Starting your own business can be exciting but it calls for due diligence to ensure that you meet all the requisite legal and tax obligations. Although the federal and Utah tax codes can be daunting and confusing for anyone, it is vital that you learn how to prepare, process and file your taxes accurately for the sake of your business. Filing accurate taxes can not only keep you out of trouble with the law but also lower your tax burden if you claim the right deductions.

As you make plans to start a business in Utah, keep in mind that the type of business you operate will determine what taxes you pay.

Business Tax Statuses In Utah

Other than knowing the type of tax your business is likely to incur, you also need to research the different tax statuses you can choose when filing those taxes. Five of these are highlighted below:

Limited Liability Company (LLC) – In Utah, LLCs are considered pass-through tax entities and do not pay taxes on a company level. Instead, business profits and losses are passed on to individual LLC members who then pay the required state and federal taxes based on the amount they receive.

Partnership – If you decide to operate a partnership business, then your company will not be taxed on its net income. The business will be considered a pass-through entity so any income will flow through to individual partners who will then owe tax on the share they get.

Sole Proprietorship – Just like partnerships and LLCs, the income realized from a sole proprietorship business will be distributed to you as the sole owner. This will be regarded as personal income and you will have to pay and file individual state tax returns on it.

C Corporation – Starting a C corporation in Utah will have you incurring double taxation. The business will be subject to corporate income tax while shareholders will also be required to pay individual income tax on whatever revenue they receive from the company.

S Corporation – One way around the double taxation dilemma faced by a C corporation would be to establish an S corporation. The latter will be treated as a pass-through entity and your company’s shareholders will be responsible for paying and filing individual tax returns on their share of profits from the business.

Get The Right Assistance

It is advisable to engage the services of professional accountants before starting your own business. Their advice can prove invaluable in helping you to set up the right business structure as well as assisting you to get the most of your tax returns and possibly save some money in the process.

We at AA Tax & Accounting Services, LLC have vast experience in preparing, processing and filing business tax returns and we would be glad to help with yours. Contact us to learn more about this and other accounting services we offer.

Business owners often enjoy more freedom and independence than those who work for someone else. This independence is what drives many people to start their own companies. However, along with the perks of being the boss come some less-pleasant side effects. One of the issues these entrepreneurs face, for example, is an overall higher risk of loss, especially when it comes to lawsuits.

Fortunately, business owners have many legal and financial tools at their disposal to protect themselves. Two of the most popular tools are entity restructuring and asset protection. Since these methods are often confused or used interchangeably, we will discuss them both.

What is Entity Restructuring?

Entity restructuring has both legal and tax implications. It can help business owners in 3 distinct ways:

• Legally avoiding excess tax liability
• Protection of assets against legal action
• Providing proper legal and tax arrangements between owners

Proper entity restructuring is an essential tool for any business, providing owners with a level of security and legal stability. For example, the right legal structure may be instrumental in protecting your portion of a shared business or partnership. However, it isn’t something you can “set and forget.” Most businesses will eventually outgrow their original structure or evolve away from it. An experienced CPA should help you establish the right structure, then keep an eye on it to ensure it’s still a good fit. Some examples of legal structures available to your business may include:

• LLCs, both single or multi-member
• General partnerships
• Sole proprietorships
• Limited partnerships
• S-corps
• Corporations and C-corporations

While your legal structure can provide some protection against legal actions, it may not be enough to secure your business and personal assets in the event of a lawsuit. This is where asset protection comes in.

What is Asset Protection?

The term asset protection refers to specific legal actions that are taken with the sole purpose of keeping your business and personal assets safe. Sadly, everything you own, such as real estate, equipment, even family heirlooms or your personal savings could be seized to pay off creditors in the event of a successful lawsuit.

One of the most important rules of asset protection is timing. Your legal measures must be in place before a suit is filed. Asset protection should be part of your financial planning strategy, safeguarding the wealth of you and your family. Talk to a professional to identify and establish your own asset protection plan. Some of your options may include:

• Asset protection trusts
• Family limited partnerships
• Accounts-receivable financing strategies
• Homestead exemptions
• Irrevocable trusts
• Retitlement of assets

Asset protection strategies, along with plentiful insurance and the right legal structure, can provide rock-solid protection for your most valuable possessions. During a stressful legal ordeal, asset protection can keep your personal property out of creditors’ hands.

What to Do Now

Generally speaking, as your business grows, so does the potential for legal action against you. Start today by examining your legal structure with a qualified financial professional to ensure it’s the right fit. Then, plan your asset protection strategy. Go over your needs and goals, and put your structure and asset protection plans into place as soon as possible. As always, the best time to protect yourself is NOW.

They say the only sure things in this life are death and taxes. We can’t help you with the former, but when it comes to taxes, being informed is the only way to wield any sort of control. Since paying income taxes is part of life that we really can’t escape, it’s important to understand how to meet our legal obligations without overpaying.

What You Need to Know: Withholdings

The W-4 form you filled out with your employer will determine your tax withholding. This form details your marital status, dependents, and if you have any other jobs. If you’re unsure about your eligibility for certain allowances, or whether your withholdings will match your legal obligations, the IRS provides this helpful calculator.

In addition to federal and state income taxes, the federal government will withhold other amounts from your paycheck, including Social Security and Medicare. Your employer is also responsible to pay a portion of these taxes.

If you’re self-employed or own a business, you’ll need to calculate your own taxes and set them aside. This will include both income and self-employment tax amounts for Social Security and Medicare, and you’ll be responsible for both the employee and employer portions. Since taxes aren’t automatically withheld from your paycheck, you’ll need to pay them according to quarterly deadlines. You may need help from a tax professional here.

Reducing What You Owe

If you’re well-informed, you’ll be able to find plenty of ways to reduce your tax liability. The methods available to you might include:

• Exclusions – These are pre-tax expenditures such as retirement accounts and flexible-spending for health care. Exclusions can reduce your gross income, thus reducing your tax liability.
• Deductions – You may deduct things like student loan interest, certain types of retirement account contributions, business costs, charitable donations, and even moving expenses. If you don’t have much in the way of eligible deductions, you can take the standard deduction, which will vary depending on your marital status and other factors. If you’re itemizing deductions, use Schedule A.
• Credits – The Dependent Care Credit, Earned Income Tax Credit, and Education Credit are examples of this. Unlike deductions which reduce your taxable income, tax credits simply take a certain amount off the taxes you owe. A $500 tax credit is just that — it takes that amount right off the top of your tax bill. There are business and individual credits. Find out if you’re eligible.

When You’re Ready to File

Everyone knows the April 15 deadline, but when you’re ready to file, you have several options.

1. Use an accountant – If you have several deductions, are self-employed, or are simply unsure of your ability to file accurately, your best bet is to hand your paperwork, receipt, and any other documentation over to an accountant. Especially for complicated returns, your accountant could save you money by finding more deductions.
2. File online – If you’re confident and have a simple return, you can file via the IRS website. This option is available to all taxpayers.
3. Software – There are several software options for filing your taxes. These programs can guide you through the process, but will cost you some money upfront.

No matter what your tax status, you’re bound to have questions from time to time. That’s why it’s always a good idea to consult an accountant or tax professional to ensure maximum accuracy and minimum liability.

If you’re self-employed, chances are you worry about reducing your tax burden as far as legally possible. While the attached infographic contains some helpful information about tax brackets and deductions, you are probably left with a lot of questions. In this article, we’ll go over some of the things your small business can – and can’t – deduct on your tax return.

Business & Personal Deductions

According to IRS regulations, a business may deduct “ordinary and necessary” expenses. These include the costs of running your business, the cost of any goods you sold, capital expenses, and even some work-related personal expenditures. Before claiming any of these deductions, you need to make sure that your business and personal expenses are separate. Schedule C is the form you will need to use to detail profits and losses. For personal deductions, you must use Schedule A to itemize them. However, doing this requires you to give up the standard deduction. Your accountant can help you decide which is most beneficial in your case.

Possible Deductions

This isn’t meant to be a complete list – for that you’ll need to consult your tax preparer – but here are some of the business deductions you might be able to claim:

• Travel costs / mileage
  Using your car for business travel? You may be able to deduct for each mile, or for the actual expenses incurred in business-related gas, maintenance, insurance, and depreciation. Out-of-town business trips are also deductible.
• Home office
  You could deduct for each square foot of your business-exclusive home office space, up to 300 square feet.
• Equipment and office expenses
  Computers and furniture for your office are just some of your allowed deductions.
• Food / entertainment
  Be sure to keep your receipts and record the purpose and nature of meetings where business-related expenditures occur. You can only deduct 50% of what you spend, including tax and gratuity.
• Unpaid work
  If you have delinquent invoices and don’t expect to be paid everything you are owed, you could help offset some of that by claiming the amount as bad debts. Bad debt must be included in your gross income total.
• Marketing expenses
  Much of these costs can be deducted, including things like business cards, brochures, and more.

Deductions That Don’t Work

Claiming any of these deductions — and others — when you aren’t really eligible could result in complicated audits and painful penalties. That’s why it’s important to work with a tax professional who can help you decide what you can and cannot claim. However, here are a few of the things you simply aren’t allowed to deduct for:

• Commuting
  While business mileage is deductible, the commute from your home to your office is not.
• Toys and gadgets
  
  This is pretty simple; if the phone, tablet or laptop you’re itching for isn’t required for running your business, you can’t claim it.
• Clothing
  If you’re required to purchase a uniform or protective clothing for work, you might be able to deduct that. However, you aren’t allowed to claim other business attire, such as suits, slacks, and shoes.
• Lunches and coffee
  
  You can only deduct for food and entertainment only if you’re also meeting with a client.

The Bottom Line

When considering deductions, it’s always best to consult a CPA or other tax professional. They can help you get the most out of your yearly tax return and avoid sending up an red flags that could cause you a lot of trouble. The IRS actually allows for many deductions to reduce your tax burden. If you know how to recognize them, you can save significant money.

For any business large to small, payroll is a big deal. It’s not only one of your biggest expenses, it’s one of your most important financial tasks. Payroll processing can take a lot of time, but getting it right is extremely important. Many business owners face questions and confusion when it comes to payroll, and all of us would love to find ways to make the process faster and simpler. Fortunately, there are ways to do this without sacrificing accuracy. Here are 5 ways to make processing your payroll easier.

1. Use direct deposit and electronic stubs
   Depending on how many employees you have, your business could save significant money using direct deposit pay them. It’s true that you might have employees that aren’t keen on this idea or don’t have bank accounts. In these cases, pay cards might present a good option. In any case, handing out or mailing paper pay stubs can be both expensive and time consuming, so you might consider electronic stubs sent via email.
2. Use technology
   Aside from electronic or non-paper payment methods, there is plenty of technology available that can make processing payroll less painful. A carefully-chosen payroll system can add automation and efficiency that you could never achieve on your own. For the best results, look at systems that integrate payroll with human resources (HRIS).
3. Involve managers and employees
   Some payroll systems include a level of self-service. This means that managers and employees must log their hours, authorize time off, verify expenses, etc. A lot of could-based payroll systems include this feature, which can go a long way to streamlining the payroll process.
4. Clarify policies and procedures
   When you set up your business and started hiring people, you created policies for PTO, expense reimbursement, commissions, and more. The more clear and widely applicable those policies are, the less confusion there will be at payroll time. If procedures vary for different levels or groups of employees, this will create more work for you. Keep that in mind when deciding how to apply policies and procedures across your organization.
5. Consider outsourcing
   There is good reason why the vast majority of small businesses end up outsourcing their payroll. Letting an accountant or third-party specialist handle it can take a huge weight from your shoulders, as well as ensure everything is processed the right way. Outsourcing your payroll typically means more than just writing paychecks. It can also help you mange tax liabilities, government compliance, commission structure, and much more. For most business owners, outsourcing payroll just makes sense.

Accurate, efficient payroll processing is vital to the health and growth of your business. The process can be tricky, but that doesn’t mean it has to be a stumbling block for you. With these 5 strategies, processing payroll can be faster, easier, and less stressful than ever.

When you’re running a business, you might enjoy a little more freedom in your own schedule, but you still have a lot on your plate. For example, part of being the boss is paying taxes, and they must be paid according to certain deadlines.

However, life happens and sometimes things slip through the cracks. You might not be able to make every single deadline, or you could have filings rejected and have to send them in a second time. When these problems arise, the IRS allows you to apply for extensions and take advantage of grace periods when you have things to correct.

Tax Filing Extensions for Your Small Business

When you fear you aren’t going to be able to file your taxes by the deadline, you can’t just file late without facing potential penalties. Even if you don’t owe any taxes, you still have to file for an extension on or before the due date. But beware: you only get one 6-month extension. If you miss that deadline, you can’t extend it again.

Fortunately, you don’t need to prove you have a good reason for needing an IRS extension…you simply apply for it. You can count on being approved unless you make an error in the paperwork or the information you supply doesn’t match IRS records. If you’re using an accountant to file the extension, the likelihood of such errors is pretty remote. For corporate tax filings, you’ll need to file form 7004 by the due date. The process is actually pretty painless. It doesn’t take long, and you can even do it online. However, there are several things you’ll need to be aware of before you file, so be sure to ask an expert for help.

This information all applies to IRS extensions. If you need a state extension, you’ll need to check your local tax authorities to understand the process.

What About Grace Periods?

When your e-filed return or extension is rejected, you might wonder if you’ll be in trouble because of the delay. You’ll be glad to know, however, that there are some standard grace periods already in place, giving you time to correct any errors and re-submit. As long as you do so within the grace period (also called the “perfection period), your filing will be considered on time. Generally speaking, the grace periods are 5-10 calendar days for e-filed returns, and 5 calendar days for extensions. Your specific grace period depends on which form you are filing.

While dealing with the IRS isn’t anyone’s favorite part of owning a business, they do try to make filing on time as simple as reasonably possible. Of course, with the help of an accountant or CPA, meeting federal and local deadlines will be easier, hopefully making extensions and grace periods unnecessary.

It’s getting late in the year. For you and your business, that means a couple of things. First, the holidays will be here before you know it. Second, tax time is fast approaching. Both of these things require a lot of preparation, but only one could get you in legal trouble if you procrastinate.

Now that we’re in the 4th quarter of the year, you need to make sure you’ll be ready for tax season. Sure, it’s still a way off, but if you’re running a business of any size, your preparations can be a little more complicated. The last thing you need is to be rushing around in April, gathering documents and updating your records. After all, you will have had months past the new year to be ready.

Proper accounting and tax reporting is a big part of keeping your business running smoothly – and legally. To help you get organized and feel ready for the deadline, we’ve put together a list of some of the things you’ll want to think about right now.

• Are your records updated?
  You probably know what it’s like to let your record-keeping slide for a while, only to spend many frustrating hours getting things back on track. It’s a pain, and you always ask yourself why you didn’t just keep things current in the first place. If you’ve gotten behind, it’s time to catch up. If not, great! Just make sure to keep up the good work.
• Do you know where everything is?
  Hopefully you have a designated place (something more secure than on your desk) for your tax-related documents. If not, you’d be wise to prepare one now. Make sure you’ve gathered all your bank statements and other applicable documents, and put them in a safe and organized location. If you don’t have everything together, start doing it now.
• Have you tracked your deductibles?
  When you spend money to equip your business or give to charity, you probably look forward to claiming those expenditures as tax deductibles. But are you keeping track? It’s easy to forget or overlook some of those items at tax time, so it’s important to put them down as they happen. If you haven’t been, you still have time to look through your records – and your memory – to make sure you catch them all.
• Do you have backups?
  Regular backups of your data are essential. Now is a good time to conduct those backups if you haven’t done it recently. Technological or human error can be disastrous for your data, and if the unexpected happens, you could find yourself in big trouble. Be sure you also keep your older backups in case the IRS surprises you later.

Those are just a few of the things you need to be thinking about as tax time approaches, but it’s certainly not a complete list. Generally speaking, if you’re well organized and updating your records frequently, you should be in good shape as far as filing deadlines go.

Of course, if you’re using an accountant, you’ll have a lot less to do. As long as you’re providing them the information, your accountant should be keeping your records updated and have everything ready to go at tax time. They can also answer your questions about business structure, tax forms, and other deadlines you might not be aware of. If you’re feeling overwhelmed or confused about how to file, save yourself some trouble and reach out for qualified help.

Starting your own business is a big step. Your mind is likely full of questions, and probably a healthy dose of both joy and fear. And who could blame you? Starting any type of business can be complicated, exciting, and downright scary. Whether you’ve already made your decision or are still on the fence about pulling the trigger, it always helps to make sure all your bases are covered. To that end, we’ve put together 5 key things you’ll want to consider when starting a business.

1. You need a business plan
   The value of a solid business plan cannot be overestimated. Your business plan will play an integral role in getting financing, and will also serve as a vital guide throughout this adventure. Even if you’re not looking for financing at the start, a business plan including marketing strategy, forecasts, and future goals can help clarify your purpose and vision. Make sure your business plan can convince others – and yourself – that your product is serving a particular need, and that there is an active market for it.
2. You can’t do it all
   No matter how advanced your education or how well you know your market, there is likely to be something you haven’t thought of, or some area where you lack expertise. And guess what? That’s okay! From finances, to marketing, to logistics, there are plenty of people and resources available to answer your questions or fill your needs. Don’t overlook outsourcing as a way to get meaningful help. Nobody can do everything alone, so don’t spread yourself to thin.
3. Set it up right
   Should you set your business up as a sole proprietorship? An LLC? S-corp? Partnership? If you’re unsure about what all of that means, it’s definitely time to get some advice. Consult with an attorney or CPA about which legal structure is the best fit for you. Depending on your situation, you may get a heap of tax benefits simply by using one business structure over another.
4. The tax man always cometh
   Before you actually start doing business, you’ll need a tax identification number. Why? Because you’ll have to register (according to federal and local laws), for things like unemployment insurance, worker’s compensation, and of course, taxes. Tax codes, deadlines, and determining your liability can be a complicated process requiring a tax professional.
5. Bookkeeping can be a bear
   Unless you’re an accountant, even simple bookkeeping can quickly become confusing. And no matter who you are, the weight of financial tasks can be overwhelming and distracting. Keeping your financials in order can take a lot of time away from things like product and business development, so be sure you’re prepared for that. As your business grows, it usually becomes necessary to let an accountant keep your financial statements, payables and receivables in order. Fortunately, most business owners are surprised at how affordable it can be to outsource this.

Businesses that are built on a solid foundation have a much better chance of success. No matter what type of company you’d like to start, it’s important to consider all of your needs and the complications they might present. Especially when it comes to finances and taxes, having all your ducks in a row is imperative to long-term viability. Since you’re sure to have questions, be sure to seek out qualified help.

No matter what type of business you’re in, one thing is certain: you’ll end up paying a significant chunk of your income to the IRS. Many individuals and business owners alike dread tax time, not just because they may owe additional money, but because of the complexities of filing correctly and the potential consequences of getting it wrong.

Not everyone uses an accountant or CPA to file their taxes, but all of us are required to file correctly and on time. It’s a source of stress for many. In fact, 40% of small business owners agree that taxes, together with bookkeeping, is the most unpleasant part of owning a business. Whether or not you use a professional is up to you. However, there are several things that can help you keep your tax prep up to snuff either way.

Avoid Common Errors

A few of the common mistakes business owners make with their taxes include overlooking self employment taxes, letting record-keeping slide, and failing to report income as stated on 1099s. There are many other oversights, but those are three of the biggest.

Know the Forms

Being familiar with all applicable tax forms is essential to accurate filing. If you fail to submit the proper forms, you’re likely to receive an unwelcome letter from the IRS — even if it’s years later. If you use contractors, you must use 1099-MISC forms. If you’re a sole proprietor, are you filling out a schedule C? The right paperwork for your situation will differ from someone else’s. If you’re unsure what to file, talk to a tax professional.

Speaking of Paperwork…

Paperwork and the IRS go hand-in-hand. If you’re going to file properly, here is a list of the most common documentation you’ll need to keep track of:

• Income documentation: gross sales receipts, returns and allowances, bank interest, and more
• Cost of goods sold (if selling products): inventory with dollar amounts (beginning and ending), materials and supplies, inventory purchases, etc.
• Expenses: office rent, computer equipment, mileage, hotels, advertising, internet service, depreciation, office rent, wages paid out (W-2 and W-3), employee benefits, and more. You’ll need receipts, bank statements, and other paperwork to document everything you claim.

This is by no means a complete list, but it should give you an idea of what you’ll need to hold onto. In general, if it documents your business’ money, keep it. Better to have more than you need than miss something that could affect your tax liability or trigger an audit — or worse.

When it comes to tax preparation, you cannot be too careful or too prepared. This checklist is a starting point, but it’s always best to get some help from an expert. That’s why most small business owners choose to use an accounting service — at least for that April 15 deadline. It’s an up-front expense that can save you a lot of time, headaches, and money over the long haul.

If you believe your business’ corporate structure may be resulting in more expense than value, it may be time for you to consider entity restructuring. This is the process of changing your legal structure (LLC, S-corp, etc.) into something that better fits your growth or other changes. Entity restructuring is an area where you’ll definitely need the help of a certified professional, but you might be worried about the cost.

There are a lot of factors that come into play during restructuring, such as tax liability, personal risk, and IRS filing requirements. It’s a complicated process that will be different for every business. This makes it difficult to estimate your expected costs with any precision. However, there are several elements that will influence how much you will pay. A few of those include:

• The size of your business — In general, the larger your operation, the more complicated the process, resulting in a higher cost.
• Your current structure — Some structures are more complex to begin with. Coming from a sole proprietorship will likely be less demanding than if you’re already an LLC or have subsidiaries.
• Their experience — It stands to reason that an experienced legal or financial team might have higher fees that someone who has little experience. But generally speaking, you get what you pay for.

Depending on these and other factors, your entity restructuring costs may amount as little as a few thousand dollars, up to several thousand. While it’s easy to understand why a lot of business owners might be reluctant to undertake restructuring because of the associated costs. But most often, if your company is really ready for a new structure, the tax savings by themselves are enough to justify the investment. You may also simplify your operations for greater efficiency, plus reduce any personal liability you may currently have. In fact, the restructuring service will often pay for itself within the first couple of years.

Ideally, you should conduct an evaluation of your business structure with a professional at least once per year. Regular monitoring can help you identify changes that could impact the fit of your current legal setup. As with many other business issues, the best way to evaluate your own situation is to consult a professional. They can help you evaluate whether your current structure is still the most beneficial. Weighing the pros and cons, they’ll work with you to identify your next steps should a change be warranted. If so, professional guidance ensures you’ll be well prepared for the transition.