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Smal Biz Taxes: What to Expect in 2020

(courtesy of Business News Daily)

There may not be any major changes to the small business tax code in 2020, but there are some important things to keep in mind. In 2018, Congress passed major adjustments to business tax law, including a lower corporate tax rate, new rules for pass-through businesses and a tax break for some industries.

“The tax changes were so significant, I would imagine that there’s still a lot of issues in terms of digesting what has occurred,” said Wayne Winegarden, senior fellow in business and economics at the Pacific Research Institute and managing editor of EconoSTATS.

As a small business owner, it’s important to stay up to date on current tax laws so you pay the right amount each year. [Doing your taxes on your own? Find the best software to use in our reviews of the Best Tax Software for Business 2020.]

Small businesses face a variety of different taxes; these taxes vary based on the structure of your business, but here are the five primary ones:

  • Income tax: With the exception of partnerships, all businesses file annual income tax returns. Partnerships, however, file an information return.
  • Self-employment tax: Relevant for most small business owners, this tax is on your net earnings from self-employment and goes toward your Social Security and Medicare obligations.
  • Employment taxes: If you have employees, you have taxes (and forms) related to their Social Security and Medicare taxes, federal income tax withholdings, and federal unemployment tax. Payroll taxes fall into this category.
  • Excise tax: There are a number of different types of taxes that fall into the excise tax category. This affects you if you make or sell specific products; operate a certain business type; use specific equipment, facilities, or products; or are paid for specific types of services. If that all sounds vague, it’s because it cuts across a number of categories. The classic examples of products that carry an excise tax are fuel, tobacco and alcohol. You can learn more about excise taxes from the IRS.
  • Estimated taxes: Many businesses (sole proprietors, partners and S corporation shareholders) must pay quarterly estimated tax payments. This occurs if you do not have taxes withheld from each paycheck or do not have a sufficient amount withheld from each paycheck.

These are two minor aspects of tax law to keep in mind in 2020. Tax reform stemming from the 2018 law is still taking effect, and understanding all of the regulations that will be implemented is important for you as you work with your accountant or tax professional.

The noteworthy changes include deductions for pass-throughs, first-year bonus depreciation and net operating loss changes.

  • International business: Anthony Parent, founding partner of Parent & Parent LLP, said many small businesses may have a rude awakening if they have significant operations abroad. There are a lot of small and medium businesses that have some sort of international components,” he said. “We’re trying to get ahead of it and warn people.” International taxation and regulation are very complicated, so it’s important to work directly with a professional to ensure you’re being taxed at the correct rate.
  • SALT cap: As of 2019, filers can only deduct up to $10,000 in state and local property and income taxes. Many business owners operating a pass-through entity in a high-tax state can take advantage of SALT deductions. Winegarden said all business owners should be aware of this cap. “I really think in the high-tax states, the SALT cap is going to be meaningful, more for small businesses just because they’re going to be filing through their personal taxes,” he said.

The biggest change businesses saw in 2019 was a significant deduction for both pass-through and corporate entities. Pass-through businesses are small businesses structured as S-corps, limited liability companies, sole proprietorships and partnerships. Pass-throughs make up approximately 95% of U.S. businesses. The new law provides a 20% deduction for those businesses. The only limitation is on service-based businesses, like law and accounting firms that make more than $315,000 per year ($157,500 if single).

C corporations are also getting a big deduction: The new law lowers the tax rate from 35% to 21%. This slashed rate aims to bring major corporations back to the U.S. to employ workers and create wealth.

The first-year bonus depreciation deduction is now 100%. In other words, businesses that make eligible equipment and property purchases can deduct the full amount of the purchase price instead of writing off a portion of the expense each year. This provides businesses with more money upfront, which lawmakers hope will be invested back into the business or used to hire workers.

“The new tax plan will allow businesses to write off the cost of assets in one shot,” said Josh Zimmelman, founder of Westwood Tax & Consulting. “A company can invest in vehicles, computers and equipment, and claim the entire expense on their … tax return.”

Winegarden said the break is an incentive for businesses to spend more. “Anything that gets you closer to complete expensing is going to increase the value of the depreciation, lower the tax burden and reward those capital-intensive firms,” he said.

Net operating losses (NOL) can no longer be carried back for two years, but instead can be applied for an indefinite amount of time going forward. NOLs occur when a business’s tax deductions exceed its taxable income. It functions as a form of tax relief for businesses, where business owners can apply a NOL to future tax payments.

The change eliminates businesses’ ability to restructure taxes completed in years past, but it extends the lifespan of NOLs indefinitely; however, this can only be applied to 80% of taxable income.

Winegarden said the thinking behind this change is to incentivize businesses to take risks and spend more money. “Knowing you can carry [the net operating loss] forward and indefinitely … lowers the cost of failure,” he said.

In addition to some structural changes, there are some important deadlines to keep in mind:

  • S-corps must file their business taxes by March 15.
  • The deadline for 2020 tax returns is April 15.
  • Quarterly estimated tax deadlines are due April 15, June 15, Sept. 15 and Jan. 15.

If you’ve purchased a business this year or are new to small business tax structures, there are a few things to keep in mind. While it is possible to do your taxes on your own, consider working with a CPA. A tax professional can ensure your business is taking advantage of all the deductions available and, more importantly, can ensure you’re paying everything you owe. Here are five other tips:

  • Think about taxes all year long. Small business owners should not treat income taxes as an annual event. Rather, tax planning should be a year-round activity. Waiting until the last minute makes tax preparation more complicated, and it limits your money-saving options.
  • Be aware of law changes. Even with the help of a skilled professional, a small business owner must keep up with new changes. This will ensure your tax professional is doing the best possible job, and it keeps you informed as a business owner.
  • Don’t make assumptions. Never make business decisions assuming that particular tax breaks will pass or that certain policies will be enacted.
  • Choose the right state to incorporate in. You don’t need to incorporate your business in the same state that you run your business. If you are just starting out, here are some of the best states to consider incorporating your business in.
  • You don’t actually want a tax refund. It is possible to get a tax refund as a small business, but in most cases, it isn’t to your benefit. Typically, a refund means you overestimated the amount of taxes you paid, which could have been reinvested back into your business.

This isn’t a comprehensive list of tax deductions available to small businesses (and you need to ensure that your business is eligible for these deductions). While this list provides potential deductions, it’s best to work with a CPA who can ensure you get all of your relevant deductions.

  • Rent: If you rent your office space or retail location, the cost of your rent is fully deductible.
  • Home office: If you have a dedicated workspace in your home (it must be regularly and solely used for business), then you are eligible to deduct expenses related to that portion of your home. The simple option is to take $5 per square foot up to 300 feet, but you can break it down as a percentage of the total square footage of your home and itemize your costs related to the space.
  • Advertising: Promoting your business not only helps grow your business, but it may shrink your taxes, as these expenses are fully deductible as well. This includes things like business cards, fliers and digital marketing spend.
  • Vehicle: As long as you can document and verify that the vehicle is used for business purposes, you can deduct the operation costs. Like the home office deduction, you can choose to use the simple deduction, which is 58 cents per mile as of 2019, or you can itemize specific costs.
  • Utilities: The basics of keeping your business running are fully deductible as well. This includes electricity, water, heat, internet and landline.
  • Travel: Business travel costs are fully deductible. This includes any flights, hotels and other transportation costs you incur while on a business trip.
  • Employee salaries: Paying your employees pays off. Their salaries, along with many benefits like retirement and education offerings, are tax-deductible.

Here are some additional resources for learning about taxes:

  • The U.S. Small Business Administration maintains a guide on navigating the tax code and staying up to date on your tax responsibilities as a business owner.
  • The IRS website has more information about how the Affordable Care Act (ACA) affects small business owners’ taxes. Note: Further changes to the ACA may be on the horizon.
  • If you have a choice regarding the state that your business will operate in, then you may want to consider the small business tax rates by state, additional information and recommendations are available at the Tax Foundation.
  • The U.S. Small Business Administration has a helpful guide on choosing the right business structure if you are just starting your business this year.
  • The IRS website has additional details on the Small Business Health Care Tax Credit, which provides a tax credit to small businesses that offer health care coverage to its employees. You can learn if you are eligible, and how to calculate and claim your credit.
  • The IRS maintains its own information center on self-employed and small business taxes.
  • In addition to our recommendations on the best tax software, see which accounting software solutions we think are the best for small business owners.
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Calling to Say I Love You and Other Ways to Show Appreciation

As Valentine’s Day approaches, people think about how to show others how much they care. In fact, Americans are expected to set a record for Valentine’s Day spending this year, according to an annual survey conducted by the National Retail Federation and Prosper Insights & Analytics. People plan to spend an average of $196.31 that day, an increase of 21% from last year. Total spending is expected to be $27.4 billion, up from 32% from 2019. That’s big money.

 

Of course, there are many ways to show appreciation, and not all of them cost money. Stevie Wonder croons about calling to express his love in the song “I Just Called to Say I Love You.” You may not want to call customers or employees to say, “I love you” specifically, so here are some other ways to show appreciation.

 

Handwritten Notes Pack a Positive Punch

In this digital age, sending a handwritten card expressing how you value someone can really stand out. In the note, share what you appreciate about the person and how they support you and your business. Check out this how-to guide for thank you notes from indeed.com.

 

Offer a Special Discount or Gift Card

Along with a handwritten note, provide a discount for your products or include a gift card for a service or event you believe the recipient would appreciate. Consider spa services, restaurant certificates and tickets to a play or sporting event.

 

Respond to Feedback

Customers and employees want to be heard, whether they are giving praise or criticism. Respond promptly to their feedback to show that you value them and their opinion. Acknowledge that you heard how an employee went above and beyond or how you will address issues or improve processes that have been brought to your attention.

 

Barter Can Help

Consider the possibilities barter offers. Explore the variety of services and products, including flowers, tickets to sporting events and other entertainment options, jewelry, restaurants, spa services, hotel packages and much more. Choose something that speaks to your customers or employees and shows them how much you care this Valentine’s Day and beyond!

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Why use cash to pay your bills? Use barter instead!

Imagine running your business or non-profit and paying bills with trade instead of cash. Many organizations in your area are doing just that, including the Pediatric Brain Tumor Foundation – SE Region.

“We are tremendously appreciative to receive support from The Barter Company’s golf tournament as well as barter for other items we need without having to spend cash,” said PBTF Regional Director Tammy Bates. “Every penny we receive in donations is vital to the work we do. Barter allows us to use the money we raise to directly help these kids and their families instead of for administrative expenses.”

More than 28,000 children in the United States are living with the diagnosis of a brain tumor, and 13 more cases are identified every day. The Pediatric Brain Tumor Foundation works to eliminate the challenges of childhood brain tumors.

The Barter Company has established itself as the leading force in the barter industry throughout the Southeast. They provide businesses with an alternative currency network by using barter dollars instead of cash to handle transactions.

Are you ready to see how barter can work for your company? Contact The Barter Company today.

Visit www.thebartercompany.com or call 770-591-4343.

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Why use cash to pay your bills? Use barter instead!

Imagine running your business and paying bills with trade instead of cash. Many businesses in your area are doing just that, including Sentinel Exteriors.

“I’m constantly looking for ways to connect with other business owners and find like-minded people to do business with,” explained Sentinel Exteriors Owner Preston Carter. “By joining The Barter Company’s trade network, I now have access to other highly regarded business people and can barter our services with them. We trade for advertising, employee rewards, and customer incentives. We also fill gaps in our schedule with new customers. The Barter Company makes life a lot easier for us!”

Sentinel Exteriors is a roofer you can trust. Their team is dedicated to making sure you have the roof you need without any high-pressure sales pitches. Roofs from Sentinel Exteriors will help protect your home for decades to come.

The Barter Company has established itself as the leading force in the barter industry throughout the Southeast. They provide businesses with an alternative currency network by using barter dollars instead of cash to handle transactions.

Are you ready to see how barter can work for your company?

Contact The Barter Company today.

Visit thebartercompany.com or call 770-591-4343.

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Harness the Power of Technology Disruption to Your Advantage

In his 1964 song “The Times They Are A Changin’,” Bob Dylan sang:

There’s a battle outside
And it is ragin’.
It’ll soon shake your windows
And rattle your walls
For the times they are a-changin’.

Dylan was referring to societal changes happening in the U.S. in the 1960s. But his lyrics can also apply to the rapid pace of technological advancement occurring today.

Newly developed technologies are quickly displacing or disrupting established ones and hold the potential to dramatically change how we live and work. These technologies include 3D printing, blockchain, artificial intelligence, machine learning, and more. They are expected to usher in new industries, companies, jobs, and economic growth in what’s being referred to as the Fourth Industrial Revolution.

How should we as humans and companies prepare for this type of change? Experts advise that we become lifelong learners, ready to adapt to and even embrace technological changes that affect our businesses and lives. In addition, we must teach children how to learn, handle complexity, use data to make good decisions, and be flexible in their thinking and approach to solving problems.

Technology has already begun to change how companies in the barter industry conduct business with customers and connect with other exchanges. Fundamentally, all exchanges want to offer a good user experience and process transactions smoothly and seamlessly.

At The Barter Company, our convenient mobile app lets clients easily manage their account and make trades. Our app is a small part of the technological advancements that are coming to transform our lives, but it is mighty in the barter industry. Clients can use it to find barter clients nearby, search available products and services, authorize trades, and see their QR certificates. It’s easy to use, and clients love it!

Finally, as we all journey together in our changing times, we are wise to heed Dylan’s advice:

Don’t stand in the doorway
Don’t block up the hall
For he that gets hurt
Will be he who has stalled

 

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Why use cash to buy things? Use barter instead!

Imagine paying for things with trade instead of cash. Many people and businesses in your area are doing just that, including Stars and Strikes with locations throughout Atlanta and the South.

Brad VanBuskirk, Director of Purchasing for Stars and Strikes, explains how barter has been beneficial for them for several reasons:

Markets our product to a large network of people who may have never visited one of our locations.

Offers our product in exchange for a wide variety of products and services we need such as marketing, advertising, and carpet cleaning.

Rewards staff with incentives such as golf outings, cabin rentals, Six Flags tickets, and the Tennessee Tri Pass.

Push more money to our bottom line by trad-ing instead of coming out of pocket.

“The options available through barter are endless!”

 

Ready to see how barter can work for you? Contact us today at tbc.jhdwebdev.com or call 770-591-4343.

 

“When I was planning my husband’s surprise birthday party, I found that Stars and Strikes was the perfect place. We had a private room, food, drinks, and bowling. I couldn’t have asked for a better place to have his party. Everyone had a great time and he was completely surprised! And, everything was taken care of through barter!”

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Barter Business Industry Sees Changes and Consolidation

Like most industries, the barter economy has seen some changes. During the Recession, many barter exchanges throughout the country closed their doors. Those of us that survived, tightened up and weathered the storm.

Once the economy picked up, a number of “new” independent and franchised-owned trade exchanges jumped to open locations in several major markets in the United States – thinking that it’s an easy business to be in. However, after a couple of years, we’ve seen many of these start-ups shut down leaving customers with trade dollars and no place to spend them. Others have merged or consolidated with other trade exchanges once they experienced some growing pains. These consolidated trade exchanges hope to improve their revenue by cutting overhead and sharing administrative costs.

Running a trade exchange is not easy as it would appear to some. Not only do you have to sign-up clients, you have to identify those businesses that would be beneficial to the exchange. Once on board, clients need constant education about how the system works and why they should think “barter” before spending cash. Those clients who get it, can’t live without it. It helps them manage their cash flow and bring in new customers. Strong and stable customer service is also essential. Having dedicated trade coordinators working with clients, like The Barter Company does, is just one way to make sure clients stay engaged with the system.

We believe that the business-to-business (B2B) barter industry is still in a healthy growth phase. Technology has been at the core of taking the ancient practice of trading into the 21st Century. Mobile devices and apps have helped make round-robin trading simple and convenient in the palm of your hand. Emerging technology and a positive economic outlook will continue to impact trade exchanges. We’re seeing this as more people are confident about the growing economy, they open new businesses and look for ways to grow their business. Of course, a solid, trustworthy barter exchange can assist any business – large, medium or small – with that by saving cash and providing new customers. B2B barter will remain a valuable component of business management for many years to come.

 

 

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B2B Barter Increases as Economy and Technology Improve

Although many financial experts think barter increases during an economic downturn, the opposite is true for business-to-business (B2B) trades. Now, as the economy has improved, we’ve seen more active trading from existing clients. Here’s why: during a recession, companies don’t have as much capacity to use their trade dollars and they “leave it in the barter bank” until the economy picks up again. Once business owners have more confidence in the economy, they’re eager to spend their barter dollars to grow and expand.

 

With an improved economy, not only are more small businesses thriving but more people are taking that leap in opening their own business. This presents more opportunities to join a trade exchange and manage cash flow which can be tight for start-ups. New business owners also crave interaction with other like-minded entrepreneurs which a good barter network can provide.

 

Technology has also positively impacted B2B trade exchanges. As technology evolves, we have embraced the latest applications to benefit our clients. For example, new mobile location apps can help a client find a restaurant that accepts their barter card whether in their hometown or when traveling. This simplifies the barter experience, as most mobile technology has done, literally placing it in the palm of your hand.

 

Most active members of a barter exchange will tell you it’s one of the best things they’ve ever done to improve their business – especially in a good economy. B2B barter helps owners save cash for operational expenses by using barter dollars instead which is an effective way to manage cash flow and grow a business with exposure to new customers.

 

The future looks bright for B2B barter and The Barter Company is committed to staying at the forefront of the industry.

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The Barter Company Inducts Newest Million Dollar Club Member

The Barter Company, a recognized leader in the barter industry, announced today that one of its clients, Southern Marketing Entertainment, has reached the company’s million dollar club level.

Million Dollar Dave has been with TBC for 10 years, and in that time has made over $1,000,000 in sales and purchases using barter. While many companies can take 15-20 years to achieve this milestone, Southern Marketing Entertainment’s owner Dave Leach is the quickest to reach the million-dollar level status in just under 10 years!

Congratulations on this accomplishment and thank you for your years of dedication with TBC!

About The Barter Company

The Barter Company (TBC) has established itself as the leading force in the barter industry throughout the Southeast with offices in Georgia and Florida. TBC provides businesses with an alternative currency network by using barter dollars instead of cash to handle transactions. The company acts as a third-party records keeper, providing clients with monthly statements that reflect all barter purchases, sales, and current barter dollar balance. For more information, visit The Barter Company’s website.

 

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We paid the invoice with a haircut. That’s how barter works.

Imagine running your business and paying bills with trade instead of cash. Many businesses right here in Atlanta are doing just that, including Challise & Company hair-skin-body.

 

“We have been working with The Barter Company for about 13 years and they have really helped us grow our business,” said Carrie Cox, Vice President of the salon and spa and Senior Master Cosmetologist. Challise & Company is a full-service Aveda salon and spa located in Marietta that offers everything from hair care to nails, skin and body care, and sercvice_cutpermanent makeup.

“Through barter, we’ve been able to do more with the salon and spa than we thought possible like travel to more hair shows, advertise, provide vendor gifts, and have great IT support. We’ve also had fun! Our employee holiday party spoiled the entire staff of 18 with limo ser-vice and a great celebration! That helps boost morale and promotes teamwork and most importantly, it helps us say thank you.”
“We’ve also used barter as part of our community work to provide food and prizes to our local schools and teachers to use in their classrooms. It’s a great way to give back to the community without using cash. We couldn’t do all the things we do without barter.”
The Barter Company has established itself as the leading force in the barter industry throughout the Southeast. They provide businesses with an alternative currency network by using barter dollars instead of cash to handle transactions.

 

 

 

Are you ready to see how barter can work for your company? Contact The Barter Company today. Visit thebartercompany.com or call 770-591-4343

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