Taxes Attorneys

Tax attorneys may be well-versed on tax law, and here is an opportunity for you to know more about capital gains taxes.  Not that this information will make you feel any better about paying them (!), but knowledge is power and it is key to know what you are paying in taxes and why.

The History Of Capital Gains Taxes In The United States

What are Capital Gains Taxes:

The money you made from the time of acquisition or purchase to the time of sale of a valuable asset is known as your capital gains. This profit has a tax levied on it, which is called a capital gain tax. Some common examples of capital include large investments such as real estate, stocks, bonds, or mutual funds. The capital gains tax rates strongly affect the economy. Any increase could negatively affect millions, including middle class families with some stock or entrepreneurs trying to open their own small business.

The Beginning:

Capital gains always remained below 7% from 1913 to 1921. It was not until the Revenue Act of 1921 when the tax made its first upward climb to 12.5%. The tax then waxed and waned, hiking up with the 1969 and 1976 tax reform acts, only to be reduced in 1978 by congress. More recently, the Taxpayer Relief Act of 1997 again, lowered the capital gains rate. Currently, the rate for most taxpayers is 15% on long-term capital gains (i.e. property held for longer than 12 months) and ranging from 10% to 35% on short-term capital gains (i.e. property held for less than 12 months). Individuals in the 10% and 15% tax brackets pay 0% on long-term capital gains.

 The Rise and Fall:

The opposition to cutting capital gains taxes is usually rooted in the belief that the tax cuts benefit only the wealthy. However, this is only partly true. While most wealthy people own stocks and other capital, there are plenty of struggling businesses and middle class families depending on capital just as much. In reality, the cutting of capital gains taxes has proven to benefit the economy when tried in the past on multiple occasions. Historically, when capital gains taxes were raised it tended to harm the US economy more than help it.

Election ‘08 and Capital Gain Taxes:

Controversy looms over the 2008 Presidential election with capital gains taxes in the spotlight. Sen. Barack Obama revealed his plan to raise capital gains taxes in order to make the distribution of wealth fairer. He cited 50 individuals benefiting from the tax sharing a $29 billion income between them. However, many experts strongly oppose Obama’s plan saying an increase will hurt the economy possibly knocking off almost 2% of Gross Domestic Product.

Unfair Tax:

When it comes to the legitimacy of capital gains taxes and increases, there are solid arguments from both sides. Those who support low capital gains tax rates claim that any increase would discourage investing and hurt the economy. However, groups that support an increase are quick to deem low rates as unfair. They claim that by taxing capital gains at a lower rate then income taxes is essential a tax benefit for just the wealthy. ‘Some people who are richer than Croesus are paying 15 cents in federal income taxes on the marginal dollar, while you may be paying 25 or 35 cents,’ claims economist Alan Blinder says on his blog, EconomistsView.

By: roni deutch

Article Directory: http://www.articledashboard.com

Tax attorneys can assist you in looking over your business tax situation, ensuring that you are taking the proper deductions that you can and should, and are paying the correct amount of taxes with regard to your business situation.  While the economy is in a tough situation, it will be business owners that take the time to re-evaluate their business from top to bottom that will find new ways to be more profitable, to cut some “fat” they did not know existed and create a stronger business to weather this current economic storm.

Take Some Time To Give Your Business A Good “Once Over”

Productivity and sales may be slow at the moment but that does not necessarily mean that you should hit the breaks on everything in relation to your business. The fact that things are a little slow from a day-to-day workload perspective means that you have more time to step back and take stock of all those things you always mean to do, but never seem to get to.

Taking the time to review and make changes to the way your business functions could prove to be beneficial both now and more importantly in the long term, as the economy picks up again.

 There are numerous facets of the business that can be addressed from financial considerations to trading terms and operations/procedures. Following are some helpful questions you may like to consider to prepare your business for the tough year ahead and put it in an optimal position for when the tides turn and business is on the up!

Ask yourself the following questions. Once you have ascertained the specific areas of your business that require attention, ensure that you speak to the relevant professional in order to get the best advice on how to improve your current situation.

Banking

* Do you have a positive working relationship with your banking manager?
* Do you regularly touch base with them to provide updates on the financial status of your business and to seek any necessary advice?
* Do you have strategies in place in the unfortunate event that something should go wrong with the business financially?
* Are your business assets correctly valued in order to support any business loans that you may have?

Accounting

* Do you have a positive working relationship with your accountant?
* Is your business structured in such a way that your personal assets are protected?
* Do you have private assets held separately from the assets of your business?
* Are business owned assets held in the correct way, under the correct structure for your situation? For example, sole trader vs. partnership vs. company vs. trusts.

Operations and Trading Terms

* Are your contracts with customers and/or suppliers correctly structured and legally compliant?
* If you are supplying materials in the course of your business, does your contract allow for the retrieval of unpaid goods?
* Do your current contracts and trading terms processes include provisions to facilitate the prompt recovery of debt owed to you?
* Are there areas of your business that could be cut down or made more cost effective but will not affect the operations and daily functioning of the business?

Protecting your business

* Do you have a compliant and up-to-date shareholder’s agreement?
* Do you have clearly defined corporate governance practices in place?
* Does your current insurance policy adequately cover your business structure and assets?
* Is any intellectual property sufficiently protected and/or legally registered? For example business names and logos, personally developed products, methods or innovations.
* Do you require confidentiality, non-disclosure or restraint of trade agreements with suppliers or current or previous employees?

Protecting you, the owner

* Do you have an up-to-date and valid Will?
* Do you require an enduring power of attorney?

Of course these are just a few areas that you can look to in order to start strengthening your business. Other areas you may wish to consider include Marketing practices, Staffing and Human Resources and Management processes.

By: Michael Quinn

Article Directory: http://www.articledashboard.com