Are you the owner of a growing business, chances are you have business growing pains. You know that you need to wear many hats. Imagine your business has grown to the point that you can expand your services beyond the boundaries of your home state, Massachusetts in our case. You may need to file tax returns in the states you are doing business in. Here are a few things to look out for.
One thing a growing business should have is a reliable tax accountant. Here is a helpful article on how to interview a reliable accountant for your business.
IRS Bonus Depreciation
Bonus Depreciation can be a big tax savings as it allows you to write off 50% of the cost of certain capital expenditures in full the year you made the purchase. Buyer beware, Maine, Vermont, New Hampshire, Massachusetts, Rhode Island, & Connecticut do not conform to the IRS bonus depreciation deduction. This will create a difference between your Federal & State incomes. Depending on your tax situation, you may wish to consider a section 179 deduction instead to streamline your bookkeeping and can often provide more relief than bonus depreciation.
Vacation Rental and Business Tax Filing Requirements
New Hampshire has a business tax filing requirement. This requirement is not just for corporations. but also for Partnerships, DBA’s, and consulting work. Even your vacation home that you rent out on Air B&B may be required to file and pay NH business tax.
What is a Composite Return?
Composite returns can keep your business partners happy. What is a composite return? When you operate an S-corporation or Partnership with multiple partners or owners, the income from the company passes through to the owners. The owners have to file wherever the business filed. The solution for many is to have the S-corporation or Partnership file a composite return in all of the states where the owners are non-residents. The business pays taxes, usually at the corporate rate. However, it saves the owners & partners the trouble of having to file taxes in all those states.
Your Growing Business Can Have Fewer Growing Pains
Running a business requires many such choices in a minefield of 50 different states. Mind you there is an ever changing tax code from Washington, DC. If you are pondering the preponderance of tax strategies, feel free to give Alex Franch, BS EA at 781.849.7200 for assistance in planning your real-estate transactions. Worthtax has locations in Quincy, Weymouth and Dedham.
Sources and Resources for Your Business’ Growing Pains
- Business Versus Hobby
- 5 Accounting Tips That Will Make Managing Your Small Business a Breeze
- Start-Up Costs for a New Business
- Incorporating a New Business