Need a business loan? Here are the documents you’ll need

May 28, 2010

Despite the recent bank bailouts, credit is still tight for small business owners. How can you improve the chances of obtaining a bank loan for your small business? Specifically, you will need to gather documents to provide the lender with a complete picture of your situation.

 What documents do you need? The list may vary slightly from bank to bank, but typically you’ll be required to produce these five items.

 1. Business plan. Draw up a blueprint for business operations for at least one year. Demonstrate how you expect to use the loan proceeds.

 2. Cash flow projections. The lender will expect a detailed analysis of what you expect to earn and the manner in which it will be spent.

 3. Prior tax returns. For an on-going business, provide past returns for a minimum of three years. Owners of start-ups may substitute individual returns.

 4. Financial status data. The lender will likely ask you to list your main personal assets (e.g., home and cars) and outstanding debts.

 5. Credit rating report. A good credit history enhances your viability as a borrower. Obtain a credit report from one of the three major reporting agencies – Equifax, Experian, or TransUnion.

 The next step is to convince the lender that you deserve the loan. Be prepared to give answers to some basic questions, such as:

 * How much money do you need?

 * How much do you intend to finance personally?

 * How will you spend the money?

 * How do you intend to repay the loan?

 * What collateral do you have to secure the loan?

 * What type of expertise do you have in your business?

 * How will you proceed if you don’t receive the loan?

 Project an air of confidence. The lender will want you to show the leadership qualities that can sustain a business through both good times and bad. The interview is as much about you as it is about the business. For assistance in preparing your loan request, give us a call.

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Posted by gillilandcpa

IRS audit plans revealed

May 25, 2010

The IRS has announced 2010 audit plans, which include audits in the following three areas:

 * A three-year random audit program started by the IRS in 2007 will now be continued indefinitely. These random audits of individual income tax returns are used by the IRS to collect noncompliance data for adjusting general audit formulas and updating tax gap estimates.

 * Another audit target: tax returns claiming the homebuyer tax credit. The IRS expects to open 200,000 audits by the end of 2010 to address potential fraud in claiming this credit. The Service will also be watching the recapture of the credit via public databases of real estate sales. Generally, those who sell a home within three years of taking the tax credit must pay it back.

 * According to IRS Commissioner Douglas Shulman, the Service is planning to focus significant audit resources on individuals with millions of dollars in assets or income, including the business entities controlled by these high-income taxpayers.

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Posted by gillilandcpa

Oops! What if you make a mistake on your tax return?

May 21, 2010

What should you do if you find that you made a mistake on your tax return? Perhaps you find that you missed a big deduction. Perhaps you receive a late notice of income you earned. Or perhaps you should have itemized instead of taking the standard deduction. The answer is not to panic. Chances are you still have plenty of time to amend your return.

 The general rule is that you have three years to amend a personal or business return. Special rules may apply if you paid your taxes late, or are claiming certain business losses or carrybacks. You may have as long as seven years if you are filing to claim a loss on a worthless security.

 Many amended returns are filed each year. Form 1040X is used to show the items of income or deductions that you want to change or the different elections you want to make. A separate form must be filed for each previous year you want to change. You’ll have to file a paper copy to amend your return, even if you originally filed electronically or by telephone. If you want to change a corporate return, you file a Form 1120X, but the procedures are similar.

 If you owe additional tax because of the change, you should send a check at the time you file your amended return. The IRS will let you know if you owe additional interest or penalties.

 Please contact our office if you have questions about an earlier return. We can let you know whether you need to file an amendment and help you with any of the necessary paperwork.

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Posted by gillilandcpa

Form W-11 certification required for new hires

May 18, 2010

The HIRE Act, passed in March, provided tax incentives for companies to hire unemployed workers. One of these incentives is an exemption from social security payroll taxes for every qualified worker hired after February 3, 2010, and before January 1, 2011.

 A new IRS form is now available for employers to document this payroll tax exemption for hiring unemployed workers. Form W-11 (Hiring Incentives to Restore Employment Act Employee Affidavit) is to be filled out by the new hire, certifying under penalty of perjury that he or she was either unemployed or worked fewer than a total of 40 hours during the 60 days prior to taking the current job. The W-11 forms are not filed with the IRS; the employer must retain them along with other payroll records.

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Posted by gillilandcpa

IRS notifies employers about new tax credit

May 11, 2010

The recent health care reform legislation included a new health care tax credit for certain small businesses that provide health insurance to their employees. The IRS is in the process of mailing postcards to more than four million small businesses and tax-exempt organizations to make them aware of this new credit for 2010.

 The credit is generally available to small companies and tax-exempt organizations that pay at least 50% of the cost of single coverage for their employees. For tax years 2010 to 2013, the maximum credit is 35% of premiums paid by eligible employers (25% for tax-exempts).

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Posted by gillilandcpa

COBRA subsidy extended to May 31

May 4, 2010

The subsidy for COBRA health insurance premiums, which expired March 31, 2010, has been extended through May 31, 2010.

 COBRA is the law that allows former employees to keep their employer’s health insurance for a certain period if they pay the premiums. The subsidy provides that the government will pay 65% of the premiums, and the individuals who lost their jobs must pay only 35% of the premiums.

 The “Continuing Extension Act of 2010″ was signed on April 15. It provides a continuation of the 65% subsidy for workers who lose their jobs between September 1, 2008, and May 31, 2010. The subsidy is available for up to 15 months. Workers whose hours were reduced and who later lost their jobs may, in some cases, also qualify for the subsidy.

Leave a Comment » | May 2010 | Tagged: , , , | Permalink
Posted by gillilandcpa

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