{"id":15886,"date":"2014-11-05T15:45:35","date_gmt":"2014-11-05T20:45:35","guid":{"rendered":"https:\/\/www.saratoga.com\/saratogabusinessjournal\/2014\/11\/be-prepared-for-audits.html"},"modified":"2014-11-05T15:45:35","modified_gmt":"2014-11-05T20:45:35","slug":"be-prepared-for-audits","status":"publish","type":"post","link":"https:\/\/www.saratoga.com\/saratogabusinessjournal\/2014\/11\/be-prepared-for-audits\/","title":{"rendered":"Business Report: Be Prepared For Audits"},"content":{"rendered":"
\n
\"ellwanger\n<\/div>\n
Steven Ellwanger is a CPA, PLLC practicing in Saratoga Springs\n<\/div>\n<\/div>\n

BY STEVEN ELLWANGER CPA, PLLC<\/p>\n

Its time for accountants and business owners
\nstart thinking about their 2014 tax returns and
\ndo planning and some projecting for the coming
\nyear. It’s infinitely easier to strategize and put a
\nplan into place now than to run around at year end
\nor after year-end tying to pick up the pieces.<\/p>\n

There are standard year-end tax planning
\nstrategies, such as buying new equipment now
\ninstead of waiting till after Jan. 1; starting a
\nretirement plan; and accelerating deductions
\nand deferring income. But small business owners
\nalready know these strategies. Here are a
\nfew topics that are much more useful.<\/p>\n

Take some time with your accountant to
\nevaluate your legal structure. If you are a sole
\nproprietor, does setting up an LLC make sense?
\nOr does an S corp or C corp make more sense?
\nDid you know that if you have an LLC already
\nin place, you can elect to be treated as an S
\ncorp for tax purposes without changing your
\nlegal structure?<\/p>\n

This is an especially important consideration
\nif your business is netting at least $60,000
\nper year. That choice has to be made up to 12
\nmonths prior to the effective date, or 75 days
\nafter. So most taxpayers, have until March 15 to
\nbe effective for Jan. 1. Reporting your income
\nas an S corp can save money by treating a portion
\nof your income as passive income, and not
\nsubject to self-employment tax. Discuss with
\nyour tax professional if electing to be treated
\nas an S corp would save money.<\/p>\n

Always be prepared for an audit. The most
\ncommon audits are sales tax and unemployment.
\nNew York state is still struggling financially
\nand is looking closer at these areas for
\nrevenue. Sales tax audits can be stressful for
\neveryone involved. Sales tax law can be very
\ncomplicated,and the methods used to audit
\na business can be surprising, like the classic pizzeria audit, where the auditor counted pizza
\nboxes purchased to determine how many pizzas
\nwere sold.<\/p>\n

Contractors have a difficult time with sales
\ntax laws regarding capital improvements vs. repairs
\nand maintenance, and must be very clear
\non their invoices of what work was done. Tax
\nprofessionals are well versed in audit methods
\nand can strategize to minimize the taxes due
\nif anything is found.<\/p>\n

Unemployment audits were, up till last year,
\nvery uncommon. But the classification of employee
\nvs. contractor has become the hottest
\ntopic of 2014.<\/p>\n

Small businesses are being audited by
\nUnemployment more than ever, and sadly
\nemployers are losing the battle. Auditors are
\nlooking much closer at the factor of control. If a
\nbusiness has any control of someone that works for them, they want to classify that worker as
\nan employee.<\/p>\n

Make sure that if you have people who work
\nfor you, that you treat as a subcontractor, that
\nyou are following certain rules regarding control.
\nIf someone works an hourly basis, they are
\nan employee. If they have to be at your office
\nduring certain hours, they are an employee. If
\nyou give them benefits or expense reimbursements,
\nthey are employees.<\/p>\n

If you tell them where to go, what to do, and
\nhow to do it, they are employees. Just because
\nyou give them a 1099-misc at the end of the year,
\nand they agree to it, does not mean they are considered
\na subcontractor in an audit situation.<\/p>\n

Business can save a lot of money by not paying
\nemployment taxes, unemployment taxes,
\nworkers’ compensation insurance, and disability
\ninsurance with subcontractors, but it’s
\nimportant to talk with a tax professional if you
\nhave concerns that you might be pushing the
\nenvelope when it comes to your subcontractors
\nwho may be employees.<\/p>\n

Most importantly, get a good bookkeeping
\nsystem. This seems like a no-brainer, but many small business do not have good bookkeeping
\nsystems in place. Once you have a good bookkeeping
\nsystem, you can use that information
\non a weekly or monthly basis to see exactly how
\nyou are doing and react accordingly.<\/p>\n

Compare the numbers to the prior year to
\nsee where you are doing better or worse, and
\nmake adjustments instead of waiting till after
\nyear-end. Bookkeeping should not only give
\nyour tax professional information, it should be
\na vital part of running a business.<\/p>\n

Whenever there is substantial change in the
\nbusiness’s bottom line, it’s time to visit a tax
\nprofessional. When things are going well, it’s
\ntime for tax strategy. When things are going
\nbad, there are ways to strategize to make sure
\nyou get all the credits you deserve, as well as
\nbeing able to make the best use of losses. It’s
\ngetting harder to run a business in New York.
\nStay educated, and surround yourself with
\nprofessionals that can help take your business
\nto the next level.<\/p>\n

Ellwanger runs his own office in Saratoga
\nSprings, offering accounting, auditing, consulting,
\nand tax services.<\/em><\/p>\n

Photo by Tammy Loya<\/p>\n","protected":false},"excerpt":{"rendered":"

Steven Ellwanger is a CPA, PLLC practicing in Saratoga Springs BY STEVEN ELLWANGER CPA, PLLC Its time for accountants and business owners start thinking about their 2014 tax returns and do planning and some projecting for the coming year….<\/p>\n","protected":false},"author":121,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[9],"tags":[58,70,102],"class_list":["post-15886","post","type-post","status-publish","format-standard","hentry","category-business-reports","tag-business-reports","tag-financial","tag-ny-state"],"yoast_head":"\r\nBusiness Report: Be Prepared For Audits - Saratoga Business Journal<\/title>\r\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\r\n<link rel=\"canonical\" href=\"https:\/\/www.saratoga.com\/saratogabusinessjournal\/2014\/11\/be-prepared-for-audits\/\" \/>\r\n<meta property=\"og:locale\" content=\"en_US\" \/>\r\n<meta property=\"og:type\" content=\"article\" \/>\r\n<meta property=\"og:title\" content=\"Business Report: Be Prepared For Audits - 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