Home / Taxation FAQ

I am starting a new business, Should I incorporate? The answer depends on a number of factors. Incorporating will give you certain legal protections but may also cost you more money for fees and minimum taxes depending on the state in which you are located. You will have to file separate tax returns and these, too, will cost you more in both time and money. You will still need to decide to decide between an S Corporation and a C Corporation. There are numerous differences between the two that you need to weigh. Many people find that a partnership or LLC allows them greater flexibility with respect to income distributions and the like. Moreover, these entities also require separate tax filings. The simplest form of organization for a new business is the solr proprietorship. Tax filing for this entity type is a Schedule C included wuth one’s individual tax return. The more important consderations have to do with how you need to structure your business to make it as effective as possible. Every situation is different and you need to consult with a lawyer and an accountant at a minimum before you make a decision.

We just bought a home. What records do we need to keep? You need to keep all of the closing documents certainly. Going forward you should retain records for all major repairs and maintenance. Current IRS provision for the sale of one’s home are fairly generous, and most people dp mpt emd up paying taxes when they sell their homes. Nevertheless, tax laws change frequently and maintenance of these records about your home is essential. Moreover, when it does come time to sell, marketing your home will be easier if you can document all of the improvements that have been made.

I have stock in a company that has gone down in value since I bought it. Should I sell it before year end to take the loss? It dependes. Without knowing your complete income situation it is virtually impossible to give you an adequate answer to this question. If you think the stock will come back up again, selling now might be a bad idea especially if you don’t have any gains to offset the loss. It is never a good idea to make this kind of decision based only on tax considerations. Losing $4 to save $1 of tax just doesn’t make sense.

I have heard the “death tax” is just about history for most Americans. Do I still need to do estate planning? Absolutely, and for reasons that go way beyond tax considerations. Depending on what state you live in you may find that you still owe a considerable sum in state estate taxes. Rhode Island, for example, has not adopted the newer federal limitations. More importantly, estate planning will help you and your loved ones understand and plan for what will happen at what will inevitably be a difficult time for everyone concerned.

Stay up-to date with the latest news and other stuffs!