NEW SMALL BUSINESS REPORTING REQUIREMENTS START NOW

Beginning in 2024, most small businesses will have to report information about their owners. This information is being reported to the Financial Crimes Enforcement Network, commonly called FinCEN. Here is what you need to know:

Do I need to report? A reporting company includes any company created in the United States that has a filing document with a secretary of state or any similar office. This would include LLC members, S Corporations and Partnerships. It does not include sole-proprietorships.

When do I need to report? The deadline is based on when your entity was created or registered. If your company existed prior to January 1, 2024, you must file your report prior to January 1, 2025. If your entity is formed in 2024, you have 90 days from the date of registration to file your report. After 2024, you have 30 days from the date of formation to file your report.

What do I need to report and why? You will need to provide your company’s legal name, Federal EIN and address. You will need to upload a copy of your driver's license or passport along with your name, address and date of birth. This information is being collected by the federal government to protect national security by making it easier to find corruption, money laundering operations, tax evasion, and drug trafficking organizations. This information will be shared with federal and state law enforcement agencies. Where do I file my report? www.fincen.gov.boi

What happens if I do not file my report? There are penalties for non-compliance as well as fines for providing false information. Please do not ignore this filing requirement.

Our firm is available and happy to help you meet this filing requirement. We will discuss this with each business owner at the time of tax preparation.

We have three types of deprecation at our disposal: bonus deprecation, Section 179 depreciation, and regular deprecation.

Bonus deprecation is made available by the federal government when they want businesses to invest in equipment. The current rules allow for an 80% deduction of the full purchase price in 2023, 60% in 2024, falling by 20% each year thereafter until it is completely phased out in 2027. Eligible assets include new and used property such as vehicles, equipment, furniture and fixtures, machinery and certain qualified improvements made to non-residential buildings.

Section 179 depreciation is embedded in the tax code so there isn’t a phaseout date. Section 179 allows businesses to deduct up to 100% of the purchase price of qualifying equipment placed in service during the tax year. For 2023, the Section 179 deduction limit is $1,160,000. A few things to remember, the business has to be profitable in order to use the section 179 deduction, there is an upper limit to the amount a business can purchase and still receive the deduction and if you own multiple business entities, the section 179 deduction has to be coordinated amount entities, the upper limit applies to the business owner, not the entity.

Work Opportunity Tax Credit is available to employers for hiring individuals from certain targeted groups who have faced barriers to employment. This program will run through December 31, 2025. Most employers in Marquette County are eligible for the WOTC because Marquette County was designated a Rural Renewal County by the Federal Government. Our office manages this program for all clients we prepare payroll for. Please contact us if you have any questions about his program.

The 2024 annual gift tax exclusion amount has risen to $18,000 per recipient. The gift tax exlcuison allows a taxpayer to give a gift tax-free without using up any of the taxpayer’s lifetime gift and estate tax exemption.

On January 1, 2024, Michigan’s minimum wage rate increased to $10.33 per hour. The hourly rate for minors, age 16 and 17 is $8.78 per hour and the tipped employee hourly rate is $3.93

Beginning January 1, 2023 the credit equals 30% of qualified energy efficiency improvements installed during the year, residential energy property and home energy audits.

What expenses qualify? Exterior doors, windows and skylights, insulation and air sealing materials or systems. The labor costs for installation of these products does not qualify for the credit. Exterior doors have a credit limit of $250 per door with a maximum of $500 total. Windows and skylights have a credit limit of $600 which translates into 30% of a $2,000 purchase price. Please be sure to check the energy star and International Energy Conservation Code standards on these products to make sure they qualify.

Home energy audits qualify for a tax credit of up to $150 if a written report is received and conducted by a home energy auditor.

Residential energy property included in the credit, limited to $600 per item ($2,000 purchase price), costs may include labor for installation of these products: central air conditioning, gas, propane, and oil water heaters, furnaces, and hot water boilers.

Heat pumps and biomass stoves and boilers with a thermal efficiency of 75% or better qualify for a credit up to $2,000 per year. The costs may include labor for installation.

The residential clean energy credit for solar electric panels, solar water heaters, wind turbines, geothermal heat pumps, fuel cells, and battery storage technology is 30% of the cost of new installations including labor costs. There isn’t a cap on the total credit, the only caveat is that the credit will reduce taxes owed, it is not refundable after taxes are reduced. You can also claim this credit on both your personal residence and a second home as long as it is not a rental property.