Bookkeeping & Write-up

Yes. Now, more than ever before, businesses can enjoy the benefits of filing and paying their federal taxes electronically. Use E-File at www.irs.gov/efile and (EFTPS) the Electronic Federal Tax Payment System at www.eftps.gov or call EFTPS Customer Service at 1-800-555-4477.

You use the current year Form 940 to amend a return that you previously filed in the current year. If you are amending a return for a previous year, use the previous year's Form 940. Follow these steps: Use a paper return to amend a Form 940 filed under an electronic filing program. Check the amended return box in the top right corner of Form 940, page 1, box a, Fill in all the amounts that should have been on the original form. Sign the form .Attach an explanation of why you are amending your return. File the amended return using the Without a payment address (even if a payment is included) under Where Do You File? On page 2.

If you receive Form 940-EZ and are not liable for FUTA Federal Unemployment Tax in the current year, then write "Not Liable" across the front of the form. Sign the form and return it to the IRS.

Restaurants employing at least 10 people must make a special report to the IRS of income and allocated tips. In 2010 the IRS assumed tip income of 8%. The allocated amount is shown on an individuals’ W-2 as tip income.

The Education Jobs and Medicaid Assistance Act of 2010 signed into law August 10, 2010 repealed the Advance EITC. After December 31, 2010, workers can not receive Advance EITC in their paychecks. Advance EITC is also known as AEITC or AEIC. Workers who received Advance EITC or AEITC on their paychecks need to file a tax return to report the amount received.

For 2012, the maximum taxable earnings amount for Social Security (OASDI) taxes is $110,100. There is no limitation on taxable earnings for Medicare's Hospital Insurance (HI) taxes.
The Social Security tax rate for employees is 4.2 percent through the end of the year.
The Social Security tax rate for employers is 6.2 percent.
The Medicare tax rate is 1.45 percent for employees and employers.
For Self-Employed individuals, the Social Security tax rate for self-employed is 10.4 percent through the end of the year. The Medicare tax rate is 2.9 percent for self-employed.

The kind of recordkeeping system depends on your business and industry. Your local CPA can provide you with many options. When deciding what is necessary and what is not necessary the following questions should be asked: How will this record be used, how important is this information likely to be, is this information available elsewhere in an equally accessible form. A separate business checkbook is highly recommended for any operation. Too many people comingle their personal and business accounts. There are various "one write" or automated systems available to help simplify the record keeping function.

COLA's were first paid in 1975 as a result of a 1972 law. Prior to that, benefits were increased irregularly by special acts of Congress. Monthly Social Security and Supplemental Security Income (SSI) benefits for more than 60 million Americans will increase 3.6 percent in 2012. The 3.6 percent cost-of-living adjustment (COLA) will begin with benefits that nearly 55 million Social Security beneficiaries receive in January 2012. Increased payments to more than 8 million SSI beneficiaries will begin on December 30, 2011.

The importance of keeping adequate, legible, complete records cannot be stressed enough. Without records, you cannot see how well your business is going and where it is going. All business transactions should be documented with checks or credit cards. Undocumented cash transactions should be avoided if possible. At a minimum, records are needed to substantiate your tax returns under federal and state laws, including income tax, social security and sales tax laws. It also is necessary to document and substantiate your transactions when you need to request credit from venders or loans from lending institutions. This documentation is also necessary should you wish to sell the business.