Tax Tips for Small Businesses
Tax Tips for Small Businesses
By: Will Pierce, Key Accounts Specialist
As an independent insurance agent and business owner you have a lot of tax information you need to be aware of. Here at Senior Marketing Specialists we’d like to offer some quick tips and tricks to keep these processes as smooth as possible for you!
Tips & Info
- Pay Quarterly Tax Estimates
- As a 1099 your taxes aren’t taken out automatically, using an online bookkeeping software will give you a quarterly estimate so that you don’t have to pay in lump sum at the end of the year!
- Form 1040-ES
- Self Employment Tax
- The self employment rate is 15.3%
- This consists of two parts: 12.4% for Social Security and 2.9% for Medicare
- https://www.irs.gov/businesses/small-businesses-self-employed/self-employment-tax-social-security-and-medicare-taxes
- The self employment rate is 15.3%
- If you are a corporation your taxes can be different based upon your set up:
- IRS Tax Form 502 and why you need to know about it!
IRS – Tips for Seniors in Preparing their Taxes
“Taxable Amount of Social Security Benefits -When preparing your return, be especially careful when you calculate the taxable amount of your Social Security. Use the Social Security benefits worksheet found in the instructions for IRS Form 1040 and Form 1040A, and then doublecheck it before you fill out your tax return. See Publication 915, Social Security and Equivalent Railroad Retirement Benefits.”
Deductions
What counts as a deduction? IRS Publication 535, your expenses must be “ordinary and necessary” in order to be deduction.
- Ordinary expense are common or accepted in the industry.
- Necessary expenses are helpful and appropriate for your business.
Now you’re wondering, what are examples of what I can use:
- Mileage Driven
- business related trips only, does not apply to trips to your permanent place of work
- schedule C and form 2106 will guide you on the standard mileage rate, in 2021 that is $.56 per mile
- MileIQ, Everlance, and TripLog are some apps you can look at for this
- Business Cards
- Office Supplies
- Software
- your CRM
- scheduling software (Everybody needs one! If you’ve been considering it, call Senior Marketing Specialists to talk through it!)
- website maintenance costs
IRS Changes in Revenue Recognition – Revenue from Contracts with Customers (Topic 606)
Timing of Revenue
- this will most likely shift revenue among quarters due to changes in timing of recognition. Under ASC 606 revenue will largely be recognized at policy effective date.
Variable Consideration
- Under ASC 606 entities are required to estimate variable or contingent consideration, resulting in your revenue being recognized earlier than under current guidelines.
I would advise to speak to your accountant about topic 606 and your book of business’ value (average age of your clients and years they’ve been on the books)
If you have more questions on any of the topics mentioned above, we would highly advise you to contact a local certified attorney if you do not already have one you work with, to go over these changes and how they may impact you.
Sources:
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