Rimberg Online Bookkeeping

Hey everyone, the summer is over and it’s time to redouble our efforts to make our businesses a huge success. I was with a potential client this week who owns a restaurant. He wanted to know if it’s ok to treat the busboys as independent contractors. The short answer- absolutely not!

IRS Summertime Tax Tip 2009-20
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. Further, 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).

We’d love to add you to our list, where we send out bookkeeping and tax saving ideas as well as good business building practices. Just click here to sign up today.

I promised to keep you updated through the Cash for Clunkers chaos and now – the least surprising end to the story – the program is kaput!

On Monday, August 24, the government ended the popular Cash For Clunkers program because it has already run out of its second round of funding. In order for dealerships to be reimbursed, they had until 8 pm EST on Monday to submit the 13-page application for any rebates processed. This deadline can only mean one thing, swarms of people headed to showrooms over the weekend.

The program did succeed in bringing a surge in demand for cars, but many dealers are actually happy with the end of such a confusing program, which took too long to process reimbursements.

As of August 20, the Transportation Department had repaid only seven percent of the money dealers had requested. With the program at an end, the government will add on to the size of the work force assigned to handle reimbursement applications.

Even with the extra $2 billion added on to the program, it took almost no time for funding to deplete again, and the government does not plan to add on a third installment. Some dealers could end up having to write off the unpaid credits if funding is exhausted before all reimbursements are made. So, hopefully, if you are in the market for a new car, you headed on over to a car dealership this past weekend!

We’d love to add you to our list, where we send out bookkeeping and tax saving ideas as well as good business building practices. Just click here to sign up today.

Here are Some Good Reason to Have Us Prepare Your 1040X:

We recently encouraged you to take advantage of incentive benefits from the American Recovery and Reinvest Act such as the first-time home buyer credit or the student learning credit. Now, you may ask, how can I reap these benefits and get the money?

In most cases, you have already filed your taxes for the most recent year, but without waiting until next year you can file an amended income tax return.

All you need is your completed tax return, a blank 1040X Form, the appropriate credit form (i.e. Homebuyer Credit, Hope and Lifetime Learning Credit and your adjusted values.

Make sure you are entering information based on the tax year you are amending. For example, if you are completing the 1040X in September 2009 to amend the taxes you filed in April 2009 (for the 2008 tax year), make sure you enter 2008 information.

Don’t forget to double-check you have all forms necessary pertaining to your specific credit! For more information, check out the IRS website (irs.gov) and good luck!

Don’t forget to call us; as soon as the company is created, there is paperwork that has to be filed immediately.

An economic downturn might be a great time for a start-up company, but that doesn’t mean you can ignore your federal tax responsibilities! According to the IRS, there are a few important things you should know if you plan on opening a new business this year.

What kind of business are you opening? The type of business you begin determines the forms you have to file and what kinds of taxes you will pay.

Do you have an EIN? An Employer Identification Number identifies each business entity. You can apply for one at IRS.gov.

Are you keeping good records? Clear income and expense reports help to ensure a successful business operation.

Do you have a consistent accounting method? You need to follow a set of rules to determine when to report both income and expenses.

For more tips on starting a new business, check out this article and visit the business section of IRS.gov for resources to assist you with starting and operating a new business.

Happy Entrepreneurship!

Well, now there’s good news for your small business!

On June 8, the U.S. Small Business Administration announced new lender guidelines for the America’s Recovery Capital (ARC) loan program. In essence, the ARC really aims to increase the cash flow of your small business.

Since June 15, SBA’s America’s Recovery Capital Loan Program can provide loans up to $35,000 in short-term relief — no fees, no interests, and 100 percent guaranteed by the government. Loans are backed by small, community banks and do not have to be paid for during the first year. You have five years to repay, and loans will be provided up until September 30, 2010.

As stated in its mission, ARC loans are for “viable small businesses suffering immediate financial hardship.” So check out the ARC loan program and maybe you’ll get that cash flow back too!

For more information on the ARC loan program, check out the SBA website.

ARRA Benefits: Act Now!

Have you been taking advantage of the benefits made available from the American Recovery and Reinvestment Act (ARRA) (link: American Recovery and Reinvestment Act)? As a taxpayer, the IRS wants to remind you that while many incentives come from this piece of legislation, most come with expiration dates, so, it is important to act as soon as possible!

Amongst many other benefits, the American Recovery and Reinvest Act provides incentives for first-time homebuyers, new car purchases, more efficient energy, and college tuition. As a reminder, the First-Time Homebuyer Credit allows you to get up to $8,000 in tax returns on a new home if you haven’t owned one within the past three years (AND if you buy one before December 1, 2009).

You can get credit for up to 30 percent of the cost of making energy-efficient improvements on your home, and as part of the American Opportunity Credit, tuition, related fees, books, and other materials for college can be covered up to $2,500 per student!

There are plenty of other credits and incentives to take advantage of as well, but it has to happen this year! For more on the Recovery provisions that may apply to individual taxpayers see the ARRA page of the Internal Revenue Service website.

“Taxes in July? That’s crazy!” While that would  probably be the most common reaction, it’s really never too early to start preparing for tax season and this summer, the IRS is here to help you out early and get the ball rolling.

Starting next month, the Internal Revenue Service will begin publishing three tax tips per week with the hopes of helping people save some time and money come tax season. Topics will range from the importance of checking your withholding to getting proper receipts from charities to protection against identity theft.

And for convenience, you can even receive these tax tips through email by signing up on the IRS e-news subscription page. It doesn’t get easier than this to get a head start on tax season, so check it out!

“To ensure the American consumer’s access.” So says Christine Varney, Assistant Attorney General of the Justice Department’s Antitrust Division, regarding the government’s aggressive policy in pursuing monopoly and antitrust companies.

The Department of Justice has already announced investigations into dominant companies such as Google and Verizon, and it could have major effects on you as consumers. While it could increase competition by lowering prices, there is some cause for concern about the timing. Targeting big companies during a recession deters innovation and limits consumer choice, slowing down economic rebound. It is important to realize the greater situation of timing and not just focus on a political party goal when it comes to issues such as antitrust that have direct effect on our economy. What are your thoughts?