“All men having power ought to be distrusted to a certain degree”
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Hi,
I am starting up a website business from home and money will be largely generated via advertising and also through customers paying to place classified ads.
What method should I adopt for bookkeeping i.e. a spreadsheet or some sort of software? What kind of information would I need to record for this type of business specifically?
Any help would be much appreciated.
Kind regards,
Tim
In view relevant of the provisions, which include the US Canada-US tax treaty of 1995, Canadian residents (not those who fit US resident criteria) buying property in the US must do their tax planning accordingly.
US income tax, estate tax and various other laws treat foreign nationals on different footings depending on whether they have a US resident or non-resident status. US laws lay down certain criteria to ascertain resident/non-resident status.
A citizen of Canada is subjected to two tests to determine his/her residence status for tax purposes.
One- if he holds a US green card he is treated as a lawful permanent US resident. His presence /absence in the US is not considered. And
Two- If he had a substantial presence in the US he is treated as a US resident. This means being present in the US for 183 days in the preceding three years in the following manner.
. If he has been present in the US for at least thirty days during the current calendar year
. If the sum of the number of his US days in the current financial year, 1/3rd of US days in the first preceding year and one sixth of US days in the second preceding year equals or exceeds 183 days.
Factors like inability to leave the US due to ill health or being present as part of a govt. delegation and certain other exceptions are taken into account while calculating the total of 183 days mentioned above. Even when substantial presence is established, meeting certain other additional criteria may still attach a non-resident status to a Canadian citizen.
A US resident alien is treated more or less similarly as a US citizen for tax purposes. He has to file tax returns and pay taxes on income received from all sources in the US and/or anywhere in the world. The resident status entitles him to all the deductions, personal exemptions and other benefits available to US citizens while computing taxable income.
A non-resident on the other hand, subject to certain exceptions, usually has to pay tax on income he receives from US sources only. In addition, his non-resident status and limited tax exposure make much less of exemptions and deductions available to him as compared to his resident counterpart.
When a Canadian resident buys a condo in Florida or other real property located anywhere in the US and rents it out, there is a withholding tax of 30% applicable on the rent. This means that the tenant is liable to withhold 30% of the rent and pay it to the IRS. By filing a US tax return and paying tax on the net rental income, the 30% gross withholding tax can be avoided.
There may be significant expenses such as maintenance; property management expenses, mortgage interest, property taxes etc. that can reduce the taxable amount considerably, and the resulting tax at marginal rates can be substantially lower. Once the net rental system is elected, it usually cannot be revoked. The Canadian property owner needs to provide the tenant with form IRS 4224 to avoid deduction of 30% withholding tax.
When a Canadian resident sells any property that he owns within the US, the Foreign Investment in Real Property Tax Act-1980(FIRPTA) mandates a 10% withholding tax on the gross sale price. However, it is possible to offset this tax against US income tax payable on any capital gain on the sale. A refund can be claimed if the withholding tax is above the tax liability.
This provision is subject to two exceptions.
a) When the property is sold for less than $300000 and the purchaser intends to use it for his principle residence for at least 50% of the time for the next two years he pays the full price to the seller instead of withholding 10% to remit to the IRS.
b) When the seller obtains a withholding certificate from the IRS stating that US tax liability is expected to be less than ten percent of the sale price. The amount of tax to be withheld, if any, would be mentioned on the certificate.
When a Canadian resident breathes his last owning property in the US, federal estate tax is imposed, which can range from 18 to 45% in 2007. Under article XXIX B of the Canada-US tax treaty, unified credit can be applied to reduce or eliminate estate taxes.
Sacramento CPA firms offers Estate Tax Planning to individuals and businesses. We have former IRS auditors who know the system to make sure you only get the best advice. Discover a bevy or articles at : http://www.april15.com.
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To support your growing business needs, you should have the knowledge to keep the score. At regular periodic intervals at the business meetings, the questions related to the transactions going on, require a proper answer. On the basis of the mutual sharing of data, financial statements can be used for the growth of any organization. The size of one?s organization doesn?t matter here, because the financial matters are one and the same for any organization. With small business accounting firm, you can discuss matters related to your accounting needs with employers, bankers and your own accountant. A number of financial tools are assist in a proper management of your business. Today?s scenario demands that you have a proper understanding of these, to increase the chances of your success.
In these bleak economic times, it is not unusual to hear of or know someone in foreclosure. In response to this trend, the Government, the lenders, and private institutions are creating various programs to assist homeowners facing foreclosure. Determining which program suits you best is the difficult part, however.
Just a few years ago, refinancing your mortgage seemed to be the best option for the majority of homeowners. Refinancing was popular because homeowners counted on their homes? appreciation value, and they withdrew equity out of their homes to repay debts. Interest rates were low and lenders exercised leniency toward those to whom they loaned. Unfortunately, the situation today is nearly the diametric opposite, and homeowners must consider other options as alternatives to foreclosure. Among those options are loan modification, short sale, repayment plan, forbearance, reinstatement, and bankruptcy (always a last resort).
Performing a loan modification on your mortgage can result in the terms of your loan being modified to something you can afford each month. There are many ways you can modify your loan, but there is only one best way of doing it. If you modify your loan based upon the terms your bank offers you, you simply won?t receive the best deal possible. This is why it is important to choose a party not affiliated with your bank to negotiate your loan modification. Borrowers must recognize that a bank or lending institution is a business that is driven by profit. Accordingly, they will always offer you a deal that benefits them far more than it benefits you. They?ll offer you a short-term solution to a long-term problem and most borrowers default on their loan again within six months of their modification. A properly performed loan modification can reduce your principal, monthly payments, and interest. It is not uncommon to hear stories about people who have had their principal balance or monthly payments cut in half! It?s critical to understand that every case is different and the final outcome is dependent upon many variables, including the lender?s cooperation. The lenders will only agree to a foreclosure alternative if they are losing less money than they would be if they foreclosed on the property. It is the job of your negotiator to help them reach this conclusion based upon the results of a mortgage audit, a statement of the homeowner?s hardships, and so forth.
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a former employer did not remit employment taxes. The IRS has deemed me to be a responsible party and has started collection action. Employer has since sold the business and refuses to voluntarily pay the taxes. My credit is being ruined and my home and business are in jeopardy. Has anybody had similar problem and/or solution?