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Are you Ready for Tax Changes in 2011? What You Need to Know

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2010 has already been a crazy year for federal taxes. There have been many new tax breaks for homeowners and businesses alike. According to this article, there are also looming questions for 2010 and 2011. Such as, will proposed tax cuts, such as 50 percent bonus depreciation on equipment purchases, an extension of the research credit, and an increase in the deduction for startup cost for small businesses be enacted this year? Amid this uncertainty, there are some new rules that will take effect in 2011 and they may impact your actions as a business owner for this year:

Reporting of credit card transactions
For tax years beginning after 2010, payment processors and third-party settlement organizations, including PayPal, are required to report to the IRS all credit card and similar transactions of payments to merchants on the new Form 1099-K, Merchant Card and Third Party Payments. There is an exemption from reporting for merchants who have 200 or fewer transactions, or proceeds of $20,000 or less for the year (the “de minimis rule”).

What to do now: Review your record-keeping practices to make sure your information on income receipts will square with the information being reported about your credit card transactions to the IRS.

W-2 reporting
Employers are required to report on employee W-2 forms the value of health insurance, starting with W-2 forms for 2011. Reporting is required whether premiums are paid by the employer, employee, or a combination of both.

What to do now: Make sure that you track health care premiums for the year. You will want to have a scalable and efficient accounting software solution is place to ensure accurate tracking.

SSi Consulting is a Gold-Certified partner serving customers in the Mid-Atlantic area offering hosted Microsoft Dynamics® GP and Microsoft Dynamics® SL at very low monthly rates. Whether you need accounting software, job cost accounting, help with your wholesale/distribution supply chain, or business management solutions for non-profits, SSi Consulting is your total solution provider.

By Bill Aiton with SSi Consulting, Mid Atlantic Microsoft Partner

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