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Let's say you decide to onboard a freelancer, also known as an independent contractor. What should your next tax- and finance-related moves be? Let's find out!
Have you found yourself becoming more and more fascinated by all this talk of AI these days? Does the opportunity to drive more strategic growth and gain a competitive edge excite you?
Many employees dash off emails with little attention paid to them. As a manager, you can help focus and train your team on some techniques for effective messaging.
Your business has employees' and may have customers' personal information (names, Social Security numbers, credit card information) stored both physically and electronically. You use this data to meet payroll, fill orders and perform necessary business functions.
Employee classifications are based on job duties and responsibilities. The classifications impact compensation, benefits and work hours; they are also used by employers to maintain compliance with labor laws.
Have you been thinking about establishing an S corporation? Maybe you have the opportunity to become a shareholder of a corporation of this type. Here's what you should know about S corporations and how they work before getting involved in one:
What is an S corporation? An S corporation essentially passes its income, losses, deductions and credits to its shareholders for the sake of federal tax purposes. From there, shareholders of S corporations report this information as part of their personal tax returns. The shareholders are assessed by the IRS at their individual income tax rates, which makes it possible for S corporations to avoid facing double taxation on corporate income come tax season. How are shareholders taxed? People within an S corporation who are responsible for performing a service for said S corporation will be paid a wage as an employee, even though these people are also considered shareholders. Also known as corporate officers, those who perform more than minor services to an S corporation and receive — or are entitled to receive — compensation will have to pay federal employment taxes. This is true even in instances when shareholders take distributions, accept dividends or receive other forms of compensation. What happens if shareholders do not report wages from an S corporation? Distributions from an S corporation evade the 15% or higher employment tax bracket. This puts small-business owners in a position where they could potentially experience considerable savings. Now, if shareholders fail to declare wages obtained through an S corporation, the IRS will become interested in whether those payments were genuinely paid in exchange for services rendered. The IRS might impose higher taxes if it finds instances of low salaries coupled with high distributions to be suspicious. What are the key provisions of an S corporation? It's important to note that shareholders are not personally responsible for any liabilities or debts associated with the business endeavors of an S corporation. As a result, creditors are not entitled to make any claims on the personal assets of shareholders when settling debt belonging to the S corporation. To qualify as an S corporation, the business is required to be registered as a domestic corporation. S corporations are allowed to consider individuals, trusts and estates as shareholders, but corporations, partnerships and individuals who aren't U.S. residents are not permitted to hold shareholder status. The total number of shareholders for an S corporation cannot exceed 100. Furthermore, each S corporation is eligible for one class of outstanding stock, and the S corporation must be eligible. In other words, there are certain sales corporations, financial institutions and insurance companies that cannot be classified as an S corporation. What documents are involved when opening an S corporation? To officially become an S corporation, you'll need to fill out and then submit Form 2553, Election by a Small Business Corporation. This document must be signed by all shareholders of your S corporation. You'll also need to file Form 1120-S, U.S. Income Tax Return for an S Corporation. All the profits, losses and deductions for each shareholder will be documented via Form 1065, U.S. Return of Partnership Income, which is known as Schedule K-1. Last but not least, S corporation shareholders can expect to file Form 1040, U.S. Individual Income Tax Return, as well as Form 1040 (Schedule E), Supplemental Income and Loss. Are there important advantages of having an S corporation? There are undeniable benefits of establishing an S corporation, hence its appeal. For instance, when you adopt the S corporation structure for your business, you'll end up subsequently lowering the amount of self-employment tax relevant to your company. Additionally, S corporations are viewed as highly credible in the eyes of vendors, partners and customers. Should you be concerned about the disadvantages of having an S corporation? There are possible disadvantages you should be aware of when looking at forming an S corporation. For starters, there are many protocols that you must follow when establishing this type of corporation. As an example, directors and shareholders have to attend scheduled meetings that must last for a certain number of minutes. There also are formalized bylaws that S corporations are required to uphold, not to mention the maintenance of proper records and various corporation-specific recordkeeping requirements. What happens if you want to transfer ownership of your S corporation? On the bright side, it is rather easy to transfer interest within an S corporation, especially compared to the same task with other types of business entities. You can structure the sale in one of two ways: You can set up an outright sale, where the buyer will make the purchase and ownership is transferred immediately; and alternatively, you can opt for a gradual sale, where the purchase takes place over time. Either way, the transfer of ownership regarding the S corporation needs to be facilitated via an official written sales agreement in order to formalize the process. Before establishing your business as an S corporation, keep in mind that your company will likely require paying more attention to the accounting and bookkeeping side of things than ever before. It's best to onboard the help of qualified accountants who can assist you. Don't be afraid to contact professionals who can provide you with banking and legal advice when it comes to business loans, taxation laws and other related issues. Harik Thompson CPAs and Advisors is committed to providing exceptional service and delivering tailored solutions to meet our clients’ financial needs. Your satisfaction is our top priority, and we constantly strive to exceed your expectations. As part of our ongoing efforts to better serve our valued clients, we need your help. Your feedback is invaluable and will assist us in refining our services. It will also help potential clients make informed decisions about their accounting, tax, and advisory service provider. Please take a moment to share your feedback by leaving us a Google Review. Thank you very much! Form I-9 asks your employees to present documents to attest to their identity and employment authorization. It's your job to make sure the documents seem genuine and relate to the employee.
There's no limit on the number of hours employees age 16 and older may work in any workweek. The FLSA doesn't require overtime pay for work on Saturdays, Sundays, holidays or regular days of rest, unless overtime is worked on such days.
Advantage Plans are offered by private companies, such as UnitedHealthcare and Humana, approved by Medicare. They are all-in-one programs that may appear to provide advantages over original Medicare, such as reduced or nonexistent premiums. But it is a balancing act, as they may require higher copays and out-of-pocket costs and may have a more limited number of providers.
Time sheets come in an array of formats. From handwritten papers and punch cards to typed spreadsheets and automated time clock systems, you have options. All that matters is that you find a time sheet style that is clear and concise for your company. This will greatly improve your company's ability to manage both in-person and remote teams by ensuring that everyone remains consistent while following the same practices no matter their role in the business.
According to Public Law Number 117-154 (06/23/2022), the U.S. Tax Code is 6,871 pages. When you add the federal tax regulations and official tax guidance, the number of pages increases to approximately 75,000. Some very helpful tax breaks can get lost in the shuffle!
Lenders and banks check your credit before they approve you for new credit cards or loans. They do this to be sure that in the past you've paid your debts on time. If you have, you are more likely to pay your new loan or credit card payments on time.
Managing payroll is often regarded as an overwhelming and daunting task. From tracking the unique tax codes for each of your employees and the seemingly countless deduction options to determining whether each employee is an hourly or salaried worker, there are many details to be mindful of, all while avoiding making payroll-related errors.
A company newsletter can link all employees, providing a mix of useful and engaging information to captivate readers' attention. Time and money are well invested. According to the Content Marketing Institute, every dollar spent generates an average return on investment of $38.
In 2016, the National Automated Clearing House Association (NACHA) reported that 82 percent of U.S. employees are paid by direct deposit, jumping from 74 percent in 2011. Clearly, direct deposit is on the rise.
Every so often a dramatic case of financial fraud makes the headlines because of the sheer amount of money involved. But, on average, companies with fewer than 100 employees suffer the largest median loss and 42% of fraud cases are caused by a lack of internal controls.
Starting in July 2020, the District of Columbia's Paid Leave Act will provide up to eight weeks of parental leave to bond with a new child, six weeks of family leave to care for an ill family member with a serious health condition and two weeks of medical leave to care for one's own serious health condition. Unpaid leave rules have been around for a while, but paid leave programs are still a rarity in the United States.
Your driver's license may no longer be the comprehensive ID you always thought it would be, thanks to the Real ID Act, a federal law that set high security standards for driver's licenses. This act takes effect October 1, 2020.
On March 7, the Department of Labor released a proposed rule that would raise the so-called salary-level threshold for white-collar exemptions to $35,308 per year from $23,660. This means that the vast majority of employees earning under the threshold would need to be paid overtime. About 1 million workers may find themselves affected by this: Companies would have to classify them as nonexempt and pay them overtime — unless they are given raises that put them above the threshold.
You may have passed on interruption insurance because policy costs range from $750 to $10,000 or more, depending on business size. But consider this: Today there are a greater number of earthquakes, storms, floods and heatwaves damaging businesses in major ways. Since 1970, the number of disasters has more than quadrupled worldwide.
How do you get from the dream to fundraising to business plan to opening? Successful business owners recount how their meetings with potential investors helped them revise their business plan, refining the numbers and focusing on the culture they wanted to create.
Have you noticed that your accounting or banking firms are letting artificial intelligence get involved in some heavy lifting? Many companies are seeing that AI should be worked into their overall strategies, putting money aside for innovation.
You don't need to know how the blockchain works to use it, but having a basic knowledge allows you to see why it's considered revolutionary. The blockchain is a digital ledger that can be programmed to record not only financial transactions, but also virtually everything of value.
Information on a blockchain exists as a shared and continually reconciled database. A blockchain database isn't stored in any single location—the records it keeps are public and easily verifiable. There's no centralized version for a hacker to corrupt, but it's accessible to anyone on the internet because it's hosted on millions of computers simultaneously. When you sign a noncompete agreement, you agree that you won't go to work at a rival company if you quit or, in some cases, you agree that you won't start a competitive business.
Noncompete agreements are used to protect trade secrets. With the increased mobility of the workforce, companies have determined that they need to protect proprietary information. You could look at noncompetes as trade secret contracts. The IRS describes an opportunity zone as "an economically-distressed community where new investments, under certain conditions, may be eligible for preferential tax treatment." How does a community become an opportunity zone? Localities qualify as opportunity zones when they've been nominated by their states. Then, the Secretary of the U.S. Treasury certifies the nomination. The Treasury Secretary delegates authority to the IRS.
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