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TAX FOR SMALL BUSINESS: AN EASY TO FOLLOW GUIDE

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– By Allen Brown.

 

For a small business owner, the calculation of profit or loss is quite important for filing income tax or personal tax returns. However, the process may often seem daunting and unclear to many. So, today we are reviewing tax for small businesses in a simple and easy-to-follow guide. In this guide, we will be going over the procedure for a sole proprietorship, corporations, or multiple owner partnerships. The procedures are different and cannot be covered in this guide alone. So, here are the things that you must keep in mind.

 

All About Due Dates and Forms

As a small business owner, you often file the business and personal tax return simultaneously, so the due dates for both are often the same. The date is usually April 15, but it is a good idea to always check. In case the due date for tax returns falls on a weekend or a public holiday, the next business day is the one when you will be filing the personal and business tax returns for that year. The due dates may often have extensions for everyone or it can be only applicable within certain States. So, you should definitely double-check the due date for your area without any delay.

As a small business owner, you may even be eligible to be given a 20% deduction of ‘qualified business income’ that is in addition to other normal deductions concerning your business. In case you think that you may be eligible for this, you can seek advice from a qualified tax preparer that you may be consulting with. For tax returns, you have to follow the schedule C income tax forms, and it is recommended that you download all the forms in a timely manner. As a sole proprietor or a single-member LLC, you will require Schedule C Business profit-loss form with instructions, and Schedule SE for self-employment with instructions.

 

What Do You Need for Schedule C Completion?

So, in order to quickly complete the process of tax returns, you must have all the information ready to use. Start with the product inventory or any parts for sale (if you deal with this) and calculate the overall cost of the goods that you sold.

You should also have documentation to prove that all the tax deductions for your business (including the cost of travel, driving, food) are accounted for. It is important to note that the expenses related to entertainment are not included in the deductibles anymore. Professionals at https://www.taxsharkinc.com/irs-notice-cp49/ explain that you will also require updated information about the expenses related to purchasing different business assets (this may include equipment or vehicles), this information is used to estimate deductions for depreciation. The Schedule C form will also require information about any possible use of your house as a business space for related deductions. So, you should have all this information ready before you start filling these forms.

 

Taxes Related to Self-Employment

As a small business owner, you are required to pay for the self-employment tax on the profit or net income of your business. These self-employment taxes include the Medicare or social security tax as well. However, in case you did not make a profit from your business this year, or perhaps the overall income was $400 or less, then you are exempted from this tax category for that particular year.

Calculating the self-employment tax is very simple and all you have to do is to multiply the income by 92.35% and then multiply the obtained figure by 15.3% to calculate the figure for tax liability for this category. With this amount, you can determine whether you are eligible for Medicare or social security benefits or not. Normally, you will not be getting any credit for the social security or medicare benefit if you did not make any money. You can either use a software program to make all the tax-related calculations or you can do the calculations yourself.

 

Adding Schedule C to Personal Tax Return

You can add the income on Schedule C form to the personal tax return income on Schedule 1 as well. You can make use of this schedule to overall additional income as well as adjustments. You will then bring them to Form 1040-SR or Form 1040. You will have to input the total tax in the self-employment category on Schedule 2 from the Schedule SE of Additional Taxes Form 1040. On Schedule 1, deductions are included for the self-employment that is one-halved. You can also add to Schedule 1 any business adjustments or tax credits if you are eligible for those.

 

How to Go About the Filing Process?

You choose to file the tax returns via mail or you can make use of the e-file. On the last page of Form 1040 instructions, you will find all the addresses that you can use to mail the tax return forms to the IRS and be done with the process. If you are going for the e-file option, some additional costs may apply.

If required, you can also opt for applying for an extension for filing the taxes. The extension that you receive is often of 6 months only for any non-corporate tax returns. However, this extension is not applicable to the payment. So, you must pay the taxes by the due date if you want to avoid any interest or penalties.

In case you committed an error while filing the return, you will have to then file an amended return to rectify that mistake on the tax return. The form that you will use for filing the amended return will depend on the type of your business. Lastly, it is advisable that you pay an estimated amount if you are not well aware of the absolute taxes that you have to pay for that year. Often business owners have this question: Will I require a tax preparer or not? If you are a simple business then you may do quite well with a simple tax software that does the tax calculations but for other small businesses going for the tax preparer is recommended. The most important thing is to abide by the schedule of taxes.

 

Finance

WHY PEOPLE ANALYTICS WILL PLAY A PIVOTAL ROLE IN SOLVING THE FINANCIAL SERVICES INDUSTRY’S SKILLS CRISIS

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By

Daniel Mason, Vice President EMEA, Visier

 

Successfully guiding teams of employees through the post-pandemic landscape will not be easy for any business, but nowhere is this more apparent than in the financial services sector. Here, leaders face the formidable challenge of rebuilding working environments against the backdrop of huge industry uncertainty, caused by the most turbulent 18 months in living memory, as well as an increasingly concerning global skills gap.

In order to succeed, not only do they need to create highly compelling environments that entice new and existing employees alike, they must also work to proactively identify areas where additional improvements need to be made. Doing so will enable swift and decisive action to be taken before seemingly small issues start to have a major impact on overall business performance or staff retention.

 

Storm clouds are gathering on the horizon

It’s safe to say the financial services industry garners more media attention than most when it comes to working conditions. With well over a million people employed in the UK alone, scrutiny into key areas such as work-life balance, job pressures and pay is near constant.

In order to gain better insight into current job satisfaction within the sector, Visier recently conducted a new study focussing on how both UK employees and HR leaders feel their businesses are managing during this difficult time, and how it is affecting both current performance and future prospects. The research revealed some worrying statistics that point towards a potential avalanche of resignations in the near future, unless something is done to prevent it.

Why is this? Put simply, too many financial services organisations don’t appear to know their employees are unhappy and of those that do, most don’t fully understand the reasons behind it, meaning they can’t effectively tackle them. This article will discuss these findings and their implications in more detail, before exploring how people analytics can be used to spot key trends – both positive and negative – early, and boost employee experience/morale at this crucial time.

 

Learning new skills is increasingly important to both employees and businesses

According to Visier’s study, over half (52%) of employees in the financial services industry expect to actively look for a new job outside of their current company in the next 12 months, with almost a quarter (24%) already doing so. In light of these alarming figures, you’d be forgiven for assuming financial services organisations have failed to adapt to Covid-enforced ways of working. However, this isn’t the case at all, with the vast majority of those surveyed reporting that their companies have reacted impressively to the pandemic.

There are, of course, multiple reasons why workers may feel compelled to move on, even if they have a positive overall connection with their current employer. While each case is unique, the three most common reasons cited in the study were, perhaps unsurprisingly, ‘poor work-life balance’ (43%), ‘salary’ (33%) and ‘feeling undervalued’ (25%).

Following closely behind in fourth place was ‘not being encouraged to learn new skills’ (19%). However, there’s a growing school of thought that this has a much bigger influence on employee satisfaction than the raw data might suggest. Work-life balance and salary have always been major drivers of change, and learning new skills can go a long way towards helping workers address these by improving the value they bring, as well as boosting their overall day-to-day efficiency. The findings backed this up, with over half (55%) of employees admitting they are worried that failure to develop new skills will lead to their careers stalling.

The study also uncovered a strong feeling amongst both financial services employees and HR leaders that learning new skills is a crucial factor in the future competitiveness of their organisations.  Just 59% of employees felt confident their employer was bringing in the right people to keep pace with clients’ expectations for digital services. Meanwhile, over two-thirds of HR leaders believe that the sector’s lack of available candidates is holding back their company’s digital transformation strategy. As such, not only do employees see a lack of skills training and opportunities as a blocker to their own progression, it also presents an existential threat to the organisations they work for.

 

People analytics is playing an increasingly pivotal role

As financial services organisations continue to work through the disruption caused over the past 18 months, they need to be conscious of key factors impacting employee retention, as well as address any skills gaps acting as barriers to effective digital transformation. Investing in the right new learning opportunities and upskilling current employees will be crucial in reducing unwanted churn and ultimately boosting long-term competitiveness.

People analytics tools give businesses – in financial services and beyond – the real-time intelligence they need to achieve this, enabling them to grow and thrive regardless of what’s put in their path. Not only can people analytics help identify worrying employee trends such as disenchantment about skills training early, it also provides the insights needed to fix issues before they can significantly impact operational effectiveness.

As the data shows, employee satisfaction isn’t the only factor at play. Job happiness is also tied to whether employees believe the business is making the right decisions for their future. However, without the right tools in place leaders must operating on gut feel alone, which is rarely a good formula for success.

Every day, a growing number of decision-makers are using people analytics to uncover the key insights needed to make informed decisions regarding who to hire, who to reskill and who to promote. This is no coincidence. The move towards people analytics at scale is not a passing craze, but the acceleration of a powerful trend that’s been gathering momentum for almost twenty years. Maybe it’s time your business sees what all the fuss is about?

 

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Finance

AS SAAS GROWS, FINANCIAL SERVICES MUST RETHINK THEIR SECURITY APPROACH

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By

Ben Bulpett, Identity Platform Director, EMEA, SailPoint

 

The financial services industry is facing an increasing number of issues related to the adoption of cloud-based services. The growth of cloud and SaaS has accelerated with the consumerisation of information technology, along with the shift to working from home. Users have become comfortable downloading and using apps and services from the cloud to assist them in their work but often without explicit IT departmental approval. In fact, there are 3 to 4 times more SaaS apps in use at a company than the IT department is aware of, on average. This is known as ‘Shadow IT’ and while it can cause headaches for any industry, financial services are open to the biggest threat.

The data that banks hold on an individual is far more sensitive than other industries. By not getting approval on SaaS, the IT team have no visibility and no understanding of how to properly secure the software. One small security slip-up and consumers can be left with very little. But it’s not just about bad security and the reputational damage that comes with it. Shadow IT can also cause heavy financial loss.

 

The risks with Shadow IT

Shadow IT takes up a whopping 30 to 40% of overall IT spending for large enterprises, according to Gartner. This means that nearly half your IT budget is being spent on tools that teams and business units are purchasing (and using) without the IT department’s knowledge. A lot of unapproved software and services may duplicate the functionality of approved ones, meaning your company spends money inefficiently. How does this impact overall revenue? While it depends on the industry, on average companies spend 3.28% of their revenue on IT, according to a recent study by Deloitte Insights. Banking and securities firms spend the most (7.16%) and construction companies spend the least (1.51%).

Additionally, Shadow IT comes with a higher risk of security and compliance complications because the tools are not properly vetted. These risks include lack of security, which can lead to data breaches. Your IT team is unable to ensure the security of the software or services and can’t manage them effectively and run updates. Gartner predicts that by 2022, one-third of successful attacks experienced by enterprises will be on their shadow IT resources. If we use Ponemon’s average breach cost of $3.86M and average probability of a breach at 27.2% annually, Shadow IT may be costing you as much as $350,000 per year in breach-related risk costs.

 

Ben Bulpett

Keeping track of SaaS

Tracking your SaaS footprint goes beyond core enterprise apps and spreadsheets – the reality is that this isn’t complete visibility. It’s a fraction of what’s out there, and the moment that spreadsheet is updated it’s now out of date. This approach is both time-consuming and filled with inaccuracies.

For example, if a finance director, through a cloud file storage app, shared a root-level folder with outside parties, this inadvertently provides access to detailed financial statements that would never be released publicly or shared. Salaries, profit and loss, and more would be unintentionally exposed. In addition, the finance director’s team files, folders, and discussions would be made completely public rather than internal and read-only. This makes financial files and other sensitive information indexable by search engines and the fault lies with the CISO and CIO, rather than the finance director.

Similarly, when a company is unknowingly running multiple duplicate project management apps outside of IT’s purview, spread throughout the company, this creates massive cost overlap and security vulnerabilities. How much sensitive data may have been stored in the other apps? These examples are all too common, and probably true at your own company.

 

Shining a light using identity security

Organisations can shine a light on Shadow IT and SaaS access risk, and ultimately have greater visibility of the full scope of ungoverned SaaS applications, by using technology such as identity security. This allows them to drive a seamless process from discovery to governance across the entirety of their SaaS app landscape and wrap the right security controls around every newly-discovered SaaS app (and the data within).

Not only does this help companies shut down issues around Shadow IT across the business, by doing so it also enables companies to be able to save hundreds of thousands of pounds each year.

 

Greater visibility

It’s estimated that by 2022, nearly 90% of organisations will rely almost entirely on SaaS apps to run their business. In this new era of working, the only way to fully protect today’s cloud enterprise is by first discovering all of these hidden SaaS applications and then applying the very same identity governance controls that are already in place for the rest of the critical business applications.

There is no room for mistakes. By addressing Shadow IT and SaaS access risk and having deeper visibility of the full scope of ungoverned SaaS applications, the financial services industry can save hundreds of thousands of pounds each year. And most importantly, keep their customers protected.

 

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