Small Business

Sole Proprietors with business expenses less than $5,000, do not have a net loss from the business, use the cash method of accounting,do not have an inventory during the year, have only one business as a sole proprietor, have no employees during the year, are not required to file Depreciation Form 4562, are not required to file Office in Home Form 8829 and have no prior year un-allowed passive losses, may use Schedule C-EZ.

In general, if you use a part of your home for both personal and business purposes, then no expenses for business use of that part are deductible. There are certain exceptions for the storage of inventory or samples used in a business or for qualified day care providers. You should speak to your local CPA about the "office in home" deductions.

The Education Jobs and Medicaid Assistance Act of 2010 signed into law August 10, 2010 repealed the Advance EITC.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.

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

There is no limit, and it is not illegal to take out or bring in any amount of money or monetary instruments from or to the United States. Examples of monetary instruments include U.S. or foreign coins in current circulation, traveler's checks, currency, money orders and negotiable instruments or investment securities in bearer form. However, if you take out or bring in more than $10,000, you must file IRS Form 4790, the "Report of International Transportation of Currency or Monetary Instruments" with US Customs. Failure to comply can result in criminal, civil forfeiture penalties.

As a self-employed individual, you should keep your payroll records for seven years, business income and deduction records for six years after the tax return is filed, and copies of your business tax returns should always be kept.

In order to avoid any future problems and to avoid any mismatching reports with the IRS, you should include this amount on IRS Schedule B, both as a positive and negative amount. Enter the Form 1099-INT amount on Schedule B, line 1 as income. Enter the same amount as a negative adjustment on Schedule B, line 1 and enter "Nominee Distribution" as the negative adjustment description. Speak to your local CPA if you have any questions about the reporting of this incorrect interest.

Costs incurred while entertaining customers, prospective customers, clients, suppliers, employees and other business associates are valid business expenses that are subject to conditions and restrictions. For entertainment costs to be deductible, the following must be documented: the time, place and nature of the entertainment, a description of the business purpose involved, the amount of each separate expense, the business relationship and identification of the persons entertained. A calender diary is recommended to maintain this information.

Generally, meal or entertainment expenses will be deductible with certain limitations as long as the meal or entertainment expenses are "directly related to" or "associated with" the active conduct of your trade or business and are not extravagant or lavish under the circumstances. Deductions are generally limited to 50% of the cost. Detailed recordkeeping should be kept to verify the deductions. Some locations considereed as entertainment venues are: nightclubs, cocktail lounges, theaters, golf and athletic clubs, country clubs, and sporting events.