Category Archives: Tax Issues

Fall Cleaning: Get Your Financial Statements in Order

by Kelly Deis of SoundPoint Consulting

Thinking that you might want to sell your business in the next few years?  If so, make sure your financial records are up to snuff. It will save you time, effort (and maybe even embarrassment) later on.

To start, let’s understand who the most likely buyer of your business might be. If your business is considered “lower middle market” (a large majority of businesses fit this category), the most probable suitor will be a first time buyer.  Continue reading

Do you sell products online? You need to know about nexus.

Until recently, a business was said to have a nexus in a state if it maintained a physical presence there. Where nexus existed, a business was required to remit taxes to the state. This understanding served until digital commerce wholly revolutionized the global economy.

Today, a retailer can operate from their living room, selling goods without any physical presence outside their own home. Clearly, the old definition of nexus is obsolete. New definitions—offered up mostly by states looking to recoup lost sales tax revenues—rely on murky rationales of “economic nexus” and “factor presence.”

Unfortunately, neither the Supreme Court nor Congress has offered to clarify the issue, leaving businesses across the country to work things out on their own.  Continue reading

Independent Contractor as defined by the IRS.

People such as doctors, dentists, veterinarians, lawyers, accountants, contractors, subcontractors, public stenographers, or auctioneers who are in an independent trade, business, or profession in which they offer their services to the general public are generally independent contractors. However, whether these people are independent contractors or employees depends on the facts in each case. The general rule is that an individual is an independent contractor if the payer has the right to control or direct only the result of the work and not what will be done and how it will be done. The earnings of a person who is working as an independent contractor are subject to Self-Employment Tax.

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Do you need a business license?

Different types of businesses need different types of licenses. It can get pretty complicated, so Washington State has created an online tool that will help you create a personalized Business Licensing Guide based on your answers to a few questions.

To give it a try, click here…

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Then leave a comment to let us know what you think.

Self-employment tax helps you get ready for the future.

Going from “employee” to being your own boss brings some significant changes professionally and personally. One of the most significant to become accustomed to is no longer having certain taxes neatly taken from your paycheck from your employer.

As a self-employed individual, not only are you responsible for directly submitting the income tax you owe to the federal, state, and local governments, you’re also responsible for paying self-employment tax.

According to IRS.gov, “Self-employment tax is a tax consisting of Social Security and Medicare taxes primarily for individuals who work for themselves. It is similar to the Social Security and Medicare taxes withheld from the pay of most wage earners.”  Continue reading

What Tax Records Should You Keep… And For How Long?

tax-records

Except in a few cases, the law does not require any specific kind of records. However, you may want to include all of these items, no matter what process of recordkeeping is chosen:

  • Business checkbook
  • Daily summary of cash receipts
  • Monthly summary of cash receipts
  • Check disbursements journal
  • Depreciation worksheet
  • Employee compensation record
  • Any financial statements

Also, be diligent in keeping these records as well, whether it be the original source documents OR electronic copies:

  • Gross receipts
  • Inventory
  • Expenses
  • Travel, transportation, entertainment & gift expenses
  • Employment taxes
  • Assets
  • Cancelled checks

Continue reading