Leaving a job and starting as a business owner is a big step. There are many variables to consider when deciding to go on your own. Here we will discuss some less familiar topics that deal with forming an LLC in Florida.
Ensure you are forming the LLC for the right reasons. The main reasons why someone would choose to form an LLC are:
b) professional association
c) legal protection
d) tax purposes
Common prior accountant mistakes we see in practice are vast and many, however, we would like to highlight some serious mistakes that may be easily spotted by the right team early on.
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Here is the list we have compiled in the last decade worth of experience, we call this our top “dirty dozen” list of mistakes that can set any business back:
1) Missing essential legal documents or legal documents are not reviewed by the accounting team
2) Unnecessary S corporation elections to complicate tax filings and increase accounting, payroll processing fees needlessly as well as incurring tax liability incorrectly
3) Unconfirmed and unfiled S elections all while the owner operates as an S corporation without actual confirmation from the tax authorities
4) Incorrect entity type selection potentially triggering taxation due to the wrong setup
5) Merchant processor (example: Square) sets up sales tax collection for a vendor that offers non-sales taxable services
6) Personal vehicles depreciated under a corporate entity as if the entity assets and the personal assets are one and the same (as with a disregarded entity LLC) – incurring audit and penalty risk
7) Regular leased vehicles depreciated as if the leased vehicle was an asset owned by the business or business owner
8) Inaccurate reporting of financial data that stems from poor communication with the accounting team
9) Missing common tax deductions, for example, reimbursements for the home office, health insurance, and vehicle travel
10) Hidden tax notices from the IRS and the State going back to the inception of the business
11) Needless registrations for payroll and sales taxes or registrations without any form filing (zero returns need to be filed regardless of activity once registered)
12) Basic audit proofing the tax position with the filing, some may be easy steps like correct itemization of receipts and mileage logs, by law, all contemporaneous requirements
The tax mistakes listed above are the most common mistakes we see, but there are plenty of more tax mistakes that businesses and individuals can make. If you have any questions or concerns, contact us today by using the form below or give us a call at (904) 330-1200. Our experienced CPA Firm in Jacksonville, FL can assist you and answer any accounting questions you may have.
“We love small business, we are small business, your success is our success”
These are the questions, as small business owners, we ask ourselves – or should be! In the ever-changing business taxation environment, this question of a contractor vs. employee classification, in Jacksonville and outside our local geographic area, has remained relevant for a good portion of the past decade. And even today, when it feels like the entire world has been turned upside down, and all rules seem to have been broken, this remains a current and relevant topic for us to worry about.
California, always a leader in adopting tax reform, is actively pursuing contractor vs. employment classification – and MIS-classification. This year, if you hire a person in the same line of work as your business, you MUST classify them as employees. Most prominently, that means that the thousands of Uber and Lyft drivers are now required to be classified as employees; no longer are they considered independent contractors, no longer can they file a Schedule C and claim business expenses. They will be forced to convert to the companies’ employees, as has just been confirmed by the Appeals Court in CA.
But this ruling affects many others, not just the Uber and Lyft drivers as seen throughout California, small business owners such as beauty salon owners, insurance agencies, contractors, restaurant owners – are learning that the workforce they have traditionally classified as independent contractors are now legally their employees, with all the consequences that bring about.
Does this affect others living and working outside of California? Absolutely, you bet your sweet….bottom! You see, California has always been at the forefront of tax reform. Other states are quick to jump on this bandwagon. At the same time, others will also look to the Gold Rush State in how the independent subcontractors are to be treated very shortly! States already starting to follow in the trailblazer’s path include New York, New Jersey, and Illinois – each planning its own version of the legislation affecting the classification of the freelance workers.
As a small business owner, be responsible if you were to classify these freelancers as employees in an audit? Layers of taxation and compliance vary from state to state, and the main compliance points would be:
There may be more, but these consideration points are pretty universal, and you should be aware of it. If you think you may need to re-think your independent contractor employee classification, reach out to our Jacksonville CPA firm for a consultation. You may call us at 904-330-1200 or email at firstname.lastname@example.org.
Tax planning is a procedure for reviewing various options for conducting business and personal transactions to reduce tax liability.
Tax planning may result in substantial tax savings.
We will discuss ways to reduce tax liability:
– Income that is subject to taxation
– Making the most deductions and tax credits
– How investing impacts tax planning
– Tax savings through retirement contributions
– Education incentives
– Business and tax planning
– Strategies for the self-employed taxpayers
– Estimated tax
Some great lines from the 1980 movie Popeye with some of my favorite actors, Robin Williams and Shelley Duvall
The Tax Man:
You just docked?
The Tax Man:
Ah ha, let’s see here, that’ll be 25¢ docking tax.
By Greg Freyman, CPA and Angela Freyman, MBA
“Real estate cannot be lost or stolen, nor can it be carried away. Purchased with common sense, paid for in full, and managed with reasonable care, it is about the safest investment in the world”
~ Franklin D. Roosevelt
There are so many fascinating aspects to real estate. In this edition we will briefly go over important information on financial and tax topics of real estate as personal and investment use.
The 2018 tax reform known as the Tax Cuts and Jobs Act (TCJA) allows for a new 20 percent deduction on certain business income, known as the Section 199A deduction. One should have the right type of business and the right taxable income.
In our past blog article Christmas Came Early In 2018, we discussed different choices in conducting business when it came to taxation and the new tax legislation in great detail. We also explained the differences in taxation of each business entity structure, and if you have been paying attention, you will recall that the S corporation is a pass-through entity which is typically a great choice for most small business owners.
Dear Clients and Colleagues,
As we wrote in our prior blogs, tax reform has had a significant impact on the tax deductions you can now claim for business entertainment and meals.
“Thankfulness is the beginning of gratitude. Gratitude is the completion of thankfulness. Thankfulness may consist merely of words. Gratitude is shown in acts.” —Henri Frederic Amiel
Before we put you all to sleep with a lot of boring tax talk, let’s simply say that great things are about to come that will surely stimulate the economy in more ways than meets the eye at first glance.
We deal with agreements on a daily basis — from the terms and conditions on a website to municipal regulations that guide public actions. These agreements are often forgotten, if not entirely ignored, which may only become apparent when an issue arises. Similarly, partnership agreements may be drafted and then ignored. Partnership agreements guide many aspects of the partnership, including important tax consequences. Unless you have a legal background, you may have retained an attorney’s help when your partnership drafted its partnership agreement. What you may not have considered at the time was having a CPA review the agreement.