Category: Personal and Business Accounting

1099 or W-2?

Posted on by PM Editor

There is always a constant misunderstanding of what forms need to be filed on a tax return when a company pays a worker to perform a service or labor under their company name. The two common forms are a W-2 or 1099-Misc. Most people who have worked for a franchise or a global named company have been given a W-2 at the end of each employment year. Because the W-2 is the most common form out of the two, business owners assume that the tax form W-2 is given to every worker but it is not always the case.

Filing a W-2

The tax form that needs to be filed can be one of the two but depends on the situation and status of the person through the eyes of the company. The tax form W-2 is for those who are an employee of the company. One of the key differences between the two tax forms is with a W-2 the business owner assumes the responsibility to deduct the taxes on the wages they are paying their employees and reports and pays the tax deducted to the Internal Revenue Service (IRS). The deductions are composed of State Income Tax, Federal Income Tax, Social Security, and Medicare; comprised these are commonly referred to as payroll taxes. There is another consideration that needs to be made if the company controls the person’s schedule and it’s providing the workers with necessary tools and training to complete a task a specific way then the worker is classified as an employee, in which the company must report this income to the IRS and furnish it’s employee(s) with a W-2 form.

Filing a 1099-Misc.

A 1099-Misc. form is furnished to workers that are considered an independent contractor. These workers are not considered employees of the business, so the worker oversees calculating their own payroll tax and submitting their own income earnings to the Internal Revenue Service (IRS) and Social Security Administration on a quarterly basis. To be considered an independent contractor, the worker contributes its own time, completes task-based projects on their own ideas and styles, the worker provides him or herself with their own tools, materials, and other supplies to complete the task. Another consideration in filing a 1099-Misc. is that the worker needs to make more than $600 in one fiscal year or it is not necessary to provide them with a 1099-Misc.

Wrong Classification

The Internal Revenue Service has developed a new form for employees who have been misclassified as independent contractors by an employer. Form 8919, Uncollected Social Security and Medicare Tax on Wages, will now be used to figure and report the employee’s share of uncollected social security and Medicare taxes due on their compensation.

IRS: Tax-related Identity Theft

Posted on by PM Editor

About 1 in every 16 people living in the United States has been a victim of identity theft. Identity theft occurs when someone uses another person’s identity information like their names, social security number (SSN), or credit card number without the other persons consent. USA today announced that “identity theft soared during 2016 and in fact, it has hit an all-time high.”

The issue of identity theft has been a focal point for the IRS(Internal Revenue Services) since tax payers have too many times been victims of tax-related identity theft and refund fraud. As you may have guessed, a tax-related identity theft occurs when someone uses your stolen Social Security number to file a tax return to benefit on a fraudulent refund. To stop these tax-related identity theft, the IRS has assigned more than 3,000 employees to work on identity theft-related issues, and provides its 35,000+ employees training on how to detect identity theft.

The IRS is working hard to prevent identity theft and has stopped 14.6 million suspicious returns and protected over $50 billion in fraudulent returns. One of the steps they take is by calling tax payers to verify some questions they have on tax returns or refund amounts. The doing of this process is not to alarm any tax payer of fraud but to be proactive, if any fraudulent act was taken. It might sound like a simply task but it is a very effective way to find out if theft has occurred.

What can you do as Taxpayer?

If you are an e-filer, do your research. Search the internet, find out if the website you are thinking to use, has not been hacked or is a scam to get your personal information. If you are not an e-filer, and use a tax consultant, make sure files can not be easily stolen or seen. Also, keep your information hidden from others who do not need to know your personal information.

On the IRS website, it states that red flags should go up if any of the following occur:

  1. More than one tax return was filed using your SSN
  2. You owe additional taxes, or refund offsets on years you have not filed.
  3. IRS records show that you have received wages from an employer you did not work for.

If you have been a victim of tax-related identity theft, contact the IRS.

 

 

Business and Personal Accounting Service

Posted on by PM Editor

Are you interested in trying personal accounting services? Or maybe you need accounting assistance for your business? Regardless of your answer, you are probably aware that there are two options that individuals and organizations are using in situations like this.

First of all, they are relying on the so-called do-it-yourself approach. This means that they are taking care of these things on their own. The main reason why they are doing this is to save money. The other option is to hire a professional accounting service provider like TaxPM. The fact is that the second option is much better because it will not only save you time, but it will also save you money in the long run. Professional accounting service providers have experience, knowledge, and expertise in this field and they are less likely to make mistakes. Ordinary people don’t have the resources to finish this task in the right way. Now let’s see what you can expect from reliable personal and business accounting service providers:

Bookkeeping (end to end service)

It’s the best idea to leave the professional to take care of your bookkeeping needs from the beginning to the end. The typical bookkeeping service includes receiving, keeping and paying vendor invoices, creating electronic payroll taxes deposits, preparing payroll tax returns and payroll in general, preparing debt service payments as we all other occasional payments and taking care of sales tax returns. (1)

IRS Communication and Negotiation

Owing the IRS is a big deal. This is the reason why it is important to communicate and negotiate with the agency in the best possible way. There are professionals that can help you with this. It turns out that this is an investment that pays off. Through this process of communication and negotiation with the IRS, these professionals can help you get the best option for tax relief. In the end, you will use the best option for tax debt relief – penalty abatement, installment plan, offer in compromise, currently not collectible etc.

Payroll and corporate tax filings

Payroll and corporate tax filings let business owners take care of their employees and their company. Instead of wasting time on this time-consuming process, business owners should leave this task in the hands of true professionals. (2) With the right service provider on your side, you can rest assured that the payroll and corporate tax filings will be accurate and reliable and completed on time. They can help you file literally all the payroll and corporate taxes you need to pay.

Tax planning and preparation

It doesn’t really matter whether you are an individual or a business owner, you will need tax planning and preparation strategy that includes tax saving tactics and strategies like insurance strategies, employee benefit plans, financing alternatives and more. All these things can be overwhelming for an ordinary person, but the experts in this field like TaxPM are doing this on a daily basis for dozens of individuals and businesses.

These are some of the reasons why individuals and business needs professional personal and business accounting service.

 

 

 

 

Launching a Business in Texas

Posted on by PM Editor

The latest reports have shown that the number of new businesses is stagnating nationwide and Texas is not an exception. (1) However, this doesn’t mean that you should give up on your dream especially if you have a solid business idea and you are determined to succeed. Launching a business in Texas is a smart idea for more than one reason. This is a state with low taxes, business-friendly laws, excellent infrastructure and other things that make it an ideal business location. In this article, we will highlight a basic guide to launching a business in Texas.

  1. Choose the best business structure

If you want to support the growth of your business, you should create an adequate structure from the start. There are a few different types of business structures including sole proprietorships, corporations, partnerships and limited liability companies. Select the one that suits your business needs and plans. If you make the right decision, you can expect tax breaks and a wide array of benefits. That’s why it’s a smart move to talk to a professional in this field. TaxPM is definitely the place where you can find such help.

  1. Registration

Once you select the right business structure, you will have to register your business with the Texas Secretary of State. The only exception is sole proprietors, but they usually have to register with their counties of operation. It is possible to register a business over the Internet or use your local county clerk office. One of the crucial steps in this procedure is to find a unique name for your business. Do this carefully because a business name can be a deal maker or a deal breaker for many modern consumers. (2)

  1. Check the permits

The next step is to learn more about the permits, licenses, certifications, and registrations that your business might need. There is no general business license in Texas, but almost every industry comes with regulatory agencies. Those selling taxable goods or providing taxable services should apply for sales and use tax permit.

  1. Create bank accounts

When it comes to taxation, this is one of the most important steps. Companies need EIN (Employer Identification Number) provided by the IRS. Sole proprietors can use their social security number for tax purposes. It’s possible to get an EIN online.

  1. Start promoting your business

There are thousands of businesses in Texas which means that you have to do something to get noticed. The last step of the process is to start promoting your new business. The good news is that there are many different marketing options for businesses today. So, you can use some classic forms of marketing like newspaper ads or TV commercials, but you can also use Internet marketing which has proven to be even more effective today.

If you want to speed up this process and finish it in the best possible way, feel free to contact TaxPM – our experts will be glad to help you.