Tax Time for Small Businesses

March 6, 2013 at 10:51 AM

Tax time is a dreaded time of the year for many people.  This year, small business owners have to adjust to new tax laws brought about in 2013.  With a number of tax changes approved as we entered the New Year, small businesses are facing a variety of new laws and regulations.  Some of these changes include higher rates on several taxes that affect small business owners, while also providing changes to credits and deductions that many small business owners find helpful.

One change that  took place immediately on January 1st, was the elimination of the two-year reduction in the payroll tax, requiring business owners to withhold  2% more from employees’ pay.  As a result of this tax increase, the 2013 FICA tax rate that employees’ pay, which is a combination of the social security tax and Medicate tax, was increased to a rate of 7.65%.  

Kate Barton, the Americas vice chairwoman for tax services at Ernst & Young also noted in a New  York Times article, that “tax rates on dividends also increased for those with high incomes, which could affect owners of businesses set up as C corporations, who often extract money from their companies as dividends instead of salary.”   Additionally, “the higher rate on dividends could make a C corporation less tax efficient than a sole proprietorship or an entity like a partnership, LLC or a subchapter S corporation, in which income ultimately accrues to the owners as individuals.”  It is important for small business owners to think through these changes and see what would be the optimal structure for their business.

Sign Up for E-News

However, it is not all bad news for business owners.  When it comes time to file 2013 tax returns, business owners will have the option to take a new home-office deduction.  This new deduction allows qualified taxpayers to deduct $5 per square foot of their home-office space, for a maximum deduction of $1,500 annually.  This new method is more direct than the current laborious tax form that requires taxpayers to calculate numerous expenses associated with their home office.  However, quick and easy may not be the best method for all.  In certain circumstances, the old laborious tax form may still be worth the effort because it can offer business owners a greater deduction.  The only way to know which way will yield the greater deduction is to calculate and compare.

Another last-minute provision that a small business can take advantage of is the Work Opportunity Credit (WOC), which is available to employers who employ workers from certain specific groups.  To take advantage of the WOC, business owners must request and obtain a certification for each employee they hire from identified target groups such as:  unemployed veterans, long-term family assistance recipient, vocational rehabilitation referrals, SNAP recipients, and  at-risk youth to a name a few.  It is important to check the rules surrounding tax changes for these and other tax credits with a tax professional.

With these changes now in place, small businesses have to take an in-depth look at their business and determine what is best. Many companies are grappling with the changes to the tax laws and are ill prepared. Becoming educated is important.  Small Business owners really need to think through their options, become informed, so that they are ready to face these new changes.  

I would like to thank Caroline Ryder for preparing this article with me.  Caroline is a Marketing Analyst with C2G Resourcing, a subsidiary of Consultants 2 Go, LLC.  Don’t forget, you can email me at Peggy@Consultants2Go.com with any questions you might have and I’ll be glad to answer them.  You can also follow me and my business on Twitter @peggymchale and @consultants2go

 

Peggy is the co-founder of Consultants 2 Go® (C2G), a consulting firm that provides marketing solutions to Fortune 500 companies in the Financial Services, Telecom, Life Sciences and other industries. Consultants 2 Go was just named to the Inc. 500/5000 List as one of the fastest growing companies in the United States. Prior to starting C2G, Peggy was a Vice President at American Express. She holds an MBA from St. John’s University and a BA from the College of Mount Saint Vincent. She recently served as a member of the Advisory Board for The Academy of Our Lady of Peace, New Providence, NJ.

The opinions expressed herein are the writer's alone, and do not reflect the opinions of TAPinto.net or anyone who works for TAPinto.net. TAPinto.net is not responsible for the accuracy of any of the information supplied by the writer.

TAP Into Another Town's News:

TAP Into Another Town's News:

Sign Up for E-News

SOMA

December 1: Maplewood's 'Coffee with a Cop'

From Maplewood's "Coffee with a Cop" event in October, Auxiliary police officers, and mother-and-daughter, Reserve. Sgt. Kimberly Tortoriello, and Daniele Tortoriello.

South Orange Police Blotter - Burglary to Garage Reported on Irving Ave.

November 30, 2016

South Orange Police Blotter as of November 30

Burglary to Garage - An Irving Ave. resident reported that between 10 p.m. on Monday, Nov. 28, and 6 p.m. on Tuesday, Nov. 29, unknown actor(s) entered her garage and stole a white & blue, 24 speed Trek bicycle. No other property appears to be missing from the garage. At approximately 10:52 a.m., the bicycle was found by a Centre Street ...

Maplewood Police Blotter - Burglary and Arrest Reported

November 26 - At approximately 8:30 p.m., officers responded to a home on Essex Ave. on a reported burglary.  Five juveniles were located in the area, were identified as the burglars, and were taken into custody.  Two females age 17 from Newark, 15 and 17 year old males from Newark, and a 17 year old male from Irvington were all arrested and charged with the burglary.

November ...

Maplewood Police Share Tips for Preventing Thefts from Vehicles

December 4, 2016

The following is from the fall edition of the Maplewood leaflet:

Each year there are thefts from motor vehicles in Maplewood and surrounding towns. The vast majority of these thefts are to unlocked vehicles and are preventable. In the very small percentage of burglaries to vehicles where force is used, it is usually because an item of value is left in plain view.

While investigating many of ...

South Orange Health & Fitness Challenge is Back with SOFit17

From Kate Schmidt, South Orange Recreation Department

The Village of South Orange is once again leading the charge for a healthier year ahead with SOFit17, the 3rd annual South Orange Health and Fitness Challenge. 

The theme of SOFit17 is the “Hundred Day Challenge” beginning January 20 and ending April 29. As in the past 2 years, community residents are invited ...

Maplewood Glee Club to Perform Winter Concert on Saturday, Dec. 3

The following is from the Maplewood Glee Club Facebook page

Featuring local a Cappella sensation SOULFEGE (Millburn High School) and audience favorites The BACKLOGS (MIT alumni quartet).

If you’re looking for a fun way to kick off the holiday season, the Maplewood Glee Club may have just the ticket. The group, currently celebrating its 70th year of singing, will perform its annual ...

Upcoming Events

Carousel_image_88bb2fa2fdd36f085cb2_0dad81224649a47a49d2_screen_shot_2016-11-29_at_6.09.45_pm

Sun, December 4, 10:00 AM

Millburn Free Public Library, Millburn

American Red Cross Run for the Red in Millburn; ...

Sun, December 4, 11:00 AM

Ethical Culture Society of Essex County, Maplewood

Sarah Price: Amish Culture

Religions And Spirituality

Carousel_image_2f6d8e5c4e740cd98ab6_screen_shot_2016-11-29_at_3.00.22_pm

Sun, December 4, 1:30 PM

Millburn Ave., Millburn

Millburn Snowflake Parade

Obituary: Murray H. Ross

November 27, 2016

Murray H. Ross

Born in Glen Cove, NY on Jan. 17, 1926
Departed on Nov. 21, 2016 and resided in Maplewood, NJ

Murray H. Ross, 90 of Maplewood formerly of Carlisle, PA died at Winchester Gardens on Mon, Nov 21, 2016. 

Murray was born in Glen Cove, Long Island. He lived most of his life in Cranford, NJ before moving to Carlisle, PA. He moved to Maplewood 2 ...

Obituary: Jennifer Feinberg, Teacher at South Mountain School

Jennifer Feinberg

September 28, 1969 - November 7, 2016

 

Jennifer Stulberger Feinberg, a life-long resident of Livingston, NJ, died unexpectedly on November 7, 2016 at the age of 47. 

Jennifer, known as Jenn, was born on September 28, 1969 in Boston, MA to Dr. Eugene and Mrs. Audrey Stulberger. Jenn graduated from Livingston High School, Muhlenberg College and Bank Street ...

Search for Next Director of Special Services & Survey

November 28, 2016

The following was sent via email on Nov. 28 to the South Orange Maplewood School District Community 

Dear South Orange & Maplewood School Community,

Dr. Leroy Nunery of Atlantic Research Partners is the consultant selected to lead our search for the new Director of Special Education. The following timeline has been developed to lead us to a recommendation to the ...

South Orange Rescue Squad: We're There in Your Time of Need, But We Need Your Help

Dear Friends and Neighbors:

All of us at the South Orange Rescue Squad truly appreciate the generous support that we have received from residents in South Orange, Maplewood and the surrounding communities throughout the last few years.

Maplewood was formerly served by the Maplewood Volunteer First Aid Squad, which has disbanded after 41 years of honorable service. We are now the only ...

What to Look for in a Real Estate Lawyer

Although real estate law doesn't sound as exciting as criminal court cases, having the right real estate lawyer can make or break a deal. You should take the time to find a good one.

What qualities should you look for in a good attorney?

Do you personally know anyone who has used the attorney and has had a good experience? Does the lawyer have mostly positive online reviews? ...

Five Shot at Bloomfield Sports Bar

December 4, 2016

BLOOMFIELD, NJ - Five people were injured during a shooting that occurred at about 11:30 p.m. Friday night at Bloomfield’s Sports in the City Food & Lounge on the corner of First Avenue and 13th Street.

According to Bloomfield Police Director Sam DeMaio, the police department is still in the very early stages of analyzing the crime scene. “Based on ballistic evidence there ...

Concerned Citizens of Vauxhall Association Elects Officers

December 3, 2016

UNION, NJ – The nomination and election of officers was the business at hand Wednesday night at a meeting of the newly formed Concerned Citizens of Vauxhall and Vicinity Civic Association.

The purpose of the Association, as outlined in the Constitution and Bylaws, is to build a wholesome community, create an active community spirit, and encourage government and citizen cooperation, ...

TSA Administrator Peter Neffenger Talks Local Travel Security at Seton Hall University

December 1, 2016

SOUTH ORANGE, NJ - TSA Administrator Peter Neffenger discussed the future of Newark International Airport and local travel security as a guest lecturer at Seton Hall on Tuesday night.

Neffenger spoke about his career as head of the TSA, as well as the success of the administration’s Instagram account @TSA, which has over 500,000 followers. He cited rehabilitating the public ...

Nearly 1.25 Million New Jerseyans Expected to Travel Over Thanksgiving: AAA

NEW JERSEY -- AAA Travel forecasts 48.7 million Americans, including nearly 1.25 million in New Jersey, will journey 50 miles or more from home during the Thanksgiving holiday. That’s one million more travelers than last year, representing a 1.9 percent increase over 2015, and the most Thanksgiving holiday travelers since 2007, when 50 million people traveled.

This year’s ...

It’s a Wonderful Life – The Radio Play “POPS UP” in Union Township, Hosted by Unity Bank.

December 2, 2016

POP UP THEATER – performances in unexpected places -- continues in Union’s Downtown Center when The Theater Project presents its annual holiday production IT’S A WONDERFUL LIFE: The Radio Play at Unity Bank.  The Theater Project will recreate the Lux Radio Theater circa 1947 as twelve actors, a musician and one extremely overworked sound technician prepare ...

Studio 509 of Maplewood Offers Free Dance Fusion Workshop at The Connection in Summit

The Connection is hosting a free Dance Fusion Workshop on Saturday, December 3 and Sunday, December 4 from 1 p.m. to 2:30 p.m., led by Guada Bas and Bethany Pettigrew, co-owners of Studio 509 in Maplewood.

Dance Fusion is a mix of ballet, jazz and modern for the mover that enjoys challenging the mind and body! The class begins with a center floor warm up, continues with across ...

Studio 509 Hosts 2016 Sip and See Trunk Show on Dec. 2

Get a head start on your holiday shopping!  Studio 509 is hosting a “Sip and See Trunk Show” featuring several local entrepreneurs, wine, and nibbles, on Friday, December 2, from 4 p.m. to 6 p.m.

Studio 509 is a Maplewood fitness studio that prides itself on fostering a community that cares about health and fitness and each other. Last year, the trunk show was conceived as a ...