2013 is coming to a close, so it’s vital that business owners be aware of the new tax laws in effect this year. Though some of the changes are positive, you will need to take these laws into account when figuring out your income tax withholding and estimated taxes. So, what are the changes?
Income Taxes Will Go Up For Some Small Businesses
If you have a small business with a pass through structure such as an LLC, S-Corp, partnership, or sole proprietorship, you might be affected by the increase in income taxes since whatever profits you take in translates into income.
Medicare Taxes Will Go Up
Along with the standard Medicare tax withholding of 1.45% employers have to withhold an additional .9% Medicare tax from the income of any employee that earns more than $200,000 per year. Unearned income is also affected by an increase in the Medicare tax rate.
Many Businesses Will Be Affected by 2013’s Tax Code Changes
If your business files a quarterly 104OES, then you will need to take these changes into account when determining how much to withhold every quarter. Review the IRS tax schedule for 2013 carefully to see whether or not your rates have gone up.
Home Office Deductions Are Easier to Claim
For 2013, the IRS only requires that a person claiming a home office deduction multiply the square-footage of their space by $5, with the maximum deduction being $1,500. This is instead of taking precise measurements and filling in 43 lines of information.
Tax Breaks for Small Business Have Been Extended Through 2013
As stated on the White House blog, 97% of small business will not see their income taxes go up, and will still be able to enjoy the following tax breaks:
- Section 179 Deductions
- Work Opportunity Tax Credit
- Research and Experimentation Tax Credit
For more information about business tax laws, visit the IRS website. At Tri-State Insurance Agency, we understand the financial obligations of Essex County, NJ business professionals. That’s why it’s so important to ensure that you have the appropriate insurance coverages to protect yourself against financial loss. For more information on our offerings, please contact us at 888.991-0526.