tax laws

8 Facts About Tax Laws and Regulations You Didn’t Know

Taxes are something that has been an integral part of our lives since we became adults. Although no one likes to pay taxes, both because of the money and because of the time that has to be spent on the whole process, it is still something that is inevitable. On average, every citizen of the USA pays about 5 thousand dollars a year in income tax, which is not a small amount of money at all.

But what creates additional stress is whether you do everything right and on time since it is very common for people to miss due date. So it is best to learn as much as possible about the tax season because then it will all be much less stressful for you. To help you, we will tell you what are the facts about tax laws and regulations you didn’t know.

1. Code is extremely long

When the Revenue Act re-established a federal income tax in 1913, signed by then-President Woodrow Wilson, it had about 400 pages and it was certainly possible to read it in a reasonable time. But since then, the number of pages has increased by about 200 times. This brings us to the fact that the tax code is incomparably longer than the Bible and the Statute of Independence combined. That is why it is practically impossible to read everything, and especially to remember.

This leads to a lot of stress in people because it is clear to them that they don’t know enough about that complex topic. That is why more and more people are hiring professionals when the tax season comes or even dedicate time to education, attending seminars and webinars like run by IRS experts, to be able to do everything without error.

2. It existed before 1913

Although most only know about the aforementioned Revenue Act, the first income tax appeared during the Civil War, so that the state would have more money at its disposal. From then until 1913, several types of taxes changed and with it various payment rules.

3. Constant changes

If you thought that everything was established a long time ago and that there were no changes, you are wrong. There have been thousands of changes in the last decade alone. This is necessary because jobs and everything else is constantly changing, so the tax code must stay up to date. That is why professionals are constantly being educated because things are changing at a great speed.

4. IRS is far from perfect

While many imagine the IRS as the perfect agency, this is nowhere near true. According to various studies we read, mistakes made by IRS employees result in a loss of several billion dollars each year. Imagine 10 billion dollars more in the federal budget if mistakes are significantly reduced. Not all the blame can be put on the employees, because they have too much work and the rules and laws are constantly changing so they are facing an uphill battle every year.

Also, it is not so rare that it is noted that IRS agents deliberately cheated, in order to avoid paying taxes and the like, for a period of several years. And what is strange is that most of them were not fired as consequence. While this is not a very common cause, it certainly happens and has a bad impact on the image of the IRS.

5. You can end up in prison if you don’t pay

Although it is much rarer nowadays for someone to end up in prison for avoiding to pay for taxes, it can still happen. Debtor’s prison is a thing of the past and there is usually another way for you to pay your debts. However, if IRS agents estimate that you have been deliberately evading taxes for years, they may charge you with tax evasion. As it is a criminal offense, imprisonment is certainly one of the possible punishments. However, confiscation of property and similar methods of forced collection most often occur.

6. Many do not pay taxes

Although it first occurs to you that many are trying to defraud the IRS, which is certainly the case, when we say that many do not pay taxes we mean that many are exempt from that obligation. The reasons are mostly too low incomes, so the state does not aim for people to be poor because of taxes and then it happens that many are exempt from paying taxes. We find information that the average US resident needs more than 100 days a year to earn taxes, so if someone needs 150 or 200 days, for example, they may be exempt or reduced.

7. The amount varies

Although most people generally pay a similar amount each year in taxes, this can vary. If you have a regular income, the amount will be almost the same or the same from year to year. But if you start earning much more, that is, if IRS notice that your income has increased greatly, then the amount you have to pay may become higher. That is why it is important to pay close attention when filling out the documents so that you can predict if a tax increase awaits you, otherwise you may run into a financial problem if you have not calculated everything in the right way.

8. The first tax season was chaos

If you think that now IRS agents are making mistakes and that there are problems, believe us that today everything is perfect compared to the first tax season ever that happened in 1914.

The Revenue Act passed in the fall of 1913 and the tax season was March 1, 1914, which caused two problems. First, it was Sunday so they had to move by a day, and then it was too short a deadline for everyone to submit a report, as well as for all those who had to review all those reports because there were too many of them in a short period of time and of course they did not have the help of a computer.

We hope that the next tax season will be easier for you now that you have learned new information.

Why do you Need an Accountant to Start your own Business?

Accounting and a small business need to go hand in hand to ensure its success. Besides financial control, overcoming the competition and creating a differential to attract customers, having a partner accounting is much more than having help to overcome the bureaucracy of the country. In this article, we’ll show you how experts from companies such as accountant can do more for your venture – as long as you make room for it. Understand how important the accountant is in a small business. A management system that connects your entrepreneurship areas: from financial to business.

What the accountant does for your company?

With an increasingly challenging entrepreneurship environment, opening your new entrepreneurship could be a challenge. Check  for more useful information. As the owner of your own business, you are likely to have experienced these difficulties in your skin. However, an accountant can help you with these activities and even go beyond that. Here are some of the skills and duties you can expect from this professional.

  • Complete and file legal documents necessary for the operation of the company.
  • Ensure your business complies with tax and tax laws.
  • Make and send statements.
  • Keep the company record up to date and in accordance with the requirements of government agencies.
  • Handle payroll to ensure all employees are properly taxed salaries.

By hiring an accountant and integrating it into an online platform, you can delegate roles, transfer responsibility for paperwork, and gain time to focus on what really matters – the performance of your business.

The importance of the accountant to your company

If you are a self-employed CNPJ, without employees, you can easily do the tax part of your venture alone and without much difficulty. But when there are other people involved with your business and you are no longer an individual micro entrepreneur (MEI), it is a bit more complex to take care of accounting activities. Therefore, having an accountant to assist you is essential to grow your entrepreneurship. Such a professional is not only involved with the technical side of finance, he also acts as an indispensable consultant.

In everyday routines and controls

Ready legal formats, contracts, definitions and financial planning are not all the work of the accountant. The professional still needs to support the changes in legislation, make the monthly and yearly balance, and also notify you regarding the pending amount of the bill. In addition, it can assist you in other activities such as:

Inventory control – guiding if there is excess or surplus to facilitate the capture and retention of working capital. Analyze and compare supplier prices and rates to improve procurement.

Pricing – Set a fair price for you to sell your services and products by estimating every variable and fixed expenses, applying current interest ratio, and draw the best profit margin for the business.

Cash Flow – Determining the outflows and inflows of the capital so that future expenses and profits can be and drawn over a given period of time.

Obtaining credit – Prepare all necessary business documents for credit and evaluate the pros and cons.

When closing the deal

It is precisely by law, settlement of accounts, division of partners, and withdrawal of receivables, inventory and other financial and legal issues that the accountant must be present until the closing of business activities.

Now that you know how an accountant can contribute to your business, it’s time to explore the market and find the professional that best suits your needs. But be aware: Before signing the contract, you need to consider factors such as academic background, professional record, industry, current customer satisfaction, availability, and ultimately fees and charges charged by the professional. After analyzing these criteria you can identify the best partner to boost your business.