YES, Employee audits IS A THING! Let our Jacksonville, FL CPA Assist You with Classification & Compliance

• Am I correctly classifying my contractors?

• Are my contractors really employees?

• What are the risks involved, and

• How do I make sure I stay compliant with the employment laws?

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 developments:

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.

What this means to small business owners in other states:

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.

What’s the difference:

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:

• The employer portion of Social Security and Medicare taxes
• Unemployment insurance
• Workers’ Compensation
• Local labor laws
• Federal and State payroll tax filings

Schedule a consultation with a Jacksonville, FL Small Business Accountant:

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 info@taxproff.com.

I have exciting news that I couldn’t wait to share with you! It’s official, as of last week, September 17 to be exact – I am now an Enrolled Agent, admitted to practice before the IRS!

Although I’ve been deeply involved with tax planning and preparation for well over six years now, working closely with Greg at Freyman CPA, and helping our firm grow, this really takes it to the next level. This designation took over a year of hard work, studying every free moment, giving up weekends, weeknights, and working toward this goal.  I have achieved this success because I love what I do, as much as I do.

The designation involves passing three separate exams of 3 ½ hours each, and the bar to pass is quite high. Passing the exam demonstrates a thorough knowledge of individual and business Federal taxation, as well as in-depth expertise with representing clients before the IRS. I am so excited to bring this additional qualification to our firm. I look forward to helping you address existing tax issues and to work proactively on avoiding and preventing such pitfalls!

So what is an Enrolled Agent, and how does this affect you in Jacksonville, FL?

An enrolled agent is a person who has earned the privilege of representing taxpayers before the Internal Revenue Service. Enrolled agent status is the highest credential the IRS awards. Individuals who obtain this elite status must adhere to ethical standards and complete continuing education courses to remain active.

Enrolled agents, like attorneys and CPAs, have unlimited practice rights. This means they are unrestricted as to which taxpayers they can represent, what types of tax matters they can handle, and which IRS offices they can represent clients before. Because this is a Federal, not state, designation, enrolled agents can practice and represent clients in all 50 states.

Enrolled agents are experts in taxation and are the only federally licensed tax practitioners. The designation dates back to 1884, enacted after questionable claims had been presented for Civil War losses. Congress acted to regulate persons who represented citizens in their dealings with the US Treasury Department.

And for you, that means the next time we prepare a Power of Attorney form for your signature, you will see my name right next to Greg’s as the authorized representative, and you will know that both partners at our firm are working on your side, resolving and communicating with the IRS and other tax authorities.

Angie Freyman, MBA, EA – and the team at Freyman CPA

Contact Our Jacksonville, FL CPA & Enrolled Agent for Assistance

If you ever need help from a trusted Jacksonville, FL accountant or an Enrolled Agent call 904-330-1200 or email at info@taxproff.com

OUR TAX SYSTEM

Taxation in the US comes in many different varieties. We have taxation on income, self-employment, gifts, and so on. When speaking in terms of the estate tax, we are discussing a tax imposed on a transfer of net assets, a transfer tax. 

Different government bodies impose various types of taxes. Federal tax governs all US citizens or domiciled residents and encompasses all the different states found across the nation. 

Each US state also has its own set of rules and regulations that apply to specific residents of that particular state. 

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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

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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?

Popeye:
I has.

The Tax Man:
Ah ha, let’s see here, that’ll be 25¢ docking tax.

Popeye:
What for?

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HOME IS WHERE THE HEART IS – One prefers one’s home to all other places. Home is where one is most emotionally attached. Although the proverb has probably been in use since time immemorial, it has been attributed to Pliny the Elder (A.D. 23-79).

This tax blog specifically deals with our views on the topic of property insurance.

We typically won’t extend recommendations via our blogs unless we have used the services ourselves and can fully stand behind the company 100%.

Before we dive in, we wanted to extend a heartfelt thank you to one very special local business, Brightway Insurance brokerage of Julington Creek, owned and operated by Mr. Dave Lego.

Dave is an amazing friend, colleague, and mentor. His roots in the insurance industry run deep.

If you are in the market for a new insurance policy or are simply needing a review of your existing one, why not give Dave a quick call at (904) 217-7624, you will be happy you did!

One more thank you to a couple of awesome people that made our move happen:

~Jane Evans of Florida Homes Realty & Mortgage LLC – (904) 993-3001

~Josh Downing of Bank of England – (904) 962-3557

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Benjamin Franklin is believed to have said, “If you fail to plan, you are planning to fail.“

This tax blog specifically deals with our views on the topic of life insurance.

As we explored the beautiful island of Bequia (pronounced Bek-Way) post-tax season 2017, Angie and I both found ourselves driving to meet the sunrise one beautiful morning amid our 7-day stay. How romantic, right? In most ways, yes, although we still answer business phone calls and run payroll errands all while tucked away on a fantasy island getaway. The role of being small business owners is something we have now become accustomed to regardless of our geographic location — thank goodness for WiFi. We are perfectly fine with this responsibility and take it quite seriously. When we committed ourselves to our clients’ needs, we knew all that it would entail.

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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.

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“Take a better stand. Put money in my mom’s hand. Get my daughter this college plan, so she don’t need no man.”
~ Biggie

My uncle was a man I greatly respected. My uncle was in fact a self-made multi-millionaire ten times over. You may ask yourself how he got there, and what is his story. Like most millionaires, he was an investor, and he invested his money so that his money would earn money for him. That was his job – his job was managing his investments, and not punching a clock. I remember his living room was filled with financial statements from companies of all kinds, and with prospectuses pilling up to the ceiling. Yes, much like Warren Buffet, he had to know the company inside and out before he would send any money that way.

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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.

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