The Small Business Tax Help Blog

Archive for December, 2009

Question: Business Tax Question… ?

I live in a county (jefferson) where we must pay a “personal property tax” on all of our business equipment at the end of the year… Just 1 mile away is a different county (shelby) & there is no personal property tax. Right now our company’s official address is also our home address. If I were to go to a post office in Shelby county, get a P.O. box & change my company’s official address, would our business be taxed by Jefferson or Shelby county?

Answer: Alabama?

I thought that all counties in Alabama had a business personal property tax.

Either way....business equipment is taxed based on its physical location. The only way to avoid the tax would be to pick up the equipment and move it to a different county.

Using a PO Box as an address wouldn't do anything accept increase the likelihood of an audit and potentially get you charged with fraud.

Hundreds of Businesses Aren't Paying Taxes

Hundreds of businesses in Shelby County have not been paying state Business Taxes, and now the State Department of Revenue is cracking down.

Equality Man

Guest Contributor Dawn Ross: No shortage of new laws for 2010

Each year brings a new set of laws for employers to comply with, and this year is no exception. Below is a summary to assist employers in negotiating the maze of new laws and to give you a preview of what else to expect in 2010.

Income Tax Witholding

One of the key concerns for SMEs and business entrepreneurs who wish to establish a business is zeroing in on an ideal jurisdiction for their company incorporation. The crucial questions that concern company incorporation in any jurisdiction are: What are the statutory requirements to incorporate a company? What is the country’s foreign ownership policy? Is the incorporation procedure simple or complex, time-consuming or quick? What is the cost of company incorporation? What are the compliances that the company needs to adhere to after incorporation? Is it easy for foreigners to relocate to a country for running the company?

Singapore. A local registered address (commercial or residential but no PO Box). At least one local resident director (a Singapore Citizen, a Singaporean Permanent Resident, a person who has been issued an Entrepass, Employment Pass, or Dependent Pass) and unlimited maximum number of directors. Directors must be at least 18 years of age and must not be bankrupt or convicted for any malpractices. Directors must be natural persons. A local resident and qualified company secretary who is a natural person and not a corporate. A minimum of 1 and maximum of 50 shareholders. A director and shareholder can be the same or different person. A shareholder can be an individual or corporate.

Minimum paid up capital of SGD 1.00. No authorized capital required.
Malaysia. A local registered address. At least two local resident directors (a Malaysian Citizen or a Malaysian Permanent Resident, a person who has been issued an Employment Pass) and unlimited maximum number of directors. Directors must be at least 18 years of age and must not be bankrupt or convicted for any malpractices. Directors must be natural persons. A local resident company secretary who is a natural person and not a corporate. The company secretary must either be a member of a professional body prescribed by the Minister of Domestic Trade and Consumer Affairs; or licensed by the Companies Commission of Malaysia. A minimum of two shareholders and maximum of 50 shareholders. A director and shareholder can be the same or different person. A shareholder can be an individual or corporate. A minimum authorised capital of RM 100,000 and paid-up Capital of RM 2.00.

Company registration in Singapore can be completed within 1 day. In Malaysia it takes 7-10 days to incorporate a company. Singapore. Fees for company incorporation with Companies Registrar: SGD 315. Fees for company registration with tax department: None. Malaysia. Fees for company incorporation with Companies Commission varies depending on the amount of authorized capital and can range from SGD 400 to SGD 28,000. Fees for company registration with tax department: None. Singapore. Annual returns along with audited annual accounts must be filed with Companies Registrar within 1 month of the Annual General Meeting. Tax returns along with audited accounts must be filed with the Inland Revenue Authority of Singapore by 31 October each year.

Malaysia. Annual returns along with audited annual accounts must be filed with the Companies Commission within 1 month of the Annual General Meeting. Note: Exempt private companies (not more than 20 shareholders and shares are not held by another company) need not file audited accounts. However, they are required by law to maintain their audited accounts for inspection by the authorities at any given time. Every company must keep accounting and other records as are necessary to explain the transactions and financial position of the company and to allow a profit and loss account and a balance sheet to be prepared.

Singapore. A company shall appoint an auditor within 3 months from the date of incorporation, unless it is exempted from audit requirements under Section 205B, or 205C, of the Companies Act. Malaysia. Every company must appoint one or more auditors who must be approved auditors in Malaysia. Appointment of auditors must be done before the first Annual General Meeting.

Although it is relatively easy to set up a business in Singapore and Malaysia, there are certain key differentiators between both the jurisdictions for company set up. Singapore is known for its ease of company set up which can be completed within 1 day, as compared to the 7-10 days norm of Malaysia. Moreover, a Singapore company can be registered with a fee of SGD 315. This is significantly low when compared to the registration fee for a Malaysian company which ranges from SGD 400 to SGD 28,000 depending on the company’s authorized capital. Last but not the least; it is easier for foreign investors to satisfy the eligibility criteria for Singapore work passes as compared to the requirements for a valid Malaysian work visa. Thus, Singapore offers a better business environment for company incorporation as compared to Malaysia.

Taxpayer Advocate Pushes for Fewer Tax Liens

National Taxpayer Advocate Nina Olson said the IRS needs to do better than answering only 71 percent of the calls it receives from taxpayers, and it should stop filing tax liens against people who don t have the ability to pay.

TFN Convent Condemned part 1

SonicWALL Gives Network Managers More Control With Management System

SonicWALL, Inc. , a leading secure network infrastructure company, today announced immediate availability of SonicWALL Global Management System 6.0, the latest major release of GMS.

Track & Log Expenses With Your iPhone – App Judgment

Danbro, the award winning specialist accountancy firm for contractors and temporary workers, are advising agencies to be tentative with the way they manage their construction industry scheme (CIS) contractors.

The Construction Industry Scheme (CIS) sets out the rules on how payments to subcontractors for construction work must be handled by contractors in the construction industry. The majority of contractors under the CIS scheme are operating as self-employed, where the amount of tax deducted and paid to HMRC is just 20% of their gross payment if registered and 30% otherwise. The main issue on which the Government aims to clamp down, is the fact that many of these self-employed CIS workers should be classified as employees, with PAYE and NICs being due on all the payments they receive.

The government has announced that they may tackle this issue of false self-employment in the next budget, with the construction industry being hailed as the primary area for concern.

The main benefit for the worker operating as self-employed is primarily driven by the differences in tax and NICs, which are as follows;

Due to these tax differences, many CIS construction contractors have a financial incentive to operate as self-employed via service providers that heavily promote their self-employed business model. At present many agencies outsource the administrative burden of managing and making the necessary CIS deductions to service providers. They simply pay over a gross amount, relying on the service provider to correctly deduct and pay the CIS tax due to HMRC and then the net amount to the contractor.

However, the agency has to be aware that:

Following on from this, it is likely that if the new proposed legislation (which will classify whether a worker is employed or self-employed) comes into effect in April 2010, many service providers promoting their self-employed solution will have to re-assess their business model. Furthermore, if agencies have relied on such service providers to administer the CIS deductions and payments to HMRC for their contractors, and the service provider has failed to make these payments, then the agency would be liable for any tax shortfalls, which could be a considerable amount.

Danbro’s Gerry Gregoire explained, “Agencies need to be aware that it’s only a matter of time before changes are going to be made and they need to be ready to embrace them. Danbro have the systems in place to provide each worker with an effective accounting solution to fit their individual circumstances. Whether they set up under our Umbrella as an employee or operate as self-employed under our CIS Construct service, we can help.”

“It’s inevitable that providers promoting their self-employed business model will be affected by the proposed legislation. They no longer will be able to pigeon hole all construction contractors as self-employed, and as a result many will have to use an alternative solution. Such changes could leave agencies dealing with hundreds if not thousands of contractors mid contract, with no payroll solution to use. Now may be the time for agencies to assess their current practices, ensuring the risks identified are minimised if not eliminated.”

Tax Tips: The joys (and woes) of self employment

As the economy continues to stumble along with uncertainty, many are starting to look at the self-employment option as the way to get ahead.

Self Employment Tax Tips : 401k Limit for Self Employment Tax