1.
Why and how do you incorporate?
There
are two main reasons to incorporate. The first reason is your business
may benefit from the “limited liability” the corporation
provides you. This means if there is a liability claim against the
corporation, the shareholders personal liability is limited to their
investment in the corporation.
The
second reason is the possible tax savings. The IRS has stated corporations
need to pay shareholders that work in the business a “reasonable”
salary. In most cases a “reasonable” salary is lower than
what the owners were making as sole-proprietors and paying self-employment
tax on. The tax savings would amount to 15% of your company’s
net earnings over and above a “reasonable” salary paid
to the shareholders working in the business.
2.
When are estimated taxes due?
April
15
June 15
September 15
January 15
3.
When are 2290 payments due?
August
31
4.
What do estimated taxes include?
Personal
estimated taxes are usually paid quarterly to both the Federal and
any taxable States. The taxes need to be paid quarterly to avoid penalties
and interest when the tax returns are filed. The Federal estimated
taxes include both income tax and self-employment tax (Social Security
Tax). The State estimated taxes are paid to any taxable state in which
you resided and/or had earned income during any given year. In most
cases, there are two ways to avoid paying penalties and interest for
not paying enough in on your estimated taxes. One is to make sure
your estimates are equal to or greater than 100% of your previous
year’s total tax liability. The other is to make estimates totaling
90% or more of your current year’s total tax liability.
5.
Should I lease or buy?
This
comes up almost daily and is never easily answered because of all
the variables involved. In summary, when you lease a truck the entire
lease payment is taken as an expense when paid. When you buy a truck,
an expense is taken for depreciation and for interest paid on the
loan. After much analysis and discussion we have found if you take
the same truck and keep it for the full term of the contract the cash
out-of-pocket as well as the deductible expenses are approximately
the same. A purchase is a lot more flexible in regard to first year
depreciation and trading or selling the truck prior to the end of
the contract. Under a lease you have to keep an eye on the value of
the truck versus the payoff amount prior to any trade or disposal
because of high residual amounts at the end of the lease. Again, each
scenario is different and needs to be analyzed before making the lease
vs. buy decision.
6.
Can I deduct "deadhead" miles?
In
most cases all expenses for “deadhead” miles are already
being taken. Since 100% of the expenses for the operation of the truck
are usually captured and deducted on the tax return, the “deadhead”
miles never need to be kept track of.
The
IRS does not give an allowance for “lost revenue” or “deadhead”
miles. For example: if the truck is paid for 1000 miles and the truck
is actually driven 1200, there is still no extra deduction for those
unpaid miles. As long as you are taking 100% of the fuel, repairs,
supplies, etc. it takes to drive all miles put on the truck you are
taking all you are entitled to under IRS rules.
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