Tax Updates For July 1
We hope everyone is enjoying the summer. The weather has been fantastic on the North Fork and we’ve been spending a lot of time at the local beaches and parks. Hopefully the sun has been shining wherever you are and you’ve had a chance to enjoy it. Summer or not, it’s always Tax Season for business owners and self-employed individuals. There are a couple of tax changes that become effective tomorrow, July 1st, that pertain to small business owners and self-employed individuals.
Savings on Federal Unemployment Tax:
The Federal Unemployment rate (FUTA) will change on July 1, 2011, from 6.2% to 6.0%. Most companies are eligible for a 5.4% credit, which reduces your effective FUTA rate from 0.8% to 0.6%. All of your FUTA liability gets reconciled when you file Form 940 at the end of the year. FUTA is only on the first $7,000 of each employee’s oayroll so you will essentially save $14 per employee after July 1st. It’s not a lot of money but in this economy every dollar counts.
Increased Mileage Deduction:
Effective July 1 through December 31, 2011, the mileage rate to calculate deductible costs of operating an automobile for business use increases from $.51 to $.555 per mile.
Also just a reminder that new payroll requirements for New York became effective in April 2011. New York requires all employers to include a business phone number on employee pay stubs. If you’re running your payroll through a payroll system like ADP or Quickbooks this information is already likely there, but if you’re writing manual checks be sure that the business phone number is on them.