TIPS FOR STARTING A HOME BUSINESS

In these tough economic times, many people are taking a hard look at employment alternatives -- some, because they've lost their seemingly stable jobs in the corporate world; others, because they dream of striking out on their own.

WATCH OUT FOR BOGUS E-MAILS

The e-mail from your bank gets your attention right away. It says you need to log into your account in the next 48 hours to continue your online privileges. Something about a system upgrade. You wonder, is it legitimate? How can you know for sure?

PARTNERS NEED A WRITTEN PARTNERSHIP AGREEMENT

If you are operating your business as a partnership, you should have a written partnership agreement. This is true for family partnerships as well.

WHO NEEDS TO MAKE QUARTERLY INCOME TAX PAYMENTS?

Any taxpayer that has income that is not subject to withholding may need to make quarterly estimated income tax payments.

HIRING FAMILY CAN CUT TAXES

As a boss, you may hire family members and pay reasonable salaries for the work they do in your business.

For example, you could hire your son or daughter to perform routine clerical or cleanup tasks. Your child’s salary would be a tax-deductible business expense, and your child’s income would be tax-free up to that year’s standard deduction amount for a single taxpayer ($5,950 for 2012). Wages in excess of that amount would be taxed at your child’s rates, which are probably lower than yours.

You can compound the benefits of this strategy by having your child contribute to an IRA, which is likely to enjoy many years of tax-deferred growth.

Wages paid to a spouse by a sole proprietor are subject to payroll taxes; those paid to your children who are under the age of 18 are not. Compensation paid has to be reasonable for the services performed.

TAKE CASH DISCOUNTS IN YOUR BUSINESS

Don’t miss the cash discounts offered by your suppliers. A 2% discount for payment in ten days, versus net payment in 30 days, computes to an annual rate of return of 36%. If you can get a 10% discount for paying twelve months of payments in advance, you will earn 23% on your prepayment.

MIDYEAR PLANNING IS A MUST THIS YEAR

Major tax change is just months away: the Bush-era tax cuts are scheduled to expire at the end of this year, and the payroll tax cut ends after December 2012. The general expectation is that tax rates will go higher in 2013, at least for wealthier taxpayers. Whenever major tax change is about to occur, the opportunities for tax-cutting multiply. That makes midyear planning critical this year if you want to keep your 2012 and 2013 taxes as low as the law allows. Contact our office at (518) 798-3330 for your midyear review.

REPORT FOREIGN INVESTMENTS BY JUNE 30

If you have foreign bank, savings, or investment accounts that exceeded $10,000 in 2011, you are required to file "Treasury Department Form 90-22.1" by June 30, 2012. This is not a form that you file with your income tax return. Rather, it is a separate form filed with the Treasury Department in Detroit. The report must be received by the Treasury Department, not postmarked, by the June 30 due date. Penalties for failing to meet this filing requirement are severe and can include jail time. Contact our office at (518) 798-3330 for details or filing assistance.

NEW BUSINESSES HAVE TAX FILING REQUIREMENTS

The IRS wants to educate new small business owners about their federal tax responsibilities. "Understanding and meeting their tax filing requirements is one of the biggest challenges faced by people starting out in business," says the head of the IRS Small Business Division.