Preparing for the Tax Man: Tips for Architects, Engineers, and other small business owners (guest post)
Miss me yet? No, I’m “not dead yet” (for you Monty Python fans). Nor have I fled to Hong Kong (a la Edward Snowden). And no, contrary to rumors, I am not working on a Middle Eastern documentary with Jon Stewart. Ahem. My MIA status was simply due to too much work. Good problem to have, right?
Regular posting will resume next week. In the meantime, since it is, once again, tax time for quarterly filers, I thought this guest post on tax issues particularly appropriate. Even if you don’t file quarterlies, pay attention now to save heart ache at the end of the year!
Looking for a few small-business tax tips? Consider this shortlist to help streamline your process:
1. Proper record-keeping: Year-round record keeping ensures that come tax time, your paperwork will be in order. Make sure that you save all documents relating to deductions in case your business is audited. Because tax credits and deductions change from year-to-year, keeping excellent records allows you to adapt while being able to reference previous years simply by checking your filing.
2. Keep two Acts in mind: Both the Small Business Jobs Act and the Patient Protection and Affordable Care Act (aka “Obamacare”) help you manage your tax burden. The first has over 17 tax provisions that decrease taxes for small businesses, all of which can win your business great savings. The Affordable Care Act allows small businesses to cover 35 percent of the health care premiums that they pay to provide health insurance to employees. In 2014, the amount will increase to 50 percent.
3. Avoid an audit: Audit traps are indicators to the IRS that they need to investigate your business dealings further. Avoid this scenario by keeping the following details straight:
Home Office Deduction rules: Know what qualifies a home office and make sure yours abides by the IRS definition before claiming one. Not all home-based businesses qualify for this deduction.
Properly classify your employees: Independent contractors and employees are not one and the same from an IRS perspective and should not be treated as such. Non-compliance with proper classification is a red flag to the IRS that your business may be attempting to avoid payroll taxes and can result in back taxes and penalties.
Miscellaneous deductions: Be cautious with your deductions, as a large amount of itemized deductions can raise suspicion. Be sure that you have all of your paperwork to support any deductions and claim them in a clear and specific manner.
Business and personal expenses do not mix: While Turbotax encourages freelancers to combine business with pleasure and write off the expenses, the IRS does not welcome this blended method and will scrutinize individuals who combine their business and personal expenses too often. Maintain separate bank accounts for your personal life and business and maintain meticulous records to ensure that your actions do not require further attention.
Whether you have an accountant or do your business taxes yourself, knowing the proper way to file is an excellent policy for a small and growing business. By maintaining clean records and staying aware of IRS policies, you can make the most of business deductions and enjoy a penalty-free tax season.
Chelsea Terris provides online content for Meticulous Plumbing, a family owned company located in Portland, OR. Chelsea is passionate about helping small businesses thrive.
Thanks Chelsea for the tax tips!
Have you been following the “fiscal cliff” debacle? Unless you spent the holiday season in a cave, the answer is probably YES. One interesting detail tucked away in the recently passed compromise legislation is the renewal of the Renewable Energy Production Tax Credit (PTC) for wind power, now extended through 2013.
The PTC awards a 2.2 cents per kilowatt hour tax credit for wind, geothermal and closed-loop biomass and 1.1 cents per kilowatt hour for other renewable energy technologies. This lasts for 10 years for most technologies, including wind. Alternatively, companies can request a lump-sum payment of 30% of the wind construction cost as a tax credit once the wind turbine starts producing power.
Also new for 2013, companies are allowed to claim the credit if construction begins before the end of this year. Previously, the facility had to be placed in service (i.e., operating) before the end of the year.
According to the folks at Green-Buildings.com, the extension of the renewable energy credit should boost wind energy construction, at least for the first half of 2013.
What is your opinion of the tax incentives for wind energy? Yeah or Nay? Share in the comment section, below.
Photo (c) berent.
Are you familiar with the North Carolina Energy Efficiency Alliance (NCEEA)? The Alliance is a non-profit organization (funded by a federal grant through the NC State Energy Office) which “aims to educate all stakeholders in the home building industry about the benefits of ENERGY STAR homes.”
Among the resources on its website, the NCEEA offers a downloadable 59 page white paper entitled “Affordable Passive Solar Handbook for North Carolina“, which includes 12 different house plans that incorporate passive solar concepts. Some of the plans are converted from a variety of sources including Habitat for Humanity; others are original designs.
Solar Features include:
- 6-11% of floor area is south facing glazing
- 2 foot overhangs
- slab on grade construction with incorporated thermal mass
- main living areas on south side of home
Affordable Features include:
- even exterior dimensions, to eliminate construction waste
- 900-1300 square feet footprints
- simple roof lines than can be built with trusses
According to the white paper, full sets of working drawings are available for free online at www.energync.net or www.ncenergystar.org. However, if you can find the applicable link at either of those sites, you are better than I am. I’m sure that if you contact the NCEEA they will point you in the right direction. (And if you do, please drop me a line as to where they can be found).
Have you reviewed the white paper? What do you think of their design concepts? Share in the comments below. And, if you are new here, be sure to sign up for regular email delivery of blog posts to your inbox so you never miss anything.
Photo: NCEEA Logo
For today’s Tuesday Tip we have a guest post by Drake MacDonald.
According to Drake, his brief experience in construction introduced him to the profession’s many shortcomings, and as an editor and writer for ConstructionManagement.net, he works to promote construction management education in the hopes of raising industry standards of organization, communication, and sustainability.
Today, many construction projects are aimed toward going green. Not only does green construction benefit the environment, it also helps people save money on energy bills. To someone who doesn’t know anything about construction management, green construction may seem daunting. Many associate going green with spending more money on construction. However that isn’t always the case. [Editor’s note: As previously discussed, sometimes costs are too high.] Some government incentives actually help people save money on green construction projects. Yet, oftentimes these incentives don’t go far enough. Here is a look at some of the incentives owners get for green buildings and what the government can do to improve them.
The biggest government incentives for going green are the tax breaks, which apply to both individuals and corporations. Individuals can enjoy a number of tax credits for going green. For instance, the Residential Energy Efficiency Tax Credit provides people with a tax credit for making everything from their windows to furnaces more energy efficient. The Residential Renewable Energy Tax Credit goes even further, by offering an even larger tax break to homeowners who build or remodel their homes to take advantage of solar or wind energy. Likewise, businesses can receive tax credits for showing a commitment to renewable energy as well as investing in new energy.
Beyond tax breaks, there are rebates, exemptions, grants and loans geared toward helping people with green construction projects. There are rewards for energy performance as well. There are also state incentives, including rebates for using renewable energy, which allow homeowners to further capitalize on building a green home.
Essentially, almost any green improvement an owner makes to his building will allow him to take advantage of at least one of these incentives. These grants and loans can help curb the financial stress that comes with a green construction project. Additionally, energy incentives save the owner money over the long-term, and that should be factored in to cost considerations.
While the government does an exceptional job of providing people with plenty of incentives to go green, it can do more to promote them. Many owners are not even aware that these incentives exist. In order to better advertise these incentives, the government should set up a universal Web site where those interested in green building can discover all available incentives for which they qualify. The government should also consider sending out mailings, as well as television advertising to promote its green building incentives.
The government should also focus on gearing more incentives to individuals. While several incentives for homeowners do exist, the majority of green building incentives are designed to benefit corporations. Furthermore, the government should remove all expiration dates on existing incentives. Many incentives have already expired or will expire in the coming months. Owners should be rewarded no matter when they make green improvements, and the elimination of incentives is likely to only deter green building from continuing.
Clearly the government has started a great incentive program for going green; however, it needs to continue, through both advertising and through making green incentives permanent. If the government is truly dedicated to promoting green building, it needs to make an effort to grow the program instead of phasing out incentives.
Melissa again: Do you agree or disagree with Drake? Drop Drake and me a line in the comment section below.
Photo by smiteme via Creative Commons license.
Marketing and sales are the life-blood of any business.
From time to time I run across really pertinent, well-written blogs dealing with the marketing aspect of construction businesses.
Today’s tip is to simply share another one with you– the Markup and Profit Blog by Michael Stone. Michael talks the marketing and numbers side of the construction business, so you can increase your bottom line.
If you want sensible, timely tips on how to increase your construction sales, check it out. I’ve added the blog to my blogroll, which is now located on its own page here.
Do you know of other marketing resources? Let me know. I’m always looking for valuable information to share with my blog readers.
Photo “Paid” by litherland via Flicker/Creative Commons license