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February 7, 2014

Tax Deadlines – Don’t let it tax your peace of mind

Hands up if you’ve got your tax act together! What? No hands up? Well then, grab a seat and listen up!

The State and Federal governments have set up certain due dates for filing or e-filing your taxes. To some, understanding taxes and meeting tax deadlines is the first among many horrifying aspects of filing tax returns. But once you understand when and what needs to be filed, it will be the first big step you’ve taken towards de-horrifying the process of tax filing and returns.

April 15th is a big date to remember. Not only must you file your taxes by this day but you also need to pay an estimate of any taxes due. 11.59 pm on that day is the deadline. Miss that and you’ll need to request an extension from the IRS. And even if you do request an extension, remember you still need to pay the taxes you owe.

In addition to that big date, there are several due dates to keep in mind depending on your status – whether you’re individual tax payer, a business (S corporation, C Corporation or LLC) or a charity. The infographic below will help you keep a track of those dates. Remember, if a filing date falls on a weekend or a national holiday, the date will be moved forward to the next working day. It’s important not to miss these dates because if there’s one thing you don’t want, is the IRS on your back, right?

tax deadlines

What happens if you don’t meet the deadline?

Brace yourself! This is the next horrifying part of filing taxes. A lot. A lot of bad things can happen if you don’t meet that deadline. For one thing, the fee for not filing is a lot harsher than it is for late filing. In addition, there are penalties which you can check out on the IRS website.

What Not to Forget

You’d be surprised at the common mistakes people make when filing their taxes. Before you send those papers to the IRS double check whether you’ve:

• Put a stamp on the envelope
• Signed the documents (Don’t laugh. It happens more often than you’d think)
• Included the social security numbers of their children and adult dependents
• Annual limits and tax tables can change from year to year. Make sure you’re using the right.

If you run a small business, there’s a never-ending string of dates that you have to keep in mind. Make entries in your PDAs, your laptop and any other devices you use to keep your appointments to help you stay on top of things.

What to Remember

Remember to take advantage of tax deductions. These may change from year to year as well and I sometimes suspect it is in the IRS’s best interests to confuse us folks! It may help to hire professional accounting firms whose job it is to prepare and file your returns while maximizing your earnings. Firms, like 1800accountant, designate a personal accountant to your case and offer 24/7 access the whole year round. It’s worth looking into such services and enjoy the peace of mind that comes from knowing you’ve got your taxes taken care of and managed to make some tax savings. Now that’s what I’m talking about. 🙂

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November 25, 2013

Tax advice for a small limited company

Tax advice to helpMany sole traders make the move to limited company status because they believe it will make them more desirable to new clients, or perhaps because they think they can save on tax in the long run. For a small limited company however, understanding how tax works is vital – and tax matters can be extremely confusing! All limited companies, both large and small, need to be up-to-date on current tax matters, as the consequences can – and often are – costly.

Limited companies don’t use the same self assessment tax return system as other businesses and self-employed individuals. All limited companies, both large and small, are subject to annual corporation tax.

This means the company does its own corporation tax self assessment – i.e. it calculates the amount of tax it must pay itself using a company tax return. The methods and deadlines are different to those used elsewhere.

The most common tax issues faced by a small limited company

It’s important to remember that once a company has applied for and been given limited company status, it is now a separate legal entity from its owner, irrespective of how many staff it employs or who is a shareholder. Everyone, even the sole director/shareholder, is an employee and the company the employer. What this means in terms of tax is that all the money the company earns belongs to the company and not its owner: from now on, any money taken out of earnings must be noted (and justified) as salary or expenses, and comes under scrutiny from HMRC.

Many small limited companies end up having to pay excess tax because the owner simply takes money out of the company without understanding the tax implications. The company can pay its director in three ways: as salary, to pay back money borrowed or spent on company costs (expenses), or as dividends on the shares the director holds in the company. Getting the mixture of salary and dividends right can reduce a company’s tax bill; get it wrong and it can go the other way.

All limited companies must pay corporation tax by the 1st of January of the year after the trading year, i.e. on 1/1/2014 for trading between 1 April 2012 and 31 March 2013. It must also file a corporation tax return (CT600) each year to HMRC, 12 months after the year end at the latest. Limited companies who fail to file their CT600s or send it too late are subject to hefty fines.

A small piece of legislation known as IR35 has also caused many small limited companies problems since coming into effect. This is when a company takes on a project for a client and takes on the status (however short-term) of an employee. Rather than pay the ’employer’s’ National Insurance on the full cost of what they paid out, the small limited company makes a ‘deemed payment’ to HMRC. This is the opposite of how it works for sole traders.

Where to get advice

Calculating taxes as a limited company is complex and can be both challenging and time-consuming. There are companies that specialise in tax management that small limited companies can turn to for advice in this field, whether a company needs help filling out its corporation tax return or with IR35 forms for employees. An umbrella company can help a small limited company with all aspects of tax and payroll and as qualified experts in all tax matters, can save time and money in the long run.

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June 25, 2013

What Kind of Tax Rebate Are You Entitled To?

Income tax rebateWe pay many different types of tax during our lives. What this means is that there is the potential to claim back tax in many different ways. Your tax rebate will be dependent upon what types of tax you have overpaid on, and this will inform the process (or processes) you need to take in order to claim it back.

Healthcare Professionals

If you work as a healthcare professional you can claim tax back for your uniform, including the costs of washing or for purchasing shoes and tights. You can also claim tax back if you require specialist equipment for your job. The only proviso is that the clothes and equipment you claim for must be for work use only, and must not already be being offset by your employer.

Mileage and Travel Expenses

Another form of tax which can be claimed back is for mileage and travel expenses. If you require a vehicle for your job you can claim tax relief which will help to offset the cost of running your vehicle. As a legitimate business expense, this is something which everyone is entitled to, and a tax rebate of this nature can be very helpful for anyone who regularly travels for work related purposes. For more information about claiming back your travel expenses as a tax rebate, visit www.taxrebateservices.co.uk.

Tax Relief for Teachers

Teachers can claim tax back for a number of different reasons. If, for example, you have been required to pay fees to a professional body such as the NUT, you can claim part of these fees back as tax relief.

Teachers can also claim tax back in the same way that healthcare professionals can, if they require the use of specialist clothing or equipment for their jobs. Tax relief can also be claimed if this clothing requires laundering which is outside of the remit of normal clothes washing procedures. But this can only be claimed if the clothing in question bears your employer’s logo.

Other Types of Professional Tax Rebate Claims

There are many different types of professionals who can claim tax back according to the requirements of their job. These include:

  • Mechanics
  • Construction Workers
  • Non Resident Landlords

For more information about whether or not you can claim back tax according to your profession, it’s always important to get the advice of a regulatory body, or from a professional tax rebate service provider.

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February 22, 2013

What investment administration services tell us about the Australian Economy

ZAH_australia_LW_230312-20120629184132244770-420x0The major economic boom that Australia surged into is about to start faltering, as investments into resources are about to pass their peaks. The Reserve Bank warns of the predicted fall in companies investing; resulting in the slowing of the massive growth that has been witnessed, and a slow rise in unemployment ahead of 2014.

Investment administration services are predicted to be a necessary service as the economy’s change of pace can be hard to detect or understand, as the investing population runs at a risk of liquidating dollars.

This faltering in the economy is predicted to come about as the Reserve Bank of Australia looks at the investments in the resource industry, and how these numbers are falling, and the worry is that there is not enough demand in the economy to replace it. Investment administration services understand companies that investments will have to change their pace, and that their investment administration will have to take different shape as the economy takes natural digressions.

Australian Treasurer Wayne Swan concurred with the Reserve Bank’s findings, saying that the outlook was “challenging”. Investment administration services should be utilized to gain better understandings on the more grim economy outlook that Australia has witnessed in a number of years, since the World Financial Crisis. Another issue, besides that loss of investments if the investment administration is not understood properly, has “made business cautious, particularly in terms of hiring labour,” Swan said.

This shifting economy means complete readjusting of investments, and looking at new investment strategies, which can be devised by investment administration services. It is important that in Australia we understand the changes that the economy takes in order to avoid the issues that plague socialist European nations.

Although as a nation Australia faces the possibility of a slipping national economy, it is after such an unpredicted high and strong dollar. Australia continues to be in a high percentile of countries repairing themselves after the financial crash. Now is a time, more than ever, that investment administration is taken seriously so as to not run the risk of turning over losses, and therefore being able to use a time like this advantageously.

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June 18, 2012

How to Pay Low Rent and Save

Renting

In the current climate, most people are struggling to get on the property ladder and renting is becoming increasingly popular. But how can you find out about paying a lower amount and save money on your biggest monthly outlay? Perhaps you are under the impression that your monthly rent payment is set in stone and the only way to pay less is to move to a cheaper rental. It may surprise you, but this isn’t necessarily the case.

Communicate with your landlord.

If you are struggling financially, speak to your landlord. Landlords don’t want the hassle of looking for new tenants and chasing late payments with the chance of receiving nothing if their tenant can no longer afford their rates.

Your landlord is human and in all likelihood, will understand if you fall on hard times. You could try asking for a decrease in rent in exchange for signing a longer term’s lease – this keeps the landlord happy, as they don’t want the expense of hiring an estate agent to look for a new tenant.

When it comes time to renew your lease, don’t be too quick to agree to any increase in rent. A good, reliable tenant is a godsend to a landlord, and they may be more willing than you think to negotiate. All you need to do is ask – you will be surprised how accommodating landlords can be if they think you are saving them time and hassle.

For those living in a complex and who enjoy DIY type work, there may be the option to assist the property owner in carrying out various tasks around the complex in order for a reduction in rent. As well as simple DIY tasks, you could carry out gardening tasks or clean windows.

Check trends.

Everything is negotiable and it pays to keep up with market trends. Speak to neighbours to find out what they’re paying, and even speak to your local tenants Have facts ready before speaking to your landlord to show that you know your stuff and have done your homework.

Highlight the benefits of having you as a tenant:

  • always pay your rent on time
  • intend to stay there for a long time
  • keep the place clean and tidy, and
  • don’t give the landlord any other hassles, etc.

Showing yourself in the best possible light with confidence will go a long way in any negotiations with your landlord.

Get a roommate.

Think of the amount of money you could potentially save if you rented out a spare room. This is the best way to gain a massive rent reduction. Always check with your landlord that this is alright. Most will have no problem with it. Renting to someone you know is always preferred. If you do not have that luxury, then make sure you screen any potential lodgers thoroughly, and ask for references in order to avoid problems later on.

Consider rent subsidy.

You may be entitled to assistance from the government if you are on a low income and should make enquiries through your local housing office. You could be entitled to some form of housing benefit and it won’t hurt to ask.

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