2011 Business Taxes Add Complexity

Still scrambling to prepare your 2011 taxes? One thing you don't have to worry about is a lot of changes in the income tax code for businesses. It was a fairly quiet year.

 The biggest news, of course, was the introduction of the 1099-K form. This must be filed by payment settlement entities, which are financial institutions that issue credit cards, as well as third-party payment processors like PayPal.

 If you accept payment using one of these entities and have processed $20,000 or more and at least 200 transactions in 2011, you should have received one, or will soon, and you must file it with your taxes like you would any other 1099.

Several forms and schedules have been altered to accommodate this. Only gross amounts will be reported, so you need to have an easy way to track transactions that could affect this total (like chargebacks).

 Other changes? A few, including:

• The 1099-B has changed. Brokers are now required to report the basis for transactions, which you'll enter on the new Form 8949 rather than on the Schedule D.
• The New Hire Retention Credit may affect some of your employees, if they've been kept on for at least 52 weeks. You would get $1,000 or 6.2 % of the newly-retained employee's wages for that year, whichever is less.
• The upper limit for the Section 179 deduction is $500,00 for the 2011 tax year. It goes down again for 2012.

You may be too mired in 2011 taxes to even think about your 2012 obligations. But you'd be wise to start thinking about them now. Year-round tax planning will minimize the drama of those dreaded IRS deadlines. Congress will undoubtedly be busy throughout 2012 and beyond, tweaking the tax code. So talk to us about making smarter tax-related business decisions in 2012.

Beth Bockenhauer is the owner of Beth Bockenhauer, CPA, a boutique accounting and CPA practice based in southern California. She started her career with five years of military service. She then worked for ten years as a small business owner, and holds a Bachelor of Science degree in accounting. Beth has worked in public accounting for the past seven years. For more information, visit www.bethbcpa.com