Scarinci Hollenbeck, LLC
The Firm
201-896-4100 info@sh-law.comFirm Insights
What New Jersey Small Business Owners Need to Know About Income Tax Returns
Author: Scarinci Hollenbeck, LLC
Date: November 22, 2016
Key Contacts
Back
When tax season comes around, there are several factors to keep in mind as a small business owner in New Jersey; specifically with income tax returns.
Tracking taxable income and ensuring compliance with requisite tax forms can be an ongoing struggle with the pressures of running a business. On top of everything else, a small business owner also needs to make sure that he files his appropriate personal income tax on the earnings they paid themselves from their company versus the business tax return from company income earned.
Income tax filings
It is difficult enough to properly file income taxes, but with all the capital expenses a small business owner makes, a sizable tax bill can be even more challenging without seeking loans. Without enough money to pay for taxes on profits, this is a particularly pressing issue for small business owners who have spent their remaining funds on capital expenditures for the year.
Part of the issue for companies of this size is the amount of effort to collect sales taxes from customers. In each state that a New Jersey small business conducts sales, the owner is required to collect the sales tax as applicable to the state. These taxes cannot be written off on returns because sales taxes are considered personal liabilities to the owner of the business.
A common misconception of collecting sales tax is that the revenue earned from those sales do not belong to the company. These earnings need calculation and paid to the federal and state governments.
Structure the business properly
Small business owners in New Jersey typically structure their companies as C corporations, S corporations, partnerships and limited liability companies. These structures differ for tax purposes – specifically whether the owner pays personal or business income:
- C corps: Pay income taxes at the business level.
- LLCs, S corps and partnerships: Pay personal or business taxes on their share of the company’s income.
LLCs, S corps and partnerships are beneficial in New Jersey because the rate for individual returns has been lower than C corps since 2006. In fact, according to a New Jersey Business interview with Ronald J. Ruggeri, principal of MSPC Certified Public Accountants and Advisors, PC, C corps are not common in the state anymore.
“We don’t really see too many C corporations these days; that way, if you operate at a loss in any given year, you get to carry that loss forward to reduce future taxable income or be entitled to a refund,” Ruggeri explained. “New Jersey looks at each year in a vacuum; whatever happens in that year happens in that year, and it can put small business owners at a disadvantage.”
No Aspect of the advertisement has been approved by the Supreme Court. Results may vary depending on your particular facts and legal circumstances.
Related Posts
See all
Does Your Homeowners Insurance Provide Adequate Coverage?
Your home is likely your greatest asset, which is why it is so important to adequately protect it. Homeowners insurance protects you from the financial costs of unforeseen losses, such as theft, fire, and natural disasters, by helping you rebuild and replace possessions that were lost While the definition of “adequate” coverage depends upon a […]
Author: Jesse M. Dimitro
Understanding the Importance of a Non-Contingent Offer
Making a non-contingent offer can dramatically increase your chances of securing a real estate transaction, particularly in competitive markets like New York City. However, buyers should understand that waiving contingencies, including those related to financing, or appraisals, also comes with significant risks. Determining your best strategy requires careful analysis of the property, the market, and […]
Author: Jesse M. Dimitro
Fred D. Zemel Appointed Chair of Strategic Planning at Scarinci & Hollenbeck, LLC
Business Transactional Attorney Zemel to Spearhead Strategic Initiatives for Continued Growth and Innovation Little Falls, NJ – February 21, 2025 – Scarinci & Hollenbeck, LLC is pleased to announce that Partner Fred D. Zemel has been named Chair of the firm’s Strategic Planning Committee. In this role, Mr. Zemel will lead the committee in identifying, […]
Author: Scarinci Hollenbeck, LLC
Novation Agreement Process: Step-by-Step Guide for Businesses
Big changes sometimes occur during the life cycle of a contract. Cancelling a contract outright can be bad for your reputation and your bottom line. Businesses need to know how to best address a change in circumstances, while also protecting their legal rights. One option is to transfer the “benefits and the burdens” of a […]
Author: Dan Brecher
What Is a Trade Secret? Key Elements and Legal Protections Explained
What is a trade secret and why you you protect them? Technology has made trade secret theft even easier and more prevalent. In fact, businesses lose billions of dollars every year due to trade secret theft committed by employees, competitors, and even foreign governments. But what is a trade secret? And how do you protect […]
Author: Ronald S. Bienstock
What Is Title Insurance? Safeguarding Against Title Defects
If you are considering the purchase of a property, you may wonder — what is title insurance, do I need it, and why do I need it? Even seasoned property owners may question if the added expense and extra paperwork is really necessary, especially considering that people and entities insured by title insurance make fewer […]
Author: Patrick T. Conlon
No Aspect of the advertisement has been approved by the Supreme Court. Results may vary depending on your particular facts and legal circumstances.
Sign up to get the latest from our attorneys!
Explore What Matters Most to You.
Consider subscribing to our Firm Insights mailing list by clicking the button below so you can keep up to date with the firm`s latest articles covering various legal topics.
Stay informed and inspired with the latest updates, insights, and events from Scarinci Hollenbeck. Our resource library provides valuable content across a range of categories to keep you connected and ahead of the curve.
What New Jersey Small Business Owners Need to Know About Income Tax Returns
Author: Scarinci Hollenbeck, LLC
When tax season comes around, there are several factors to keep in mind as a small business owner in New Jersey; specifically with income tax returns.
Tracking taxable income and ensuring compliance with requisite tax forms can be an ongoing struggle with the pressures of running a business. On top of everything else, a small business owner also needs to make sure that he files his appropriate personal income tax on the earnings they paid themselves from their company versus the business tax return from company income earned.
Income tax filings
It is difficult enough to properly file income taxes, but with all the capital expenses a small business owner makes, a sizable tax bill can be even more challenging without seeking loans. Without enough money to pay for taxes on profits, this is a particularly pressing issue for small business owners who have spent their remaining funds on capital expenditures for the year.
Part of the issue for companies of this size is the amount of effort to collect sales taxes from customers. In each state that a New Jersey small business conducts sales, the owner is required to collect the sales tax as applicable to the state. These taxes cannot be written off on returns because sales taxes are considered personal liabilities to the owner of the business.
A common misconception of collecting sales tax is that the revenue earned from those sales do not belong to the company. These earnings need calculation and paid to the federal and state governments.
Structure the business properly
Small business owners in New Jersey typically structure their companies as C corporations, S corporations, partnerships and limited liability companies. These structures differ for tax purposes – specifically whether the owner pays personal or business income:
- C corps: Pay income taxes at the business level.
- LLCs, S corps and partnerships: Pay personal or business taxes on their share of the company’s income.
LLCs, S corps and partnerships are beneficial in New Jersey because the rate for individual returns has been lower than C corps since 2006. In fact, according to a New Jersey Business interview with Ronald J. Ruggeri, principal of MSPC Certified Public Accountants and Advisors, PC, C corps are not common in the state anymore.
“We don’t really see too many C corporations these days; that way, if you operate at a loss in any given year, you get to carry that loss forward to reduce future taxable income or be entitled to a refund,” Ruggeri explained. “New Jersey looks at each year in a vacuum; whatever happens in that year happens in that year, and it can put small business owners at a disadvantage.”