wTypical Situation: A manufacturing company has surplus or idle machinery that is not is use and therefore not making them any revenue. Or they are looking to expand operations and are in need of equipment. They can save tens of thousands buying quality used equipment that is ready to go versus brand new equipment that may take months to get.
When you hear a business owner say:
The Consultant offers a free comprehensive assessment of your current equipment. How much it is worth, and what type of demand or market there is for it. They can also help you find the manufacturing machinery you need.
How they Work: They have customized programs to offer you unique, proactive approaches to maximizing return on your company’s surplus, idle or soon to be idle assets. They have 55+ years of experience and use that to expertly market your assets to a worldwide audience. By combining knowledgeable staff with hyper-aggressive, targeted marketing, they are able to find buyers who are willing and able to pay top dollar for your used assets.
Matching Ideas with Resources: www.perfectionglobal.com
Tax treatment for family members working in the family business
One of the advantages of someone running their own business is hiring family members. But when including family members in business operations, certain tax treatments and employment tax rules apply. Here are some facts to know when working with a spouse, parent or child.
Both spouses carrying on the trade or business
If spouses carry on a business together and share in the profits and losses, they may be partners whether or not they have a formal partnership agreement. If so, they should report income or loss from the business on Form 1065. They should not report the income on a Schedule C (Form 1040) in the name of one spouse as a sole proprietor. But, the spouses can elect not to treat the joint venture as a partnership by making a qualified joint venture election.
Qualified joint venture
Spouses may elect treatment as a qualified joint venture instead of a partnership. A qualified joint venture conducts a trade or business where:
Spouses electing qualified joint venture status are sole proprietors for federal tax purposes. Each spouse must file a separate Schedule C to report their share of profits and losses. They don’t need an EIN unless their sole proprietorship must file excise, employment, alcohol, tobacco or firearms returns. One spouse cannot continue to use the partnership’s Employer Identification Number (EIN) for the qualified joint venture. The EIN must stay with the partnership; it’s used by the partnership for any year in which the business doesn’t meet qualified joint venture requirements.
If the business has employees, either of the spouses as sole proprietors may report and pay the employment taxes. The spouse, as an employer, must have an EIN for their sole proprietorship. If the business filed or paid employment taxes for part of the year under the partnership's EIN, the spouse may be considered the employee’s “successor employer” for purposes of figuring whether wages reached the Social Security and federal unemployment wage base limits.
One spouse employed by another. The wages for the services of an individual who works for their spouse are subject to income tax withholding and Social Security and Medicare taxes but not to the Federal Unemployment Tax Act (FUTA).
Child employed by parents. Payments for the services of a child under age 18 aren’t subject to Social Security and Medicare taxes, if the business is a sole proprietorship or a partnership in which each partner is a parent of the child. Payments to a child under age 21 aren’t subject to FUTA. Payments are subject to income tax withholding, regardless of the child’s age.
Payments for the services of a child are subject to income tax withholding as well as Social Security, Medicare and FUTA taxes if they work for:
Parent employed by child. The wages for the services of a parent employed by their child are subject to income tax withholding and Social Security and Medicare taxes. They’re not subject to FUTA tax.
Employees complete Form W-4 so that their employer can withhold the correct federal income tax from their pay. The IRS encourages everyone to use the Tax Withholding Estimator to help them make sure they have the right amount of tax withheld from their paycheck. The estimator automatically links to Form W-4, Employee’s Withholding Allowance Certificate, which they can then fill out and submit to their employer.
Taxpayers who filed an extension can find resources on IRS.gov that can help them file their tax return. One of these resources is Publication 5307, Tax Reform Basics for Individuals and Families. This publication is now available in several different languages.
This publication has info to help individual taxpayers understand the tax reform law. It gives tips about actions they may need to take to comply with federal tax return filing requirements.
The pub can be especially helpful for extension filers who haven’t filed their tax returns and those who were otherwise unable to file their return by the deadline. Taxpayers who haven’t filed over the summer can file their tax returns whenever they are ready. They do not need to wait until the October 15 extension deadline to file.
This online publication is available on IRS.gov in these languages.
Pursuant to Public Act 101-0177 the Illinois Equal Pay Act now bans employers and employment agencies from asking about applicants’ past wage and compensation histories. This law takes effect on September 29, 2019. Employers can be penalized for asking the applicant or the applicant’s current or former employers for wage or salary history. If they have not yet done so, employers should review their employment applications to make sure they do not ask for salary and wage history. They should also train those involved in hiring on the new law. For more information you may contact the Illinois Department of Labor at the Equal Pay Hotline 866-372-4365.
Frequently Asked Questions on Wage History Ban
These tax tips can help new business owners find success
Starting a business can be very rewarding. It can also be a little overwhelming. From business plans to market strategies, and even tax responsibilities…there are many things to consider. Here’s what new business owners can do to help get off to a good start.
IRS Video Portal features tax info for small businesses and employers
Small business owners and others with tax questions can check out the IRS Video Portal to get more information on a wide range of topics. Taxpayers can visit the site to find videos and recorded webinars on topics such as:
Starting a business
individuals, tax professionals, governments, and charities and non-profits. There’s also a playlist with videos in Spanish.
New tax law allows small businesses to expense more, expands bonus depreciation
The Internal Revenue Service reminds small business taxpayers that changes to the tax law mean they can immediately expense more of the cost of certain business property. Many are now able to write off most depreciable assets in the year they are placed into service.
The Tax Cuts and Jobs Act (TCJA), passed in December 2017, made tax law changes that will affect virtually every business and individual in 2018, 2019 and the years ahead. Among those for business owners are tax rate changes for pass-through entities, changes to the cash accounting method for some, limits on certain deductions and more.
Section 179 expensing changes
A taxpayer may elect to expense all or part of the cost of any Section 179 property and deduct it in the year the property is placed in service. The new law increased the maximum deduction from $500,000 to $1 million. It also increased the phase-out threshold from $2 million to $2.5 million. These changes apply to property placed in service in taxable years beginning after Dec. 31, 2017. For most businesses, this means the 2018 return they file next year.
Section 179 property includes business equipment and machinery, office equipment, livestock and, if elected, qualified real property. The TCJA also modifies the definition of qualified real property to allow the taxpayer to elect to include certain improvements made to nonresidential real property. See New rules and limitations for depreciation and expensing under the Tax Cuts and Jobs Act for more information.
New 100 percent, first-year ‘bonus’ depreciation
The 100 percent depreciation deduction generally applies to depreciable business assets with a recovery period of 20 years or less and certain other property. Machinery, equipment, computers, appliances and furniture generally qualify. The law also allows expensing for certain film, television, and live theatrical productions, and used qualified property with certain restrictions.
The deduction applies to business property acquired after Sept. 27, 2017, and placed in service after Sept. 27, 2017, and before Jan. 1, 2023. In general, the bonus depreciation percentage is reduced for property placed in service after 2022. See the proposed regulations for more details.
Taxpayers may elect out of the additional first-year depreciation for the taxable year the property is placed in service. If the election is made, it applies to all qualified property that is in the same class of property and placed in service by the taxpayer in the same taxable year. The instructions for Form 4562, Depreciation and Amortization, provide details.
Business owners can refer to the Tax Reform Provisions that Affect Businesses page for updates.
Direct from the Small Business Administration Website, 10 Steps to starting your business. Even if you have started you business, this is a great review to make sure your ducks are in a row.
1. Conduct market research
Market research will tell you if there’s an opportunity to turn your idea into a successful business. It’s a way to gather information about potential customers and businesses already operating in your area. Use that information to find a competitive advantage for your business.
2. Write your business plan
Your business plan is the foundation of your business. It’s a roadmap for how to structure, run, and grow your new business. You’ll use it to convince people that working with you — or investing in your company — is a smart choice.
3. Fund your business
Your business plan will help you figure out how much money you’ll need to start your business. If you don’t have that amount on hand, you’ll need to either raise or borrow the capital. Fortunately, there are more ways than ever to find the capital you need.
4. Pick your business location
Your business location is one of the most important decisions you’ll make. Whether you’re setting up a brick-and-mortar business or launching an online store, the choices you make could affect your taxes, legal requirements, and revenue.
5. Choose a business structure
The legal structure you choose for your business will impact your business registration requirements, how much you pay in taxes, and your personal liability.
6. Choose your business name
It’s not easy to pick the perfect name. You’ll want one that reflects your brand and captures your spirit. You’ll also want to make sure your business name isn’t already being used by someone else.
7. Register your business
Once you’ve picked the perfect business name, it’s time to make it legal and protect your brand. If you’re doing business under a name different than your own, you’ll need to register with the federal government, and maybe your state government, too.
8. Get federal and state tax IDs
You’ll use your employer identification number (EIN) for important steps to start and grow your business, like opening a bank account and paying taxes. It’s like a social security number for your business. Some — but not all — states require you to get a tax ID as well.
9. Apply for licenses and permits
Keep your business running smoothly by staying legally compliant. The licenses and permits you need for your business will vary by industry, state, location, and other factors.
10. Open a business bank account
A small business checking account can help you handle legal, tax, and day-to-day issues. The good news is it’s easy to set one up if you have the right registrations and paperwork ready.
Please remember that GLM can help you through each steps of the process. Your accountant can and should guide you through this and help you set yourself up in each step that benefits you the most.
Typical Situation: Our client is growing and are unsure if they are legally complaint with employees. They feel they have been "winging it" in the area of HR, for too long and want to formalize processes. Or simply, they have many questions about employee issues and need answers we cannot provide (Legally and we just don’t know)
When you hear a business owner say:
HR Source Provides
How they Work
HR Source is a not-for-profit employers' association serving more than 1,200 companies and organizations. They provide human resources and legal support, publish compensation and benefits surveys, conduct HR and supervisory training, and more.
Matching Ideas with Resources:
In true blog fashion, the last parts are at the top of the page. Scroll all the way down and work your way back up to read them in order.
Tom is the Business Development Manager for GLM. If you are interested in learning more about GLM's services, contact him: