A Must-Read for Business Owners! 🚀

Hello, dear entrepreneurs and business enthusiasts! 🌟 Today, we’re diving deep into something that’s not just another piece of legislation but a pivotal change that could affect the very foundation of your business – the Corporate Transparency Act (CTA). And yes, while it sounds like something out of a legal drama, trust me, it’s far more relevant to your day-to-day business operations than you might think. 📜💼

What’s the Big Deal with the CTA? 🤔

In the spirit of combating financial crimes, the U.S. government has unfurled the Corporate Transparency Act. 🛡️ Enacted under the broader National Defense Authorization Act in 2021, this new sheriff in town aims to crack down on money laundering, terrorist financing, and other nefarious activities hiding behind corporate veils. 🎭

Who Needs to Listen Up? 📢

If you own a business, whether it’s a sprightly startup or a seasoned enterprise, and particularly if it falls under the “small and medium-sized” umbrella, this is for you! 🏢🌱 The CTA mandates that most businesses disclose their beneficial owners to the Financial Crimes Enforcement Network (FinCEN) – a move designed to make ownership transparent and traceable.

Tick-Tock, The Clock is Ticking… ⏳

Here’s where things get spicy 🌶️:

• New Businesses: Formed on or after Jan 1, 2024, you have 90 days to comply.
• Future Businesses: Starting from Jan 1, 2025? You’ve got 30 days.
• Already in Business? Before Jan 1, 2024, circle Dec 31, 2024, on your calendar – it’s your deadline.

Why Should You Care? 🚨

Now, you might be thinking, “Why all the fuss?” 🤷‍♂️ Here’s the kicker: failing to report or update your business’s beneficial ownership information can lead to civil penalties up to $500 per day, fines up to $10,000, and, brace yourself… up to 2 years behind bars! 😱 Yes, you read that right. The stakes are high, and ignorance is far from bliss in this scenario.

The Sublime Message: Don’t Get Caught Off Guard 🌈

The essence of the CTA is not to bog down your entrepreneurial spirit but to foster a transparent, crime-free business environment. 🕊️ It’s a reminder that in the grand chessboard of business, playing by the rules is not just smart; it’s imperative.

How to Glide Through Compliance? 🛫

Fear not! Compliance might sound daunting, but it’s a manageable feat with the right knowledge and resources at your disposal:

1. Identify if you’re a “reporting company” – Not all businesses are covered, so do your homework 📚.
2. Gather your beneficial ownership information – Think of it as an official introduction of your business’s key players to the government 🤝.
3. File your reports online – Yes, it’s 2024, and thankfully, we can do this digitally 🖥️.

A Call to Action: Be Proactive, Not Reactive! ⚡

As the saying goes, “An ounce of prevention is worth a pound of cure.” Don’t wait until the 11th hour. Start preparing your compliance documents today, and if you’re feeling overwhelmed, seek professional help. It’s a small price to pay for peace of mind and the freedom to focus on what you do best – running your business 🚀.

Final Thoughts 💭

The Corporate Transparency Act is more than just legislation; it’s a commitment to ethical business practices and a testament to your integrity as a business owner. Embrace it, prepare for it, and let’s continue to foster a business environment we can all be proud of. 🌟

Remember, in the world of business, transparency isn’t just about being open; it’s about being ahead. 🏁

1. Biweekly Payroll: Your employees are paid every other Friday.
2. Semiweekly Deposit Schedule:
   • If your payroll falls on Wednesday, Thursday, or Friday, you must deposit the employment taxes by the following Wednesday.
   • If your payroll falls on Saturday, Sunday, Monday, or Tuesday, you must deposit the taxes by the following Friday¹².

To summarize:

• Payroll on Wednesday, Thursday, or Friday ➡️ Deposit by the following Wednesday.
• Payroll on Saturday, Sunday, Monday, or Tuesday ➡️ Deposit by the following Friday.

Remember to use the correct deposit schedule to avoid any penalties. If you have any further questions, feel free to ask!

If you filed Forms 1099 and 1096 by paper, the IRS does not offer an online system to directly check the status of these forms. However, there are a few ways to confirm that the IRS received your paper-filed forms:

1. Certified Mail: When mailing your forms, send them via Certified Mail with a return receipt requested from the United States Postal Service (USPS). This method will provide you with proof of mailing and a confirmation that the IRS received your forms. Keep the return receipt for your records.
2. IRS Inquiry: If you want to verify if the IRS has processed your Forms 1099 and 1096, you may call the IRS at 1-866-455-7438 (toll-free). This is the phone number for the IRS Information Return Reporting Program, and they can help you with questions related to filed information returns. Be prepared to provide your business’s Employer Identification Number (EIN) and other identifying information when you call.
3. Watch for IRS Notices: After filing your Forms 1099 and 1096, keep an eye out for any notices from the IRS. If there are any issues with your forms, such as missing or incorrect information, the IRS will generally send you a notice to alert you of the problem.

Please note that processing times for paper-filed forms are usually longer compared to electronically filed forms. The IRS may take several weeks or more to process your paper submissions. To expedite the process in the future, you may want to consider filing your information returns electronically using the IRS Filing Information Returns Electronically (FIRE) system. Electronic filing also allows you to receive acknowledgment of receipt within 72 hours of transmission, making it easier to confirm that the IRS received and accepted your forms.

Sections 1245, 1250, 1252, 1254, and 1255 of the U.S. Internal Revenue Code (IRC) deal with the taxation of gains from the disposition of certain types of property. Each section addresses specific types of property and how the gains should be treated for tax purposes. Here’s a brief overview of each section:

1. Section 1245 – Depreciable Personal Property: This section deals with the recapture of depreciation taken on personal property, such as machinery, equipment, or other tangible personal property, when the property is sold or disposed of. The gain from the disposition of Section 1245 property is treated as ordinary income to the extent of the depreciation taken on the property.
2. Section 1250 – Depreciable Real Property: This section addresses the recapture of depreciation taken on real property, such as buildings and other structures. Unlike Section 1245, only a portion of the gain (attributable to depreciation taken in excess of straight-line depreciation) is treated as ordinary income. The remaining gain is generally treated as a long-term capital gain.
3. Section 1252 – Farm Property: This section applies to gains from the disposition of farmland that has been used for soil or water conservation purposes, and for which the taxpayer has taken deductions under Section 175. The gain is treated as ordinary income to the extent of the deductions previously taken.
4. Section 1254 – Intangible Drilling and Development Costs (IDC) and Mining Exploration Costs: This section deals with gains from the disposition of oil, gas, or mineral property, where intangible drilling and development costs or mining exploration costs have been deducted. The gain is treated as ordinary income to the extent of the deductions previously taken.
5. Section 1255 – Payments in Lieu of Taxes: This section deals with gains from the disposition of property for which the taxpayer has received payments from the government in lieu of taxes. The gain is treated as ordinary income to the extent of the payments previously received.

These sections can be complex, and the rules for each can vary based on specific situations. It’s important to consult a tax professional or the IRS for guidance tailored to your individual circumstances.

Regenerate response

The IRS is warning employers to be careful of third parties who are telling them to claim the Employee Retention Credit (ERC) when they might not actually qualify. Some of these third parties charge high fees or fees based on the amount of the refund, and may not tell employers that they need to reduce the amount of wage deductions on their federal income tax return.

The ERC is a credit for businesses that kept paying their employees during the COVID-19 pandemic or had a big drop in revenue from March 13, 2020 to December 31, 2021. To qualify, employers must have had to close down or had a big decrease in revenue because of COVID-19. Employers who think they qualify can claim the credit on their employment tax return.

The IRS is reminding employers to be cautious of any schemes or offers that seem too good to be true, and to make sure they qualify for the credit before claiming it. If an employer claims the credit when they don’t qualify, they may have to pay it back with penalties and interest.

Employers can find more information on the IRS website about the qualifications and how to claim the ERC. If they suspect any illegal activities related to the ERC, they can report it to the IRS.

The IRS has announced an increase in the standard mileage rate for business use of a vehicle. Beginning on July 1, 2022, the rate will be 62.5 cents per mile, up from 58.5 cents per mile for the first half of the year.

This change will affect many businesses that rely on the use of company-owned or employee-owned vehicles for business purposes. The standard mileage rate is used to calculate the deductible costs of operating a vehicle for business, charitable, medical, or moving purposes.

The IRS adjusts the standard mileage rate each year based on changes in the cost of operating a vehicle. The new rate takes into account factors such as fuel prices, maintenance and repairs, and vehicle depreciation. The increase in the mileage rate reflects the rising costs of operating a vehicle and will help to ensure that businesses are able to fully deduct the costs of using a vehicle for business purposes.

The new rate will apply to miles driven on or after July 1, 2022. Businesses that use the standard mileage rate can either use the new rate or the actual expenses of operating the vehicle, whichever results in a greater deduction.

It is important for businesses to track their mileage accurately, whether they use the standard mileage rate or actual expenses method. This includes keeping records of the start and end odometer readings, the business purpose of the trip, and the total miles driven. Using an integrated accounting solution or mileage tracking apps can help to automate this process and ensure compliance with IRS regulations.

In conclusion, the increase in the standard mileage rate for business use of a vehicle is a reminder of the importance of tracking business mileage accurately. The higher rate will help businesses to fully deduct the costs of using a vehicle for business purposes and should be taken into account when planning for the upcoming fiscal year. Businesses should also ensure that they are using an appropriate method of tracking their mileage and keeping accurate records to ensure compliance with IRS regulations.

As a self-employed individual, it is important to keep accurate and thorough records of your income and expenses. Good record keeping can help you track the financial performance of your business, prepare for tax season, and make informed decisions about the future of your business.

Here are some best practices for keeping proper records as a self-employed individual:

1. Keep receipts for all business expenses: This includes things like office supplies, marketing materials, and equipment purchases. Keep these receipts in a safe place, such as a file folder or a digital folder on your computer.
2. Record all income: Make sure to record all of your income, whether it comes from clients, sales of products, or any other source. It’s important to keep track of how much you earn so you can accurately report it on your tax return.
3. Use a separate bank account for your business: It’s a good idea to open a separate bank account for your business to keep your personal and business finances separate. This will make it easier to track your business’s financial activity and prepare for tax season.
4. Use accounting software: There are many different types of accounting software available that can help you keep track of your income and expenses. These programs can make it easier to generate financial reports and keep track of your business’s financial health.
5. Keep track of your mileage: If you use your personal vehicle for business purposes, it’s important to keep track of your mileage. You can write down your mileage in a notebook or use a mileage-tracking app. This information can be used to claim a tax deduction for the use of your vehicle for business purposes.

By following these best practices for record-keeping, you can ensure that you have accurate and complete records of your income and expenses. This can save you time and stress during tax season and help you make informed decisions about the future of your business.

401(k)s, Roth IRAs, and Traditional IRAs are all types of retirement savings plans that offer different tax benefits and are best suited for different types of taxpayers. Understanding the differences between these plans can help taxpayers make informed decisions about how to save for retirement.

A 401(k) is a type of employer-sponsored retirement savings plan that allows employees to contribute a portion of their pre-tax earnings to an individual retirement account (IRA). Contributions to a 401(k) are made with pre-tax dollars, which means that they are not subject to federal income tax when they are made. This can help reduce a taxpayer’s taxable income in the year the contribution is made.

Earnings in a 401(k) account grow tax-free until they are withdrawn, at which point they are subject to federal income tax. Some 401(k) plans also offer matching contributions from the employer, which can further increase the account balance.

One of the main advantages of a 401(k) is that it offers the opportunity for tax-deferred growth, which means that earnings in the account are not taxed until they are withdrawn. This can help the account balance grow faster over time. However, 401(k)s have contribution limits and are generally only available to employees of a sponsoring employer.

A Roth IRA is a type of individual retirement account that allows taxpayers to contribute after-tax dollars to an account that grows tax-free. Contributions to a Roth IRA are not tax-deductible, but earnings in the account grow tax-free and qualified withdrawals from the account are tax-free.

One of the main advantages of a Roth IRA is that it offers tax-free growth and tax-free withdrawals in retirement. This can be especially beneficial for taxpayers who expect to be in a higher tax bracket when they retire. However, Roth IRAs have income limits and contribution limits, and not all taxpayers are eligible to contribute to a Roth IRA.

A Traditional IRA is a type of individual retirement account that allows taxpayers to contribute pre-tax dollars to an account that grows tax-deferred. Contributions to a Traditional IRA may be tax-deduct

First-Year Choice
If you do not meet either the green card test or the substantial presence test for 2020 or 2021 and you did not choose to be treated as a resident for part of 2020, but you meet the substantial presence test for 2021, you can choose to be treated as a U.S. resident for part of 2021. To make this choice, you must:
1.
Be present in the United States for at least 31 days in a row in 2021, and
2.
Be present in the United States for at least 75% of the number of days beginning with the first day of the 31-day period and ending with the last day of 2021. For purposes of this 75% requirement, you can treat up to 5 days of absence from the United States as days of presence in the United States.
When counting the days of presence in (1) and (2) above, do not count the days you were in the United States under any of the exceptions discussed earlier under Days of Presence in the United States.
If you make the first-year choice, your residency starting date for 2021 is the first day of the earliest 31-day period (described in (1) above) that you use to qualify for the choice. You are treated as a U.S. resident for the rest of the year. If you are present for more than one 31-day period and you satisfy condition (2) above for each of those periods, your residency starting date is the first day of the first 31-day period. If you are present for more than one 31-day period but you satisfy condition (2) above only for a later 31-day period, your residency starting date is the first day of the later 31-day period.
Note. You do not have to be married to make this choice.

_{Example 1. Juan DaSilva is a citizen of the Philippines. He came to the United States for the first time on November 1, 2021, and was here on 31 consecutive days (from November 1 through December 1, 2021). Juan returned to the Philippines on December 1 and came back to the United States on December 17, 2021. He stayed in the United States for the rest of the year. During 2021, Juan was a resident of the United States under the substantial presence test. Juan can make the first-year choice for 2021 because he was in the United States in 2021 for a period of 31 days in a row (November 1 through December 1) and for at least 75% (0.75) of the days following (and including) the first day of his 31-day period (46 total days of presence in the United States divided by 61 days in the period from November 1 through December 31 equals 75.4% (0.754)). If Juan makes the first-year choice, his residency starting date will be November 1, 2021.
Example 2. The facts are the same as in Example 1, except that Juan was also absent from the United States on December 24, 25, 29, 30, and 31. He can make the first-year choice for 2021 because up to 5 days of absence are considered days of presence for purposes of the 75% (0.75) requirement.}

_{Statement required to make the first-year choice for 2021. You must attach a statement to Form 1040 or 1040-SR to make the first-year choice for 2021. The statement must contain your name and address and specify the following.}
•

That you are making the first-year choice for 2021.
•
That you were not a resident in 2020.
•
That you are a resident under the substantial presence test in 2022.
•
The number of days of presence in the United States during 2022.
•
The date or dates of your 31-day period of presence and the period of continuous presence in the United States during 2021.
•
The date or dates of absence from the United States during 2021 that you are treating as days of presence. You cannot file Form 1040 or 1040-SR or the statement until you meet the substantial presence test for 2021. If you have not met the test for 2022 as of April 18, 2022, you can request an extension of time for filing your 2022 Form 1040 or 1040-SR until a reasonable period after you have met that test. To request an extension to file until October 15, 2022, use Form 4868. You can file the paper form or use one of the electronic filing options explained in the Form 4868 instructions. You should pay with this extension the amount of tax you expect to owe for 2021 figured as if you were a nonresident alien the entire year. You can use Form 1040-NR to figure out the tax. Enter the tax on Form 4868. If you do not pay the tax due, you will be charged interest on any tax not paid by the regular due date of your return, and you may be charged a penalty on the late payment.
Once you make the first-year choice, you may not revoke it without the approval of the IRS.
If you do not follow the procedures discussed here for making the first-year choice, you will be treated as a nonresident alien for all of 2021. However, this does not apply if you can show by clear and convincing evidence that you took reasonable actions to become aware of the filing procedures and significant

Quoted from Publication 519 page 8

https://www.irs.gov/pub/irs-pdf/p519.pdf

Response

Accountable plans can be set up in a variety of ways, so long as they meet basic requirements. The requirements are dicussed on page 29 of Pub 463.

Essentially, to offer an accountable plan, an employer must comply with three standards:

1. The expenses must have a business connection;
2. The expenses must be substantiated within a reasonable period; and
3. The employee must return any money not spent to the employer, also within a reasonable period.

If any of the three conditions isn’t met, the reimbursement arrangement is treated as a nonaccountable plan. In other words, the reimbursements are taxable compensation to the employee and subject to employment taxes.SUBSTANTIATION

“Substantiated” means the employer must collect documentation that shows the amount, time, place, and business purpose of the expense. This generally entails an account book, log, receipt, bill, or credit card statement. It doesn’t have to be the original, but the proof must be specific enough to differentiate the types of expenses. For instance, a credit card statement for a hotel expense would not be enough unless it clearly separated meals and entertainment from an overnight stay expense. A list of categorized expenses is also not enough, unless the individual purchases are detailed and supported. The required documentation is covered under two different sections of the Code.

REIMBURSEMENTS AND PER DIEMS

Businesses and their employees may rely upon federal per-diem tables and mileage allowances to report meal and travel expenses rather than documenting specific costs. This is true even if the amount claimed is less than the amount the employee spent. Employers must still retain dates, times, and the business purpose of the expense. If your client is using per-diem reimbursement amounts, be sure to adjust for cost differences in different areas for per-diem amounts and prorate for partial days of travel.

References   Pub 463, p. 29https://www.irs.gov/pub/irs-pdf/p463.pdf

Starting Accountable Plan

Accountable Plan