IRS Has Options to Help Small Business Owners

This blog post was originally published through the IRS Tax Tips service. More information on all of these topics can be found at the Small Business and Self-Employed Tax Center. Small business owners often have a running list of things to do. These include deadlines, sales calls, employee issues, banking, advertising – and taxes. The IRS… Read more »

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This blog post was originally published through the IRS Tax Tips service. More information on all of these topics can be found at the Small Business and Self-Employed Tax Center.

Small business owners often have a running list of things to do. These include deadlines, sales calls, employee issues, banking, advertising – and taxes. The IRS can help with the last one.

Here are seven resources to help small businesses owners with common topics:Tax Tipso avoid

  • Looking at the Big Picture: The Small Business and Self-Employed Tax Center brings information on IRS.gov to one common place.
  • Organizing Tasks: The IRS Tax Calendar for Businesses and Self-Employed helps owners stay organized. It includes tax due dates and actions for each month. Users can subscribe to calendar reminders or import the calendar to their desktop or calendar on their mobile device.
  • Searching for Topics: The A-to-Z Index for Business helps people easily find small business topics on IRS.gov.
  • Getting Information by Email: Small business owners can sign up for e-News for Small Businesses. The free, electronic service gives subscribers information on deadlines, emerging issues, tips, news and more.
  • Watching Videos: The IRS Video Portal offers learning events and informational videos on many business topics.
  • Finding Forms: The Small Business Forms and Publications page helps business owners find the documents they need for the type of business they own. It lists tax forms, instructions, desk guides and more.
  • Meeting in Person or Online: Small business workshops, seminars and meetings are held throughout the country. They’re sponsored by IRS partners that specialize in federal tax topics. Topics vary from overviews to more specific topics such as retirement plans and recordkeeping.

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IRS Announces Filing Date Changes

The following blog post was sent by the Internal Revenue Service with the request that it be circulated to all employers who furnish W-2 forms to employees or 1099-MISC forms to independent contractors.  There is a change in the date when such forms must be filed with the Social Security Administration.  All small businesses should… Read more »

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The following blog post was sent by the Internal Revenue Service with the request that it be circulated to all employers who furnish W-2 forms to employees or 1099-MISC forms to independent contractors.  There is a change in the date when such forms must be filed with the Social Security Administration.  All small businesses should review this information to be sure that they are in compliance.

New Jan. 31 Deadline for Employers

The Protecting Americans from Tax Hikes (PATH) Act, enacted last December, includes a new requirement for employers. They are now required to file their copies of Form W-2, submitted to the Social Security Administration, by Jan. 31. The new Jan. 31 filing deadline also applies to certain Forms 1099-MISC reporting non-employee compensation such as payments to independent contractors.taxes-blog-image

In the past, employers typically had until the end of February, if filing on paper, or the end of March, if filing electronically, to submit their copies of these forms. In addition, there are changes in requesting an extension to file the Form W-2. Only one 30-day extension to file Form W-2 is available and this extension is not automatic. If an extension is necessary, a Form 8809 Application for Extension of Time to File Information Returns must be completed as soon as you know an extension is necessary, but by January 31. Please carefully review the instructions for Form 8809, for more information.

“As tax season approaches, the IRS wants to be sure employers, especially smaller businesses, are aware of these new deadlines,” said IRS Commissioner John Koskinen. “We are working with the payroll community and other partners to share this information widely.”

The new accelerated deadline will help the IRS improve its efforts to spot errors on returns filed by taxpayers. Having these W-2s and 1099s earlier will make it easier for the IRS to verify the legitimacy of tax returns and properly issue refunds to taxpayers eligible to receive them. In many instances, this will enable the IRS to release tax refunds more quickly than in the past.

The Jan. 31 deadline has long applied to employers furnishing copies of these forms to their employees and that date remains unchanged.

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Tax Forms Due by End of January – Don’t Wait to Order!

As we begin 2016, many small business owners start gathering the necessary documents for filing their 2015 taxes. Small businesses who have employees or independent contractors are required to distribute tax forms (W-2 for employees, 1099 for contractors) by the end of January.  If in the past you have been getting your blank forms from… Read more »

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Tax Forms Due by the End of January - Don't Wait to OrderAs we begin 2016, many small business owners start gathering the necessary documents for filing their 2015 taxes. Small businesses who have employees or independent contractors are required to distribute tax forms (W-2 for employees, 1099 for contractors) by the end of January.  If in the past you have been getting your blank forms from a Taxpayer Assistance Center, please note that this is no longer an option.

The Internal Revenue Service has announced that forms used by small businesses will no longer be available at taxpayer assistance centers, and must be ordered online.

The demand for paper tax products is declining because of an increase in e-filing and the availability of products online. Due to the decreased demand and printing and shipping costs, the IRS will no longer stock Forms W-2, W-3 and 1099 in Taxpayer Assistance Centers. The forms, which are used by small business owners, can be ordered online or by telephone and mailed directly to the taxpayer’s home or business address. Don’t wait until the last minute to get blank Forms W-2, W-3 or 1099.

To order online, go to the IRS’ Online Ordering for Information Returns and Employer Returns.

To order by phone, call the IRS at: 1-800-829-3676.

The Social Security Administration also offers an online option to create and file electronic Forms W-2. File Forms W-2/W-2c and W-3/W-3c electronically by visiting the Social Security Administration’s Employer Reporting Instructions and Information website to create and file electronic fill-in versions of Forms W-2 and W-3.

If you’re interested in an overview of any other changes related to Social Security for Tax Year 2015, view the Social Security Administration’s guide to the most recent updates. You can also visit the IRS’s webpage for Self Employed and Small Businesses if you have additional questions about filing and paying your business taxes.

Lastly, don’t forget to check out the section of our Resource Library that covers taxes. Happy filing!

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Solopreneurs – Could You Really Be Considered an Employee?

This post is a continuation of last week’s topic and was written by Patricia Frame of Strategies for Human Resources, our guest author for our solopreneur blog series. Recently, the US Department of Labor (DOL) issued new guidance on when a person is an independent contractor and when they are an employee. Even if you… Read more »

The post Solopreneurs – Could You Really Be Considered an Employee? appeared first on Alexandria Small Business Development Center.

This post is a continuation of last week’s topic and was written by Patricia Frame of Strategies for Human Resources, our guest author for our solopreneur blog series.

Solopreneur - Could You Really Be Considered an EmployeeRecently, the US Department of Labor (DOL) issued new guidance on when a person is an independent contractor and when they are an employee. Even if you have your own company, if you are a solopreneur you need to understand the new rules to protect yourself. Under these rules, many legal reviews indicate that many independent contractors now will be considered employees instead.

Under the new guidelines issued July 15, 2015 for classifying such workers the DOL looks closely at what the ‘economic realities’ are to decide whether a worker is economically dependent on the employer or are actually in business themselves.

There are six factors which the DOL typically will assess in total and none are considered alone. These include:

  •  The extent to which the work performed is an integral part of the employer’s business
  •  The worker’s opportunity to manage for his/her profit and loss (not including ability to work more hours)
  •  The relative investments of the employer and the worker
  •  Whether special skills (business skills, not technical ones), judgement, and initiative are required to perform the work
  •  Permanency of the relationship
  •  Degree of control retained or exercised by the employer, not including flexible work options.

Certainly those solopreneurs who once were employees and then moved out to become consultants or contract workers AND who still work primarily for their old employer are at risk.

But you may be at risk also if:

  • You have only 1-2 clients
  • You work in a role where you are on-site at a client full-time or part-time regularly or serve as an interim executive
  • You have not yet set your business up fully
  • You are at risk under the factors mentioned above.

Whether you are obviously at risk or not, you should take precautions to ensure you can maintain your independent status, if you wish to remain independent.  This could include:

  • Documenting all your client engagements regularly with any agreements you sign, their business information, and the scope of your work for each client.  Many of us sign non-disclosure or confidentiality or other agreements with our clients. Be sure you have copies of these as well as any agreements or contracts you have your clients sign.
  • Establishing your business visibly within your community and field. This could include having a website or business profile on social media, the advertising you do, your business cards and other marketing materials, and so on.
  • Maintaining required business licenses
  • Having separate business banking accounts and other business relationships

Note that the DOL has stated that having a business incorporated is not in itself enough to prove you are a real business and not an employee.

All this advice seems simple and obvious, but often we know what we should do but we do not actually do it all. This is especially true if you started your solopreneur work as something to do until you could find a new job.

If you are re-classified as an employee, you lose the business deductions on your taxes although you may gain benefits from regular employment. The choice should be made by your decision and actions, not inadvertently.

If you need assistance and advice to ensure you are building a successful business, the Alexandria SBDC offers a range of services. Check our website for those which will help you succeed!

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Important Independent Contractor Rules Change

The US Department of Labor (DOL) has issued new guidance that redefines independent contractors (often called 1099 workers after the IRS form.) This is critical to your business if you use independent contractors since many now will be considered employees instead. Under the new guidelines issued July 15, 2015 for classifying such workers, the DOL… Read more »

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Independent Contractor Rules ChangesThe US Department of Labor (DOL) has issued new guidance that redefines independent contractors (often called 1099 workers after the IRS form.) This is critical to your business if you use independent contractors since many now will be considered employees instead.

Under the new guidelines issued July 15, 2015 for classifying such workers, the DOL looks closely at what the ‘economic realities’ are to decide whether a worker is economically dependent on the employer or are actually in business themselves.

There are six factors which the DOL typically will assess in total, and none are considered alone. These include:

  • The extent to which the work performed is an integral part of the employer’s business
  • The worker’s opportunity to manage for his/her profit and loss (not including ability to work more hours)
  • The relative investments of the employer and the worker
  • Whether special skills (business skills, not technical), judgement, and initiative are required to perform the work
  • Permanency of the relationship
  • Degree of control retained or exercised by the employer, not including flexible work options

What does this mean for your business?

Just because a person wants to be considered an independent contractor does not mean you should allow it.  While many businesses prefer to use independent contractors to save on payroll taxes and benefits, neither the DOL or IRS have approved  that practice, as both large and small firms have learned in past cases.

Independent contractors should be used carefully and not commonly.  Now you need to keep detailed documentation on each independent contractor to show how you determined the person was not an employee.  Such documentation could include:

  • The work requirements used to seek independent contractors’ bids include:
  • Project work plans which show the limits of the work
  • Business cards, W-9s, business website links, and copies of business licenses
  • A list of other current clients of each independent contractor or such pages on their website
  • Correspondence related to the work

In addition, various legal newsletters have recommended the following practices to help support your determination that the person is an independent contractor and not an employee:

  • Do not provide internal email addresses
  • Do not normally invite them to employee functions
  • Do not provide any employee benefits

This new guidance means it would be wise to look at all independent contractors you are currently working with and assess whether each is actually independent or should be considered an employee.  Doing this review now will help you avoid legal risk, including pay, benefits, compliance, and tax problems.  For further information, talk with your employment attorney or contact us for a legal or HR consult appointment.

For more information, please reverence this guidance from the Department of Labor.

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Health Care Rules Under the Affordable Care Act

This post was written by Patricia Frame of Strategies for Human Resources after encountering many small business owners who were not aware of changes in health care rules under the Affordable Care Act. Many small organizations provide pre-tax or post-tax payments to employees instead of offering a group health-care plan. The IRS has now reminded small… Read more »

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This post was written by Patricia Frame of Strategies for Human Resources after encountering many small business owners who were not aware of changes in health care rules under the Affordable Care Act.

Changes in Health Care Rules Under the ACAMany small organizations provide pre-tax or post-tax payments to employees instead of offering a group health-care plan. The IRS has now reminded small employers that you no longer can do this. If you provide an allowance or reimburse employees for their health care costs, directly or through a Health Reimbursement arrangement (HRA), you must stop this practice by June 30, 2015.

You have options for your next step but need to decide on these quickly.  You may:

  • Find a group plan via the federal SHOP exchange for small organizations
  • Work with your insurance broker to find group coverage that works for your situation
  • Include some or all of the payments for health care coverage which you have been making in the employees’ regular pay rate or salary

There are exceptions to these rules for Subchapter S Corporation employee-shareholders and retiree benefit plan beneficiaries.  Please check with your insurance broker and lawyer on these.

If you continue to provide such allowances or reimbursements after June 30, 2015, you will be subject to a fine of $100 per employee per day.

For many small businesses, this will create an employee morale issue.  It is vital that you learn your options, make your decision, and clearly communicate to each currently covered employee what you are doing and what their options are if you will offer any.  We are available to discuss this with you.

Although this IRS rule, under IRS Notice 2015-17, was issued in February, the Alexandria SBDC has recently become aware that some small business owners have not been aware of this change, hence this post.  You should consult your insurance broker, employment lawyer, human resources advisor, or CPA for further information.

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