Raymond J. Busch, Ltd CPA
Start the New Year off Right! 
January 2010 
Dear  ,
 
 Let 2010 be your year. Make sure to take time to plan and goal set for the new year. Analyze your business and see what opportunities may be taken advantage of to increase revenue. It can be difficult to find the time, but remember what got you into business in the first place and use that same drive to push you to prosperity in 2010. I wish you the best of fortune and growth.
Why do I need an accountant?
 

Accounting is really quite simple and straight-forward.  You have money coming into your business in return for the goods and/or services you provide; and you have money going out of your business to pay for your materials, your employees, your equipment and physical facilities (i.e. the costs that you incur in providing those goods and services).

  • If you have more money come in than goes out, you make a profit.  Good job!
  • If you have more money go out than comes in, you have a loss.  Too bad!

Unfortunately, when you throw in Inventory, Accounts Receivable, Accounts Payable, Depreciation, and a lot of the other time-related aspects of accounting that affect your financial reports, it just doesn't seem quite that simple. 

But, when you own a business, accounting is something you have to do!  Using a manual bookkeeping system can be frustrating and time-consuming, even if you have the background for it.  A computerized accounting system, such as QuickBooks© or Peachtree Accounting©, can help.  But it probably won't save you much time.  And it won't turn you into an accountant any more than purchasing a computerized design or CAD system will turn you into an architect or engineer.  In fact, without proper setup and installation, computerized accounting systems often leave you just as confused, but at a much lower level of detail. 

To manage your business profitably, you need the right financial data, advice and services.  But you may not have knowledge or ability to do it all yourself -- and if you do, that still might not be the best or most profitable use of your time.  Our accounting firm can provide you with the accounting, consulting, payroll, tax services, and other business services you need to profitably manage and grow your company. Our firm wants to be part of your success. Count on us to listen, give you top priority, and respond promptly with cost-effective services specifically suited to your personal capabilities and business needs
About Us

acct chart

Employee vs. Independent Contractor - Ten Tips for Business Owners

If you are a small business owner, whether you hire people as independent contractors or as employees will impact how much taxes you pay and the amount of taxes you withhold from their paychecks. Additionally, it will affect how much additional cost your business must bear, what documents and information they must provide to you, and what tax documents you must give to them.

Here are the top ten things every business owner should know about hiring people as independent contractors versus hiring them as employees.

1. Three characteristics are used by the IRS to determine the relationship between businesses and workers: Behavioral Control, Financial Control, and the Type of Relationship. 

2. Behavioral Control covers facts that show whether the business has a right to direct or control how the work is done through instructions, training or other means. 

3. Financial Control covers facts that show whether the business has a right to direct or control the financial and business aspects of the worker's job. 

4. The Type of Relationship factor relates to how the workers and the business owner perceive their relationship.

5. If you have the right to control or direct not only what is to be done, but also how it is to be done, then your workers are most likely employees.

6. If you can direct or control only the result of the work done -- and not the means and methods of accomplishing the result -- then your workers are probably independent contractors. 

7. Employers who misclassify workers as independent contractors can end up with substantial tax bills. Additionally, they can face penalties for failing to pay employment taxes and for failing to file required tax forms. 

8. Workers can avoid higher tax bills and lost benefits if they know their proper status.

9. Both employers and workers can ask the IRS to make a determination on whether a specific individual is an independent contractor or an employee by filing a Form SS-8 - Determination of Worker Status for Purposes of Federal Employment Taxes and Income Tax Withholding - with the IRS.

10. You can learn more about the critical determination of a worker's status as an Independent Contractor or Employee at IRS.gov by selecting the Small Business link.  Additional resources include IRS Publication 15-A, Employer's Supplemental Tax Guide, Publication 1779, Independent Contractor or Employee, and Publication 1976, Do You Qualify for Relief under Section 530? These publications and Form SS-8 are available on the IRS Web site or by calling the IRS at 800-829-3676 (800-TAX-FORM).

Check us out at:
 
 
Raymond J. Busch, Ltd CPA
17728 S. Oak Park Ave.
Tinley Park, Illinois 60477
(708) 691-5633
 
Small Business Tax Preparation Tips -
 Stay a Step Ahead of "Tax Season" Today
By 
www.business.gov
Tax season may not be upon us yet, but it's certainly around the corner. And, as every good accountant worth their salt will tell you, getting ahead of your obligations and doing some early tax planning and preparation will stand you in good stead once reporting time comes around.

 Whatever your business structure and reporting requirements there are several steps you can take now to get your small business tax obligations "ducks in a row" to help you maximize your deductions and sail through tax season.

1)     Gather Your Records and Check Your Books

Whether you are an independent contractor or growing small business, spend some extra time as the calendar year draws to a close examining your books and records. Make sure everything is accurate and up-to-date, and that records and documentation that help support the numbers in your tax return are clearly organized - this includes old tax forms, expense receipts, bank statements, etc. Read "Bookkeeping Basics for Small Business" to get a better understanding of smart bookkeeping practices.

 2)     Understand What Deductions Can do For Your Small Business

 Now is the time to increase your expenses so that you can maximize your business tax deductions before the end of the year. From stocking up on office equipment; making charitable donations; to paying bills early (utilities, phone bills, etc.) - all these affect your deductible bottom line.

 Taking all the deductions you deserve can be a tricky business and, as a small business owner, getting it wrong can be costly. Not least of all when it comes to understanding what business tax deductions you are eligible to claim. 

 

 3)     If Cash Flow Permits - Defer Income Earned

 Depending on your business structure, you may be able to make some inroads to reducing your overall taxable earnings for the current tax year by deferring any payments you receive for services or products rendered during until the first week of January . This will defer your tax owed on this income until April 2011. If you are a sole proprietor, LLC, S Corporation, or in a legal partnership, income deferral can make good sense - especially if you don't foresee any significant changes to your income tax rates in the new year.  If unsure, make sure to check with a professional tax advisor.

 However, if you have any doubts about the solvency or future of your clients, don't defer - collect those payments soon as possible.

 4)     Understand Your Obligations as an Employer  - January and February are Busy Reporting Months

 If you have hired employees for the first time, or have used independent contractors in the past year, it's worth familiarizing yourself with tax reporting obligations and deadlines that will hit early in the new year.

 

  • Employees - As an employer you must provide your employees with W-2 forms by January 31 (usually the next business day if the 31st falls on a weekend as it does in 2010). W-2 forms must also be filed with the Social Security Administration (SSA), showing wages paid and taxes withheld for the year. This must be accompanied by your W-3 form (which shows the total of all W-2s) by the end of February.
  • Independent Contractors - If you have paid an independent contractor or other business who is not your employee at least $600 during the year, you should have been maintaining W-9 forms, contractor's business licenses and certification of insurance during the year. The end of January is the deadline for sending each independent contractor a completed copy of Form 1099-MISC to report payments made to that contractor. Read Hiring Independent Contractors for more information about your obligations.

  5)     Set-up or Contribute to a Retirement Plan

 By setting up and/or making a contribution to a 401(k), Roth IRA, SEP, or KEOGH plan - you can reduce your annual taxable income. Check your plan's allowable contribution limit for the year and talk to your accountant about what makes sense for your business.

 6)     Take Advantage of the Tax Resources Offered by the Government

 The good news is that, more than ever, the government is reaching out to small businesses to help address their tax questions and provide free tax advice.

 

Join Our Mailing List