Three Tax Tips for 2016 for Small Businesses
Three Tax Tips for 2016 for Small Businesses

Three Tax Tips for 2016 for Small Businesses

According to the Small Business Administration, somewhere around a whopping half a million businesses are born and die each month. If you're a banker who deals with small business loans, some of those businesses are likely your clients. How can you help them get started in 2016? Here are some tax tips for new businesses.

1. Know your taxes and deductions

For owners of new small businesses, the question, "what are my taxes and deductions?" is a gateway to a series of other questions. There’s a pretty direct answer to the first part by pointing to the tax bracket the business resides in, but the second requires some involvement. The main takeaway to instill in all small business owners is the importance of documentation. They may be thrilled at the array of things and the amount which they can deduct, but those potential tax breaks are useless without the proper evidence.

2. Know how your employees and vendors affect your taxes

There’s a crucial difference between these classifications for small businesses. In terms of taxation, hiring employees adds several new wrinkles to the filing process and places a lot more responsibility on the business to comply with regulations. Knowing when to classify someone as an independent contractor can save a small business a good deal of money, but improperly labelling an employee as one will create headaches and have severe consequences such as adjusted back taxes. The DOL’s pending overtime changes and the Affordable Care Act both have big implications in this area.

3. Know your tax breaks

As a business advisor for your clients, this is where you earn their trust the most: finding benefits of which they weren’t previously aware. For example, in Ohio there are serious tax breaks on a certain threshold of small business income tied to their adjusted gross income.

Not all states have legislation like Ohio’s, of course, so that expertise may take the form of knowing some specific deductions unique to your client’s industry or how they conduct business (e.g., environmentally friendly practices).

We encourage you to do research for your clients and keep an open line of communication. Be prompt in responding to their needs and be straightforward about what they can and can’t expect in the tax filing process. Paycor is here to help—check out our banker resource center to learn more.

Sources: Internal Revenue Service, Nolo.com, smbiz.com

More to Discover

2019 Compliance Changes

2019 Compliance Changes

It’s critical that you’re aware of all the tax changes that could affect your organization in 2019. This session will include frequently asked questions, an overview of federal and state withholding updates and trends we are seeing in areas of Tax and ACA compliance. Speakers: Arlene Baker and James Schwantes Arlene Baker is a Senior Compliance Analyst with over 40 years of payroll and tax experience. She’s a member of the National Payroll Reporting Consortium focusing on IRS compliance, and she’s been a member of the national and local APA for 25 years. In 2003, Arlene was awarded the Ohio Payroll Professional of the Year award. James Schwantes is a Compliance Analyst with a legal and tax background. Prior to working at Paycor in the...

Proposed Department of Labor Rule to Update Regular Rate Requirements

Proposed Department of Labor Rule to Update Regular Rate Requirements

In late March, the Department of Labor (DOL) announced a proposed rule to clarify and update the regulations governing the regular rate requirements under the Fair Labor Standards Act (FLSA). Unless exempt, an employee’s regular rate of pay is used to determine how much he or she should be paid for working overtime. The FLSA generally requires overtime pay of at least 1.5 times the regular rate for hours worked past 40 hours per week. The proposed rule details what forms of payment employers can exclude when determining an employee’s regular rate of pay. The cost of the following items would no longer apply: Tuition programs Discretionary bonuses Payment for unused paid leave Wellness programs, fitness classes, gym access, onsite...

FLSA Law Update

FLSA Law Update

What new cases and issues are arising regarding FLSA? We’ll discuss the change from a narrow interpretation to a fair interpretation of exemptions by the U.S. Supreme Court and what other courts and the DOL think of it. We’ll also discuss the recently reintroduced opinion letters and the possible increase in the salary level threshold. Speaker: Brian Dershaw BRIAN G. DERSHAW is a partner in Taft Stettinius & Hollister’s Labor & Employment practice group. Brian has broad experience serving as counsel for companies of all sizes. He has appeared in state and federal trial and appellate courts in discrimination, harassment, retaliation, wrongful discharge, non-compete, trade secret and contract litigation. Brian works closely with...

Understanding FMLA Regulations

Understanding FMLA Regulations

What is the Family Medical Leave Act (FMLA?) The Family and Medical Leave Act (FMLA) is a federal law that allows eligible employees to take up to 12 weeks of unpaid leave in any given 12-month period for certain medical and family reasons without fear of losing their job. Signed into law in 1993, the FMLA is designed to help employees balance their work and family responsibilities while promoting equal employment opportunity for men and women. Who is Eligible for FMLA? An employee is eligible for FMLA leave if he or she has worked for a covered employer at least 12 months, completed at least 1,250 hours of work during the past 12 months and worked at a location within 75 miles of where the company employs 50 or more people. Keep in...