Archives for March 2020

Tax season comes around every year, and there’s no avoiding it. But does tax season usually mean that you’re spending time away from more important areas of your business that could lead to future growth? If you’re spending too much time on menial tasks for tax preparation, you might be using billable time that would be better spent elsewhere. You’ll have to do the math yourself, but if you take a close look at the hourly rates you’d bill yourself for menial tasks, pro-rate those, and compare that to the amount you’d pay for that task to be outsourced, you may find that outsourcing could help you to save enormously.  Outsourcing services can help to prevent bigger disasters. With an e-filing service like eFile360, you can outsource a number of electronic tax filing needs. You’ll be able to ensure accuracy with services like TIN Checking, which prevents inaccuracies that lead to future delays, or even penalties. The same way that outsourcing can help to save you money, the error-checks that come with e-filing with eFile360 can save you from far more costly penalties. The cost to fix a tax-filing problem is usually much more costly than the prevention taken in the first place.  We also provide reliable, 24/7 customer service that’s on your side whenever you need assistance. Outsource your tax e-filing and delivery needs with eFile360 and see your energies shift to other important areas of your business. By not outsourcing, you are using billable time that could be better spent elsewhere. You may also find that those resources and efforts could be better put into other areas of your business, or even money that you give back to yourself in salary. We also provide an easy-to-use self-service platform. You can pass over the e-filing work to us and ensure that your forms are submitted on-time and accurately. If you’d like to speak with one of our customer service representatives about your next tax solution, feel free to chat with us.  …

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Your accountant could be overcharging for your 1099-MISC forms and you don’t even know it.  Your accountant should never be charging you to file 1099-MISC forms for certain scenarios. If your employees are not represented correctly when filing taxes, the IRS may issue no-match letters in the future. The misrepresentation could simply be information not matching up correctly or sending the incorrect forms. If you don’t send forms at all or send them past the deadline, you could also face steep penalties.  The very basic rule for distributing 1099-MISC forms is for any non-employee to whom you pay more than $600 throughout a tax year, you are required to deliver them a 1099-MISC.  Any errors that cause the IRS to question where and when income was reported can delay the tax process. This means that misclassifying employees or independent contractors could lead to penalties and delays, so you may want to take a closer look at how you’re paying employees to ensure that you’re reporting their income correctly. How are third-party app transactions reported? With the introduction of third-party money transfer apps, the landscape becomes a little more confusing in terms of understanding when a 1099-MISC is required. Third-party processors complete payments via the same clearinghouse system as credit and debit card transactions, so cash-transfer apps are not considered third-party processors. You might be familiar with: Venmo Zelle Square Cash Plastiq In this case, 1099-MISC forms must be filed when you’re using cash transfer apps. Money transfer services are intended for personal use, which is different from a merchant service intended for doing business. This means that a money transfer app doesn’t send out tax information as a third-party processor does. So when using these types of apps to pay for business services, you do need to send a 1099-MISC (if the income reported is over $600). If you use third-party vendors to pay …

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If you’re employing both independent contractors and employees, you’ll want to know the difference between both in order to distribute tax information correctly, as well as how to prevent future IRS issues with how you handle your forms. When businesses don’t classify their employees correctly, they pay dearly (think Uber in 2016, who had to give an over $100 million payment to drivers they had misclassified as independent contractors instead of employees). While larger corporations might be more to blame for having misclassified as a means to save money, much smaller businesses might make a mistake in classifying simply by not understanding the rules.  Understanding the difference between independent contractors and employees The same way that independent contractors might invest more of their time and energy into the resources they use to do the work as well as the standards of their employee (for example, when and where they work), they also invest more energy into completing their tax forms since they pay a self-employment tax. The IRS recommends that companies base their employee on three broad standards: the schedule, behavioral control, financial control, and more the type of relationship, then they will probably want to use the employee classification. Employees are then entitled to severance, workers’ compensation, and other protective measures, and have payroll taxes. One of the most important distinctions in classifications is the length of time an employee works for an employer, versus an independent contractor who might be hired on for one specific project or for a predetermined length of time (or a trial period before becoming a full-time employee, for example).  The IRS once used a 21-question test that can help you to determine whether or not you have hired an employee or contractor. Some experts recommend taking a look at it if you’re still feeling lost.  Once you’ve determined what types of forms you need, it’s time to file. …

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