Bitcoins Treated as Property for Federal Tax Purposes

Many retailers and online businesses now accept virtual currency for
sales transactions, but the federal tax implications were relatively
unknown until recently when the IRS issued a set of FAQs on virtual
currency such as bitcoins. The FAQs provide basic information about the
U.S. federal tax implications of transactions in, or transactions that
use, virtual currency. Here's what you need to know.

Sometimes, virtual currency such as bitcoins operate like "real"
currency--i.e., the coin and paper money of the United States or of any
other country that is designated as legal tender, circulates, and is
customarily used and accepted as a medium of exchange in the country of
issuance.

But bitcoins do not have legal tender status in any jurisdiction. If
you've been paid in virtual currency, you should be aware that virtual
currency is treated as property for U.S. federal tax purposes. In other
words, general tax principles that apply to property transactions also
apply to transactions using virtual currency. Among other things, this
means that:

     Wages paid to employees using virtual currency are taxable to the
employee, must be reported by an employer on a Form W-2, and are
subject to federal income tax withholding and payroll taxes.
     Payments using virtual currency made to independent contractors and
other service providers are taxable and self-employment tax rules
generally apply. Normally, payers must issue Form 1099.
     The character of gain or loss from the sale or exchange of virtual
currency depends on whether the virtual currency is a capital asset in
the hands of the taxpayer.
     A payment made using virtual currency is subject to information
reporting to the same extent as any other payment made in property.

If you're a business or individual that deals in virtual currency such
as bitcoins, don't hesitate to call us.

 

Barry Eisenberg, SCORE Counselor

Visit us at: www.scoresouthflorida.net

 

Special Counselor of the Month

   

We are delighted to shine the spotlight on a distinguished member of our staff who by his or her efforts brings great credit to our organization. This month we are honored to salute:

ALPESH PATEL

 
Alpesh is a relatively new member of our award-winning Chapter, but in a very short time he has made a lasting impression. Becoming an IT aficionado at a very early age, Alpesh today owns and operates his own  Brand and Internet Marketing company, but still makes time to help others through his volunteer service with SCORE.
In addition to a full complement of clients eager to receive his mentoring, Alpesh also serves the Chapter as the Facilitator for our monthly Tech Roundtable, which often has a waiting list of eager attendees. And recently, at our 6^th Annual SCORE Business Conference at Lynn University, Alpesh instructed four sold-out classes on “How To  Build a Website”.
So, you see Alpesh’s versatility. What you don’t see, until you are being mentored by him, is his gentle, thoughtful way of guiding clients to the goals they seek. This special skill, combined with his extensive background of knowledge makes Alpesh a much sought-after Mentor.
No “picture” of this talented and giving Mentor would be complete without mentioning that, with all he has on his plate, operating his business, meeting with business clients, volunteering at SCORE, serving as an advisor to several charities, Alpesh still makes sure to spend quality time with his young children at sports and activities, and assist at school events.
 So, take a well-earned bow, Alpesh Patel, our Special Counselor of the Month.Everything you do, for everyone you help, makes our Chapter shine!

Small Business Defined

 

Is your business a Small Business? Please note that there are more details than I am presenting in this article. Here is one definition from the US Government:

U.S. Code› Title 15 › Chapter 14A › § 632

The United States Code is a consolidation and codification by subject matter of the general and permanent laws of the United States

Title 15 is identified as Commerce and Trade

Chapter 14A is identified as Aid to Small Business

Section 632 is identified as Small Business Concern

(1) In general

A small-business concern, including but not limited to enterprises that are engaged in the business of production of food and fiber, ranching and raising of livestock, agriculture, and all other farming and agricultural related industries, shall be deemed to be one which is independently owned and operated and which is not dominant in its field of operation: Provided an agricultural enterprise shall be deemed to be a small business concern if it has annual receipts not in excess of $750,000.

(2) Establishment of size standards

(A) In general

In addition to the criteria specified in paragraph (1), the Administrator may specify detailed definitions or standards by which a business concern may be determined to be a small business concern for the purposes of this chapter or any other Act.

(B) Additional criteria

The standards described in paragraph (1) may utilize number of employees, dollar volume of business, net worth, net income, a combination thereof, or other appropriate factors.

(C) Requirements

Unless specifically authorized by statute, no Federal department or agency may prescribe a size standard for categorizing a business concern as a small business concern, unless such proposed size standard—

(i) is proposed after an opportunity for public notice and comment;

(ii) provides for determining—

(I) the size of a manufacturing concern as measured by the manufacturing concern’s average employment based upon employment during each of the manufacturing concern’s pay periods for the preceding 12 months;

(II) the size of a business concern providing services on the basis of the annual average gross receipts of the business concern over a period of not less than 3 years;

(III) the size of other business concerns on the basis of data over a period of not less than 3 years; or

(IV) other appropriate factors; and

(iii) is approved by the Administrator.

(3) Variation by industry and consideration of other factors

When establishing or approving any size standard pursuant to paragraph (2), the Administrator shall ensure that the size standard varies from industry to industry to the extent necessary to reflect the differing characteristics of the various industries and consider other factors deemed to be relevant by the Administrator.

Now, did that help?

 

Steve Koenig, SCORE Counselor

Visit us at: www.scoresouthflorida.net

 

SBA definition of a Small Business

The following is taken from the Small Business Association web site:

Am I a Small Business?

You may take it for granted that your company is a "small business." The distinction is important if you wish to register for government contracting as a small business. To be a small business, you must adhere to industry size standards established by the U.S. Small Business Administration. As you register as a government contractor in the System for Award Management (SAM), you will also self-certify your business as small.

The SBA, for most industries, defines a "small business" either in terms of the average number of employees over the past 12 months, or average annual receipts over the past three years. In addition, SBA defines a U.S. small business as a concern that:

Is organized for profit

Has a place of business in the US

Operates primarily within the U.S. or makes a significant contribution to the U.S. economy through payment of taxes or use of American products, materials or labor

Is independently owned and operated

Is not dominant in its field on a national basis

The business may be a sole proprietorship, partnership, corporation, or any other legal form. In determining what constitutes a small business, the definition will vary to reflect industry differences, such as size standards.

 

Size Standards

Because all federal agencies must use SBA size standards for contracts identified as small business, you need to select NAICS codes that best describe your business and then determine if the business meet size standards for the selected NAICS codes. Use our Size Standards Tool to find out if you qualify as a small business. Once you have determined you are indeed a small business, you can then certify your business as small by registering as a government contractor.

For more SBA information go to: www.SBA.gov

 

Steve Koenig, SCORE Counselor

Visit us at: www.scoresouthflorida.net

 

 

Ideas for Opportunity

I have worked with some clients that believe they have a good idea that will make them a fortune. Some of these clients try to “sell” the idea to a company that will simply “pay them” for it. Some clients have not actually built the product they try to sell. You may not have people with ideas knocking down your door. And surely you cannot be the only idea person in your industry. So where can you find ideas for your business? Try these:

1. Your competition.  Where are they going? Check the patent applications.

2. Your Employees. They often have great ideas You should find and reward these.

3. Product reviews. Check out website reviews.  Can you develop a better solution?

4. Trade shows. Great places to find opportunities.

5. Your Customers. What kinds of problems are they having?

6. Online search. Writers often report on opportunities.

 

Identifying ideas is the first step. Now you need to come up with solutions. In order to keep coming up with great new ideas, you need to stay current and constantly repeat the processes.

 

What are you doing to keep abreast?

 

Steve Koenig, SCORE Counselor

Visit us at: www.scoresouthflorida.net

 

 

 

Cyber Threats and YOU

A recent article published in a southern city business journal focused attention on the status of cyber threats and small business. The article by Mike W. Thomas in the San Antonio Business Journal states:

Small businesses are increasingly worried about cyber threats today but are still doing little to address those concerns, according to a new survey. The survey of small businesses with fewer than 100 employees shows a disconnect between awareness of the cyber threat and actions that would address the problem.

A majority of small businesses owners, 63 percent, reported that they are worried about undetected malware, while 38 percent are worried about phishing attacks and 41 percent are concerned about breaches caused by human error. Nevertheless, 31 percent of small businesses still reported that they are not doing anything to protect against these threats.

What are you doing to protect your business?

 

 

Steve Koenig, SCORE Counselor

Visit us at: www.scoresouthflorida.net

 

 

 

 

 

2014 Hurricane Season. Are you ready?

It only takes one Hurricane to do a lot of damage to your business. How ready are you?

After a disaster hits, your insurance can help get your back into business. How soon often depends on your preparedness. So here are a few things you can do to make recovery easier:

1. Copy, copy, copy. – Your available records are a key to moving the process forward.

Scan records, tax returns, deeds, and insurance documents. List all financial account information. You can put all the information on a flash drive and store the drive away from the business location. Consider the idea of storing the information in a lock box somewhere for quick access.

2. Video Records can help. – Create a video of the business possessions. Show serial numbers where possible and describe the items and condition with a voice-over. Store the video with the flash drive noted above.

3. Cash and information is King. – Put together what boaters call an “overboard bag”. Pack it with enough cash to hold you over for 2 weeks (yes it is hundreds of dollars), along with key phone numbers like insurance broker, banks, etc., a few weeks of prescription drugs and some clothes. Put the bag in an easily accessible location.

4. Backup business information as often as possible and store them in a remote location. There are many options available.

Are You Ready?

 

Steve Koenig – SCORE Counselor

Visit us at: www.scoresouthflorida.net