We wish you and your loved ones a wonderful holiday season and the very best for 2016.
Contributed by Elite Bookkeeping & Tax Services
The Internal Revenue Service recently simplified the paperwork and recordkeeping requirements for small businesses by raising from $500 to $2,500 the safe harbor threshold for deducting certain capital items.
The change affects businesses that do not maintain an applicable financial statement (audited financial statement). It applies to amounts spent to acquire, produce or improve tangible property that would normally qualify as a capital item.
The new $2,500 threshold applies to any such item substantiated by an invoice. As a result, small businesses will be able to immediately deduct many expenditures that would otherwise need to be spread over a period of years through annual depreciation deductions.
“We received many thoughtful comments from taxpayers, their representatives and professional tax community”, said IRS Commissioner John Koskinen. “This important step simplifies taxes for small businesses, easing the recordkeeping and paperwork burden on small business owners and their tax preparers.”
Responding to a February comment request, the IRS received more than 150 letters from businesses and their representatives suggesting an increase in the threshold. Commenters noted that the existing $500 threshold was too low to effectively reduce administrative burden on small business. Moreover, the cost of many commonly expensed items such as tablet-style personal computers, smart phones, and machinery and equipment parts typically surpass the $500 threshold.
As before, businesses can still claim otherwise deductible repair and maintenance costs, even if they exceed the $2,500 threshold.
The new $2,500 threshold takes effect starting with tax year 2016. In addition, the IRS will provide audit protection to eligible businesses by not challenging use of the new $2,500 threshold in tax years prior to 2016.
For taxpayers with an applicable financial statements, the de minimis or small-dollar threshold remains $5,000.
American Corporate Enterprises, Inc. are not accountants and we do not offer tax advice.If you do not have a tax adviser and you need help with your bookkeeping or taxes, contact our affiliate:
Elite Bookkeeping & Tax Services (800) 416-3820
Are you in need of some business financing in your state? Here are links to resources for loans, grants and tax incentives for you.
New Jersey http://www.nj.gov/njbusiness/financing/
North Carolina http://blnc.gov/start-your-business/financial-resources
North Dakota http://www.business.nd.gov/finance/
Rhode Island http://commerceri.com/finance-business/
South Carolina https://www.scbos.sc.gov/
South Dakota http://sdreadytowork.com/Financing-Incentives.aspx
Are you interested in doing business with other states? Below are links for vendor and procurement resources for you.
Your Corporation or LLC would need to be registered in those states in order to do business there. We can help you with forming domestic entities as well as filing as foreign entities in every state.
New Jersey http://www.nj.gov/njbusiness/contracting/
New York https://nyspro.ogs.ny.gov/
North Carolina http://www.doa.nc.gov/pandc/Default.aspx
North Dakota http://www.nd.gov/spo/vendor/registry/
South Dakota https://boa.sd.gov/divisions/procurement/vendors/
West Virginia http://www.state.wv.us/Admin/Purchase/vrc/default.html
View our package options at https://www.americancorpenterprises.com/compare-plans/
Also did you know that you can earn referral credit with us? Tell your friends about our special offer and if they place an order, you’ll receive referral credit. That applies even when we’re not running promotions.
Feel free to call us if you have any questions. Toll Free (888) 274-1130.
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