Archive for the ‘Small Business Finances’ Category

It is important not to disregard a wage levy from the IRS or you may find your company liable for the employee’s delinquent taxes. Recently, a corporation that failed to obey an IRS wage levy on one of its employees was liable for the employee’s delinquent taxes and for a penalty under Code Sec. 6332(c)(2).

The Texas Comptroller’s Office has new information for 2011 franchise tax filing, including the Franchise Tax Web Service, passive entity reporting, apportionment, temporary credit election, extensions and mandatory electronic funds transfer (EFT), and combined group extensions. (Texas Tax Policy News 4, 04/01/2011.)  WebFile is still a free service.

Retailers gained a major victory this month when the IRS announced that proceeds from the sale of gift cards does not have to be counted as taxable income until they are redeemed even if they were sold through a subsidiary or franchise.

Retailers who issue gift cards in place of refunds may also defer any income associated with the original sale.

This means that any money received as the result of the sale of gift cards need not be declared as long as those gift cards can be redeemed for merchandise from the company that issued them.

As a reminder, you should check all the facts with your Accountant or CPA.

Sources: National Retail Federation, Accounting Today

Congress just passed changes to the Federal Insurance Contributions Act (FICA) reducing the employee Social Security tax rate by two percentage points to 4.2%. Similarly, for self-employment income for tax years beginning in 2011, the Act reduces the Social Security tax rate under the Self Employment Contributions Act (SECA) tax by two percentage points to 10.4% percent. (Act Sec. 601)

If you are an employer, all your employees will receive a 2% increase in their paychecks on wages paid in 2011. This will cost you, the employer, nothing but there are some potential bookkeeping hassles.

As a result, for 2011, employees will pay only 4.2% Social Security tax on wages up to $106,800 and self-employment individuals will pay only 10.4% Social Security self-employment taxes on self-employment income up to $106,800. The maximum savings for 2011 will be $2,136 (2% of $106,800) per taxpayer. If both spouses earn at least as much as the wage base, the maximum savings will be $4,272.

If you use a software package like QuickBooks to do your payroll, you may have to manually override the employee portion of the Social Security if the software update is not available by the time you pay your first wages in 2011. If you are one of the many small business who manually calculate payroll, you will have a few extra steps to figure the amount of your payroll tax deposits.

Employers must make a reasonable effort to contact an employee to prevent wages from being abandoned and remain liable for unclaimed wages until paid or turned over to the state.  Why the state?  Unclaimed paychecks or paychecks returned by the post office as undeliverable are governed by state law.  State laws vary from one to seven years.

In the state of Texas, unclaimed wages must be reported to the state annually and are “unclaimed property.”  According to the State of Texas Comptroller’s website:

The Texas Comptroller of Public Accounts is responsible for administering the Texas Unclaimed Property Program. Property is turned over to the Comptroller’s office annually when the owner’s whereabouts are unknown and the property has been inactive on the books of the reporting company after the appropriate abandonment period has expired.