Every time you turn around it seems that government is slapping regulation and requirements on small business.
Here are some facts from the Small Business Administration (SBA). Small businesses:
•Represent 99.7% of all employer[s]
•Employ just over half of all private-sector employees
•Pay 44% of total U.S. private payroll
•Have generated 64% of net new jobs over the past 15 years
•Create more than half of the nonfarm private gross domestic product (GDP)
•Hire 40% of high-tech workers (such as scientists, engineers and computer programmers)
•Are 52% home-based and 2% franchises
•Made up 97.3% of all identified exporters and produced 30.2% of the known export value in FY 2007.
•Small firms produce 13 times more patents per employee than large patenting firms; these patents are twice as likely as large-firm patents to be among the 1% most cited.
Further, if you look to the Kauffman Foundation, startup firms are the “sole engine” of job creation in the U.S. economy. Kauffman crunched a data set from the Census Bureau covering the years 1977-2005. In all but seven years during that period, existing businesses cut an average 1 million jobs, while firms in existence for a year or less created 3 million
Here is an article from Forbes magazine that summarized the problem.
http://blogs.forbes.com/greatspeculations/2010/09/03/government-declares-war-on-small-business/?partner=alerts
Thursday, September 23, 2010
Wednesday, September 22, 2010
IF YOU ARE A SMALL BUSINESS THAT PAYS EMPLOYEES HEALTH INSURANCE THE IRS HAS A NEW FORM FOR YOU
The Internal Revenue Service has released a draft version of the form that small businesses and tax-exempt organizations will use to calculate the small business health care tax credit when they file income tax returns next year. The IRS also announced how eligible tax-exempt organizations –– which do not generally file income tax returns –– will claim the credit during the 2011 filing season.
The IRS has posted a draft of Form 8941 to this website. Both small businesses and tax-exempt organizations will use the form to calculate the credit. A small business will then include the amount of the credit as part of the general business credit on its income tax return.
Tax-exempt organizations will instead claim the small business health care tax credit on a revised Form 990-T. The Form 990-T is currently used by tax-exempt organizations to report and pay the tax on unrelated business income. Form 990-T will be revised for the 2011 filing season to enable eligible tax-exempt organizations –– even those that owe no tax on unrelated business income –– also to claim the small business health care tax credit.
The final version of Form 8941 and its instructions will be available later this year.
As a refresher
The small business health care tax credit was included in the Affordable Care Act signed by the President in March and is effective this year. The credit is designed to encourage small employers to offer health insurance coverage for the first time or maintain coverage they already have.
In 2010, the credit is generally available to small employers that contribute an amount equivalent to at least half the cost of single coverage towards buying health insurance for their employees. The credit is specifically targeted to help small businesses and tax-exempt organizations that primarily employ moderate- and lower-income workers.
For tax years 2010 to 2013, the maximum credit is 35 percent of premiums paid by eligible small business employers and 25 percent of premiums paid by eligible employers that are tax-exempt organizations. Beginning in 2014, the maximum tax credit will go up to 50 percent of premiums paid by eligible small business employers and 35 percent of premiums paid by eligible, tax-exempt organizations for two years.
The maximum credit goes to smaller employers –– those with 10 or fewer full-time equivalent (FTE) employees –– paying annual average wages of $25,000 or less.
The credit is completely phased out for employers that have 25 FTEs or more or that pay average wages of $50,000 per year or more. Because the eligibility rules are based in part on the number of FTEs, and not simply the number of employees, businesses that use part-time help may qualify even if they employ more than 25 individuals.
The IRS has posted a draft of Form 8941 to this website. Both small businesses and tax-exempt organizations will use the form to calculate the credit. A small business will then include the amount of the credit as part of the general business credit on its income tax return.
Tax-exempt organizations will instead claim the small business health care tax credit on a revised Form 990-T. The Form 990-T is currently used by tax-exempt organizations to report and pay the tax on unrelated business income. Form 990-T will be revised for the 2011 filing season to enable eligible tax-exempt organizations –– even those that owe no tax on unrelated business income –– also to claim the small business health care tax credit.
The final version of Form 8941 and its instructions will be available later this year.
As a refresher
The small business health care tax credit was included in the Affordable Care Act signed by the President in March and is effective this year. The credit is designed to encourage small employers to offer health insurance coverage for the first time or maintain coverage they already have.
In 2010, the credit is generally available to small employers that contribute an amount equivalent to at least half the cost of single coverage towards buying health insurance for their employees. The credit is specifically targeted to help small businesses and tax-exempt organizations that primarily employ moderate- and lower-income workers.
For tax years 2010 to 2013, the maximum credit is 35 percent of premiums paid by eligible small business employers and 25 percent of premiums paid by eligible employers that are tax-exempt organizations. Beginning in 2014, the maximum tax credit will go up to 50 percent of premiums paid by eligible small business employers and 35 percent of premiums paid by eligible, tax-exempt organizations for two years.
The maximum credit goes to smaller employers –– those with 10 or fewer full-time equivalent (FTE) employees –– paying annual average wages of $25,000 or less.
The credit is completely phased out for employers that have 25 FTEs or more or that pay average wages of $50,000 per year or more. Because the eligibility rules are based in part on the number of FTEs, and not simply the number of employees, businesses that use part-time help may qualify even if they employ more than 25 individuals.
Wednesday, September 1, 2010
NEW REQUIREMENTS FOR BUSINESS THAT HAVE CHARGE ACCOUNTS
We want to make sure that you are aware of the new troublesome Federal Trade Commission rules that become law on January 1, 2011. The rules are meant to help detour identity theft. These rules are referred to as the “Red Flag Rules” and impact every company that bills customers. This is not specifically for credit cards but rather for billings that you send out.
If you are not in compliance, quite possibly you could be subject to a fine of $2,500 per occurrence plus a $3,500 civil penalty.
If you are not yet aware of this new requirement and would like more information you can find more information on the Kopsa Otte website at
http://www.kopsaotte.com/tax/documents/RedFlagMemo.pdf
It is a pleasure serving you.
If you are not in compliance, quite possibly you could be subject to a fine of $2,500 per occurrence plus a $3,500 civil penalty.
If you are not yet aware of this new requirement and would like more information you can find more information on the Kopsa Otte website at
http://www.kopsaotte.com/tax/documents/RedFlagMemo.pdf
It is a pleasure serving you.
CONGRESS CONSIDERS HAVING ALL EMPLOYERS PROVIDE IRA'S TO THEIR EMPLOYEES
Here we go again. A possible new burden on already challenged businesses. Note that this has not passed but it is being discussed. In reading the proposed legislation it is a phase in deal so that in the first few years the cost is not extreme. The problem is we all have seen these programs expand.
Democratic lawmakers in the House and Senate have introduced the Automatic IRA Act of 2010 to set up automatic individual retirement accounts for all workers in order to encourage some $15 billion in additional savings a year. Half of all American workers have no retirement savings at all.
I will keep an eye on this for you.
Larry Kopsa CPA
Democratic lawmakers in the House and Senate have introduced the Automatic IRA Act of 2010 to set up automatic individual retirement accounts for all workers in order to encourage some $15 billion in additional savings a year. Half of all American workers have no retirement savings at all.
I will keep an eye on this for you.
Larry Kopsa CPA
Friday, August 27, 2010
RONI DEUTCH SUED BY CALIFORNIA ATTORNEY GENERAL
I presume that you have seen the Roni Deutch commercial on TV claiming that she can negotiate with the IRS and you will only have to pay pennies on the dollar. These ads always infuriate me because, as a tax professional, I know that she cannot do what she claims and her claims confuse the public. According to the lawsuit, the claims made in the ads are false and the people actually still owe the money. She spends over $3,000,000 per year on advertising.
The thing that upsets me the most is that the people that she is preying on are having financial problems in the first place and working with her just makes their problems worse. Look at the lawsuits. The 45 people working for her are not tax experts, but actually salespeople.
Now she gets what is coming to her. Roni Deutch, the so-called “Tax Lady” has been slapped with a $34 million law suit by California Attorney General, Jerry Brown.
According to the Attorney General’s web site, “Tax Lady Roni Deutch is engaged in a heartless scheme that swindled people with tax problems. She promises to significantly reduce their IRS tax debts, but instead preys on their vulnerability, taking large up-front payments but providing little or no help in lowering their tax bills.”
Brown’s office says that rather than reducing tax bills, Deutch actually increases taxpayer’s debt by putting them “in an endless loop of requests.” Brown claims the reason for the requests are to boost her bottom line at the expense of the taxpayer.
Further, Brown says that Deutch’s TV ads are “misleading” and feature fictional testimonials promising impressive results, despite the fact that Deutch’s success rate is said to be about 10% in tax cases. The claim states that “most clients never obtain a tax debt resolution” from Deutch.
In the complaint, Brown specifically cites an ad called, “It’s Your Turn” which features three clients whom Deutch claims to have “saved” from having to pay thousands of dollars to the IRS. According to Brown, those clients still owe the IRS the full amount of their taxes, plus interest and penalties.
Deutch’s practices inside her firm are called to the carpet in the complaint, as well. Brown’s office claims that Deutch’s law firm is actually a high pressure “boiler room” where she belittles her employees. “She screams at and berates sales agents who are not performing adequately,” according to the complaint. The complaint alleges that Deutch requires her employees to promise callers results that the potential clients are likely to never see.
Brown’s complaint seeks nearly $34 million in restitution for clients, including funds to refund taxpayer retainers which Brown’s office alleges were improperly retained. The complaint also seeks to prevent Deutch from engaging in unfair business practices and false advertising. The State has also asked for a preliminary injunction to force Deutch to cease her “illegal practices” prior to the resolution of the complaint.
Deutch and her office had to see this coming. In March, Brown posted an alert for California taxpayers warning them to avoid “phony tax-relief companies” that charge exorbitant fees, but provide no actual relief. At the time, Brown advised taxpayers, “Every tax season, phony tax-relief companies emerge to exploit cash-strapped Californians who owe back taxes to the IRS. Taxpayers should be on high alert, avoid paying up-front fees to these companies and never ignore notices from the IRS.”
This isn’t Deutch’s first public complaint. In 2006, she agreed to pay $300,000 to settle a lawsuit filed by New York City’s Department of Consumer Affairs for similar complaints about her misleading commercials.
I’ve heard a number of complaints from taxpayers who have worked with so-called tax debt relief companies who promise big results. I’ll just say this… If it sounds too good to be true, it probably is. There’s a reason that you don’t see most tax attorneys on TV promising you “pennies on the dollar.” I can’t stress enough how important it is to work with a trustworthy tax professional – one that returns phone calls and letters, one that keeps you posted about the status of your matter – to resolve your tax obligations.
Take a look at Deutch's website at: www.ronideutch.com. Listen to the testimonials, and then listen to what the California attorney general is saying about her:
http://www.washingtonexaminer.com/breaking/california-ag-sues-tax-lady-roni-deutch-for-34-million-accuses-her-of-defrauding-customers-101323199.html.
p.s. She doesn't really look like the picture on her website.
Larry Kopsa CPA
The thing that upsets me the most is that the people that she is preying on are having financial problems in the first place and working with her just makes their problems worse. Look at the lawsuits. The 45 people working for her are not tax experts, but actually salespeople.
Now she gets what is coming to her. Roni Deutch, the so-called “Tax Lady” has been slapped with a $34 million law suit by California Attorney General, Jerry Brown.
According to the Attorney General’s web site, “Tax Lady Roni Deutch is engaged in a heartless scheme that swindled people with tax problems. She promises to significantly reduce their IRS tax debts, but instead preys on their vulnerability, taking large up-front payments but providing little or no help in lowering their tax bills.”
Brown’s office says that rather than reducing tax bills, Deutch actually increases taxpayer’s debt by putting them “in an endless loop of requests.” Brown claims the reason for the requests are to boost her bottom line at the expense of the taxpayer.
Further, Brown says that Deutch’s TV ads are “misleading” and feature fictional testimonials promising impressive results, despite the fact that Deutch’s success rate is said to be about 10% in tax cases. The claim states that “most clients never obtain a tax debt resolution” from Deutch.
In the complaint, Brown specifically cites an ad called, “It’s Your Turn” which features three clients whom Deutch claims to have “saved” from having to pay thousands of dollars to the IRS. According to Brown, those clients still owe the IRS the full amount of their taxes, plus interest and penalties.
Deutch’s practices inside her firm are called to the carpet in the complaint, as well. Brown’s office claims that Deutch’s law firm is actually a high pressure “boiler room” where she belittles her employees. “She screams at and berates sales agents who are not performing adequately,” according to the complaint. The complaint alleges that Deutch requires her employees to promise callers results that the potential clients are likely to never see.
Brown’s complaint seeks nearly $34 million in restitution for clients, including funds to refund taxpayer retainers which Brown’s office alleges were improperly retained. The complaint also seeks to prevent Deutch from engaging in unfair business practices and false advertising. The State has also asked for a preliminary injunction to force Deutch to cease her “illegal practices” prior to the resolution of the complaint.
Deutch and her office had to see this coming. In March, Brown posted an alert for California taxpayers warning them to avoid “phony tax-relief companies” that charge exorbitant fees, but provide no actual relief. At the time, Brown advised taxpayers, “Every tax season, phony tax-relief companies emerge to exploit cash-strapped Californians who owe back taxes to the IRS. Taxpayers should be on high alert, avoid paying up-front fees to these companies and never ignore notices from the IRS.”
This isn’t Deutch’s first public complaint. In 2006, she agreed to pay $300,000 to settle a lawsuit filed by New York City’s Department of Consumer Affairs for similar complaints about her misleading commercials.
I’ve heard a number of complaints from taxpayers who have worked with so-called tax debt relief companies who promise big results. I’ll just say this… If it sounds too good to be true, it probably is. There’s a reason that you don’t see most tax attorneys on TV promising you “pennies on the dollar.” I can’t stress enough how important it is to work with a trustworthy tax professional – one that returns phone calls and letters, one that keeps you posted about the status of your matter – to resolve your tax obligations.
Take a look at Deutch's website at: www.ronideutch.com. Listen to the testimonials, and then listen to what the California attorney general is saying about her:
http://www.washingtonexaminer.com/breaking/california-ag-sues-tax-lady-roni-deutch-for-34-million-accuses-her-of-defrauding-customers-101323199.html.
p.s. She doesn't really look like the picture on her website.
Larry Kopsa CPA
Friday, August 20, 2010
QUESTION ON WITHHOLDING FROM AN EMPLOYEE'S PAYCHECK
Larry, thanks for all the information. Could you answer this for me? I have an employee that broke a piece of equipment that cost over $300. I want to take $50 a pay period out of her payroll check. Before I start recovering my money I want to make sure that I am not getting into an trouble. Your thoughts?
Inus
Inus, making unauthorized deductions from an employee's pay can be a serious mistake. Employers can legally deduct from an employee's pay amounts that are only authorized or required by law (such as tax withholding), by court order (such as garnishments), and amounts authorized by the employee (such as the employee's share of health insurance).
What are unauthorized deductions? State laws vary and it can be tricky. In addition, federal wage and hour law requires payment of agreed upon and earned wages (with the allowed deductions listed above.)
I would recommend that you first talk with your attorney to see if this is permitted by your state law or your state department of labor. Even with the employee's permission, this could be a problem.
Larry Kopsa CPA
Inus
Inus, making unauthorized deductions from an employee's pay can be a serious mistake. Employers can legally deduct from an employee's pay amounts that are only authorized or required by law (such as tax withholding), by court order (such as garnishments), and amounts authorized by the employee (such as the employee's share of health insurance).
What are unauthorized deductions? State laws vary and it can be tricky. In addition, federal wage and hour law requires payment of agreed upon and earned wages (with the allowed deductions listed above.)
I would recommend that you first talk with your attorney to see if this is permitted by your state law or your state department of labor. Even with the employee's permission, this could be a problem.
Larry Kopsa CPA
WANT TO COMPARE THE NEW TAX LAW PROPOSALS?
The tax foundation has updated their interactive calculator at www.MyTaxBurden.org to include the Democrats’ plan for the expiring Bush-era tax cuts recently scored by the Joint Committee on Taxation.
Now you can compare you 2011 federal income tax liabilities under four policy scenarios:
(1) All the tax cuts expire completely at the end of this year
(2) All the tax cuts are extended into 2011 or made permanent
(3) President Obama’s budget is adopted, which would allow the tax cuts to expire for families making over $250,000 a year (singles making over $200,000), extend some stimulus measures and impose new limitations on itemized deductions
(4) Congressional Democrats’ recent proposal is adopted, which is similar to the Obama plan but does not extend stimulus measures or include additional limits on itemized deductions.
All you have to do is type in basic information – such as filing status, wage income and number of dependents – along with optional more detailed information – such as capital gains and dividend income, state and local taxes paid and other itemized deductions – and determine what your federal income tax burden would be in 2011.
Now you can compare you 2011 federal income tax liabilities under four policy scenarios:
(1) All the tax cuts expire completely at the end of this year
(2) All the tax cuts are extended into 2011 or made permanent
(3) President Obama’s budget is adopted, which would allow the tax cuts to expire for families making over $250,000 a year (singles making over $200,000), extend some stimulus measures and impose new limitations on itemized deductions
(4) Congressional Democrats’ recent proposal is adopted, which is similar to the Obama plan but does not extend stimulus measures or include additional limits on itemized deductions.
All you have to do is type in basic information – such as filing status, wage income and number of dependents – along with optional more detailed information – such as capital gains and dividend income, state and local taxes paid and other itemized deductions – and determine what your federal income tax burden would be in 2011.
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