Category: Business Accounting

History Behind State & Local Taxes

We can take paying state & local taxes back to the Founding Fathers. From the start of our country, until current day the Federal Government has always recognized the rights of the states to impose taxes on its citizens. When the Constitution was written, the ability to impose taxes was included; however the states retained the right to impose any type of tax except those that are clearly forbidden by the United States Constitution. That’s why Federal Taxes remaining mostly the same over the years while state taxes have the ability to fluctuate year to year as well as between states.

Monies from the state & local taxes are obtained through tax collection, fees and licenses as well as the money granted by the Federal Government to each of the 50 states. The income earned is put towards providing public services including public schools, police forces, health and welfare benefits and the operation and maintenance of state governments.

The most common state & local taxes are the personal income tax, corporate tax, sales, tax and real property tax. Personal income tax and sales tax were introduced in many states between 1930-40’s.

How to Register for State & Local Taxes

It seems that when it comes to taxes, things get confusing quickly. Federal taxes have enough ins and outs, but putting things right side up for a small business when it comes to state & local taxes could make you think twice about doing them yourself. If that’s the case though, we’ve got a few pointers for you:

1. You’ll want to find out the information that is recent and accurate for your state. Here’s a good place to start: Tax Info by State
2. You’ll want to register your business entity at these sites so you’re set up when it’s time to file your tax return or pay quarterly taxes.
3. You’ll want to gather all your financial paper work together before you start working on your return – need a checklist to get you started? Here you go.
4. If you sell a product or service that is taxable and you’re in  a sales tax state, you’ll need to set up a process to collect and pay the monies you collect. Not sure if you’re supposed to be collecting sales tax? No problem – every state except Alaska, Delaware, Montana, new Hampshire, or Oregon has sales tax. Remember, if you’re selling in more than one state you’ll need to be collecting and filing for sales tax in each of the states you’re making sales in.

In conclusion, navigating state and local taxes can be complex and overwhelming, especially for small business owners. Understanding the historical context and current requirements is crucial for compliance and successful operation. If you encounter any difficulties in registering or managing state and local taxes for your business, consider seeking the expertise of a trusted company like Vyde. Our team can provide the guidance you need to ensure that your tax obligations are met accurately and efficiently.

Frequently Asked Questions:

1. What are state and local taxes?
   State and local taxes are taxes imposed by state and local governments on individuals and businesses. Common types include income tax, sales tax, and property tax.
2. How do I know if I need to register for state taxes?
   If your business operates in a state with an income or sales tax, you likely need to register. Check your state’s tax authority website for specific requirements.
3. What documents do I need to register for state taxes?
   Typically, you will need your business registration documents, financial records, and identification information. Refer to your state’s requirements for specifics.
4. What if I sell in multiple states?
   If you sell in multiple states, you must register for and collect sales tax in each state where you have a tax obligation. This includes filing tax returns for each state.
5. How can Vyde help with state and local tax issues?
   Vyde offers expert services to assist with registering and managing state and local taxes, ensuring compliance and helping you navigate the complexities of tax regulations.

Many business owners feel that they are strapped for cash, would like to expand their business but don’t know how or how it would be possible.  One thing I learned growing up in a low-income household is that there’s always something you can do to change your status. Many times all it takes is to outline your (or your business’) strengths and skills, think outside the box, and network.  Instead of wishing for something great to happen, you’ll be able to find helpful and effective ways to make a little business luck of your own, from the items you include in your outline.

Case study:  From the beginning, I have paid for everything in cash for my business along the way.  It is a goal I’ve had to not borrow any money. This makes it tricky when I just started out, would look at the account and realize, I needed to cut costs, and certain invoicing software costs more than I can afford.  So…I went hunting for new invoicing software that was cheaper. I did find one that fit all the needs I had with a trial version. I tried it out and realized that it was a small business developer just starting out.  It had most things I needed and the developer would get back to me very quickly on questions I had. After a few months, I found I needed to upgrade to a higher level of this invoicing software because my business had grown.  I decided to talk with him about his business needs. This is something you can do with small businesses, but larger businesses are more set in stone. We ended up striking a deal. I test his software out, give him recommendations as I go as a user, he’d change anything I needed along the way and I’d get the product for free for my team for as long as that worked for both of us.

Top 3 ways to Change Your Business Luck:

• Affiliate Marketing
• Collaborative Partnerships
• Negotiations

How to get people to help you out:  If you like the sound of a deal like that, look for opportunities, and look for ways that your business can benefit not only customers, but other businesses you need things from.  You may have to sacrifice fancy bells and whistles, but you can save money and make a great partnership as well.

Affiliate Marketing: You may have heard this buzzword and be intrigued.   Many people get passive income by promoting products on a sales site like Amazon.  When customers buy the product through your specialized link, you get a “commission” or “affiliate percentage” off of the sale.  This can be done to a huge scale, or if you have a product that compliments your current business strategy (for example, I had a Martial Arts studio client with insanely popular YouTube videos.  They started selling costumes the martial artists would wear in the videos with the Amazon link and getting a share from those that would purchase through their link. *Note: You need a large following to make this profitable.

Collaborative Partnerships:  This takes a little more risk and “schmoozing.”  When you are looking to lower bills, think about what costs most.  Think about other ways you could possibly solve that problem that would cost less OR think about how another business you know of might be able to solve your problem.  In the ladder case, think about what you have that could benefit that company, and then approach them. I like to offer free Small Business Spotlights as a way to grow exposure and help small businesses get to know me better instead of slimy sales tactics and cold calls. *Note: Make a list of the ways you can benefit them ahead of time. Any size business can use this tactic.

Negotiations: These require the most guts but they can be the most beneficial if you think less like a used car salesperson, and more like a friend who wants to help and needs a favor.  When you find a company or person you want to help your business, money is not the only thing that speaks. Think about the needs that company/person has. Set an appointment to discuss a partnership.  When you go in, build the relationship, voice your concern, and then just like in the Godfather, “give them an offer they can’t refuse.” Well maybe not COMPLETELY like in the Godfather 😉 *Note: Make a list of the different outcomes you’d be okay with ahead of time. If they say no, find out why and be ready to solve THEIR problem.  Any size business can use this tactic.

Different levels of businesses need different levels of these strategies.  For more information on the specifics of how to make affiliate marketing, collaborative partnerships, and negotiations help your business succeed, here’s a previous article and an upcoming online free conference that will help!

Frequently Asked Questions

1. How can I expand my business when I feel strapped for cash?

Expanding your business with limited cash flow is possible by leveraging your strengths, thinking outside the box, and networking effectively. Start by outlining your business’s strengths and skills, and explore opportunities like affiliate marketing, collaborative partnerships, and negotiations. These strategies can help you maximize your resources without requiring significant upfront capital.

2. What is affiliate marketing, and how can it help my business?

Affiliate marketing involves promoting products or services on platforms like Amazon, where you earn a commission for each sale made through your specialized link. It can help your business generate passive income, especially if you have a large following. For instance, if your business has an online presence, you can promote products that complement your offerings and earn extra revenue without additional costs.

3. How can I use collaborative partnerships to lower my business costs?

Collaborative partnerships involve working with other businesses to solve mutual problems or reduce costs. Identify areas where your business could benefit from another company’s expertise, and approach them with a mutually beneficial proposal. For example, offering a Small Business Spotlight in exchange for discounted services is one way to create a win-win situation that reduces your expenses.

4. What are some tips for successful business negotiations?

Successful negotiations require understanding the needs of the other party and offering solutions that benefit both sides. Approach negotiations as a partnership rather than a transaction. Before negotiating, list possible outcomes that you find acceptable, and focus on building a relationship with the other party. Offer a proposal that addresses their needs while fulfilling yours, and be prepared to adjust your offer based on their feedback.

5. How can I find opportunities to make strategic partnerships for my business?

To find strategic partnership opportunities, start by assessing your business needs and identifying companies that could help meet those needs. Research potential partners and consider how your business can offer value to them. Networking events, industry conferences, and online communities are excellent places to connect with potential partners. Approach them with a clear proposal that outlines mutual benefits, and be open to creative solutions that can help both businesses thrive.

We’re accountants, so you’re probably thinking that this article is going to be completely biased towards hiring accountants, preferably us, to do your bookkeeping and taxes, right? Well, we’d love to meet you and talk to you about your business, financial goals, and so on. We’d also like to make your life easier by taking care of the day to day management of your books, and filing your business (and personal) taxes come tax time. But we’re going to be honest here and give you the pros and cons of hiring an accountant to take care of things, because we get it – we’re doing the small business thing too, and we know that straight talk, especially when it comes to business stuff, is exactly what you want and need.

Reasons to Do the Accounting Yourself

There are plenty of reasons to hire an accountant, but lets talk about the reasons you might not want to (despite the fact that it may not be in your budget at the moment).

• You can understand tax laws – if reading tax law is your thing, we totally get that. Our guess is that you’re either incredibly savvy (like us accountants are) when it comes to these things, or you’ve missed your calling and should be an accountant. But in reality, some people just seem to get this stuff- they might have taken some accounting courses in college and spending the time deciphering tax laws and codes doesn’t make them pull their hair out. If this is you – you might want to just save yourself the cash and take a go at it yourself.
• Numbers are your thing –  when it comes to bookkeeping, we’ve seen it all. If numbers give you warm fuzzies and talking spreadsheets, P&Ls, and Balance Sheets make your heart sing, then handling your monthly books and filing your taxes isn’t a bad idea.
• If your taxes are simple or unchanged – honestly, there are people out there that fit this category. If you’re not taking out business loans, running a large payroll, making investments, buying and selling property, or changing your marital status then doing your own taxes is pretty straight forward. If you’re trying to figure out if your taxes are in the simple or unchanged category and you’re not sure… read on.
• You don’t own property or investments- we briefly mentioned this above, but other investments might include Roth IRAs, 401(k), stocks, bonds, running rental properties, vacation homes, partial ownership in timeshares, and so on.

Reasons to Hire an Accountant

If you’ve read this far you obviously didn’t nod your head to any of the bullets above. Just to make sure we’ve got you headed in the right direction, here are some reasons hiring an accountant will be beneficial to you.

• Getting a handle on your money – everyone needs a budget, and many people have one, but few actually stick to the plan when it comes to their money. If you’re feeling that  keeping track of receipts, logging mileage and making note of expenses is kind of something that you do in vain, odds are that you don’t really have a handle on your money and there’s no clear plan for how to grow your business or manage your finances when you business does grow. An accountant can help with that – in fact they love it.
• You’ve started a new business – the best thing a new business owner can do is have a solid financial plan. We get that being business savvy and having entrepreneur mojo is what everyone talks about when their business is an overnight success, but  a solid plan will make that success that much more certain and its the best way to keep track of how your new business is faring. Hiring an accountant can get you off  to a good start and can answer questions about what type of business entity you want to be so you maximize your income and minimize what you pay in taxes.
• Life changes have happened this year- maybe you got married, divorced or had a child. Purchased a new home, changed jobs, or decided to quit or day job and take your side hustle to a full-time gig. These types of changes make filing taxes intricate. They don’t happen all the time, so the ins and outs aren’t something that you’re filing year after year – for us accountants, we see clients with these changes all the time, and making note of these things is just part of the job.

Today we’re talking tax deductions, what they are, what qualifies, and how it will help your small business. Grab your favorite beverage and a notepad and pen and get ready to spend the next 30 minutes getting expert advice on how to work deductions to your benefit.  Have a specific questions or don’t have time to watch the entire episode? Check out the show notes (with watch times) below.

What qualifies a deduction?

start watching 0:58

Ordinary – an expense that is common and accepted in your trade or industry.

Necessary – an expense that is helpful and appropriate in your business.

Basis for Deductibility

start watching 3:58

• Cash – when you actually purchase, that is the day when something becomes deductible (this the default and the most beneficial for the small business to use)
• Accrual – when you receive the expense, that’s the day that the expense becomes deductible
• Hybrid – a mix between cash and accrual

What Will I Save?

start watching 7:07

Tax Savings Formula

Deduction x Tax Rate = Tax Savings

Examples of What You Can Deduct

start watching 9:06

Vehicles (for business use)

Phone

Equipment (Tools, Camera, Computer, etc.)

Supplies (Office, Cleaning, Hardware, etc.)

Contract Labor

Business Meals

Travel

Insurance

Website and Software

Taxes

Marketing and Advertising

Insurance

For many, landing a job right out of college is a necessity. There are student loans to pay back, rent/mortgage  not to mention the general costs of living. Most need as many dollars in their pocket as possible to afford living, so saving for retirement often gets put off. We get it, bills are bills.  The one thing we don’t think about is retirement. But a 401(k) is a great way to invest right out the gate (or whenever you decide to start one really). Read on to find out why investing in a 401(k) is a smart move and how it brings more perks than just money for retirement.

Why Investing in a 401(k) is a Good Idea

• your contributions go in tax free – meaning you’re getting interest on every penny you put in rather than the amount minus tax
• because your contributions go in pre-tax, that means your taxable income right now is lower – that’s a win for sure!
• Many employers match your contribution – which means you get free money! Check with your HR department to find out the details so you can take advantage of this benefit if it’s offered.
• Saver’s Credit at tax time – you may or may not qualify for this one, but it’s worth checking into. With the Saver’s Credit,  you could get up to $1000 credit if you’re single or $2000 if you’re married filing jointly.

What You Need for Tax Filing

With all the perks, you’d think the downside of the 401(k) would happen come tax time – but there’s no additional paperwork for you. Your W2 reflects your 401(k) contributions. If you want to see how much you’re saving now, take a look at your W2 and you’ll see how much your taxable income is lowered by contributing to your 401(k).

Have questions about filing taxes? Want to know what other forms of investing would work for your current financial status. We’d love to chat with you – contact us here. 

Nothing is sure but death and taxes, or so the saying goes.  But what about when there’s tax reform? What’s sure about that. Ben Sutton takes on the Tax Reform as his topic for our first Vyde Webinar in 2018. Regardless of your political affiliation or whether or not you have a small business – this tax reform effects you! If you’re wondering what specific changes were included in the bill passed by Congress and how it will effect you and your small business come tax time make sure you watch this episode. It’s packed with useful information and gives a good starting point with how the changes might effect you.

If you don’t’ have 30 minutes to spare, we’d recommend taking a look at the show notes below – you’ll get a good idea what topics we cover in this episode. We’ve even included start times so you’ll be able to skip ahead or go back and rewatch those issues that you’ve got questions or are just looking to learn more about.

INDIVIDUAL TAX ITEMS

Standard Deduction – Doubled

start watching at 2:20

Personal Exemptions Taken Away

start watching at 3:40

Increased Child Tax Credit (added a new tax credit for children over 17)

start watching at 4:58

Mortgage Interest decreased to $750k

start watching at 6:40

Medical Expenses

start watching at 8:10

State and Local Taxes (SALT)

start watching at 8:55

Health Insurance Individual Mandate

start watching at 9:28

BUSINESS TAX ITEMS

New C-CORP Tax Rate

start watching at 10:30

Section 179 & Bonus Depreciation

start watching at 11:16

Entertainment Deduction Taken Away

start watching at 13:23

Qualified Business Income Deduction (QBI Deduction)

start watching at 14:56

Do you have a question?

regarding the recent tax reform we didn’t answer? We’d love to talk taxes or bookkeeping with you. You can get connected with us here.