If your company is registered with the State of WA’s Department of Revenue to be a “reseller”, it’s extremely important to distinguish between purchases your business makes with the intention of reselling them, versus purchases your business intends to utilize in your business.  If you intend to utilize the purchase in your business, for example a computer or furniture item, remember that you are required to either pay sales taxes at “source”, or alternatively pay “use” taxes, when you file your company’s combined excise tax return.  If your business is eligible to resell an item at the retail level, and therefore is not required to pay sales taxes at the wholesale level, make sure you apply for a “Reseller Permit”.  If you don’t understand the rules, or have any questions about how they specifically apply to your company, please contact us!

If you are a business owner it’s extremely important to understand up front whether those you pay for services are independent contractors, versus employees.  Don’t leave your business or yourself open to the possibility of having those you thought to be independent contractors reclassified as employees, but instead become informed as to the specific rules/requirements of both the State of WA and the Federal government.  Also, if you are a company owner, this is the time of year for you to determine whether those you’ve paid for services during 2011 require a Form 1099, and since the IRS now requires all business owners to declare on their 2011 income tax return whether or not they are required to file Form 1099’s, and if so, whether or not all required 1099′s were filed.  Make sure you can answer these questions on your annual income tax return with confidence!

Most business owners need some financial and general planning advice from time to time.  Unfortunately, there are what we like to call “insulting” firms out there, which approach businesses and their owners, falsely guaranteeing better performance and more profits.  The problem is that these firms, and the “insultants” they send out in the field, posing as consultants, are actually focused on bettering themselves and the companies they represent, by charging outrageous fees, for advice that at best might be considered common sense solutions.  So, if you are approached by someone like this, you should be very skeptical, and you should also let them know that you’ll be contacting your trusted accountant, and/or your financial advisor for advice instead!

Beginning with your 2011 tax return, all business and rental real estate taxpayers must disclose “did you make any payments in 2011 that would require you to file Form 1099” – yes, or no, and if yes, “did you or will you file all required Form 1099’s”? Also, if you engaged in the sale of any capital asset (e.g. securities and/or real estate) a new Form 8949 must be filed, along with Schedule D, to disclose the specifics of each transaction, as organized by its short or long term nature – read more .  Finally, make sure you disclose any foreign financial assets (e.g. cash, securities or contracts) if $50,000 or greater, on new Form 8938 – read more .

Now that tax season is underway, we have expanded our office hours to better serve you.  We are now open from 9 am to 6 pm Monday through Friday, except Wednesdays, when we are closed to the public.  As the year moves along, a couple of reminders – don’t be fooled by phishing type emails that appear to be issued from the IRS – just remember that the IRS never sends emails to taxpayers – read more.  Also, remember that at the start of each calendar year it’s important to prepare an updated Form W-4 for your employer, to be sure your withholding is adequate.  In order to help you prepare a W-4, use the IRS’s withholding calculator, which provides an estimate of your federal income tax withholding, so you can properly complete your Form W-4.

If you are a not for profit entity that intends to file a Form 990 with the IRS in the near term, you should know that the IRS has temporarily suspended the processing of electronically filed not for profit tax returns from 1/1 – 2/29/12.  You can still file a paper version of your entity’s return over this time period – read more.   In the State of WA, another type of  reporting that may affect your not for profit entity is the sales tax reporting of certain fundraising activities.  Generally speaking, the Department of Revenue now expects not for profits engaging in “amusement and recreation services” to collect and pay sales or use taxes – read more.

New this year is Form 1099-K, which will be issued by merchant credit card and
third party network companies, to report the gross amount of “merchant card
payments”, such as payments your business receives from VISA, Mastercard, etc., and from “third party network payments”, such as Paypal – please refer to the FAQ’s from the IRS website for additional information.  Also, if you are a company owner, remember that you may need to consider issuing 1099-Misc Forms for the 2011 calendar year to unincorporated service providers, and other qualifying recipients, by the 1/31/12 filing deadline.  Please refer to our summary of Form 1099 reporting requirements for additional information.  As always, remember to contact us if you have questions about these reporting requirements.

Remember that the State of WA minimum wage rate will increase to $9.04 per hour effective 1/1/12 (the federal minimum wage rate remains 7.25 per hour).  Also, the employee payroll tax “holiday” continues through at least the first 2 months of 2012, so that all wage earners will have 2% less withheld from their payroll checks, due to a reduction in the federal social security tax rate – read more.  Finally, at the beginning of each calendar year it’s always a good idea to complete a Form W-4, in order to update your income tax withholding for the coming year, especially if you’ve had a change in personal circumstances, such as marriage, children, additional itemized deductions, etc.

Now that the calendar year is rapidly winding down, if you have any questions about the year end accounting procedures that you need to implement for your company, please contact us.  We can also work with you to determine your 2011 income tax liability, while you still have a chance to do something about increasing your FIT withholding before 12/31/11.  During the holidays, our office will be closed on Monday the 26th of December, and Monday the 2^nd of January.  Thank you and Happy Holidays!

If you haven’t done so in awhile, remember to periodically review and update your beneficiary designations for your life Insurance, employer sponsored benefit plans (401k’s, 403b’s and defined benefit plans, etc.) as well as your traditional and Roth IRA’s, to make sure you’ve properly named your intended beneficiaries.   Otherwise, upon your death, the named beneficiary of your respective benefit will receive the asset you have designated, irrespective of what your will or other legal document declares.  Unfortunately, sometimes an ex-spouse, a deceased individual, or other unintended beneficiary is mistakenly named the beneficiary, and therefore receives the decedent’s benefit upon the death of the policy or benefit holder.