. If you have a home office, commuting between your home office and any other work site is deductible. If you wake up and step into the office for some quick e-mails, head off to work at an office, then come back to the home office to finish up, you get to deduct all your travel miles.

lansingstatejournal.com

Business commute might be deductible is a post from: Top Business Opportunities

Under current law, qualified individuals can file for a home office tax deduction if they use a portion of their home as a principal place of business or a place to meet with clients. However, although studies indicate that 53 percent of American small businesses are home-based, few take advantage of this tax deduction.

Gonzalez’ legislation would direct the Secretary of Treasury to establish an optional, easy-to-use standard for this deduction.

“Home-based businesses are one of the fastest growing segments of our nation, providing jobs and nurturing our economy,” Gonzalez says. “To maximize the job creation role that small businesses can play in our economy, they need the right tools, which we are helping to provide by simplifying the tax deduction regulations.”

Companion legislation in the Senate is being sponsored by U.S. Sens. Olympia J. Snowe, R-Maine and Kent Conrad, D-N.D.

The Snowe-Conrad-Gonzalez initiative has been endorsed by the National Federation of Independent Business (NFIB), the IRS National Taxpayer Advocate Service, and the U.S. Small Business Administration’s Office of Advocacy.

bizjournals.com

Gonzalez sponsors tax simplification bill is a post from: Top Business Opportunities

What Triggers an Audit?
Following is a comprehensive list of things that can trigger an IRS audit:

Failure to include income that has been reported to the Internal Revenue Service
During the month of January, you receive tax documents in the mail declaring income and certain expenses that relate to your tax return. For example:

1. 1099-INT declaring the amount of interest income you’ve received from various sources including banks and investment companies
2. 1099-DIV declaring the amount of dividends you have been paid on your investments
3. 1099-MISC for work as an independent contractor and for rental income from tenants of your commercial properties
4. W-2s and K-1s

The Internal Revenue Service receives this same information. When you file your tax return, the IRS plays a matching game to ensure that you have declared all of this income on your tax return. If you have not, the IRS will recalculate your tax liability and bill you accordingly.

entrepreneur.com

Audit Attractors to Watch Out For is a post from: Top Business Opportunities

“As a result of this legislation, roughly 40,000 small businesses across Texas will be able to hang onto more of their dollars and plow them back into their businesses in the form of new hires and new equipment,” said Gov. Perry. “There aren’t many states that could extend a tax cut to small businesses in these tough economic times – I am proud that Texas has.”

“Thousands of businesses now know that because they won’t have to pay franchise taxes for the next few years, they can instead spend that money bolstering their business operations which are essential components to maintaining our strong state economy,” said Rep. René Oliveira, author of the legislation.

By providing approximately 40,000 small businesses with a tax cut, Texas continues to be an attractive place to start or relocate a business, live and raise a family. Texas’ low taxes, reasonable and predictable regulatory climate, fair tort system and a balanced budget with more than $9 billion in the state’s Rainy Day Fund all contribute the state’s economic prosperity and competitive edge. Texas is home to more Fortune 500 companies than any other state and ranked as the number one exporting state in the nation for the seventh year in a row.

kdbc.com

Governor signs bill to cut taxes for small business owners is a post from: Top Business Opportunities

Facing bankruptcy can be a terrifying experience for a franchisee or small business owner. But it’s not uncommon – and it’s not hopeless either. Not everyone comes back from the brink, but Jeff McKeown is one entrepreneur who did. After four years in the staffing industry, he decided to open his own Express Personnel franchise in Racine, Wis. in 2000 at the age of 26.

In order to put the required $28,000 down, McKeown and his wife borrowed $15,000 and cashed out their 401(k)s and combined savings accounts to come up with the difference. Eager to get his business off the ground, McKeown said he accepted any and all clients, even those with bad credit and iffy documentation. He also felt that to compete, he needed to have the lowest price in town so he kept very small margins.

“Many clients did not pay their bills and several declared bankruptcy with huge payments to me outstanding,” McKeown explained.

By 2003 he owed the franchisor $120,000 and had maxed out all of his credit cards. Express Personnel’s corporate office even sent McKeown a 10-day letter that said the company planned take back the franchise.

That’s when he realized he was in trouble, McKeown said. So with the help of a consultant, he fired 30 percent of his customers, raised prices, and established minimum gross margins and strict credit terms. The business began to grow and by July 2006 he had paid off the majority of his debt. Last year, McKeown says he earned about $160,000 to $170,000 and is expecting to net $400,000 to $500,000 in 2007.

Climbing out of debt

If a franchisee or small business owner is nearing bankruptcy then “either their revenue is short or their expenses are too darn high, but usually it’s both,” according to Jeff Elgin, CEO of Minn.-based FranChoice, a franchise consulting firm.

Elgin suggests taking a good hard look at the expenses for starters, and making sure that all of them are absolutely necessary. “Take away the credit cards,” he said.

For franchisees, “usually, the fundamental issue is that they’re not executing the system,” Elgin said. And if it’s a good franchise company, then it has a proven and reliable system. “If you execute it, you will succeed,” he says. People just need to get “back to the basics of blocking and tackling.”

Indeed, many franchisors have consultants on staff tasked with helping franchisees grow their businesses.

“I thought I knew it all,” McKeown said. He now advises other young entrepreneurs to find a mentor or expert who can offer support and business advice.

By Jessica Dickler, CNNMoney.com staff writer

How to beat bankruptcy is a post from: Top Business Opportunities

The IRS determined when it began accepting credit card payments for business taxes in 2006, that the convenience fee paid or incurred by a business making a tax payment with a credit card can be deducted as a business expense. This key feature continues in place in 2007, and represents an important benefit to business owners like you who take advantage of this convenient payment option.

If You Pay Your Taxes With Plastic, You Can Deduct It Too is a post from: Top Business Opportunities

On April 17 Jackson Hewitt franchise owners may be getting a little hot under the collar.

That’s not because of today’s tax deadline, but rather because earlier this month the Justice Department sued the operators of more than 125 Jackson Hewitt tax preparation offices, accusing them of cheating the U.S. Treasury out of more than $70 million through a “pervasive and massive series of tax-fraud schemes.”

Investigators accused 24 defendants in the Jackson Hewitt case of encouraging individuals to file bogus tax returns through such means as claiming fake deductions and fuel tax credits, seeking refunds based on phony earnings statements, and abusing the federal earned income tax credit.

“The news is going to negatively impact other stores,” according to Robert Purvin, chairman of the American Association of Franchisees and Dealers. “Hearing about a bad experience at one location may make you less likely to go into another location,” he said.

“That’s a fact of life of franchising.”

CNN Money

Death by tax fraud is a post from: Top Business Opportunities

Carson Stanwood has no problem with the Internal Revenue Service going after tax cheats. The founder of Stanwood & Partners Public Relations, based in Jackson Hole, Wyo., understands that paying their taxes in full puts small-business owners like him at a competitive disadvantage against the corner cutters.

But when contemplating some of the Treasury Department’s recent enforcement proposals – such as vastly expanding the number of Form 1099s he would have to issue and requiring him to verify his independent contractors’ taxpayer IDs with the IRS – Stanwood, 47, changes his tune.

“I applaud them going after this until I hear that it’s going to vastly increase my paperwork. I believe it would add 20 to 25 percent to what I pay my bookkeeper – another $6,000 or $7,000 a year – which would suck,” says Stanwood, whose firm took in about $1.5 million last year. “That’s two or three laptops the employees won’t get, smaller Christmas bonuses, or an epic vacation my wife and I don’t take.”

More on this story

IRS may shift AMT gap burden to small biz is a post from: Top Business Opportunities

As surely as seasons change, entrepreneurs face a new personal finance challenge at every turn, whether it’s a sudden cash flow squeeze or a hike in taxes. And with stocks now wobbly, the path to wealth may seem less certain than ever. That’s why FSB recruited expert financial advisors to give custom-tailored advice to three busy entrepreneurs: one who owns a budding apparel company, another who runs a successful mortgage business, and a third who has just cashed out and is now considering his options. Here are some financial tips, including the latest on new tax laws and strategies, to help you make the most of life’s seasons.

Read more here

Three roads to wealth is a post from: Top Business Opportunities

Here are some things to consider in the next few months:

1. Make a plan – At minimum your plan should summarize total revenue, collections by client and expenses from the past year to support projections for 2007. Update it quarterly.

   While you’re at it, consider major expenses you expect and time and budget those purchases to your advantage.

2. Keep better records – Probably the biggest single thing small-business people can do is keep good records. Poor record-keeping increases your taxes.

   It’s less likely that things get overlooked if they’re organized.

   Try this: Buy 12 envelopes and label them by the month. Put records of all deductible expenses each month inside the appropriate envelope; on the back, write a list of contents as you go and total each month’s expenses. (Or you can reach the same result with a paper accordion file.) At the end of the year, you’ll have a pretty good, organized set of records.



3. What’s your corporate structure? – Consider whether to change your business’s corporate structure. There may be tax benefits, for example, to switching from a C-Corporation to an S-Corporation. For most small businesses, the changes must be made by March 15 to affect this year’s taxes.
4. Set up retirement plans – If you don’t have a retirement plan in place, or want to make a change, do it now. Some plans take several months to establish, and an earlier start allows more savings – especially with automatic payroll deductions.

   A recent study reporting that just half of workers have socked away more than $42,000 for retirement by the time they reach age 40.

5. Do you work at home? – If you qualify – and there are plenty of restrictions – setting aside home office space may enable you to depreciate a portion of your home and also to deduct normal operational costs, such as mortgage or rent, property taxes, utilities and maintenance or repair costs. The sooner you set up your office, the longer you can claim those deductions.
6. Put your teens to work – Instead of paying them an allowance, pay older children to work for your business; their compensation will be a deduction for the business, and their tax rates likely are lower than yours.

   Sole proprietors don’t pay Social Security or Federal Unemployment Taxes on wages paid to their own children under age 18, but those wages must be reasonable for the child’s work.

7. Schedule a tax review – If you have a tax adviser, open your business calendar now and write yourself a reminder in about October to schedule a meeting next fall. A brief conference late in the year will result in a fee but may save taxes and time, accountants said.

thecolumbian.com

2007 Tax Tips is a post from: Top Business Opportunities

Some people try to get away with the most absurd things come tax time. Bankrate.com wrote a classic piece on the nine weirdest tax write-offs individuals have tried to take, such as the Amish fellow who pimped out the buggy he used for business and tried to deduct the accoutrements, including a velvet interior and tinted windshield, or the landscaper that deducted the expense of his dog because it would pull the wagon at jobsites.

Tax time can result in temporary insanity in the best of us. The Bankrate story just reminds us that reviewing legitimate tax write-offs and being aware of the newest tax rules can help you file a tax return that won’t raise IRS eyebrows — or make your CPA fall over from laughter.

Weird Tax Write-Offs is a post from: Top Business Opportunities

Many entrepreneurs overlook perfectly justifiable — and legal — tax deductions simply because they are unaware of them. So before the 2006 tax season begins, take the time to review the deductions to which you are fully entitled. To help you get started, here are the top five tax deductions that most small business owners often overlook:

1. Equipment expensing | Buying computers, telephone systems, furniture or other equipment instead of leasing it entitles a business to write-off their cost, usually over a fixed number of years using depreciation. However, small businesses that are profitable can benefit from a so-called Sec. 179 deduction. This means a business can deduct up to $108,000 of cost for a single piece of equipment or in various items as long as equipment is placed in service before the end of the year. This deduction limit will rise to $112,000 in 2007.
2. Commercial buildings that go green | New for 2006 is a deduction for commercial building owners whose buildings meet certain energy standards. The deduction is as much as $1.80 per square foot for buildings that achieve a 50 percent energy savings target.
3. Domestic production activities | This deduction enables businesses to lop off 3 percent of their net profits from domestic production activities from their income — resulting in significant tax savings for owners without spending a single additional penny to receive the write-off.
4. Accelerated depreciation for building components. | The cost of commercial buildings (exclusive of land) usually can be depreciated over 39 years using the straight line method (i.e., ratable depreciation). However, parts of the building that are not viewed as structurally integral can be separately depreciated over much shorter periods (typically five or seven years) using an accelerated depreciation method. The more rapid the write-off, the greater the up-front savings to the building owner due to the time value of money.
5. Vehicle use | Business use of an owner’s personal car can be deducted using the IRS standard mileage rate (44.5¢ per mile in 2006) or the actual expenses related to this use. Dollar limits cap annual depreciation write-offs. Higher dollar limits apply to light trucks and vans.

   SUVs weighing more than 6,000 pounds are not subject to the usual dollar limits on depreciation. The top limit on the Sec. 179 deduction for these vehicles is $25,000; additional cost can be depreciated under usual depreciation rules.

Barbara Weltman at Inc.com

Top Five Overlooked Tax Deductions is a post from: Top Business Opportunities

1. South Dakota
2. Nevada
3. Wyoming
4. Alabama
5. Washington
6. Florida
7. Mississippi
8. Colorado
9. Texas
10. Michigan

See where your state ranks.

10 best states for taxes is a post from: Top Business Opportunities

Yet, some entrepreneurs manage to launch a start-up on the side without quitting their day job. While it’s a lot like leading a double life, many say the rewards are worth it — namely, extra income and the chance to test out a new, often more enticing career without losing steady paychecks and benefits.

“Starting a business on a part-time basis is one of the most efficient ways of finding out if a business will work for you,” says Paul Edwards, co-author of 16 books on self-employment, including “Finding Your Perfect Work.”

In 2004, Mr. Stim decided to start a side business, an audio-book production business. It was part of his research for “Whoops! I’m in Business,” a guide he wrote on turning a passion or hobby into a business.

The new studio landed a contract almost immediately, and “boy, you really freak out once you’ve got a contract,” he says. One concern: “How do you not blow it at both jobs at once?”

Mr. Stim says he’s able to swing both by working for Nolo from home, which saves valuable commuting time, and by enlisting his wife as a partner at the sideline business, Sutro Studios.

One tax benefit to the side business: He can write off the cost of audio equipment, which he enjoys as a long-time music-production enthusiast. If the side business is something you love, there’s nothing like it, Mr. Stim says. “It augments my income, and it gives me something fun to do.”

Because of the drain on your free time, be sure to involve family members in the decision-making process. Without the proper amount of family consent, this can torpedo the relationship with the family.

startupjournal.com

Keep the Day Job — Launch a Sideline is a post from: Top Business Opportunities

Answer: Read on the StartUp Journal

Home-Office Deductions Have a Steep Price Tag is a post from: Top Business Opportunities

Like all business deductions, entertainment costs must be “ordinary and necessary” in order to qualify. If your business is a used furniture shop, it´s not very likely that the cost of taking one of your customers to dinner and a movie would be an ordinary and necessary business expense. On the other hand, it could be, if for example the customer you take out for the evening is furnishing a motel and is prepared to spend $45,000 on furniture.

Here is the information Sara needs to record in order for the cost of taking Emily to lunch to qualify as a deductible business expense:

• The location — Mavis´s Downtown Country Cooking
• Names of people entertained — Emily (in “real life” you would want to include the person´s last name), owner Clean as a Whistle
• Date — November 8, 2006
• Business purpose — Discuss flex plan with business owner
• Amount spent — $35

Treasury Regulations state that this information must be recorded in a timely manner — in other words, you should record the information soon after the entertainment event rather than waiting until the day before an IRS audit.

The location, date, and amount spent are already on the receipt Sara gets from the restaurant, so all Sara needs to do is write Emily´s name and the business purpose somewhere on the receipt and make sure the receipt is properly filed.

All Business

How to Deduct Entertainment Costs is a post from: Top Business Opportunities

Alterations to the tax code in 1999 made it easier to qualify for home-office tax deductions. Below are five deductions homebodies would be foolish to ignore. To increase your odds of success, be sure to keep your business and personal life separate–including all checking accounts, credit cards and phone bills.

1. Infrastructure (utilities, phone service, housekeeping services, landscaping) Run-of-the-mill homeowners and renters can’t deduct these expenses, but at-home entrepreneurs can.

2. Home mortgage interest and property taxes. U.S. taxpayers can deduct these anyway, but as a small business owner, you can save even more by applying a percentage of mortgage interest and property taxes to the home-office section of your tax form.

3. Travel expenses. You can’t deduct fuel expenses if you commute to work each day, but if you work from home, you can deduct the costs of traveling away from your home for any business-related activity.

4. One-time office equipment purchases. Section 179 of the tax code says you can take a one-time deduction–up to $105,000–for the purchase of office equipment, as long as you don’t purchase more than $400,000 of equipment in a calendar year.

5. Family affair. Sole proprietors with children under 18 who work for them can deduct their children’s “wages.”

Forbes.com

Five Tax Breaks For At-Home Entrepreneurs is a post from: Top Business Opportunities