June 2010

•  June 15th - Second estimated tax payment due.Your check to the United States Treasury should be accompanied by Form 1040-ES.  If you are making estimated payments, you should have received payment vouchers when you picked up your 2009 tax return.  If you need additional copies, please contact us.  If you filed for an extension, have not yet filed your 2009 taxes, and foresee having tax liability in 2010, please call us so that we can prepare you a voucher to submit with your payment. 

• June 11th - Ross Tax & Accounting Co. moving day.  We will be shutting down our computers late Friday, June 11th and will be up-and-running in our new location on Monday, June 14th.  Please make note of our new physical address: 6701 Carmel Road, Suite 114, Charlotte, NC 28226 

Starting A Business? Avoid These Hiring Mistakes

Challenges that merely annoy an established firm often capsize a start-up company.   This can be especially true in the area of staffing.  A big corporation can survive hiring mistakes, however if a fledging firm was to commit the same mistake it may spell disaster.  After all, if a small business employs only six people, one wrongly hired employee will make up a sixth of their work force.  That person's incompetence or poor skills can have a severe affect on the firm's bottom line.  Therefore hiring the correct people can make a world of difference in the success of your small business.

Below are the the three most common hiring mistakes made by start-up companies today:

Mistake 1: Hiring Friends & Family -  While this strategy may work in some circumstances, hiring friends and relatives more-than-often spells trouble.  Even if it's subconscious, friends and family members often expect to be treated differently than other employees.  Such a double standard, whether real or perceived, can hurt morale and productivity.  As a general rule, hiring decisions should focus solely on the needs of the business and the applicant's qualifications.

Mistake 2: Trusting in a Handshake - Employee agreements should always be laid out in writing.  As humans, it's natural for our memories to fade and expectations to fluctuate.  Therefore, just as with other important aspects of your business, employee arrangements should be put down on paper.  This can be as simple as drafting employee offer letters that cover compensation, rights to intellectual property, and bonus arrangements - or as complex to employee handbooks that clearly state the responsibilities of the firm and its staff.

Mistake 3: Bringing in a Partner for the Wrong Reasons- Before selling part of your business think long and hard about the risks involved.  Sure, you might save money in the short-term but is it worth surrendering a portion of your company (which includes control over important management decisions) to someone else?  Before you make this decision, carefully evaluate what this partner will contribute.  Are there other possible ways to fill gaps in your team?  A bad partnership may end up in the business equivalent of divorce court ... so choose wisely.

For assistance with any of the issues facing the start-up of your business, give us a call.

Are Wedding Bells In Your Future?

If you are getting married, or have just tied the knot, you not only need to consider the implications of unifying your finances, but also the effects that marriage will have on your tax situation.  For starters, your tax filing status will change.  Once hitched, you will have the choice of either filing a joint return with your spouse or filing a separate return as a married person. 

Filing a joint return most commonly gives you the largest tax savings.  Both spouses' income and deductions for the entire year will be combined and filed on one tax return.  Any deductions that are subject to limitations will be determined based on the combined income of both individuals.

In some cases, filing a separate return may save you taxes.  A spouse who has high medical expenses or miscellaneous itemized deductions and low income, for example, might be better off filing a separate return.  However, you may not claim certain credits and deductions that are available to joint-filers (such as the child & dependent care credit, the earned income credit, or the education credits).  Filing separate tax returns could affect the taxability of your social security benefits and the deductibility of rental losses.

The tax law has been changed to eliminate some of the additional tax that married couples once paid - this is commonly referred to as the "marriage penalty."  Once you marry, you will need to complete a new Form W-4.  This is a good time to review your financial situation, evaluate your new-combined income, and redetermine how much you each want your employer to withhold from your pay.    

Be sure not to miss other limitations that come into play once you get married.  For example, your IRA contribution may not be deductible if your spouse is covered by a retirement plan at work and your income exceeds certain limits. 

For details and guidance please do not hesitate to contact us.  The last thing we like to see on April 15th are newlyweds surprised with tax bills due to not planning in advance. 

Taxes & Summer Jobs

Is your child looking for a job this summer? If so, you both may have questions about taxes. Here are three common concerns.

* Is a tax return required? The answer depends on several factors, including the total amount of income received. For instance, if wages are the only source of income, your child can generally earn up to $5,700 during 2010 before a federal tax return is necessary. However, unless your child can claim an exemption from withholding, a return may be required even when wages earned are lower than the filing requirement. That's because filing is the only way to claim a refund of overpaid taxes. In addition, self-employment income, tips, interest, dividends, and stock sales can affect the filing requirement.

* Can my child open an IRA? Anyone under age 70½ who has earned income can contribute to a traditional IRA. There's no age restriction for Roth accounts, though the amount of the contribution phases out at higher income levels (starting at $105,000 for single individuals in 2010). The maximum standard contribution for 2010 is $5,000.

* Are there any tax breaks if my child works for me? You can take a business tax deduction when you pay a reasonable wage for work your child performs in your business. If your business is a sole proprietorship or a partnership you and your spouse operate, and your child is under age 18, you don't have to pay social security, Medicare, or federal unemployment taxes. The child's wages are subject to income taxes.

If you have other questions about the tax implications of a summer job, contact us.

Are You On Twitter?

Are you, or your business, on Twitter?  If so, we want to follow you.  Click the bird to left to follow us and we will follow you back. 

For those of you unfamiliar with Twitter, we have found it a great tool for sharing relevant business information and we recommend it for building relationships within your market. For a quick lesson watch "Twitter in Plain English" and then join as we continue to tweet fun & useful articles & information.

This newsletter provides business, financial, and tax information to clients and friends of our firm. This general information should not be acted upon without first determining its application to your specific situation. For further details on any article, please contact us.