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Three New Maryland Laws Business Owners Should Know About

Three New Maryland Laws Business Owners Should Know AboutMaryland business owners have seen the state’s minimum wage increase coming for a few years. The hike (from $9.25 to $10.10 per hour) went into effect July 1, 2018, and was the final phase of a law passed by the General Assembly in 2014. The first raise, from $7.25 to $8, went into effect in 2015, increasing three times after that. The minimum wage increase was not the only law to take effect on July 1. There are a few other new laws on the books now that business owners will want to keep an eye on. Corporate income tax: As of July 1, Maryland has officially initiated a phase-in of a single-sales factor apportionment system to calculate corporate income tax. What it means: In tax years 2017 and earlier, all multistate Maryland corporate taxpayers calculated sales tax with a three-factor formula based on property (how much land the corporation…

Health care tax credit for small businesses

Maryland small business owners might be unaware of a federal tax credit for some businesses that provide health insurance for their workers. It is available for businesses making less than $50,000 annually with less than 25 full-time employees. The credit was established by the Affordable Care Act. Despite the fact that the Government Accountability Office estimates up to 4 million small businesses were eligible for the credit in 2014, fewer than 200,000 companies claimed it. The GAO cites several reasons for such low participation. Many business owners are simply not aware of the credit. Others may find claiming it is too complex. The credit is available for two consecutive years and is available for up to 50 percent of the employer's health care contribution costs. The GAO states that some owners may not feel the credit gives them enough of an incentive to provide health insurance to their workers while…

How companies can save money through tax inversion

Companies that are based in Maryland may be able to save money on taxes by moving their headquarters overseas. Many companies take advantage of lower foreign tax rates by buying or merging with foreign companies and completing what is known as a 'tax inversion." Although regulators in the U.S. are trying to make tax inversions more difficult to complete, companies like Coca-Cola Enterprises and CF Industries are still opting to pack their bags. Corporate tax rates in the U.S. are much higher than they are in countries like Japan, Germany, Canada and Great Britain. U.S. companies with overseas operations must pay taxes on profits that they earn in the U.S. as well as on the profits that they earn in foreign countries. When a company moves its domicile to another country as part of a tax inversion, it can pay only the local tax rate in all of the countries…

Business tax planning

Taxes are often one of the biggest expense items on any Maryland business's income statement. When managed properly, tax expenses can be kept under control, helping you and your business reach higher levels of profitability. Without proper planning, taxes can be a major expense, possibly causing your business to take a loss. In extreme situations, poor tax planning could lead to tax errors, which could in turn cause fines, interest and other penalties. For all of these reasons, it's critical that you have a skilled, experienced and knowledgeable tax attorney on your side. Tax planning begins with business formation. Different business structures have different tax consequences. From sole proprietorships to limited liability companies to corporations, every type of business structure has its own set of tax rules and regulations. There is no right structure for everyone. Rather, you should use the structure that best fits your needs and goals. A…

What tax year do I use for my business?

A business owner in Maryland or any other state may choose a calendar tax year or a fiscal tax year. A tax year is selected based on when a company submits its first tax return, ask for an extension on a tax return or pays estimated taxes. Unless a company is subject to a required tax year, it is free to choose between a calendar or a fiscal year. As its name implies, a calendar tax year begins on the first day of January and ends on Dec. 31. Fiscal tax years are 12 consecutive months that end on the last day of any month except January. Companies that keep no records, have no accounting period or do not have a tax year that qualifies as a fiscal year must use the calendar year. Those who wish to change their tax year once it has already been adopted must file…

Business tax planning in Maryland

Tax considerations are important for businesses of all sizes, and planning is important to limit the risk of unexpected consequences. The more your company grows, the more extensive your tax obligations may become. Proper business tax planning can be important to ensure that obligations are minimized so that the value of company holdings and income can be maximized. Making decisions without experienced insight may be risky due to the fact that the laws related to business taxes can be complex and confusing. These decisions could be risky if your understanding is limited. However, reliable legal representation may allow you to bypass risky decisions that could jeopardize your company. Additionally, you may find that as your short-term tax obligations and decisions are handled, an experienced business tax lawyer may provide long-range understanding of your choices and their implications. In addition to federal income tax concerns, your company may be faced with…

Tax information for Maryland business owners

If someone is opening a new business, it is important that they are proactive about how they deal with taxes. Proper business tax planning can help prevent entrepreneurs from running into legal problems as well as help them estimate their business costs related to taxes. Planning should include selecting the most appropriate business structure, keeping track of tax-related documents and taking advantage of tax credits. The most common business structures are sole proprietorships, partnerships, LLCs and Subchapter C or S corporation. Each has different pros and cons, and the type of structure someone chooses for their business will also determine how they are taxed. Along with selecting the right structure, it is critical that individuals keep track of their accounting and any receipts that may be needed for tax purposes. Failing to do so may lead to problems filing and the possibility of an audit. There are a variety of…

Business tax planning tips

Maryland business owners should have a long-term plan when it comes to paying taxes. Whenever a business experiences a financial gain or a financial loss, it may be a good idea to talk to a financial adviser who may be able to help a company minimize its tax burden. The first step that a business may want to take when it makes a profit is to create a retirement plan for its owner. This will help an individual save for retirement while being able to deduct the contribution as a business expense. The next tip for business owners is to consider the structure of the business. While a sole proprietorship makes it easy to run the company, incorporating may provide legal protection that could save money in the future. An attorney may be able to help with additional paperwork that is involved when running a corporation. Running a profit or…

Consider tax implcations before forming a LLC

Business owners based in Maryland owe it to themselves to study the tax implications that come with forming a LLC. LLC's are a popular form of business organization because the offer an opportunity to organize a business that is separate from personal expenses and liability. For partners looking to start a small business and protect their family assets, this is an attractive option. Many times, when forming their business, individuals tend to put the potential taxation repercussions. When filing federal taxes, the IRS has no designated form for LLCs. Owners can file as if the business were an S or C corporation. The state of Maryland does not require a special business tax for LLCs. While the State Comptroller's office provides information for filing business taxes, in many case those new to paying business taxes are prudent to seek the advice of an attorney. Regardless of whether a company decides…

High or low ranking? Is Maryland a pro-business state or not?

Maryland Gov. Martin O'Malley is unquestionably enthused by a pro-business endorsement rendered the state by the U.S. Chamber of Commerce. That entity gives Maryland high marks for business innovation and entrepreneurship, ranking it preeminent among all American states in those categories. O'Malley obviously likes to pass along that view, mentioning it frequently in speeches. What the governor prefers not to note is an alternative view advanced by the national nonprofit group Tax Foundation, which gives the state comparatively poor marks for its business and corporate tax policies. In stark contrast to the chamber's number-one ranking, the foundation places Maryland near the bottom of all states, making its business climate appear decidedly unwelcoming. Which view is correct? Is Maryland a Mecca for business start-ups and efficient corporate policies or, alternatively, does the state place hurdles in front of business entrepreneurs and established corporate actors? As is similarly true with many things…