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Many employers do not properly report or misclassify the compensation paid to individuals for labor performed for their business. Due to a recent Uber court case holding cab drivers to be employees, the recent doubling and tripling of penalties for non-filed W-2’s and 1099’s, as well as employer attempts to reclassify W-2 employees as independent contractors to avoid the 50 employee threshold for health insurance, it is important for a business owner to be aware of the laws.

Since it is now April-time a lot of people are thinking about taxes.  I have had several questions about filing past tax returns.  Am I in trouble? Will I be put in jail?  I can’t pay so why should I file?  Many people fear filing old tax returns.  In my opinion, not knowing how much you owe I think can be more ‘made up’ fear than just preparing the return and having actual facts of how much you really owe.  In many cases I have found that the tax due is less than anticipated and just getting the tax filing done provides peace of mind so that you can budget and get the tax paid and you can move forward.

Since many of my clients operate their businesses in Oklahoma, I wanted to let you know that you will not be receiving a BAT (Business Activity Tax) Return for 2013.  This form was enacted in 2010 and replaced the OK Franchise Tax Return.  Most businesses paid $25 on the return which also acted as a credit to the annual $25 business license fee from the OK Secretary of State. 

If you have a business office in your home, you no longer have to keep track of all your home expenses.  Effective for tax years beginning in 2013 (so the tax return that you will be filing in 2014), taxpayers can elect a simplified deduction for the business use of their home.  The deduction is $5 per square foot with a maximum square footage of 300.  Thus, the maximum deduction is $1,500 per year.  Here are the details of this simplified method:

• Annual Election – A taxpayer may elect the safe-harbor method or the regular Sec 208A method on an annual basis.  Thus, a taxpayer may freely switch between the methods each year.  The election is made by choosing the method on a timely filed original return and is irrevocable for that year.
  

If you use independent contractors to perform services for your business or rental that is a trade or business, and you pay them $600 or more for the year, you are required to issue them a Form 1099 after the end of the year to avoid facing the loss of the deduction for their labor and expenses.  (This requirement generally does not apply for payments made to a corporation. However, the exception does not apply to payments made for attorney fees and for certain payments for medical or health care services.)

It is not uncommon to have a repairman out early in the year, pay him less than $600, then use his services again later and have the total for the year exceed the $600 limit.  As a result, you overlook getting the information needed to file the 1099s for the year.  Therefore, it is good practice to always have individuals who are not incorporated complete and sign the IRS Form W-9 the first time you use their services.  Having a properly completed and signed Form W-9 for all independent contractors and service providers eliminates any oversights and protects you against IRS penalties and conflicts.  

2014 will be a challenging tax year for businesses and higher-income taxpayers. The following issues are concerns that may impact you and your company’s tax liability in the new year.  

• Small Business Health Insurance Credit – The tax credit to small employers (25 or fewer equivalent full-time employees) that provide an affordable health insurance plan for their employees and supplement at least half the premiums, will increase to 50% of the employer’s contribution in 2014, up from 35% in 2013. For non-profit employers, the credit will be 35% in 2014. 
  
  

New version of desktop QuickBooks accomplishes goal of speeding up, refining your workflow.

QuickBooks, still the preferred software for small businesses, keeps getting smarter in its annual upgrades. Rather than pile on tons of new features in its upgrades, Intuit – for many years – has concentrated on making it easier for you to access the tools and data that are already there.

QuickBooks 2014 is no exception. Its combination of small-but-effective changes makes it easier to get in and do what needs to be done quickly and then get out and move on to activities that will help build your business.