Small Business Taxes Made Easy, Fourth Edition

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Acknowledgments 

Introduction: A Letter from Eva Rosenberg to You, the Business Owner 

Lighten Up 

How to Use This Book 
Prologue: Update on the Latest Tax Laws 
1 SMALL BUSINESS CHECKLIST 
Three Indicators Will Predict the Success of the Business 
So What Do You Need to Do? 
The Checklist in To-Do Order 
Resources 

2 BUSINESS PLANS YOU KNOW AND TRUST 
Create a Business Plan 
Why You Need a Business Plan 
Real Business—Planned Losses 
General Benefits 
The Fine Line Between Success and Failure 
Exit Plans for Fun and Profit 
Let’s Not Fail Due to Success 
Knowing What to Do—When 
Outline of a Plan 
Rebalancing Your Business Plan for Tax Consequences 
Business Plan Books and Resources 
Resources 

3 ENTITIES: SELECTING YOUR BUSINESS STRUCTURE 
Decisions, Decisions, Decisions 
What Do You Want to Be When You Grow Up? 
An Overview of Certain Tax Considerations Related to Entities 
Major Issues Related to Entities 
Entities, in All Their Glory 
A Brief Word About Nevada, Delaware, and Wyoming
Corporations 
What About Nonprofits? 
Entities We’re Not Discussing 
All the Highlights in One Place 
Your Big Decision 
Resources 

4 RECORD KEEPING 
Keeping Records Is a Pain 
Types of Accounting Systems 
Doing It by Hand 
The IRS Says It All 
Fiscal Year 
Accounting Styles 
Records You Must Keep 
How Long Should You Keep Records? 
Glossary of Bookkeeping Terms 
Resources 

5 INCOME 
Money In, Money Out, Wave Your Hands All About 
A Capital Idea 
What Is Income? 
Timing of Income 
A Brief Explanation About “Accrual Basis” 
Sales Taxes Received—Are They Your Money? 
Income Rarely Reported 
The IRS Has a Cash Audit Guide 
Some 1099s Your Business Receives 
So What the Heck Is Income? 
Resources

6 COMMON DEDUCTIONS 
Rule of Thumb 
Universally Deductible 
It’s All About You 
Mixed-Use Assets 
Depreciation 
More Deductions Than You Can Imagine 
Resources 

7 OFFICE IN HOME 
The Song Is Right! Let’s Stay Home 
It’s a Red Flag; It’s Just Asking for an Audit 
Frustrating Change to the Law Affecting Employees 
An Attractive Change to the Law Affecting Homeowners Only 
Simplify, Simplify 
Inner Space 
Two Critical Reminders 
Prove It, Baby! 
What Are Office-in-Home Expenses? 
When You Can’t Use Office-in-Home Deductions 
Evaluate Your Options 
A Final Note—and a Final Story 
Resources 

8 VEHICLES: EVERYONE’S FAVORITE DEDUCTION 
Deducting Auto Expenses for Employees 
Deducting Auto Expenses for Business Owners 
Should I Lease or Buy? 
The Cons of Depreciation 
Give Yourself Credit 
Driving Home Conclusions 
Resources 

9 EMPLOYEES AND INDEPENDENT CONTRACTORS 
Who Is an Employee? 
Protecting Yourself from Independent Contractor Claims 
What Are 1099-MISCs? 
Payroll and Payroll Taxes 
Payroll Across Entities 
Hiring Family Members 
Paying Payroll 
Preparing Payroll: Checks, Journals, Reports 
Reporting Payroll 
Employee Benefits 
Employee Ownership and Stock Options 
Summing up Employees 
Resources 

10 OWNERS’ FRINGE BENEFITS, RETIREMENT, AND TAX
DEFERMENT 
Fringe Benefits and Reimbursements 
Retirement Plans 
Tax-Deferred Opportunities 
Using the IRS to Your Advantage 
Resources 

11 ESTIMATED PAYMENTS 
Estimated Payments Overview 
My Short Method 
Worst-Case Scenario 
Computing Your Estimated Installment Payments 
Paying the Tax 
Tips to Reduce Penalties for Underpayment of Estimated Tax 
Don’t Overpay Your Estimates If You’re in Trouble 
Resources 

12 SPECIAL CONSIDERATIONS FOR ONLINE BUSINESSES—
AND BUSINESSES THAT SELL ACROSS STATE LINES 
WWW = Who, What, Where 
What? I Thought There Was No Internet Tax 
Nexus 
Internet Sales Tax Issues 
Rents and Services—Domestic and Abroad 
Legal Issues on the Internet 
In the End 
Resources 

13 TAX NOTICES, AUDITS, AND COLLECTION NOTES 
Dealing with Basic Tax Notices for Individual Returns 
IRS Audits 
What Will Happen During the Audit? 
Negotiating 
Audit Reconsiderations, Appeals, and Tax Court:
Some Brief Words 
Owing Taxes 
How About Filing Bankruptcy? 
Summary of IRS Interactions 
Resources 

Epilogue: Some Final Words of Advice—and Resources to Rely On 

Index