Top 10 Tax Changes for Business Owners for Tax Year 2011

Here at Pronto Income Tax, we love to serve the small business owners in and and around the City of Los Angeles with affordable, professional income tax preparation and tax consulting. We are proud to say that we have 47+ years experience doing taxes for self-employed people in Los Angeles. Tax laws are always changing and busy small business owners often have trouble keeping up with changes that could affect them; we know how it is, we are a small business ourselves after all so we can relate!

Therefore we would like to offer you on this page our "Top 10 Tax Changes for Small Business Owners for Tax Year 2011." We hope that learning of these small business owner tax changes will save you money on your 2011 small business tax return. After all, knowledge is power as a small business owner.

But before we get to the list of small biz changes, please allow us to quickly inform you about our limited time $99 self-employed tax preparation promotional offer only in our West Los Angeles office location. NO ONE will beat our $99 price for self-employed tax preparation in our West L.A. office. This promotional small business tax prep offer is valid only until March 25th of 2012 and can only be redeemed in our West Los Angeles / Culver City / Marina Del Rey office in the 90066 zip code.

You must use the secret code "Andy said it was OK" to get this special $99 offer for small business tax preparation. This price includes federal and state tax returns and electronic filing; in short, this price is not a gimmick like some other places try to do, it is the real price you will get when you say the secret code!

And now without further shameless plugging, here is our Pronto Income Tax list of the 10 most important business owner income tax changes for tax year 2011:

1. IRS is pursuing unreported business income with a new technique: as of 2011, IRS is now requiring merchant credit card processing companies to report the amount of credit and debit sales for each business directly to the IRS, on a new Form 1099-K. This will make it more difficult to hide (i.e. not pay tax on) business income, since the IRS will now have third-party information about the sales of each business. Every business owner who accepts credit/debit cards should be aware of this tax change.

2. For tax year 2011, the standard mileage rate for business miles is 51 cents per mile for the first six months of 2011 (January – June), and then 55.5 cents per mile for the last six months of the year (July – December). Business owners can choose either the standard mileage rate or actual vehicle expenses.

3. For 2011, business owners can still take self-employed health insurance as a deduction to reduce income tax, but not to reduce Self-Employment Tax, as was the case for tax year 2010.

4. Business owners who hired full-time employees during 2011 may be able to claim a California tax credit of up to $3,000 per new employee hired. The California New Jobs Credit can be claimed using Form 3527. More information about the CA New Jobs Credit can be found at www.ftb.ca.gov.

5. The "wage base" for Social Security Tax remains at $106,800 of net business profit for tax year 2011, but has been increased to $110,100 for 2012. For business owners with at least $110,100 of net profit, this change translates to a tax increase of $505 for 2012.

6. To protect a business cell phone deduction in past years, extensive and burdensome levels of record-keeping were required. These outdated documentation rules have been loosened to give business owners easier deductibility of cell phones used for business.

7. For 2011, there is no more $400 Single / $800 Married Filing Jointly "Making Work Pay Credit" to help self-employed taxpayers pay their Self-Employment Tax. However, the Self-Employment Tax rate for tax year 2011 is lower at 13.3 percent of net business income, rather than the usual 15.3 rate. Currently, Congress has extended this 2 percent reduction in the Self-Employment Tax rate through the end of 2012.

8. IRS tax penalty relief available for self-employed taxpayers whose business income has declined at least 25 percent in 2011 relative to 2010. If you are in this situation of your business income declining at least 25 percent and you owe a tax bill for 2011 that you cannot pay by April 17, you can use the new IRS Form 1127A to apply for IRS tax penalty relief. You won't get this IRS penalty relief unless you apply for it, though--so make sure to apply if you qualify!

9. For tax year 2011, business owners have the ability to write off the cost of business equipment, such as vehicles used for business, much more aggressively than the normal IRS rules allow. The Section 179 expensing limits, for example, are very generous at $500,000. "Bonus depreciation" is also available. However, business owners should be strategic about when to write off the cost of business equipment, so as to obtain maximum tax benefit and not waste deductions in years they're not needed.

10. The pending expiration of the so-called "Bush Tax Cuts," scheduled for the end of 2012, may affect business owners of all income levels in a large variety of ways. Overall, the entire federal income tax system itself is very much up in the air and is likely to remain so until after the 2012 Presidential Election.

If you are a small business owner in Los Angeles looking for affordable self-employed tax preparation, visit our West Los Angeles office today to claim your limited time $99 self-employed small business tax preparation tax preparation offer. You can save yourself hundreds of dollars using this offer and get great service, too.

If you are not ready to actually do your taxes, but just have a question or two, you can also stop by our office or call 310-577-7530. We are always happy to help local small business owners with any and all tax preparation, bookkeeping, and payroll needs. Thank you for visiting this page, we wish you all the best of luck with your business ventures, and we hope to see you soon to do your self-employed tax return (federal and state) for only $99!

Please note that this $99 self-employed tax preparation promotion is for new clients only and cannot be combined with any other promotion or discount.