The Consequences for Failing to Comply with the 1099 Rules

If your business paid someone (who was not your employee) a total of $600 or more during the year, you must issue a 1099 to them (unless it is a corporation). For attorneys, 1099s are required even if incorporated or regardless of their entity type. In addition 1099s must be filed with the Internal Revenue Service. The 1099 filing requirement applies for payments made by
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Categories: BUSINESS TAX STRATEGIES, CORPORATIONS & LLCs, and SMALL BUSINESS ADVISORY.

Reducing Liability by Segregating Assets

To help hold onto what you’ve worked hard to accumulate and to manage risk (especially for business owners) it’s important to segregate assets and activities into separate legal buckets. The separate buckets should be put into place BEFORE the threat of legal action or the court may rule that a fraudulent conveyance occurred. The number of buckets needed will depend on the type of activities
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Categories: ASSET PROTECTION and SMALL BUSINESS ADVISORY.

1099s: The IRS’ War on Underreporting—Don’t Get Caught in the Crossfire

The IRS has declared war on the underreporting of income and is taking the most aggressive approach ever in their ability to enforce compliance with new 1099 regulations. Many IRS auditors are now denying deductions for payments by businesses that fail to issue required 1099s, even if unintentional. The IRS penalty trap Since 2012 business tax returns have two questions that all businesses must answer,
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Categories: CORPORATIONS & LLCs and SMALL BUSINESS ADVISORY.

Transferring Risk Using Insurance for Commercial Businesses

California law requires that business owners act responsibly in managing the risks common to their industry and to protect against other areas of vulnerability. Businesses should consider transferring a large part of its risk to an insurer (which has deeper pockets) to protect against the full impact of an uninsured loss, which could threaten its viability. Home-based businesses If you operate your business from home,
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Categories: CORPORATIONS & LLCs and SMALL BUSINESS ADVISORY.

Insurance for the Home Based Business

Small business owners are often very good at what they do. As entrepreneurs, they run their businesses like the great offensive coaches in professional sports. A great offense is a good thing, but offense alone will not win the big games. A truly great team or business must develop a great defense as well. An effective defense comes into play as a company puts the
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Categories: SMALL BUSINESS ADVISORY.

Independent Contractors—Factors to Consider

Whether a worker is an employee or independent contractor depends on the right or ability of a company to exercise control over the worker. An employee is subject to the will and control of the employer not only as to WHAT shall be done but HOW it shall be done.  In contrast an independent contractor (contractor) is engaged to provide a finished project or job.
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Categories: CORPORATIONS & LLCs, EMPLOYEES & HR, and SMALL BUSINESS ADVISORY.

Does Your Business Look Like a Hobby to the IRS?

You must report income to the IRS from almost all sources including hobbies. If your activity is not carried on for profit, allowable deductions cannot exceed the gross receipts for the activity. In contrast, if you’re conducting a trade or business you may deduct your ordinary and necessary expenses even if it generates a loss. Your business could be ripe for an IRS audit if:
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Categories: SMALL BUSINESS ADVISORY.

Starting a Business Creates Tax Benefits

Starting a business can create tax benefits by converting some personal expenses into tax deductions. What was formerly non-deductible may become deductible when you operate a business, thereby increasing your personal benefit significantly. For example, when you buy something for $100 (as an employee) using after-tax dollars, you must actually earn about $150 to net the $100 bring-home pay in order to buy the item
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Categories: BUSINESS TAX STRATEGIES and SMALL BUSINESS ADVISORY.

Reducing Liability with Good Business Practices

Business owners need to demonstrate good business practices in order to reduce their company’s liability and to prevent personal liability themselves. Operating a business through an LLC or corporation won’t protect your home and personal property from business lawsuits and creditors if you don’t also demonstrate good business practices. The following are some of our recommendations: Maintain the corporate or LLC veil of protection.  Even
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Categories: ASSET PROTECTION, CORPORATIONS & LLCs, and SMALL BUSINESS ADVISORY.