The Small Business Tax Help Blog

Archive for August, 2009

The basic requirements to set up a company, incorporation procedure, time-line and statutory compliance are some of the factors that need to be taken into account while determining the ease of setting up a company in a given jurisdiction. This article presented by www.guidemesingapore.com contrasts the company registration and related statutory requirements for two of the major countries in Asia namely Singapore and India.

FOREIGN OWNERSHIP
Singapore does not impose any restrictions on foreigners who wish to do business in the country. It allows 100% foreign ownership (i.e. shareholding) of a Singapore private limited company. Any foreign individual or a foreign entity can register a company in Singapore. No special approvals or formalities are required and the new entity can engage in any lawful business activity.
In India, foreign entrepreneurs can set up a foreign direct investment company with 100% ownership only in certain business sectors. Some sectors are subject to caps on investment limits and require prior approval from the Indian government, while certain other sectors prohibit foreign investment.

MINIMUM INCORPORATION REQUIREMENTS
In Singapore, the minimum incorporation requirements include: a local registered address; at least 1 local resident director (a Singapore Citizen, a Singapore PR, or a foreigner holding an Employment Pass, Entrepreneur Pass or Dependent Pass); a local resident and qualified company secretary (must be a natural person); a minimum of 1 and maximum of 50 shareholders (natural persons or corporates); and a minimum paid up capital of SGD 1.
To set up a company in India, foreigners must comply with the following requirements: a local registered address; at least 2 directors (need not be local residents); minimum of 2 and maximum of 50 shareholders (natural persons or corporates); and a minimum paid up capital of INR 100,000.
INCORPORATION PROCEDURE
Company registration in Singapore is fully-computerized and can be completed within 1 day via electronic means. There are only two major steps involved in company formation – name approval and filing incorporation documents.
On the other hand, incorporating a company in India involves several steps and is not only tedious but also time-consuming. It can take up to few months to complete all formalities. You must first seek government approval for setting up a foreign direct investment company in India. Directors must obtain a ‘Director Identification Number’ and ‘Digital Signature Certificate’ prior to company incorporation. Upon company name approval and filing incorporation documents, the Certificate of Incorporation will be issued.

INCORPORATION TIMELINE
Company incorporation in Singapore can be completed in a record time of less than 24 hours, with minimal formalities. By contrast, in India it can take anywhere between 2-3 months to incorporate a company.
ANNUAL FILING REQUIREMENTS
In Singapore, an Annual Return must be filed with Companies Registrar and Income Tax Return with the Singapore tax department each year. Small companies with revenue less than SGD 5 million and no corporate shareholders are exempt from filing audited accounts with the returns.
In India, companies must submit Annual Return along with audited annual accounts to the Registrar of Companies. No company is exempt from the audit requirement. Income Tax Return along with audited accounts must be filed with the Indian tax authority each year. Companies whose annual turnover is less than INR 4 million are exempt from the tax audit requirement.
CORPORATE TAXES

The corporate tax rate in India is 30.9% for taxable income up to INR 10 million and 33.9% for taxable income above INR 10 million. Companies are also subject to dividend distribution tax of 16.995% and capital gains tax of 10%, 15% or 20%. Services tax stands at 10.3%. The state level VAT ranges from 1%, 4%, 12.5% to 20%, while the central level sales tax stands at 2%.
Taxes in Singapore are significantly lower than India. Singapore charges a corporate tax rate of approximately 8.5% for profits up to S$300K and a flat 17% for profits above S$300K. There is neither a separate dividend distribution tax nor any capital gains tax. GST stands at 7%.
According to a recent tax comparison report issued by GuideMeSingapore.com that considers the case of a hypothetical start-up firm expecting to make an annual income of US$300k, the firm will have a total tax bill of only US$34k in Singapore while it would face an approximate tax bill of US$102k in India.
ON A FINAL NOTE
Based on the comparative analysis it is clear that Singapore offers a better business environment for foreign entrepreneurs, as compared to India. Some of the distinct characteristics of company formation in Singapore include: easy incorporation procedure which can be completed in less than 24 hours; liberal foreign ownership policy; minimal statutory requirements and an attractive tax regime.

Obama On Small Business: A Year Later

Dire predictions ring true. Too bad.

IRS Resources for Small Business Owners

Question: Do I Need To File Business Taxes For 2008?

I incorporated (LLC) my new business in California in 2008. There were no sales or business or anything to claim. Do I need to file taxes?

Answer: Yes you do. A corp or an LLC that elects to be taxed as a corp MUST file a return every year that it exists regardless of revenue, income, or loss. You also must file the CA return and pay the minimum franchise fee of $800.

France eyes 'Google tax' on internet ads

A proposed French "Google tax" on online advertising revenues to fund subsidies for musicians and newspapers drew criticism from the internet sector.

Fox News Business Interview With Leslie Eastman - 5/18/09 - Southern California Tax Revolt Coalition

In Florida, child support is a branch of the family law where it has been made obligatory on the part of the non custodial parent for payment of child support to the custodial parent or a child support agency. The main purpose for this payment is for the use of welfare and support of the child. It is also used towards providing the child with various other aspects ranging from clothing to school fees. The aim and mission of the child support has been kept with a view of taking care of those children of parents who are separating or have separated due to various reasons.

For getting child support, the first and foremost task will be to file a case with the Florida Department of Revenue (DOR) which is the body that is responsible for child support collection cases. Once you have filed the case it may take some time ranging from 6 months to a year for finalization of the issue. Once the case has been finalized and the amount of child support calculated and settled, it is obligatory on the part of the non custodial parent to pay the child support regularly.

However there may be cases when the non custodial parent has a job outside the State of Florida or they change their employers frequently, or may also be intentionally evading payment of child support. In such cases it may be difficult to get back child support. Under such circumstances the custodial parent may use some of the Florida child support collection services to ensure that the parent is located and they either make child support payment or suffer the consequences as per law.

The most common method for getting back the child support is withholding the income of the erring parent. The employer of the non custodial parent may use this method to automatically deduct child support payments from his or her paycheck just as income taxes are deducted and then directly to the child support agency for disbursement to the parent who has custody of the child or children.

In Florida in addition to withholding of income, other methods are used to enforce a court order for child support and collecting past due child support payments that may be due. Some of these methods are credit bureau reporting, establishing liens against personal or real properties, denial or suspension of license, revoking passports, intercepting tax refunds, any amount won through lottery, unemployment funds, or the workers’ compensation payments, garnishing bank accounts and using enforcements through court orders.

In some of the severe cases, where it has not been successful in obtaining child support payments using the enforcement methods mentioned above, it is the duty of the child support agency to ask the courts to take action against the debtor. The court may imprison the debtor or he or she may be required to submit a bond agreeing to pay the child support payments timely in future.

There are a number of agencies in Florida which are working as child support collection services. These agencies have a wide network all over the country. The main work of these agencies is to ensure effective child support collection and disbursement of the same.

His loss outweighs $1 million win

SHAMOKIN DAM — John W. Dailey is a heartbroken millionaire. Three days after he won a $1 million Pennsylvania Lottery prize, Dailey, of Selinsgrove, acknowledged that he should have been ecstatic about his good fortune, “but I’m not,” he said.“I should be jumping for joy and happy, but my wife and I are still in mourning over our son, a soldier who died over a month ago.”Their son, John P …

Jerusalem: the collapse in the Silwan Street is because of the Israeli excavations under the town and the area around …

Jerusalem, WAFA: The avalanche occurred last night, in the main Street of Silwan town, linking the town center and the Al Aqsa Mosque because of Israeli excavations beneath the town.

4 Steps to Getting Your New Business Started

An enrolled agent is a federally-authorized tax practitioner who has technical expertise in the field of taxation and who is empowered by the U.S. Department of the Treasury to represent taxpayers before all administrative levels of the Internal Revenue Service for audits, collections, and appeals.

But the more important question is not what an enrolled agent is, but rather what an enrolled agent can do for you. It’s very obvious that most people get anxious when someone even mentions tax preparation, so I want to get straight to the point.

Who They Serve

Enrolled agents serve as advisors and representatives to a variety of people or establishments filing taxes, including sole proprietorships, corporations, non-profit organizations, or any legal business entity, including international businesses, non-resident aliens, resident aliens and new immigrants.

They can prepare tax returns for an array of filers such as individuals, partnerships, corporations, estates and trusts. Because the taxation process changes every year, they must continually be trained on new strategies and procedures. Simultaneously, they are required by the IRS to have 72 hours of professional education every three years to retain their status as an enrolled agent.

What They can Offer

Tax preparations are not the only element that enrolled agents may be able to help you with. They can also help with IRS audit responses, collection matters, levies, liens and other IRS procedures.

We’re talking about trust, convenience and credibility. For some, it would be like we are handing our yearly migraine off to someone else to handle and it’s worth the price we pay for it. However, this process has also turned out to be quite a double edged sword with the potential omission of very important information. At that point it becomes a “blame-game” and things could get real ugly, real fast.

Trust and Insurance

It’s not that having an enrolled agent will solve all of the taxation problems and headaches you may have, but they are held to a higher standard than those who may be internally trained by companies or individuals that have no affiliation with the government. It’s can be a much more comforting feeling knowing that there is accountability between the US Department of the Treasury and enrolled agents.

However, even with the safeguards that Enrolled Agent Agencies and the government can set up, it is still a good idea to protect themselves as tax preparers from slip-ups that occur. Enrolled agents and agencies are able to protect themselves from litigation by purchasing professional insurance policies that protect them from accidental tax preparation errors.

TaxACT 2009 Raises the Bar Higher on Free and Affordable Tax Preparation Solutions

CEDAR RAPIDS, IA–(Marketwire – 01/07/10) – Given the number of tax law changes and a still-recovering economy, a quality and affordable tax preparation solution is more valuable than ever. TaxACT has answered the call with a wide range of new features and enhancements for 2009 products. 2nd Story Software released final versions of TaxACT 2009 federal and state products today. Preview versions …

Tax Audit