The job of bookkeeping can be very time consuming. With no exceptions, every monetary amount that is paid or received must be recorded. Additionally, accuracy is of the supreme importance, making keeping the books in a quick manner a very bad idea. As business owners are often lacking in time, many choose to hire bookkeepers to keep company records well maintained.
Certainly bookkeeping is necessary and beneficial to business owners. According Pettir.com Proper bookkeeping can help businesses effectively manage cash flow, stay well-informed on company performance, and develop plans for the future. Moreover, accurate bookkeeping is required by both federal and local tax agencies.
A company's books are used to determine the amount of taxes the company must pay. They are also used in preparing tax returns. Sometimes, a tax agency may decide to investigate the information reported on a tax return or other type of tax-related document. In such cases, business owners are required to present accurate records for the tax agency's inspection. In the United States, for example, the Internal Revenue Service requires business owners to keep financial records that are complete and up-to-date. State and city tax agencies may require businesses to maintain accurate records as well. Failure to observe acceptable bookkeeping practices may lead to significant monetary fines, penalties, or in severe cases, imprisonment.
Showing posts with label Tax. Show all posts
Showing posts with label Tax. Show all posts
30.12.11
New IRS 1099-K Tax Form
The 1099-K is a new form for tax year 2011 that shows gross sales reported to the IRS. The IRS has introduced a 1099-K form requiring all Payment Settlement Entities (Credit Card providers including banks, PayPal, and others) to report all qualifying payments made to individuals during the 2011 calendar year. This includes payments by credit cards, debit cards, and stored-value cards (including gift cards).
To prevent duplicate reporting to the IRS, the 1099-MISC form from the small business owner must now exclude the payments types listed above; however, it must still include Cash, Check, EFT, ACH, and Direct Deposit payments.
Online sellers who have $20,000 or more in gross sales and 200 transactions or more in the calendar year will receive the 1099-K from their third-party payment networks such as PayPal. Sellers will need to check the information on the form to ensure the reported income is correct.
Sellers will also be responsible for documenting expenses that were associated with that reported income, so that they only pay taxes on the profit, not the gross sales as reported on the 1099-K form. That's important because the gross sales totals do not exclude expenses like transaction fees or returns, which are important deductions to a small businesses' net income.
To prevent duplicate reporting to the IRS, the 1099-MISC form from the small business owner must now exclude the payments types listed above; however, it must still include Cash, Check, EFT, ACH, and Direct Deposit payments.
Online sellers who have $20,000 or more in gross sales and 200 transactions or more in the calendar year will receive the 1099-K from their third-party payment networks such as PayPal. Sellers will need to check the information on the form to ensure the reported income is correct.
Sellers will also be responsible for documenting expenses that were associated with that reported income, so that they only pay taxes on the profit, not the gross sales as reported on the 1099-K form. That's important because the gross sales totals do not exclude expenses like transaction fees or returns, which are important deductions to a small businesses' net income.
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