How to Avoid the Top Five Most Expensive Tax Problems for Small Businesses in 2011

Transcription

1 How to Avoid the Top Five Most Expensive Tax Problems for Small Businesses in 2011 Charley Moore, Chairman and Founder, Rocket Lawyer Edward J. Leyden, Tax Lawyer, Hollrah Leyden LLC Meet Our Speakers Charley Moore Founder and Chairman Rocket Lawyer Edward J. Leyden Tax Attorney Hollrah Leyden LLC 1

2 Top 5 Tax Problems 1. Poor Record Keeping 2. Dubious Tax Deductible Business Expenses 3. Payroll Tax Problems 4. Not Classifying Workers Properly 5. Wrong Corporate Structure 1. Poor Record Keeping Most small businesses that fail to comply with their tax reporting requirements are not dishonest, they're just bad record keepers. What records should you keep? How should you organize them? How long should you keep them? Paper or digital? 2

3 2. Dubious Tax Deductible Business Expenses 5 business deductions commonly targeted by the IRS are: Entertainment Car Home Office Business Gifts Equipment & Supplies 3. Payroll Tax Problems What are your payroll tax requirements? Do you have to pay quarterly taxes? How do you pay? What happens if you don t pay? 3

4 4. Not Classifying Workers Properly For small business owners, choosing between hiring employees or independent contractors is an important decision that defines not just working relationships, but taxation as well. Employee vs. Independent Contractor What are the tax requirements for each? What happens if I misclassify workers? 5. Wrong Corporate Structure Each corporate structure has different implications for legal liability, expenses and procedures, and taxation. Which is best for you? Sole Proprietorship Partnership S Corporation C Corporation Limited Liability Company 4

5 What to do if the IRS does contact you: Even if you ve done everything right, the IRS may come calling. If this happens to you, relax. Most IRS notices are nonthreatening if handled correctly. What is the notice saying? Call the IRS Follow instructions Gather documentation Respond or Contact a Tax Attorney IRS Publications IRS Pub 334 Tax Guide for Small Business IRS Pub 505 Tax Withholding and Estimated Tax IRS Pub 535 Business Expenses IRS Pub 463 Travel, Entertainment, Gift, and Car Expenses IRS Pub 587 Business Use of Your Home IRS Pub 1779 Independent Contractor or Employee 5

6 Valuable Resources Powered by New Member Benefit: NFIB members save 10% on monthly or annual legal plans and all business legal documents! Access Over 14,000 documents for all of your business legal needs, including: Employment Agreement Independent Contractor Agreement Response to IRS Penalty Business Contract Corporate Bylaws Corporate Minutes Visit for more information! Charley Moore Edward J. Leyden 6

7 Additional NFIB.com Resources Be Careful About Tax Deductions for That Office or Shop in Your Home resources/business resources item?cmsid= IRS Red Flags to Avoid resources/business resources item?cmsid= Tax Deductions That Small Businesses Often Overlook resources/business resources item?cmsid= Tax Savings You Could Be Taking resources/business resources item?cmsid=44953 Coping with Payroll Regulations resources/business resources item?cmsid=18839 Independent Contractor Versus Employee: Nailing Down the Distinction resources/business resources item?cmsid=33125 How to Choose the Right Business Structure for Your Small Business resources/business resources item?cmsid=49906 Stay Connected with NFIB More information about the Small Business Webinar Series: We want your feedback. If you enjoyed today s webinar or have suggestions for the future, please fill out the short survey that you will receive via after this webinar. Did you know NFIB is on Stop By and Leave a Comment 7