cheap true religion shorts Terrible Tax Blunders f

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ording to Internal Revenue Service statistics, more than three hundred thousand new S corporations appear each and every year.
The popularity of S corporations should not surprise, however. S corporations provide two big tax savings to small business owners. First, they typically don't pay federal or state corporate income taxes.
And, second, S corporations often minimize the payroll taxes that S corporation shareholder-employees pay because only amounts the corporation designates as wages get taxed for Social Security and Medicare tax purposes. Unfortunately, S corporation owners make some common tax blunders--blunders that can destroy or delay the tax savings the S corporation option should deliver.
Blunder 1: Late Sub S Elections
The first blunder? Thinking you can make the S election at the end of the year. An S election needs to be made early in the year or before the year even starts in order to be effective for the year. Specifically, you should make the S election either before the year starts or within 75 days after the start of the new year.
For a business whose tax year begins on January 1, the election needs to be made by March 15. If a new business begins life mid-year on, say, May 23, the 75-day counter starts ticking down from that date.
Note: The IRS does provide a mulligan for people who miss the election deadline. Taking this mulligan, however, requires that you strictly follow some "late S election relief" procedures. Accordingly, you probably want to get a CPA's help with this.
Blunder 2: Forgetting Shareholder-employee Payroll
When you make a successful S election,[link widoczny dla zalogowanych], the Internal Revenue Service sends your business an approval letter. That letter uses scary--almost threatening language--warning you to pay reasonable compensation to shareholder-employees.
Despite the warning, S corporations commonly forget to do the formal payroll thing--including regular payroll checks and tax deposits,[link widoczny dla zalogowanych], quarterly payroll tax returns, and year-end W-2s. That's often a huge mistake.
If you don't do payroll, the IRS will catch up with you. At that point, the IRS will re-categorize all of the shareholder-employee draws as wages. This re-categorization may trigger thousands of dollars of back taxes, penalties and interest for each year and for each shareholder-employee for whom you forgot to do payroll.
Accordingly, you got to do payroll. Period.
Blunder 3: Bad Borrowing Habits
Ironically, your bank often helps you make another common S corporation tax blunder: The bank will loan you money to buy some piece of equipment--or perhaps a business vehicle.
But--and here's the mistake--the bank often loans the money to your S corporation. Instead, the bank should loan the money to you personally and you should then re-loan the money to your S corporation.
An awkward problem exists when a business loan gets used to fund an S corporation purchase. You get to write off your purchase only when you have at least that much basis in the S corporation. Yet you only get basis from money you've personally invested in or personally loaned to the corporation.
You don't get basis from a loan made to your S corporation for,[link widoczny dla zalogowanych], say, a new delivery vehicle purchased for the business. Without basis, you often won't be able to deduct the purchase on your tax return.
This S corporation tax mistake gets made all the time--often when S corporation owners are making last minute, year-end asset purchases to drive down their income.
Fortunately, you can solve the problem pretty easily. Make sure you directly borrow the money for asset purchases and then do a back-to-back loan to your corporation.
This back-to-back loan shouldn't increase your risks. You'll probably have to personally guarantee the loan anyway, right?
Blunder 4: Triggering the BIG Tax
Typically, S corporations don't pay