Taxes

A CPA Helps Business Owners Understand Payroll Taxes

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Payroll taxes can be a headache for business owners. Employers are required to withhold some types of payroll taxes from an employee’s paycheck. Some payroll taxes must be paid by both the business owner and the employee, while some are the responsibility of the business owner alone. Along with understanding the different types of payroll taxes, employers must stay up-to-date on the amount of each tax, as well as the most current legislation regarding taxes. Many business owners consult a Reno CPA to make it easier.

What Are Payroll Taxes?

There are federal and state payroll taxes. A CPA can help business owners understand both types, but state payroll taxes usually create more problems for employers because the requirements are different depending on the location. In Nevada, there are no state income taxes. Individuals and business owners are only required to pay federal income taxes, social security tax, and Medicare. Like most states, Nevada does have an unemployment tax that business owners must pay. Nevada also requires many employers to pay an additional payroll tax, known as the Modified Business Tax.

Federal Payroll Taxes

The amount of federal income tax that a business owner takes out of an employee’s paycheck is determined by an IRS W-4 form. Employers are required to have every employee complete a W-4. Generally, social security and Medicare taxes (FICA) are shared equally by the employer and the employee. But in 2011, the employee tax contribution rate was lowered to 4.2% for social security. Business owners are still required to pay 6.2% on all wages less than $106,800. Medicare tax rates are still 1.45% for both parties. A CPA can keep business owners stay informed about current tax rates.

Unemployment Taxes

Unemployment taxes are collected by the federal government, as well as individual state governments, to fund the unemployment program. Most business owners are required to pay unemployment taxes by filing a Form 940 with the IRS. As of July 1, 2011, the federal unemployment tax rate is 6%, but a credit of 5.4% is available for employers who pay state unemployment taxes. In Nevada, the state unemployment tax is referred to as unemployment insurance tax, or UI tax. Calculating the UI tax rate depends on several factors that are best explained by a Nevada CPA.

UI Tax Rate

Any business owner in Nevada who pays at least $225 in wages within one calendar quarter is subject to UI taxes. The amount of the tax is a percentage of every employee’s wages, up to $26,400 (2012 wage limit). New businesses pay 2.95% for the first 14 to 17 quarters in operation. After this period, the UI tax rate is determined by Nevada’s ‘experience rating.’ Depending on how much a business pays in UI taxes and the unemployment benefits its employees receive, the UI tax rate can range from 0.25% to 5.4% of the total taxable wages the business has paid.

Modified Business Tax

On October 1, 2003, the state of Nevada made it a requirement for business owners to also pay an excise tax on their paid wages. The Modified Business Tax is a quarterly payroll tax based on an employer’s gross wages and paid to the Nevada Department of Taxation. This tax is in addition to the UI tax that is paid to the Employment Security Commission. The current Modified Business Tax rate is 0.63%, and there are no wage limits or caps to benefit the business owner. There are deductions available to reduce the tax. Most of these credits are associated with health care payments.

Many business owners are unsure of the legislation concerning payroll taxes, but failing to comply with state and federal tax laws can be detrimental to a company. An experienced Nevada CPA is the best resource for learning more about federal payroll taxes, as well as current information on the UI and Modified Business taxes.

Reno’s Best CPA,

Tim Nelson

A CPA Helps Business Owners Understand Payroll Taxes2016-09-22T16:33:50-07:00

Reno Tax Preparation Requires Cooperation Between CPA And Client

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A Reno CPA or certified public accountant is a huge help to individuals and businesses when it comes time for filing taxes. However, in order for the CPA and client relationship to be successful, communication is imperative. By understanding how communication works best between a CPA and his or her client, you can make sure your relationship with your CPA is solid. In addition, this helps to ensure that filing taxes, keeping records, and all other processes are easier and more accurate.

Don’t Be Afraid to Ask Questions

One of the best methods of communication is asking questions. As a client, if you are unsure of a specific process or you do not know why certain results are the way they are you can ask your CPA to explain it to you. Things like tax preparation, expense records, and loss charts can be very confusing for someone who doesn’t work with those numbers every day. A great accountant will take the time to explain what he or she is doing and why things have to be completed a certain way. Just because you’re not doing the tax preparation or other processes yourself, doesn’t mean you shouldn’t be able to understand what’s happening.

Reports and Information

If there’s something a CPA knows about, it’s keeping records. A great certified public accountant will record everything and provide reports and information to you regarding the processes he or she is going through in order to file your taxes or keep up with your business records. This will allow you to examine the processes yourself, and keep your own records for those processes. It’s also very important for you to keep records and provide your CPA with information as well. Keeping receipts and transaction logs of expenses will allow your CPA to prepare your taxes in the most accurate way. This ensures that your taxes are paid correctly and that you’re on an even ground with the IRS.

Why a CPA is the Best Choice

In addition to learning how to prepare taxes to begin with, a CPA will spend hours each year learning new information about laws that have changed, new stipulations for tax preparation and so much more. Most individuals don’t have the time to spend themselves learning these things, and trusting a professional is the best choice. A qualified CPA understands tax laws easily and in-depth, so they can make sure your taxes are filed correctly and accurately. In the same way that you’d hire an expert cake decorator to make sure your wedding cake is perfect, hiring a CPA ensures that your taxes are filed perfectly.

Overall, by having a great relationship with your Reno CPA, you can be sure that your tax preparation is done accurately and that nothing has been missed. It’s important to trust your accountant and communication is the best way to build that trust.

Reno Tax Preparation Requires Cooperation Between CPA And Client2016-09-22T16:29:02-07:00

Ask A Reno CPA: When Is Online Income Taxable?

Hi there,

Tim Nelson CPA Reno Business Taxes

I have seen many articles about the amount of home-based online businesses that are started up each month and there are many more articles about how big Facebook and other social platforms are getting and how people are making money on them. The problem is there is sometimes a blur between what types of online behavior are taxable and what are not.

Online Garage Sales

For example, if you are having an online garage sale, like selling some items on Craigslist or other such sites, you usually do not have to report sales. This is usually true if you sold the item for less than your cost.

Selling Appreciated Assets

However, if you are selling appreciated assets like paintings, antiques or collectibles and you are selling the item for more than your cost, you usually have to report the transaction as a reportable gain.

Online Businesses or Reoccurring Sales

There are also individuals who either have an online business or have taken the garage sale theory to the next step by buying and reselling items. Any time you may be seen as running a business, especially with how blurry the line is online, you should contact a Reno Certified Public Accountant.

The last thing you want to do is get into tax trouble because of your actions online. Remember when you are making money you should always think about the potential tax implications. When in doubt, ask a Reno CPA about the situation. They will be able to tell you whether you owe taxes and, if so, they will likely be able to help you find deductions.

If you have further questions about this topic you can read more on the Internal Revenue Services’ Website: http://www.irs.gov/businesses/small/industries/article/0,,id=209314,00.html or you can contact Evans Nelson & Company CPAs today. (Contact us online or call 775-825-6008)

Reno’s Best CPA,

Tim Nelson

Ask A Reno CPA: When Is Online Income Taxable?2016-09-22T16:13:50-07:00

Business Consulting | Start Up Businesses

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Have you recently opened a business? Are you starting to find some holes, or need help in your processes and aren’t sure how to fix them? A Reno CPA can help you find the best ways to ensure your business adapts to all rapidly changing needs a new business can go through.

Meeting with your CPA quarterly can keep you on track too. Are you aware you have to pay income taxes on an individual basis for your business earnings? What do you need to do with a person who is helping you out–should they be an employee or a general contractor? Understanding the advantages and disadvantages of both will help you make the best decision for your business—and bottom line.

Evans Nelson & Company CPAs is here to help you with these kinds of questions, decisions and choices. Our business experience and knowledge can help you ensure your new business is financially sound with smart choices that will better enable you to manage your business instead of worry about it.

Say it’s Dec 28th and you realize you have a huge tax liability. What can do you do to avoid paying this? Should you delay income, spend more income, or increase your expenditures before the end of the year to save money? Purchasing capital equipment, or a computer you need may help to actually save money, and help keep your business financially sound.

Many new business owners may not know these effective ways to save money, minimize your tax liability, and many other things that can affect the business long and short term, tax wise and financially. Certified Public Accountants can help businesses that have gotten started but really don’t have a good handle on where they can save money and avoid problems. Reno CPAs are here to help move your business forward to that next level of success.

Business Consulting | Start Up Businesses2016-09-22T16:08:55-07:00

Elections & Tax Law Changes

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I often hear people say “Tax laws are constantly changing! How can I protect my business? How can I even keep up with how it will impact my bottom line?”

One of the constants in life is change…and you can be sure there will be constant tax law changes as well! How can you keep up with them all? What kind of impact does an election year have on tax laws?

A Reno CPA or certified public accountant is a huge help to individuals and businesses when dealing with tax law changes. After all, it’s our business to know the information that can help you pay the least amount of taxes and use all the tax advantages in the IRS tax code.

We understand how difficult it can be with all the constant IRS tax code and tax law changes, but at Evans Nelson CPAs, we keep up with tax law changes. Certified Public Accountants are required by law to complete a certain number of Continuing Education classes and seminars. At Evans Nelson, every one of our CPAs goes well beyond those minimum requirements, along with other research to stay informed. It’s our business to advise you and you deserve far more than just minimum requirements.

Whether it’s proposed changes investments in capital equipment–can it be all deducted in the first year–to health insurance deductions, to changes in business taxes, or personal write offs, tax law changes can affect when and how you may want to take certain actions. We help guide you with sound advice based on information from the IRS and our experience and understanding of how these tax law changes will affect your individual circumstances.

Simply consulting for an hour or two with your Reno CPA can save you 10, 20 or even more hours of research and frustration trying to determine what is best for your business, and also help you find the best ways to protect it.

So save yourself the struggle and time consuming research by hiring a professional. Evans Nelson stays informed, so you can focus on your passions.

Elections & Tax Law Changes2016-09-22T16:02:27-07:00

The Mortgage Debt Forgiveness Act

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Are you “upside down” with your mortgage? Do you know how the tax implications of walking away from your home or having short sale can affect you? How can a Reno CPA help you with these types of mortgage issues? What are the tax implications of a short sale, foreclosure and other options? The Mortgage Debt Forgiveness Act ends this year. Do you understand what the benefits can be for you?

Millions of homeowners around the country are “upside down” with their mortgages. Being “upside down” means you owe more on the mortgage than the house is worth. Real estate values have fallen dramatically, especially in Nevada.

So, many people are asking “What are the tax implications of getting rid of my house? Should I short sell it? Foreclose it? Should I stay or just walk away?”

Here’s an example. A house is worth $200,000 but the mortgage is for $400,000. The Bank will usually send a 1099 or 1099C (cancelation of debt) form for that difference of $200,000.

The IRS will normally require you to pay on the tax owed for that $200,000. But you didn’t “receive” that money, the house is still the same house, and you got rid of it. It isn’t worth $400,000 anymore, you can’t sell it for $400,000 but the mortgage is still for that amount.

The Mortgage Debt Forgiveness Act, which runs through the end of 2012 (December 31, 2012) says you don’t have to pay tax on that $200,000.

Many people are worried about that huge tax liability. They are not sure if it would be better to try to short sell or foreclose on their house before the end of 2012 to be able to use the Mortgage Debt Forgiveness Act before it expires and avoid that tax.

Nevada has had its fair share of foreclosures and other mortgage issues. It is very important to sit down with a Reno CPA to discuss the options and tax implications of walking away from the house, vs. short selling, foreclosing or simply keeping it.

A Reno CPA can help you determine the best course of action, based on the many factors of your personal situation, and can help save you thousands of dollars (along with saving you time and frustration) by helping you determine the best choice for you.

Contact Evans Nelson & Company, CPAs for more information today.

The Mortgage Debt Forgiveness Act2016-09-22T15:44:22-07:00