CIMA Operational level The fundamentals of business taxation
CIMA Operational level The fundamentals of business taxation: The Types of Business taxation
The IRS requires that all businesses except partnerships file an income tax return yearly. A business that uses the withholding method of paying taxes pays the taxes as it earns income. A business that pays estimated taxes can pay the taxes due when it files a federal income tax return. In addition, some states require businesses to pay income tax depending on the legal structure of the business.
The IRS imposes self-employment taxes to contribute to social security and Medicare of a person who works for himself. Some taxpayers find this to be a benefit because the coverage provides them with benefits for retirement, disability and hospital insurance, and also pays benefits to a survivor in the case of death of the payee. Self-employment tax is 15.3 percent. 12.4 percent of that tax goes to Social Security. The Social Security portion of the tax is paid only on the first $106,800 earned by a taxpayer. The IRS defines a self-employed person as “one who carries on a trade or business as a sole proprietor or independent contractor, a member of a partnership that carries on a trade or business, or a person who is otherwise in business for themselves.”
An employer must pay employment taxes to cover Social Security and Medicare taxes, federal income tax withholding, and federal unemployment tax (FUTA) for its employees. The employer pays half of the expense of the Social Security and Medicare tax out of her own pocket and deducts the other half from the employees’ paycheck. The employer covers all the cost of the FUTA. For convenience, the IRS allows an employer to pay the taxes through electronic deposit, check, money order or cash. States also require that businesses with employees pay state employment taxes to cover workers’ compensation insurance and unemployment insurance. California, Hawaii, New Jersey, New York and Rhode Island pay taxes to cover temporary disability insurance.
The federal government levies excise tax for certain types of businesses, depending on what they sell or manufacture, the kind of business they operate, the kinds of equipment and products they use, and whether they receive payment for certain services. These include environmental taxes, communications and air transportation taxes, fuel taxes, and taxes on the first retail sale of heavy trucks, trailer and tractors.
CIMA Operational level The fundamentals of business taxation: Details on CIMA Operational level Marketing: History and Services
Details on CIMA Operational level Marketing: The Chartered Institute of Management Accountants (CIMA) is a UK based professional body offering training and qualification in management accountancy and related subjects. It is focused on accountants working in industry, and provides ongoing support and training for members.
CIMA is one of the professional associations for accountants in the UK and Ireland. Its particular emphasis is on developing the management accounting profession. CIMA is the largest management accounting body in the world with more than 227,000 members and students in 179 countries. CIMA is also a member of the International Federation of Accountants.
CIMA operates a standard scheme of qualifying examinations for prospective members. It promotes local education, training and management development operations, and new techniques through its research foundation and the dissemination of management accounting practices through publications and other media related activities. CIMA has been active in recent educational and vocational initiatives in former Eastern bloc countries. It publishes a monthly journal, supplied free to members and registered students, called ‘Financial Management’.
CIMA is recognised as a professional accounting body for various statutory purposes by UK and various overseas governments. The institute regulates the activities of its members by a code of practice, a discipline committee and (a recent innovation) a continuing education scheme. Its governing body is its council, comprising members elected from regional branches. Each of the branches has a committee and is responsible for much of the ‘grass roots’ activity. Activity such as qualification development is undertaken from the London head office.
The CIMA Global Business Challenge, an annual international business and strategic management competition for undergraduates around the world, is designed to bring out the best in the young business leaders of tomorrow.
In July 2009, CIMA added an online community – CIMAsphere – to its website. The community consisted of a range of blogs, discussion boards, groups, community answers, expert Q&A sessions and some social networking features for members, students and the general public. This has since been shut down. Members are instead encouraged to join the CIMA LinkedIn group, and students are directed to CIMAconnect, an online study support portal.
In 2011, CIMA entered into a joint venture with the American Institute of Certified Public Accountants (AICPA) to launch a global management accounting designation called the Chartered Global Management Accountant (CGMA).In the Americas outside the U.S., non-U.S. CPAs can obtain the new designation as an AICPA International Associate, after a rigorous assessment process. In the rest of the world, new designation holders are able to become members of CIMA after the same assessment process.
CIMA is proactive to tie up with American CPA because of the current convergence trend between US-GAAP and IFRS, reinforced following the merger of the iconic New York Stock Exchange with Germany’s Deutsche Boerse AG. “It remains to be seen whether companies listed in a combined exchange would be required to report under IFRS, US GAAP or both, but as the US appears to be moving towards IFRS adoption it is more likely the international standards would be the accounting rules of choice”.
CIMA Operational level The fundamentals of business taxation: Recommended read
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