Preparing for Business Taxes from Day One

Preparing for Business Taxes from Day One

Whether your business is big or small, you have 20 employees or none, you are required to pay the right taxes at the right time. Understanding your tax obligations are an important part of your business formation. How you are structured and whom you employ will impact your taxes, and any mistakes or omissions will not go unnoticed by the Internal Revenue Service (IRS) or the Colorado Department of Revenue (CDOR). A small business attorney can help you prevent liability issues, maximize your deductions, and represent you in the event of an audit or penalty. This post will cover five things every small business owner should know about business tax.

1. Your Business Structure Determines Your Tax Responsibility
“Small business” is not your only category. There are numerous structures your small business may fall under, and each has its own set of tax liabilities. Sole proprietorship, partnership, s corporation, and c corporation are just a few of these structures, and they all have their own advantages and limitations. The two most common state and local tax requirements for your small business are income taxes and employment taxes. Your business structure determines your state income tax responsibility.
Colorado has specific laws regarding employment taxes and insurance, including workers’ compensation, unemployment, and temporary disability. Visit the CDOR Taxation Division to learn more about state income and employment tax obligations. In addition to these, the IRS requires that you pay self-employment tax, estimated tax, and excise tax, also depending on your business structure. With each types of business tax comes its own set of rules, eligibility, and forms to file. Your small business attorney will keep you compliant with all state and federal tax laws.

2. You Can Choose Your Tax Year
You may assume a calendar year equals a tax year; however, you have the ability to choose a fiscal tax year instead if you need your annual accounting period to end in a month other than December. Or, if you are a new business, you can choose a short tax year since you were not in existence for the entire tax year. You also have the option of changing your tax period with permission from the IRS.

3. There are More Deductions Than You Think
Your goal is to maximize your profits, which can be challenging amid rent, utilities, employee salaries, materials, and many other operational costs. As a small business owner, you may be able to deduct many more expenses than you realize. Some common business deductions include supplies, furniture, and equipment. Some lesser known deductions include startup expenses (e.g. research, training, advertising), mileage, meals, software, subscriptions, insurance premiums, child labor, phone bill, retirement contributions, and more. Just be sure to have solid documentation and record keeping.

4. You Have to Make Estimated Payments
As a small business owner, you are responsible for making quarterly estimated tax payments throughout the year. Planning for the coming year by estimating what you owe and having the funds designated for payment will ensure you are ready for tax time every time. If you fail to submit the taxes you owe, you are subject to penalties. Even after conducting the necessary research and consulting a tax expert, new small business owners are prone to unintentional tax mistakes. A small business attorney will assist you if you find yourself in tax trouble.

5. You are Required to Pay Self-Employment Tax
As a small business owner, you are responsible for your portion of self-employment tax – social security and Medicare taxes – and the half that would otherwise be paid by an employer. You can lessen the blow at tax time by making advance deductions. Furthermore, half of your self-employment tax can be claimed as an income tax deduction.

Consulting the right business professionals will ensure that your tax return is accurate and your deductions are maximized. There are many resources for small businesses offered by the Colorado Department of Revenue, including its Revenue Online website. With an account, you have access to your tax records and a variety of services, including filing or amending a return, changing your address, filing a protest, and viewing account balances and payments.

If you need business tax advice, contact me, Elizabeth Lewis, at the Law Office of E.C. Lewis, P.C., home of your Denver Business Lawyer. Phone: 720-258-6647. Email: elizabeth.lewis@eclewis.com

Contact Us Today

Law Office of E.C. Lewis, P.C.
Your Denver Business Attorney
501 S. Cherry St., Suite 1100
Denver, CO 80264
720-258-6647
Elizabeth.Lewis@eclewis.com

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Future Expectations and Your Small Business Structure

Future Expectations and Your Small Business Structure

You have had your brilliant idea for you new business – whether it’s software development or a boutique bakery – and now you need to know how to make it come to life. One of the most important things you will do for your new business will happen at the very beginning and concerns your future expectations and your small business structure.

Choosing your business structure has important implications for your future taxes, who owns your company, and who is responsible for any losses. Your business structure can mean the difference between paying employment taxes on everything you make and being able to take part of your business’s income as non-employment taxable dividends. Without the correct business structure and operations, you may fail to have limited liability and be personally liable for any damages caused by your business, you, or your workers. A Colorado attorney will help you choose the best business structure for your individual needs. Here is a brief summary of the most common small business types:

Sole Proprietorships

Sole Proprietorships are the most basic business type. If you are a freelancer, you probably are already a sole proprietor. There is little paperwork to be filed or forms to fill out, as it is the default status for running a business in the U.S. While simple, this business type comes with a lot of risk as there is no delineation between you as a person and you as a business. You are the only person responsible for the profits, and also for the loses. “This risk extends to any liabilities incurred because of employee actions” (SBA.gov).

Partnerships

If you are part of dynamic duo (or trio, or beyond), and you want that to continue into your business, a Partnership may appeal to you. The IRS sets the expectations of a Partnership as “Each person contributes money, property, labor or skill, and expects to share in the profits and losses of the business.” There are different types of business structures housed under the umbrella of Partnership, each with different expectations for the length of the collaboration between parties, and the amount of liability and input for each party. The Small Business Administration has a helpful list of things you should discuss with your potential business partners before filling your paperwork. However, like a sole proprietor, partners typically have personal liability so careful consideration of this business structure should be had with an attorney before entering into it.

Limited Liability Company (LLC)

Limited Liability Companies (LLCs) is a business structure that does just that – limits your liability. It is a relatively new business structure – the first one was created in 1977. LLC laws are determined at the state level, so the state you form your LLC in matters. Due to the variation between states, LLCs can get a bit complicated, but Attorney Elizabeth Lewis is experienced in business formation and will help you navigate the formation of your LLC correctly. A few types of businesses generally cannot be LLCs, such as banks and insurance companies.

C-Corporations Taxes as C-Corporations

“From a legal standpoint, a corporation is a different person than the person or people who created it, and is therefore able to own property of its own, accrue its own profits, and be responsible for its own debts and civil liabilities.” (Upwork.com)
Most large businesses are Corporations, and a lot of legislation regarding Corporations has these large businesses in mind. A corporation taxed as a c-corporation may not be a good fit for your small business, as owning one tends to place a large burden on owners. Additionally, you may be taxed twice, since your corporation is a separate entity from yourself if you are a c-corp. It is a better a company type than the previously listed ones, however, if you plan on taking your company public.

Corporations and LLCs Taxed as S-Corporations

You can only have s-corporations if you have an LLC or corporation formed under state law. Many small businesses use them since they do not cause the double taxation problem. Not all companies can become S-Corporations however. From the IRS:

“To qualify for S corporation status, the corporation must meet the following requirements:

  • Have only allowable shareholders
  • May be individuals, certain trusts, and estates and
  • May not have owners that are partnerships, corporations or non-resident alien shareholders
  • Have no more than 100 shareholders
  • Have only one class of stock
  • Not be an ineligible corporation (i.e. certain financial institutions, insurance companies, and domestic international sales corporations)”

The way you structure your business will have long lasting implications for your earnings, liability, and taxes. Improperly done filings can cost hundreds of thousands of dollars, and create stress year after year. It is best to consult an attorney before creating your business.

If you need help evaluating your future expectations or deciding on your small business structure, contact me, Elizabeth Lewis, at the Law Office of E.C. Lewis, P.C., home of your Denver Business Attorney. Phone: 720-258-6647. Email: elizabeth.lewis@eclewis.com

Contact Us Today

Law Office of E.C. Lewis, P.C.
Your Denver Business Attorney
501 S. Cherry St., Suite 1100
Denver, CO 80264
720-258-6647
Elizabeth.Lewis@eclewis.com

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Millennials, E-Commerce, and Denver Real Estate

Millennials, E-Commerce, and Denver Real Estate

Headlines and ratings have Colorado at the top. Denver has been consistently ranked as one of the best cities to live in by U.S. News and World Report. Denver was also first in 2015 and 2016 for best places for business according to Forbes. These accolades are in addition to the state’s impressive roster of colleges and universities, not to mention its luscious landscape and booming retail scene. This all translates into a desirable place to live, which affects your business decisions. A small business attorney will help you with all of your commercial real estate needs from setup to leasing or buying to protecting your assets.

The Millennials Are Coming To Colorado

Colorado has steadily become a migration destination in recent years, and according to a Denver Post article, there is an influx of millennials. Like many groups, millennials like to live in areas where there are other millennials, and this group uses social media to share their day to day experiences. This, in turn, contributes to a momentum of migration, which has a major impact on the real estate market. A Biz Journals article reports that Denver’s retail real estate market is expected to be the “world’s hottest” over the next few years, second only to San Francisco, and that the retail market will outperform all other global retail markets. With all of the positive reports and growth comes competition for space and rising rental rates. If you are renting commercial space for your small business, you may not be able to afford hikes in rent. As a landlord, tenants may be harder to keep or come by. Because the millennials are coming to Colorado in droves, there is a tight real estate market. A tight real estate market means there is more at stake, leading to more potential legal disputes. Careful review of your lease is critical in these times, and a small business attorney can help you with all of your contracts and agreements.

E-Commerce Is Everywhere, Even If Your Business Is Only In Denver

Defined as a transaction of buying or selling online, e-commerce has expanded rapidly over the years and is accelerating. Boundaries between electronic and conventional commerce have become blurred as more and more businesses move at least portions of their operations onto the internet. All businesses employ some form of electronic applications whether through email, online catalogs, e-newsletters, digital coupons, social media marketing, or countless other transactions. Amazon, an e-commerce revolutionary, just opened its first fulfillment center in Aurora, Colorado and is reportedly looking for a downtown Denver office location. While a 452,000 square foot industrial location is not exactly small retail real estate, having big e-commerce and tech companies opening offices in Denver affects all sectors of commercial real estate, employment, and retail. So whether you have a brick and mortar storefront or work from home, a small business attorney can advise you about operating in an increasingly virtual market in conjunction with an increasingly competitive real estate scene.

Owning Or Leasing Retail Space In Colorado

You know Denver is the place for your small retail business. You confidently cater to tech savvy and discerning tastes. You have a solid online presence. So, what do you do if your retail space no longer meets your business needs? What if you cannot afford increasing rent costs? It may be time to find another option or location. If you are unsure of the future of your business and its size, you may be better off continuing to lease or sublease. However, if you want to stay in a particular district or neighborhood and have no plans to expand, then you may want to buy rather than rent. A small business attorney will help you decide whether to rent or buy and guide you through locations and spaces as well as the accompanying leases and contracts.

If you need help with your e-commerce and Denver real estate options, contact me, Elizabeth Lewis, at the Law Office of E.C. Lewis, P.C., home of your Denver Small Business Lawyer. Phone: 720-258-6647. Email: elizabeth.lewis@eclewis.com

Contact Us Today

Law Office of E.C. Lewis, P.C.
Your Denver Business Attorney
501 S. Cherry St., Suite 1100
Denver, CO 80264
720-258-6647
Elizabeth.Lewis@eclewis.com

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Accessing Your Colorado Tax Record with Revenue Online

Accessing Your Colorado Tax Record with Revenue Online

Colorado small businesses benefit from a variety of initiatives aimed at making it easy to fuel the entrepreneurial fire, such as the easy to use website for the Colorado Secretary of State, where you can accomplish a huge variety of business startup tasks with just a few clicks of your mouse!

Another excellent resource for individuals operating small businesses in the state of Colorado is called Revenue Online – a website managed by the taxation division of the Colorado Department of Revenue. Since this year’s first quarter tax filings are in the rear view mirror, this is a good time to think about looking ahead and making access to our Colorado tax records easier. How? Once you have filed your first tax return in the State of Colorado, you should consider signing up for an account to gain easy access to your tax records and a broad variety of services.

Things You Can Do with a Colorado Revenue Online Account

This is just a partial list; visit the Revenue Online site to see all of the tasks and information you can access with an account:

For Individuals
Taxpayers who create a Login ID will have access to their Colorado tax accounts. Taxpayers will have the ability to view their return history, view previous correspondence sent by the Department, and make electronic payments. You can also:

  • Amend a Return
  • Change Your Address
  • File a Protest
  • View Account Balances
  • View Your Payments
  • View Your Letters
  • View and Print Your Returns

For Businesses
Businesses that create a Login ID will be able to file and pay a variety of taxes including Sales Tax, Withholding Tax and Corporate Income Tax. Plus

  • File or Amend a Return
  • Change Your Address
  • File a Protest
  • View Account Balances
  • View Your Payments
  • View Your Letters

Signing Up for a Colorado Revenue Online Account

For the most part, gaining access to your tax account via Revenue Online is a simple process, however, you need to be aware of an exception with regard to individual income tax accounts. For security reasons, you cannot obtain access to individual income tax accounts until you first acquire what is called a Letter ID number. The Letter ID number is exactly what it sounds like – an ID number associated with a letter from the Colorado Department of Revenue. If you have a recent letter from the Department, you can simply use the Letter ID number located in the upper right corner the letter – it doesn’t matter what the topic of the letter is.

If you do not have a recent letter, you may request a Letter ID number on the Revenue Online website under “Additional Services” and “Request a Letter ID” (see image below).

Revenue Online Services screenshot

A letter containing the “Letter ID” number will be sent by postal mail to the address on record with the Department (so make sure yours is current before you submit the request!).

It might take up to 10 business days to receive the “Letter ID” letter, but once you have it, you will be able to create a Revenue Online account for your individual income tax account, which is important if you are a single member Limited Liability Company because as such you will have filed your business taxes as part of your personal return.

When you are ready to go, visit Revenue Online in your computer Web browser at www.Colorado.gov/RevenueOnline. To sign up for you account, you will need:

  • Taxpayer or Business Name
  • Tax ID Number, such as Social Security Number or ITIN from the IRS; Federal Employer ID Number (FEIN) or a Colorado Account Number (CAN) assigned by the Department
  • Address associated with your tax account

Once you have completed the registration process, you will receive an email that tells you whether you were able to get access to the account. Make sure to check your Junk email folder if you do not see the email in your Inbox – the email Subject line will say: Colorado Department of Revenue – Revenue Online Account Access Complete and will contain an Authorization Code that you will use the first time you log in, after which you will create your own password for the account.

If you need help with your business taxes or business tax planning, contact me, Elizabeth Lewis, at the Law Office of E.C. Lewis, P.C., home of your Denver Small Business Lawyer. Phone: 720-258-6647. Email: elizabeth.lewis@eclewis.com

Contact Us Today

Law Office of E.C. Lewis, P.C.
Your Denver Business Attorney
501 S. Cherry St., Suite 1100
Denver, CO 80264
720-258-6647
Elizabeth.Lewis@eclewis.com

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5 Crucial Areas of Commercial Real Estate Law for Colorado Businesses

Real estate law is a broad and complicated legal area. Colorado is no exception with a tangled mass of statutes on everything from discloser and zoning laws to insurance and contract laws. Whether you lease or own your business location, you will likely encounter a property law issue at some point. Attorney Elizabeth Lewis, MS, JD can help guide you through real estate law at every level before it affects your business. The following post will discuss five crucial areas of commercial real estate law for Colorado businesses.

  • Landlord/Tennant Laws
  • Disclosure Laws
  • Zoning and Land Use Laws
  • Contract Law
  • Insurance Laws

Landlord/Tennant Laws

Whether you own or rent your business space, landlord/tenant laws are designed to protect the rights of both sides who have entered into a rental or leasing agreement. There are numerous areas within these laws, including taxation, right of privacy, payment of rental fees, disclosures, duration of agreements, and right to terminate agreements. As a Colorado business owner, it is essential to comply with state laws in order to prevent violations. It’s a good idea to hire a Colorado-based attorney to advise you on all of your real estate and leasing issues from initial set up to lease/contract review to protecting your assets.

Disclosure Laws

Before you buy or rent a business space, you want to know everything you are getting into. Are there any toxic substances, like asbestos or lead paint? Does the building have energy use restrictions or accessibility inspections? You may have found the perfect location, nestled in the bustling heart of downtown Denver, but it is important to know what you may not readily see. Like other real estate laws, discloser laws vary from state to state and deal with the location, condition, and restrictions of the property. Furthermore, a commercial lease and residential lease differ greatly and are subject to different laws. A small business attorney will review and advise you on existing or potential factors before you are ready to lease or buy a retail space.

Zoning and Land Use Laws

Your real estate choice, whether you operate out of a home office or huge warehouse, will affect your business. Commercial real estate can be divided into several categories, including office buildings, industrial, retail, restaurant, multifamily, undeveloped land, and more. Each of these properties are subject to Colorado state zoning and land use regulations.

Besides determining taxation, these laws define and enforce how a property is used. As a business owner, you already have a checklist a mile long when it comes to choosing your location – rent or buy, physical space, length of lease, affordability, renovations, maintenance, competitors, specifications for signs, accessibility, and much more. Learning that you must apply for rezoning to the local board is not something you want to add your list, and it does not guarantee that your application will be accepted. With the expert advice of an attorney, you can navigate through these real estate laws in order to select the perfect location.

Contract Law

After you have decided whether to buy or rent, reviewed the terms of disclosure, and confirmed zoning, you will enter into a contractual agreement. Specifically worded and structured, these legally binding documents are meant to stand up to any challenges by a landlord, tenant, or outside entity. Many savvy business owners have agreed to the terms of a contract only to fall victim to some unforeseen loophole or unintentional breach that leads to litigation. In this event, an attorney will represent you and help protect your business.

Insurance Laws

Based on the space you occupy and the business you operate, you are required to have certain insurance. This is to protect your investment and cover any property loss or liability issues. The type(s) of insurance you purchase depends on your status as lessor or lessee, the number of employees you have, as well as any building ordinance or state laws. In the unfortunate event of an accident, burglary, fire, or other disaster, additional insurance can help to cover the aftermath of damage to your business. A small business attorney can help you decide what coverage is right for you.

If you are a landlord or a tenant who needs help with Colorado commercial real estate, contact me, Elizabeth Lewis, at the Law Office of E.C. Lewis, P.C., home of your Denver Small Business Lawyer. Phone: 720-258-6647. Email: elizabeth.lewis@eclewis.com

Contact Us Today

Law Office of E.C. Lewis, P.C.
Your Denver Business Attorney
501 S. Cherry St., Suite 1100
Denver, CO 80264
720-258-6647
Elizabeth.Lewis@eclewis.com

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