Tax Advice and Representation for Businesses

As a business owner, you bear the responsibility of paying income tax whether your business is a sole proprietorship, a partnership, an LLC, or a corporation.


Browse our resources below to help answer any questions you have. If you have immediate questions, please fill out our "request a consultation" form.

Why Close with Koontz & Associates

We understand you have many options when partnering with a real estate attorney. Every attorney will tell you the same thing: they are the best in town and they have you and your client in their best interest.

Not every attorney is also an accountant.

When you partner with Koontz & Associates you also get an accounting perspective. Your closing is going to have a strong impact on how you file your taxes. Wouldn't you want an accountant at the table when you close?

Buyers and Sellers may save money by having both an attorney and an accountant at the closing table. We are a comprehensive fabric. Nothing will "fall through the cracks."

Most importantly, we'll come up with questions that you never knew you should ask. You may be distracted by the millions of loose ends you need to tie up during the closing process. We are here to help you tie those knots and make sure everything is tight.

What are you waiting for? Get in touch and find out why it's better when you close with us.

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10 Business Start Up Tips

Thinking of starting a business or formalizing your business entity? Have you been afraid or not quite ready to take the risk? Fear not! America thrives on the contributions of small businesses. Follow the legal and regulatory steps below to be sure you start growing your business from a solid foundation.

  1. Select Business Structure

    One of the first steps in organizing any new business is to determine which type of business entity should be formed. When considering the type of business, you need to evaluate both present and future needs of the business and its owners in legal, financial, and tax related aspects. Did you know when operating as a sole-proprietorship, you are entirely and personally responsible for the actions of the company? The best way to really protect your personal assets is to form a corporation or limited liability company (“LLC”).

    There are four common types of business entities:

    Sole Proprietorship

    The sole proprietorship is the simplest form of business structure, however provides the least amount of liability protection. This is not a separate legal or tax entity. The business owner is personally liable for all taxes and liabilities of the company. Many people mistakenly believe the use of “Doing Business As” (D/B/A) designation as the formation of a separate entity. It is not, and it does not afford the owner any liability protection.


    A partnership is an organization or association of two or more owners who operate a business together and allocate the ownership and profit/loss aspects according to their contractual terms. This partnership is a separate entity for legal and tax filing purposes, but not tax paying. Rather it is a form of a conduit where income, losses, credits, and certain deductions are passed along to each partners' tax return. There is no liability protection for the general partners.


    A corporation is a separate, legal entity formed through a state charter using Articles of Incorporation. It is authorized to perform primarily all the business activities an individual can, including such things as filing and paying taxes, signing contracts, and making loans. It is formed through the issuance of stock or securities.

    Limited Liability Company (LLC)

    A limited liability company (LLC) is often described as the combination of a partnership and a corporation. This is because an LLC combines the tax advantages and management flexibility of a partnership with the liability protection of a corporation.

    Forming an LLC has become a popular alternative for sole proprietors and partnerships that have thought about forming a corporation in order to protect personal assets. LLCs also avoid "double taxation" because the income of the LLC itself is not taxed at the company level. Like a partnership, taxes on profits and deductions of losses are passed through to the individual on the personal tax return of each LLC member (owner).

  2. Determine State Business & Professional License Requirements

    The State of Florida regulates certain industries and professions. You may verify if your profession is regulated by visiting

  3. Name the Business

    Availability may be determined via State of Florida’s ( entity name registration and/or the US Patent and Trademark Office database.

  4. Register with the Florida Department of State, Divisions of Corporations

    All legal entities, with the exception of sole proprietors operating under their owner’s full legal names, must file with the State of Florida, Division of Corporations ( A Fictitious Name Registration is also required of individuals who do business under any name other than their full, legal personal name or a properly registered corporate name, partnership, trademark, service mark or limited liability company.

  5. Apply for your Federal Tax ID number

    It is commonly recommended that a Florida business apply for a free Employee Identification Number (EIN) number with the IRS. If your corporation or LLC will be electing to be taxed as an S- Corporation, you will make this election with the IRS as well, using Form 8832 and Form 2553.

  6. Register with Tax Authorities

    In addition to federal & state payroll taxes, employment taxes, sales taxes are handled at the state & county levels. If you will collect and remit taxes to the State of Florida, you will additionally need to file Form DR-1 at

  7. Establish Financial Relationships

    As soon as possible, open a separate business bank account and set up your accounting system. Even small businesses are strongly recommended to open separate accounts. This will demonstrate the observation of the corporate formalities required for liability protection to be afforded & greatly reduce the time and expense on bookkeeping or accounting.

  8. Protect Your Investment

    There are several protective measures that you can take for your business. First, make sure to copyright any original works of authorship (books, drawings, designs, etc.), trademark any branded names used, and patent any inventions. Also, to protect yourself from any potential litigation, you may wish to seek out business liability insurance.

  9. Develop Internal Agreements

    If more than one person will be involved in the ownership and management of the firm, or if you are developing an LLC, Corporation, or partnership, it is recommended that you seek legal advice in the development of internal agreements.

  10. Hire Employees and Outsource

    Your time is valuable! Focus on your core business and outsource accounting, administrative, and legal work to expert and staff.


Koontz & Associates has helped form many new businesses in Sarasota and around the state. We work with local residents and international clients looking to move to Florida. Start the conversation about your new business with us by requesting a consultation with Jo Ann Koontz, Attorney / CPA - 941-225-2615.

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Tax Representation

Related Topics: Business Tax

Representation before the IRS

If you have a tax issue and need to communicate with the IRS, consider hiring professional help to represent you.  A tax professional will help you reduce the financial, emotional, and mental strain that dealing with the IRS causes.  Koontz & Associates, PL is able to represent you before the Internal Revenue Service and other tax authorities.  In most cases, we can negotiate with the IRS on your behalf without you having to speak directly with their representatives.   Our goal is to serve you and provide the best tax relief solution. 

Jo Ann M. Koontz is a licensed CPA and Attorney practicing in the area of taxation.  Since 1998 she has worked on cases involving the IRS.  She can assist you with your unique situation.


Representation before the Florida Department of Revenue

If you have received notices from the Florida Department of Revenue, you should consider hiring professional help to represent you.   The Florida Department of Revenue is involved in several areas of taxation such as Sales and Use Tax, Reemployment Tax, Corporate Income Tax, Documentary Stamp Tax and other taxes.

Sales and Use Tax applies to the sale, rental, lease, or license to use goods, certain services, and commercial property in Florida. Also, short term residential rentals are subject to sales tax as well.   Individuals and businesses operating, selling or using goods and services may be required to collect or pay taxes to the Florida Department of Revenue.  If your business will have taxable transactions, you must register with the Department of Revenue before doing business in Florida.  If you are unsure whether your business transactions are subject to sales tax, contact Koontz & Associates, PL for clarification.

Formerly known as Unemployment Tax, Florida’s renamed Reemployment Tax is designed to give partial, temporary income to workers who lose their jobs through no fault of their own and are able and available to work.  Employers pay for reemployment assistance through a tax administered by the Department of Revenue.  If your business meets the criteria of the department, you must register and pay reemployment taxes.

Corporate income tax returns need to be filed with the Florida Department of Revenue.  Corporations, LLCs, partnerships, individuals, and entities that do business, earn or receive income in Florida (including out-of-state corporations) must file a Florida corporate income tax return.  For details and assistance with preparing your corporate tax returns contact Koontz & Associates, PL.

Other taxes administered by the Department of Revenue include communications services, documentary stamp, fuel, gross receipts, insurance premium, pollutants, severance, solid waste and surcharge.  If you have questions about any of these, contact Koontz & Associates, PL for assistance.

Call Koontz & Associates, PL in Sarasota if you are struggling with an IRS or Florida tax problem

Jo Ann M. Koontz offers a powerful combination of in-depth knowledge of tax regulations, a firm grasp of the business world, and years of experience representing clients. To schedule a consultation, call the Sarasota office of Koontz & Associates, PL at 941-225-2615.

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Tips for Taxpayers Who Owe the IRS

Related Topics: backtax, Tax

Many people become paralyzed with fear when they owe money to such an onerous creditor as the Internal Revenue Service. They cringe at the sight of that dreaded piece of mail – a notice from the IRS. The most important thing is to respond promptly. Ignoring the problem will only make it worse.

An IRS notice includes the amount of tax owed, plus any penalties and interest added from the date the tax was due. If you are unable to pay your balance in full, and fail to respond, the IRS will begin collection actions against you. This may include offsetting any refund to which you may be entitled, filing a notice of federal tax lien against your property, or serving a notice of levy of assets such as wages, bank accounts, Social Security benefits and retirement income. To prevent these drastic actions, you must communicate with the IRS promptly.

The first thing you should do is to confirm the tax assessment is in fact correct. If you believe it isn’t, you must contact the IRS within 60 days and speak with someone who can explain the charges. If you still believe the charges are incorrect, or if you are uncomfortable calling the IRS, you should contact an attorney or a tax professional.

Second, if you are able, you should remit some payment with the notice/bill in order to show good faith effort to comply. Because your balance is subject to interest and a monthly late payment penalty, it is in your best interest to pay the balance in full as quickly as possible. Penalties are also assessed for failure to file a tax return, so you should file immediately even if you cannot pay your balance in full.

If you are able to pay your full balance and simply need more time, you may request up to 120 days to pay in full. You are not obligated to pay a fee for this arrangement, although the interest continues to accrue. The IRS will encourage you to obtain a cash advance on your credit card or obtain a bank loan, but many people are unwilling or unable to do so, as the fees for doing so may be too high.

The most common solution to this daunting debt is to submit a request for an Installment Agreement. This is a monthly payment plan you can use to pay the debt, ward off collection efforts and return to a good night’s sleep. Again, interest continues to accrue until the debt is paid in full. In many cases, the IRS still files a tax lien.

To qualify, you must meet certain criteria. You must demonstrate current and future filing compliance – meaning all tax returns have been filed. In addition, you must begin making payments toward your current tax liability, the purpose of which is to show that this problem will not continue to recur and the issues which contributed to the problem have been resolved.

You must disclose your income, expenses, assets and liabilities. Based on the information provided, you can make an offer of the monthly payment you feel you can afford. The IRS will ultimately determine your monthly payments based on your disposable income, according to local standards. Frequently, the IRS calculation of the amount you can afford is higher than what you’re comfortable with. There is some room for negotiation, if you properly exercise your rights.

The IRS will respond to your request usually within 30 days, either to inform you whether your request has been approved or denied, or in some cases, whether more information is needed to make a decision.

Once the IRS approves an Installment Agreement, it is imperative that you comply with all the terms and not miss any payments or make late payments. If you default, the Installment Agreement may be voided and the IRS may immediately reinstate enforcement actions to collect.

Another option for taxpayers who are unable to pay is to request an Offer in Compromise (OIC). An OIC is an agreement between the taxpayer and the IRS that allows you to settle your outstanding tax liability by paying less than the full amount owed. Although, it should be noted that if the liabilities can be fully paid through an Installment Agreement or other means, the taxpayer will in most cases not be eligible for an OIC.

If you truly cannot afford to pay anything as a result of your financial hardship, the IRS may place you in a status known as “Currently Not Collectible.” This is a temporary hold on your account which permits you to not make any payments for the duration of the hardship. This status is reviewed annually and you have an obligation to inform the IRS promptly if there is a change in your financial circumstances. Interest continues to accrue, but no collection action will be enforced.

The tax rules and regulations are complex and change frequently. You should always file your tax return timely, even if you know you cannot pay the balance due in full. Knowing that payment arrangements can be made provides a significant relief for many taxpayers. If you are not comfortable representing yourself, you should hire an attorney or tax professional that practices in this area regularly and understands the intricacies of dealing with the IRS.  

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Business Income Taxation

Related Topics: Business Tax

As a business owner, you bear the responsibility of paying income tax whether your business is a sole proprietorship, a partnership, an LLC, or a corporation. Proper calculation and payment of your business taxes are essential for the financial health of your company and to ensure that you do not encounter any legal or tax liability issues in the future. Business income taxes are extremely complex, especially in light of recent changes in tax legislation. Without the proper skills and an intimate knowledge of tax law, it is very easy to make a mistake that could prove costly for your company. Attorney and Certified Public Accountant Jo Ann M. Koontz of Koontz & Associates, PL can assist you in calculating your business income tax, taking advantage of the deductions available to you, and avoiding serious mistakes.

New Legislation Makes Business Income Tax Preparation More Complicated

New tax legislation is passed every year and has great impact for individuals and for businesses, but unlike the provisions made for individuals, the incentives and benefits for corporations may be temporary. It is essential that you take advantage of the tax incentives and create a comprehensive tax plan that takes temporary benefits into consideration. Koontz & Associates, PL have followed these changes closely and are ready to help you take advantage of these incentives and put a creative financial strategy in place for the future.

Significant Benefits for Companies that Invest in Equipment, Property, and Services

Both the American Taxpayer Relief Act of 2013 and the 2012 Relief Act provided significant incentives for businesses who invest in capital and equipment. However, because many of these incentives are temporary, it is vital that you take advantage of them now. Changes included:

  • A 50% first-year bonus deprecation allowance to apply for qualifying property placed in service through 2013. For longer lasting and transportation property, the allowance extends into 2014.
  • Under Internal Revenue Code Section 179, taxpayers in 2013 may expense as much as $500,000 of qualifying property reduced by the amount by which the property exceeds $2,000,000. Beginning in 2014, however, taxpayers may only deduct $25,000 of qualifying property with an investment cap of $200,000 regardless of inflation.
  • Research Tax Credits, originally set to expire in 2011, have been extended through 2013. This credit may be claimed for costs incurred by business research or payments to universities and other institutions for their research. This applies to the amount by which the research for this fiscal year exceeds the annual average for research for the last four years.
  • The Relief Act extended the 15-year recovery period for leasehold, retail, and restaurant improvements. Taxpayers may continue to take those deductions through 2013.

Changed Vehicle Deductions Have Easy-to-Miss Details

Business vehicles have always been eligible for tax deductions. However, new changes have been made with regard to depreciation reductions and lease inclusions. Vehicle expenses can be calculated using mileage costs or using actual expenses, such as lease payments, registration, maintenance, storage, repairs, oil changes, and tolls. The actual deductions taken will vary depending on the size and type of vehicle, whether it is a luxury car, and whether it is leased. Deciding whether to calculate costs based on mileage or actual expenses can be tricky. Koontz & Associates, PL can help you make the right decision for your business.

Sweeping Health Care Reform Has Significant Effects on Southwest Florida Business Owners

The U.S. Supreme Court ruled that the Patient Protection and Affordable Care Act (PPAC) is constitutional. This act has significant consequences for businesses. With the Supreme Court’s declaration, all businesses are now required to meet the provisions of PPAC. Employers must report the total cost of provided health benefits on their employees’ W-2 forms, whether the employer or the employee pays for it.

Small businesses have slightly different provisions for health care. If you own a small business with no more than 10 employees and an average wage that does not exceed an average of $25,000, you may be able to take a 35% tax credit on health insurance premiums paid in 2012 and 2013. Tax exempt employers can take a 25% discount on premiums paid between 2010 and 2013. After 2014, taxable employers can deduct 50% of insurance costs and non-profit employers can deduct 35%. An employer must offer insurance through a state insurance exchange.

Employee Services Are Rewarded with Significant Tax Incentives

In addition to health care, employers are rewarded for giving jobs to those-in-need and to providing services to their employees. The Work Opportunity Tax Credit (WOTC) grants tax incentives to employers who hire from hard-to-employ groups. Usually, this incentive is equal to 40 percent of the worker’s wages, with a maximum set at $6,000. The Heroes Act of 2011 extended this tax credit to companies who hire veterans and disabled veterans. The tax credit for hiring these workers can go as high as $9,600.

In addition, the Relief Act made a permanent extension for tax credits given to companies that provide child care and facilities for their employees. Companies may deduct 25% of all child care costs and 10% of all child care resource and referral costs, not to exceed $150,000 in any tax year.

Some Tax Hikes Negatively Impact Business Owners

Not all of the changes in tax law will positively impact business owners. There are increases of which you should be aware. They include:

  • Personal holding company taxes – The rate on these taxes has been permanently raised from 15% to 20%, beginning December 31, 2012
  • Accumulated Earnings Taxes – The rate on these taxes has also been permanently raised from 15% to 20%, beginning December 31, 2012

It is vital that you be aware of these changes or work with and who is familiar with them to keep from unwittingly making a smaller payment than required and having issues with the IRS in the future.

Call Koontz & Associates, PL for Corporate Income Tax Services in Southwest Florida

Jo Ann M. Koontz offers a powerful combination of in-depth knowledge of tax regulations, a firm grasp of the business world, and years of experience representing tax clients. To schedule a consultation, call the Sarasota office of Koontz & Associates, PL at 941.225-2615.

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Sales & Use Taxes and Tourist Development Tax

Sales & Use Taxes 

Almost every Floridian who purchases, sells or provides goods and services is subject to Sales and Use Taxes.  Florida sales tax is generally 6% but it can be higher depending upon additional local levies.  This applies to the purchase price, admission prices, storage, and services, as well as tangible items. Use tax is similar to sales tax, although it only applies in certain situations, for instance:

  • If you buy a taxable item in Florida and did not pay taxes at the time of purchase
  • If you buy a taxable item outside of the state without paying taxes and have it delivered into Florida
  • If you buy a tax exempt item with the intent to resell and then use it for personal or business purposes

In addition to little-known laws regarding use tax, there are also laws regarding discretionary sales surtax, which is a county tax that applies to almost all goods or services subject to regular sales tax. However, these taxes are not universal across Florida but are calculated according to the county to where the goods are shipped. Not paying sales or use taxes or the discretionary sales surtax can result in serious legal consequences including criminal sanctions.  Because sales and use tax regulations are not always clear cut, it is easy to make mistakes. Consulting with us can help ensure that you meet all requirements, and minimize your tax liability by taking advantage of all exemptions.

Sales and Use Tax Questions

If you are starting a new business in Florida, it is essential that you determine whether state law requires you to collect and remit sales tax. Most businesses are required to pay sales and use tax and relatively few are exempt. Exempt from taxation are federal, state, county, and municipal governments, charities, religious groups, educational institutions, science organizations, and veterans’ institutes. If you are not sure whether you are subject to taxation or eligible for exemption, consult with us. We can help you complete tax registration with the state of Florida and also prepare and file your sales and use tax returns allowing your business to utilize all eligible exceptions, deductions, and incentives, and reap the greatest profits possible.

Tourist Development Tax

Florida law allows for a Tourist Development Tax.  Individual counties may impose local option transient rental taxes on rentals or leases of accommodations in hotels, motels, apartments, rooming houses, mobile home parks, RV parks, condominiums, or timeshare resorts for a term of six months or less. The revenues may be used for capital construction of tourist-related facilities, tourist promotion, and beach and shoreline maintenance; however, the approved uses vary according to the particular levy. Depending on a county's eligibility, the maximum tax rate varies from a minimum of 3 percent to a maximum of 6 percent. These local option taxes can be administered by the Department of Revenue or by one or more units of local government.  Koontz & Associates, PL can assist you with your questions and concerns about these taxes and the relevance to your situation.

Call Koontz & Associates, PL for Information on Sales & Use and Tourist Development Taxes

Jo Ann M. Koontz offers a powerful combination of in-depth knowledge of tax regulations, a firm grasp of the business world, and years of experience representing clients. To schedule a consultation, call the Sarasota office of Koontz & Associates, PL at 941-225-2615.

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State and Local Tax Services

Related Topics: Business Tax

Florida does not levy a state income tax on individuals. However, Florida residents are not exempt from other taxes payable to the state. Business owners and those who own tangible personal property may owe significant taxes to the state and/or county. Corporate Income Tax and Tangible Personal Property Tax can be complicated to understand, calculate, and file. The experienced Sarasota accounting team of Koontz & Associates, PL can ensure that you meet all legal requirements and limit your tax liability.

Florida Corporate Income Tax

Many companies that generate profits in Florida, including those located outside of the state, owe Florida corporate income tax, and even if no taxes are due, many of those companies must still file an information tax return each year. Corporate income tax can be confusing because there are different regulations for each type of business tax structure. For instance:

  • An LLC taxed as a corporation must file the Florida corporate income tax return.
  • An LLC taxed as a partnership may have to file Florida Form F-1065
  • A single member LLC is not subject to Florida corporate income tax. However, if the sole member of the LLC is a corporation that owns the company, it is not tax exempt, and the business must file Florida form F-1120.
  • Entities which have elected to be taxed as S corporations and tax-exempt businesses do not have to file a Florida corporate income tax return unless they are subject to federal income tax.  However, in the first year the business elects to be taxed as an S-Corporation, the company must notify the Department of Revenue of the S corporation election in order to be exempt from filing a tax return.

Tangible Personal Property Tax Is Governed by Numerous Regulations

All business owners, self-employed workers, and independent contractors who own tangible personal property are subject to tax on these assets each year. Florida law defines tangible property as, “all goods, chattels, and other articles of value (but does not include vehicular items) capable of manual possession and whose chief value is intrinsic to the article itself.” Furniture, computers, equipment, and signs are examples of such goods. Owners of tangible personal property should file Form DR-405 or an extension before April 1, or they will be subject to penalties. Each tax return is eligible for an exemption of up to $25,000 based on the value of the property, and if more than one person owns the property, each owner may qualify for a $25,000 exemption. In addition, each freestanding business site requires a separate DR-405 form with a related $25,000 exemption.

Tangible Personal Property Tax is complex, and many property and business owners find themselves filing form after form, still unsure as to whether they are meeting all of their legal requirements or paying tax at the proper rate.  The Sarasota law and CPA firm of  Koontz & Associates, PL is highly familiar with this area of tax law and will work on your behalf to take advantage of the deductions to which you are entitled.

Call the Sarasota Law Firm of Koontz & Associates, PL for State and Local Tax Assistance in Southwest Florida

Jo Ann M. Koontz offers a powerful combination of in-depth knowledge of tax regulations, a firm grasp of the business world, and years of experience representing tax and business matters. To schedule a consultation, call the Sarasota office of Koontz & Associates, PL at 941-225-2615.

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Calculate and File Your Payroll Tax

Related Topics: Business Tax, Payroll

As an employer, you have numerous tax responsibilities, one of which is filing state and federal employee payroll tax quarterly and at the end of each taxable year. These taxes are withheld from each of your employees’ paychecks, and you must submit these withholdings regularly to the federal government. Usually, payroll taxes are calculated by subtracting statutory and voluntary payroll deductions from the employees’ gross pay to arrive at net pay for the year. Though this may sound simple, it can actually become quite confusing, especially if you are in charge of a large workforce. If the thought of filing payroll tax for your employees fills you with trepidation, the experienced and knowledgeable firm of Sarasota’s Koontz & Associates, PL can help you calculate and file these returns so you can focus on the myriad of other things you need to do.

All Forms of Payroll Tax

There are multiple forms of payroll tax that must be calculated and filed. They include:

  • Federal Income Tax – These funds must be withheld from each paycheck and deposited by the employer.
  • Social Security and Medicare Tax – These taxes are withheld from an employee’s paycheck, and the employer pays a matching amount. In 2013, the rate of Social Security and Medicare taxes increased to 6.2%.
  • Additional Medicare Tax – In 2013, the federal government approved an additional 0.9% Medicare tax for workers above a certain wage bracket. Employers are now responsible for withholding these funds.
  • Federal Unemployment (FUTA) Tax – Employers must pay an annual tax to fund state and federal unemployment programs.
  • Self-Employment Tax – Self-employment taxes are comprised of two parts: Social Security and Medicare. As a self-employed person, there may be tax deductions that can be taken. We can help you determine your eligibility for self-employment tax deductions.

In addition, employers must take into consideration voluntary payroll deductions such as health insurance, life insurance, retirement plans such as 401(k)’s, stock purchase plans, meals, uniforms, and union dues.

Calculating and Filing Payroll Tax is a Year-Round Commitment  

Employee payroll tax must be filed monthly or semi-weekly, and your business must follow schedules according to federal law. These laws and requirements can change at the beginning of every taxable year, so it is important to keep on top of the regulations for the year. Beginning in January and extending through April, there are a number of other forms such as W-2s and 1099s that you are required to file. In short, filing and keeping track of payroll tax can be a full-time job in itself, depending on the number of employees you have.

Koontz & Associates, PL Can Help with Payroll Taxes.

Jo Ann M. Koontz offers a powerful combination of in-depth knowledge of tax regulations, a firm grasp of the business world, and years of experience representing clients. To schedule a consultation, call the Sarasota office of Koontz & Associates, PL at 941-225-2615.

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Individual Income Tax

Related Topics: Individual Tax, Tax

Koontz & Associates, PL Prepares Individual Tax Returns

Planning, calculating, and paying income tax can be complicated. The professional tax services provided by the Sarasota Law and CPA firm of Koontz & Associates, PL can ease the stress of income tax payment with comprehensive individual income tax preparation and planning services.

New Laws Make Certified Public Accountants a Necessity for Smart Tax Planning

Each year, the federal government passes new laws regarding income taxes, and in the last few years, the government has made sweeping changes.  When President Obama signed The American Taxpayer Relief Act into law it reduced the amount of income tax to be paid by most Americans and it extended many tax incentives, either permanently or temporarily.

While the Act is primarily beneficial for most Americans, not all of its provisions work to your advantage. In addition, the widespread changes make income tax planning for the following years very difficult. Koontz & Parkin CPAs can help you take advantage of the positive aspects of the Act, minimize negative impact, and make a smart, well-informed tax plan for the future. In particular, the Koontz & Associates, PL team can help you with specific areas affected by the new laws, including:

  • Tax Rates: The Taxpayer Relief Act permanently extended previous tax rates for families, except for single filers with incomes above $400,000, heads of households with incomes above $425,000, and married couples with joint returns of $450,000 or more. These taxpayers will pay at a 39.6% interest rate, with adjustments for inflation in the following years. However, the amount of Social Security each worker must pay increased to 6.2% (a 2% increase) meaning that Americans will actually take home less income this fiscal year.
  • Capital Gains and Dividends: For taxpayers with the incomes mentioned in the section above, capital gains and dividends are now being taxed at 20% rather than at 15%, as they were in previous years. For other taxpayers, the taxation rate remains at 15%, and for income below the top 15% tax-bracket, there is a 0% taxation rate.
  • Alternative Minimum Tax: The Alternative Minimum Tax (AMT) was established more than 40 years ago to ensure that wealthy citizens paid their taxes. However, it was never adjusted for inflation, and in recent years it began affecting middle-income taxpayers, as well. The American Taxpayer Relief Act made permanent adjustments for inflation and changed exemption amounts.
  • Estate Tax: For a number of years, estate, gift, and generation-skipping transfer taxes have been inconsistent. The Taxpayer Relief Act set a standard of taxation, and the minimum estate, gift, and generation-skipping transfer tax is now 40%, which represents a 35% increase from 2012. However, there is no change in the exclusion amount for estate and gift tax in 2013. In subsequent years, it is at $5 million, with adjustments for inflation. The generation-skipping transfer tax exemption is also $5 million for 2013 and years following, with adjustments for inflation.
  • Tax Deductions: The American Taxpayer Relief Act permanently and temporarily extended a number of tax credits and deductions, including a permanent extension of the enhanced adoption credit/exclusion, a permanent extension of the enhanced child and dependent care credit, a permanent extension of the $1,000 child tax credit, and a permanent extension of the enhanced student loan interest deduction. Temporary extensions include the higher education tuition deduction, transit benefits parity, IRA distributions to charitable organizations, American Opportunity Tax Credit, teachers’ classroom expense deductions, cancellation of indebtedness on principal residence, and residential energy efficient property credit.
  • 3.8% Net Investment Tax: Additional tax is now calculated based on a taxpayer’s “net investment income,” including interest, dividends, annuities, rent, royalties, and similar sources of income. However, it is not calculated based on income from a business or the sale of property related to a business. It is also based on the lesser of the taxpayer’s net investment income or adjusted gross income in excess of $200,000 ($250,000 for a married couple or $125,000 for married couple filing separately).
  • 0.9% Medicare Tax: Beginning in 2013, higher income individuals are required to pay an additional 0.9% Medicare tax. In other words, any income exceeding $200,000 ($250,000 for a married couple or $125,000 for a married couple filing separately) will be taxed at a 2.35% Medicare rate.
  • Retirement Savings: The American Taxpayer Relief Act has made it easier for taxpayers to save and plan for retirement, lifting most restrictions on Roth accounts.

Call Koontz & Associates, PL for Individual Income Tax and Planning Services in Sarasota

Jo Ann M. Koontz offers a powerful combination of in-depth knowledge of tax regulations, a firm grasp of the business world, and years of experience representing clients. To schedule a consultation, call the Sarasota office of Koontz & Associates, PL at 941.225-2615.

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Tax Services

Related Topics: Tax

At Koontz & Associates, we understand the tax implications of any decision you make and we can help you minimize your tax commitment wherever possible by looking at the big picture.

Your tax standing is delicate — one bad decision has the potential to destroy your financial record, sink your business, and jeopardize your goals for the future. No matter what issue you’re currently having, it needs to be addressed quickly.

Not having any of the problems below? Good! Let’s keep it that way. Request a consult so we can establish a relationship now and make sure you don’t find yourself in a messy tax situation down the road. Remember, it’s easier and less expensive to prevent tax issues ahead of time than it is to fix them when the damage has already been done.

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