Which Business Structure Should I Be?

One of the most asked questions I get is "should I set up my business as a Limited Liability Company (LLC) or an S-Corporation (S-Corp for short)?" And the short answer is - it depends.

Depending on who you ask, an attorney or an accountant, you will get different opinions. So let me equip you with a few facts to help weigh-in on your decision.

Limited Liability Company

An LLC is easier to set up. Most states allow you to complete and file an Articles of Organization and you're all set. This is after you have done a name search to ensure that no other business is operating in your state under the name you chose. Most states, if not all, have a generic version of this form on their website but you can also have your lawyer draft one up for you if you want it contain more detail.

An LLC allows you to allocate your profit and loss between owners more easily. In a LLC, these percentages can be allocated based on the owners participation, or lack of, in the business. With and S-Corp, this allocation is based on their share of stock in the business. It doesn't matter if they were active in the business or not.

S-Corporation

As an S-Corp, you can put yourself, as the owner, on payroll. Not only do you get the tax deduction on your return, but this allows you to have federal and state taxes withheld from your paycheck and paid on your behalf. This can help reduce your tax liability at the end of the year.

As the owner of an S-Corp, you are not liable to pay self employment tax. Self employment tax is the Social Security and Medicare portion of taxes that solopreneurs and the self-employed have to pay for themselves. If is the equivalent to the Social Security and Medicare withheld from your paycheck and paid on your behalf if you were on payroll.

Now if your business is already an LLC, you can be taxed as an S-Corp. This means that a simple form can be filed with your tax return to make this election. If you started your business in the current year then the due date to file this election to file this election for that year is 2.5 months after the date you set up the business. If you started your business in previous year then the due date was March 15th of the current year. This means if you file it now, if won't be effective until Jan 1 2017. If your 2015 is on extension, you may have until the extended due date. I would consult with your tax accountant to determine which option most benefits your organization.

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Article Source: https://EzineArticles.com/expert/Sherrell_T._Martin/1382292

10 Mistakes to Avoid When Buying a Hotel Business

The hotel business is thriving worldwide with an impressive 550 billion U.S. dollars revenue expected to come in this year as reported by Statista. No wonder investors are so eager to devote their money to international hotel franchises. An increasing number of entrepreneurs are turning towards the hotel industry when they think of buying a business.

It can be difficult to land a profitable deal if you are unsure of how to proceed. Here are some common errors to avoid when purchasing an existing hotel business.

1. Ignoring full disclosure

When you meet the seller, they will present a well rehearsed pitch to entice you into purchasing their hotel. That's understandable but you should not allow future potential to cloud your judgment of the present. What matters in the end is the actual business you receive not what it could be in a couple of years. Make a point to focus on the liabilities that come with that purchase. Having facts and figures about essentials like rents, wages, employees, contracts, taxes, etc. will paint a realistic picture in your mind.

2. Neglecting due diligence

Never take the seller's word for it. It's not personal just business. Always ask for numbers outright but double-check them. It is your right to ask for proper documents and reports that depict the investments and cash flow of the establishment. Hire professional brokers, accountants and lawyers who are experienced in handling hotel purchases.

3. Unprepared for lifestyle change

It's always unwise to buy a business before understanding how it functions on a daily basis and your involvement in it. Hotels operate 24/7 so do not expect to be free on nights and weekends all the time. An excellent way to get accustomed to it is to come to an agreement with the seller about offering a free crash course in running a hotel.

4. Overlooking contracts

A hotel needs plenty of supplies so there are fixed contracts with vendors you must look into before closing the deal. Check the quality of the supplies and the reliability of the vendor. It is very important to ensure there are no overdue payments that maybe piled on you because you were clueless about them.

5. Disregarding outstanding rent

There are often regular rental agreements signed by the hotel for daily supplies, furnishings, etc. So take an inventory of all the hotel assets and how many of them are rentals. Request a full history of those rentals to confirm none of the rent is still due to be paid. Such small expenses could pile up to create debts for you after you sign the deal unaware of them.

6. Not checking bookings

Apart from regular check-ins hotels hire out halls and conference rooms for corporate and private events. Take note of all the future bookings made by clients. These usually have advance deposits so you have to be certain all of those payments have been paid to you not the seller.

7. Underestimating tax payments

A large establishment like a hotel has a giant bundle of taxes waiting to be paid on a regular basis. Have your lawyer and accountant look through all legal documents and compile a list of taxes the hotel owes is crucial to escape any possible seizing of assets due to unpaid taxes.

8. Incomplete employee records

Not all employees are fulltime and work daily. There may be several different contracts the hotel has with employees. Do a full review of employee performances to see if it is up to mark. Be aware of hotel policies on insurance, wages, holidays, sick leaves, etc. regarding employees.

9. Risking financial vulnerability

Not all sellers are cooperative. It might be that the hotel seller is unwilling to compromise on key issues and you don't want to let a splendid opportunity pass you buy because of one person. Be courteous and diplomatic ensuring you are not placed in a position where you will have to bear the brunt of loss if something goes awry.

10. Not seeking specialists

This is imperative particularly if you have never negotiated for a hotel business before. A seasoned hotel owner can easily strike an agreement that gives him advantage over you leaving you with the short end of the stick. Find lawyers, accountants, brokers and advisors who have sufficient experience and can help you navigate the deal safely.

Finding a hotel business for sale online (https://tobuz.com) has gained more popularity in recent years with a surge in internet security and the global business community becoming close knit. You don't have to exhaust yourself running here and there for appointments when you can simply have open conversations with sellers online.

Article Source: https://EzineArticles.com/expert/Sid_Malik/2211344

8 Taxes Taboos You Should Break Today for Your Business' Sake

8 taxes taboos you should break today for your business' sake!

For small businesses, improper management of your taxes can mean the death of your business. Depending on your type of business, your tax liabilities will vary. This is why we decide to come up with a treatise discussing the different taxes taboos (fears) and possible ways to overcome them.

1. Facing the tax examiner
   Everyone dreads facing the tax examiner. In most cases, audit fears are usually greater than audit realities. Especially for small businesses and startups that are not used to tax auditing. The remedy, however, is that you should keep good records. Individuals who work themselves do tend to get scrutinized more, so ensure business record keeping is accurate.


2. Hesitation to incorporate
   Many small businesses hesitate to register their business as a corporation, thinking it will increase the payable tax. However, but if you ever want to raise money, registering as a corporation is mandatory. Failing to keep your business up-to-date by incorporating it will end up costing you more money. Informed decisions about incorporation can help you save thousands of dollars in fees and taxes


3. Deciphering the Tax Code
   The National Taxpayer Advocate in one of its annual assessments revealed that deciphering tax code is one of the most serious fears of the taxpayers. No wonder the average taxpayer get overwhelmed and confused easily because of the sheer number of codes and sections involved. However, this shouldn't weigh you down. As a small business owner, rely on tax software and professionals to get it done.


4. Spending of Sales Tax
   Spending of sales tax is another fear of entrepreneurs and a common problem of small businesses. Often, the sales tax collected in the receipts is deposited along with the business income and considered available cash by the owners. As soon as the due date comes around, the sales tax amount becomes higher than presumed and creates a serious cash-flow problem because there is not enough money to cover the sales tax and a few period later, the business is on the verge of self-destruction. However, you need not fear this; this problem can be tackled by opening a separate bank account to hold sales tax receipts


5. Paying Employment Taxes
   Employment tax deductions are another common pitfall for startups and small business owners. It is important that you completely understand your responsibility as an employer before hiring your first employee because tax deductions for employees are shared between the employee and employer. Before you hire staffs, learn all about tax-related responsibilities as an employer and set up your accounting software with the correct numbers.


6. Filing Income Taxes
   If your small business is registered as a corporation, you will need to file an annual income tax return. Normally, you will be expected to submit quarterly estimated tax payments to the authorities so they can hold your deposits until tax payment time. Failure to submit the correct quarterly amounts on time can result in significant penalties when payment time comes, so it is important to stay on top of these due dates as well.


7. Hiring tax accountants
   Hiring a competent accountant will undoubtedly streamline the tax process and help you devise tax strategies. While staying in-house cuts costs and help to keep you on a budget, outsourcing allows you to focus your attention on other things related to your business. Including this in your business plan beforehand will save you a lot of headaches, prevent taxes from being an issue, and will help increase your venture's chances of success.


8. Lack of Understanding basic tax laws
   Understanding the basic tax laws will help you stand for yourself in situations of (illegal) high tax deduction. Taking your time to study this will really go a long way to help you in case you fall a victim of such.

Article Source: https://EzineArticles.com/expert/Danielle_Ngounou/2363883

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