Small Business

You may not deduct the cost of renting, maintaining or operating facilities to entertain. Examples of facilities would include yachts, boats, lodges, fishing camps, apartments, hotel suites or homes in a vacation area. The no-deduction rule applies to rent, depreciation, maintenance and operating expenses. It does not apply to the food and beverage costs incurred when entertaining in the facility.

Generally, the deduction for business gifts is limited to $25 a year for each recipient, if the gift is made to an individual or partnership.
There is no dollar limit on the deductibility of a business gift made to a corporation or business entity. Gifts to a corporation or other business entity intended for the eventual use or benefit of a owner, shareholder or employee is subject to the $25 limitation.

Whether you choose the actual auto expenses, including depreciation or lease payments, or use the mileage allowance method, you can still deduct the actual business tolls and parking expense costs.
You should maintain a record of the expenses and keep your receipts to verify the deduction.

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.

Payments for the services of a child under age 18 who works for his or her parent in a trade or business are not subject to social security and Medicare taxes if the trade or business is a sole proprietorship or a partnership in which each partner is a parent of the child.
If these payments are for work other than in a trade or business, such as domestic work in the parent's private home, they are not subject to social security and Medicare taxes until the child reaches age 21.
However, Payments for the services of a child under age 21 who works for his or her parent, whether or not in a trade or business, are not subject to federal unemployment (FUTA) tax. Payments for the services of a child of any age who works for his or her parent are generally subject to income tax withholding unless the payments are for domestic work in the parent's home, or unless the payments are for work other than in a trade or business and are less than $50 in the quarter or the child is not regularly employed to do such work.. Speak to your local CPA if there is a question of whether a worker is covered by Social Security.

The cost of installing a safe for storing investments in your home is deductible on IRS Schedule A as miscellaneous deduction, subject to the 2% Adjusted Gross Income limitation.

A business plan serves as your business' resume. It precisely defines your business and identifies your goals. Its basic components include a current balance sheet, income statement and cash flow analysis. A business plan is a crucial part of any loan package. It illustrates to suppliers, personnel and other parties about your goals and operations.

Some aspects to consider are licenses required, zoning laws and other regulations that vary from state to state and business to business. Depending on the type of business you are running, you may also need establishment licenses, liquor licenses, delivery and/or transport licenses. Your local SBA office or Chamber of Commerce will provide you with general information. The first decision is to decide about your form of organization. You can choose to be a sole proprietorship, corporation, s corporation or partnership. Speak to your local CPA for advice specific to your business and location.

There is a minimum wage set by federal law for most jobs. The actual wage paid is entirely between you and the prospective employee. Wage compensation is usually calculated using position importance and skill as the main criteria. You may consult with your local CPA or trade associations to learn more about the current practices in your business field.