Independent Contractor or Employee: How Do You Know? 0
Last week we discussed how important it is for a business owner to be classifying their workers appropriately or risk increased penalties from the IRS. But how do you know how the IRS classifies an individual working for you? How can a business owner determine the business relationship between themselves and an individual, and how do they classify them as an independent contractor, an employee, a statutory employee or statutory nonemployee?
Read MoreHow To Classify Your Employees and Why: SB 459 0
Many business owners have a lot to deal with on a day-to-day basis, whether it is managing staff, dealing with clients, working through administrative paperwork—there are few California business owners who have the time to look at every Senate Bill that gets passed.
Here’s one that we think you should all know about: California Senate Bill 459. Do you have any independent contractors working for your company? How many? Did you send them all a 1099 form? And, most importantly, do they all legally qualify as independent contractors?
If you are surprised by any of the questions above, it’s a good thing you’re reading this.
Read MoreShould You Use Tax-Preparation Software, or Not? 0
You’ve seen infomercials boasting about free software programs that allow you (yes, you!) to file your own tax returns. But the question is: How reliable are these programs, and should you use them?
The answer is pretty simple. If you have a general understanding of the US tax law and if you have enough common sense to comprehend your tax returns when completed, then it is okay to use tax-preparation software to do your own returns. However, if you have absolutely no idea what you are doing
Read MoreHow Do I Find the Accountant That’s Right For Me? 2
Don’t be fooled—April may seem like a long way off, but those sneaky taxes will creep up on you before you know it. Don’t wait until the very last minute to look for a tax preparer—begin looking now. Where do you start? Here’s a beginner’s guideline on what to look for when on the hunt for a legitimate and reputable tax preparer.
Read MoreShould I Incorporate My Orange County Small Business or Not? 2
Incorporation doesn’t sound like something a small-business owner needs to worry about—corporations are those big, faceless companies in big shiny skyscrapers, right?
Not necessarily! You only have to be making $50,000 a year to make it worth it from a tax perspective—for the most part.
Read MoreIt’s Time to Prep for Tax Returns! 2
At the moment, you’re probably waiting for your 1098, 1099 and W-2 forms to come in the mail before you can start your tax preparations. But now’s the time to get ready for your 2011 tax return! The first place to look to get your info ready to take to your tax preparer or accountant is by reviewing your 2010 tax return. This will remind you of some general information that will allow you to get your files in order.
Read MoreWhat IS Use Tax, and Why Do I Have to Pay It? 3
Amazon has been in the news a lot lately because of their affiliate programs and not charging their California customers state sales tax on their purchases.
The definition of use tax from the Franchise Tax Board website is as follows: Use tax is a separate tax that is generally due on the purchase of tangible property from outside of California. If you purchase an item from out of state that will be used, consumed or stored in California, you owe use tax.
Read MoreDecember Tips for Savings Accounts and Estate Planning 3
Are you looking to take advantage of any tax breaks available by the end of the year? It’s a good idea if you are positioned correctly.
If you are a W2 employee, there is not much time left for you to augment your 401(k) savings. IRAs allow you to contribute until April 15, but 401(k)s that are covered in an employment plan only allow the employee to contribute until December 31st. Therefore, if you’ve only put in $2,000 for the year, and you make $10,000 a month, you probably won’t have time to max out your 401(k) allocation of $16,500 before the end of December. But now would be a good time to look at maxing out what you can in order to maximize the amount your employer will match.
Read MoreWhat Purchases O.C. Small Businesses Should Make Before 2012 1
We’re counting down to the end of the year! It’s time to make those purchases that you’ve been putting off all year, but that you’ll know you’ll use in 2012, and for years to come.
Do keep in mind that what you’re doing is buying a tax deduction—and spending money just to save money on taxes is never a good idea, because you’re only saving a portion of what you spend when it comes to your taxes.
Read MoreAnaheim Hills Accountant Answers: What IS a Business Expense? 0
Here’s another one of those questions I get asked a lot: Why isn’t that a business expense? Primarily because there’s a difference between what the IRS defines as a business expense and what we’d like to write off as a business expense.
Let’s start with an example. Say you’re working late on a project, and it looks like you won’t make it home for dinner. You order some food to be delivered so you can keep working. Is that a business expense? No.
No, you might ask? But you wouldn’t have had to buy that food if you weren’t working on that report for your client, XYZ Corp! True, but you were going to eat anyway, as humans need food to survive. So whether you had brought in dinner or bought it, it’s not something that was specific to the job.
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