Accounting Outside The Box

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HIRE a new employee, get the help you need and tax breaks you can feel good about!


The recently passed Hiring Incentives to Restore Employment Act (HIRE) gives employers two types of tax relief. Employers can receive an exemption from paying for hiring employees who meet a particular threshold for unemployment, and then earn a credit for retaining employees for a particular time. In other words, you can save money while getting the help you need to get the job done.

The tax exemption is for hiring unemployed workers. Employees that would qualify the employer for the tax exemption have worked less than 40 hours in the 60 days preceding the hire date. The employer would receive an exemption from the employer’s 6.2 percent share of social security tax on wages paid. For full information regarding this type of exemption, reference the following link –

The tax credit applies to employers who retain the employees hired under HIRE for at least 52 weeks. The amount of the credit is the lesser of $1,000 or 6.2 percent of wages (as defined for income tax withholding purposes) paid by the employer to the retained qualified employee during the 52 consecutive week period. For full information regarding this type of exemption, reference the following link –

For full information, you can go to .

If you have additional questions, contact your favorite accountant. That’s me, of course!

Small Businesses Can Take Advantage of Special Tax Breaks

In February 2009, the American Recovery and Reinvestment Act (ARRA) extended some special tax breaks to small businesses. Businesses need to act fast to take advantage of several of the tax breaks. The bonus depreciation and increased section 179 deduction are valid through the end of 2009. The bonus depreciation is 50% of the cost of new capital expenditures; which allows for faster expense recovery. The section 179 deduction was increased to $250,000 and enables a small business to deduct the cost of machinery, qualifying vehicles, furniture, and computer equipment. If you have been holding off making purchases of new equipment, now is the time to do so!

The second provision that can benefit small businesses involves the net operating loss carryback. The carryback has been expanded to five years from two years for small businesses. The deadline for this special provision is September 15, 2009, for small corporations with a calendar tax year and October 15, 2009, for individuals. It can pay to have a tax expert review your situation and see if tax refunds may be retrieved from prior years by carrying back a 2008 loss.

The third provision is the exclusion of a gain on the sale of certain small business stocks. An exclusion of 75 percent of the gain upon the sale of qualified small business stock is available. The exclusion only applies to qualified stocks purchased between February 17, 2009, and January 1, 2011. The stock must be held for five years to be eligible.

A fourth provision modifies the required estimated tax payments that small business owners may need to make. The estimated tax payments can equal 90 percent of either their 2009 or 2008 tax (whichever is smaller).

Another provision involves COBRA insurance. Employers that provide 65 percent of the COBRA premium to eligible former employees may claim a credit on the 941 quarterly payroll reports.
Other provisions involve discharge of business indebtedness, acceleration of certain corporate business credits, and the holding period for S corporation built-in gains.

Please see your tax professional to determine if you are eligible for any of these provisions and jump start your economic situation.

(Information obtained from the Internal Revenue Service Website)

Year-End Jitters and Saving Money By Hiring An Accountant Now

As 2008 draws to a close, business owners have more on their mind than the holidays. Taxes and tax planning need to be given some thought before you ring in the new year.  Early December is a good time to get accounting caught up and make some projections for the remainder of the year. If a business is new and does not have an accountant, now is a good time to find one. Your accountant can make recommendations on whether to purchase that new piece of equipment you want now or wait until January. Your accountant can also make suggestions on maximizing your expenses.

It is not too late for your accountant to do some tax planning for 2008. If you have not made any estimated tax payments, your accountant can determine if you need to make one or not and save you from paying unnecessary penalties and interest in 2009. Another reason to hire or touch base with your accountant now has to do with payroll.

If you prepare your own payroll tax reports throughout the year, you should consider having your accountant handle the fourth quarter payroll reports and W-2s. A lot of IRS and state tax notices can be avoided if steps are taken to make sure all the wages and taxes reported throughout the year tie into the final reports. Most business owners rely on software to generate the reports and put full trust that what has been printed from the software is correct. Unfortunately, that is not always the case and software is generally not dynamic enough to flag potential errors. In the long run, it can provide peace of mind and save money and many needless hours responding to notices if a professional processes your payroll reports at year end.

Allowing your accountant to get involved well before the taxes are due is always a wise decision. You will save money (and who doesn’t want to save money in this economy) and you will be able to have some quality time with your accountant before tax season makes that nearly impossible. I encourage you to contact your accountant or find a new accountant now before the year ends so you can leverage your budgeted accounting dollars for maximum use.