Section 179 Deduction

A company should consider leasing rather than buying certain business equipment. Leasing may offer increased tax advantages. Under Section 179 of the IRS Tax Code a small business may deduct the full price of leased or financed equipment, according to Section179.org. In some cases the deduction will be more than the total loan or lease payments for the year. Most equipment qualifies for the Section 179 deduction. However, the equipment must be leased within dollar amounts specified by Section 179.
Being aware of federal tax laws can help a business make wise decisions regarding workers and managing business assets. The more a business owner knows about taxation rules, the more the company will be able to save money and maximize assets and resources.


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Section 530

If a company wrongly classifies a worker, it may still avoid employment tax under Section 530 of the Revenue Act of 1978. The IRS auditor will provide written notice of these provisions. Section 530 relieves business tax but not worker’s employment tax liability. The consistency test and the reasonable basis test are the two requirements for Section 530.
The consistency test requires a business to have treated all workers in similar jobs in the same manner as workers in question, according to the IRS website. The reasonable basis test requires that a company treat the worker as a subcontractor due to relying on a court case or ruling, a prior IRS audit, a long-standing industry practice, or any other reasonable basis for treating the worker as a subcontractor.
If a business is unsure about whether it should classify a worker as an employee or a subcontractor the company can request an IRS opinion on your situation, according to the IRS website. A Form SS-8 may be filled out and sent to the local IRS office.


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Worker Classification

Correctly classifying workers as employees or independent contractors may help avoid future conflicts with the Internal Revenue Service (IRS). If the IRS finds a worker has been misclassified, a company may have to pay for missed employee tax benefits, according Tax Resolution University. The IRS loses over $14 billion per year due to underpaid employer taxes. Some businesses may incorrectly classify workers to avoid paying for health insurance and 401K plans. Other business owners may simply be ignorant.


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Subcontractors vs Employees

There may be tax advantages in using subcontractors rather than employees for skilled or semi-skilled services. Using subcontractors rather than employees can shield a business from employer paid taxes, such as Social Security and Worker’s Compensation Insurance, according to Financial Web.


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Timely Tax Payments

A business can save money by paying certain taxes on time. Many states will award a 3% to 5% discount for timely payment, according to Financial Web. Some of these taxes may include value-added taxes or state sales taxes.


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Small Business: Loans and Grant & Financing FAQ's

Financing FAQs 

Starting a business can be daunting, as you wonder how do you put yourself in the best position to succeed. The answer is simple: you begin with solid information. Check out some of the frequently asked questions below to get yourself off to a solid start. 

Can I use a grant to start my business?

Generally, no – despite what you may have heard, it is rare that a for-profit business would receive grant money to start or expand a business. 

While there are a few grants available to small businesses, they are largely directed towards accomplishing specific priorities identified by the federal government or a state government agency.  For example, some states provide grants for expanding child care centers; creating energy efficient technology; and developing marketing campaigns for tourism. These grants are not necessarily free money, and usually require the recipient to match funds or combine the grant with other forms of financing such as a loan.  

How can I find a legitimate loan or grant?

There’s a sea of misinformation about business loans and grants on the Internet. Use Business.gov’s Loans and Grants Search Tool as the starting point for finding legitimate financing programs your small business might be eligible for. Keep in mind, for-profit businesses are rarely given government grants and should look to low-interest loans or venture capital financing if you’re wanting to start or expand a business. 

Grants.gov is also helpful for finding thousands of federal government grant programs, or the Catalog of Federal Domestic Assistance, which offers a comprehensive database of grants, loans and other assistance programs available from federal agencies.

I have bad credit - can I still get a small business loan?

With the state of the economy and lines of credit being significantly scaled back or eliminated altogether, loans have become increasingly hard to obtain - especially if you have poor credit. Luckily, the government has designed federal and state loan guarantee programs for people unable to obtain financing through traditional lending channels.  In many of these programs, the loan proceeds can be used for most business purposes including working capital, machinery and equipment, land and buildings, leasehold improvements, and debt refinancing. Before you apply for a loan, you should pull together the basic documentation you will for your application.

What happens if I default on my loan? 

While it’s not the end of the world, defaulting on your loan will definitely have some immediate effects like a drop in your credit score, increased interest rates, and foreclosure of property - and it will definitely make it more difficult to find another loan (should you need to in the future). 

If you are about to default on a loan, you may want to consider some of the tips offered in the Loans and Grants Community, like negotiating new terms with your lender, considering government debt relief options, or liquidating some of your business assets. Also, if your business will make it or break it depending on a loan then you may want to try looking into other methods of funding your business. 

Source: http://community2.business.gov/t5/Small-Business-Cents/Loans-and-Grant-amp-Financing-FAQ-s/ba-p/38620?cm_mmc=GovDelivery-_-101310-_-weekly-_-community