Every year the IRS publishes audit statistics showing that it audits S Corporation returns much less frequently than it audits sole proprietorship (schedule C) returns. Consequently, one of the factors business owners and their advisors have traditionally considered before choosing a form of business is the relative likelihood of IRS scrutiny of the business’s tax return.
No surprises there, right?
Well, not so fast. Last week I attended [...]
Tags: IRS Audits · S Corporations · Self-Employed Taxpayers
The National Association for the Self-Employed reports that the recently enacted Healthcare law will have an onerous record-keeping effect on small businesses:
Many of the nation’s entrepreneurs are about to become more familiar with IRS Form 1099. According to a new law set to go into effect in 2012, business owners will be required to submit a Form [...]
Tags: Business Transactions · C Corporations · IRS procedure · S Corporations · Self-Employed Taxpayers
In a summary opinion issued yesterday the Tax Court held that an IRS revenue officer failed to substantiate expenses she claimed in her eBay business.¹Â
Below is an excerpt from the Court’s opinion in Orellana v. Commissioner, T.C. Summ. Op. 2010-51 (Apr. 20, 2010). The IRS agent/taxpayer’s admissions are stunning (emphasis added):
Petitioner argues that she was just taking [...]
Tags: Gross Income · Self-Employed Taxpayers · tax court
We didn’t need it, but here is more evidence that self-employed individuals should incorporate or form an LLC.
WebCPA reports that the IRS is intensifying it’s scrutiny of Schedule “C” filers (i.e. sole proprietorship):
Estimates by the IRS show that $68 billion of the $345 billion tax gap in 2001 was due to the underreporting of income by sole [...]
Tags: Self-Employed Taxpayers · Tax Tips
Thursday, October 15th, is the last day taxpayers can file their 2008 individual income tax returns without incurring a late filing and late payment penalty. But what do you do if you don’t have all of the information necessary to complete your return?Â
Many unincorporated, self-employed taxpayers fail to keep adequate books and records from which a business tax [...]
Tags: Deductible Expenses · News · Self-Employed Taxpayers
In May I wrote a post titled 59 Tips for the Self Employed in which I suggested that new business owners not work from their homes so as to avoid distractions like the refrigerator, the T.V. and the bed.
Many readers and most of my fellow tax bloggers disagreed with me.
Now here comes Matthew Bandyk of U.S. News & World Report and [...]
Tags: Self-Employed Taxpayers
June Walker, an unenrolled tax preparer, writes a blog subtitled Tax & Financial Advisor to the self-employed since 1979.
In a recent post she advises her business clients to commingle their business funds with their personal funds.
You read that write right: She advises the commingling of funds.
Listen:
You need only one checking account. Do not open a [...]
Tags: Self-Employed Taxpayers
California tax blogger Mitchell Port writes about the top six things the IRS wants you to know before starting a new business:
I especially liked #4:
 Good records are necessary. Which record keeping system is suited to your business is up to you so long as it shows your income and expenses. Except in a few cases, the [...]
Tags: Self-Employed Taxpayers
The IRS has issued announced IR-2009-51 summarizing the tax breaks made available to small businesses and the self-employed under the American Recovery and Reinvestment Act (“ARRA”).
Here’s the preamble:
Small Business Week is May 17 to 23, and the Internal Revenue Service urges small businesses to act now and take advantage of tax-saving opportunities included in the recovery law.
[ARRA]Â enacted [...]
Tags: Announcements · Self-Employed Taxpayers
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Getting Started
1. Incorporate Don’t operate as a sole proprietorship
2. Hire a professional bookkeeper
3. Outsource your payroll
4. Buy an accounting software package
5. Attend local new business owner courses
6. Don’t hire your relatives
7. Think twice
8. Don’t start a business just because you have a cool sounding name for it.
9. Get a line of credit
10. Don’t work out [...]
Tags: Self-Employed Taxpayers
Wall Street Journal – Taxes Blog
