1. “Free” Counsel – If I hear this one more time, I think I’ll scream. “My cousin’s plumber said I could deduct my haircut because…..blah blah blah”. Now, why do business owners have such a tendency to take advice from everyone but the professional? One of the fastest ways to kill your business is to keep listening to everyone but the professional, trying to save a buck. Think about it, do you call your electrician when you have a toothache? No, that’s ridiculous right? Well why do you get tax advice from your cousin’s friend’s plumber? So if you want to stay in business for years to come, pay for professional advice!

2. Your Buddies – Going into business with family and friends can be a nightmare. One of the biggest issues when going into business with family and friends is the lack of formalization. Here’s the scenario, sisters go into business together and they forget about creating a partnership agreement or an exit strategy. They just know that they love baking and they want to sell their delicious treats to the world. But problems arise when the bank account is empty and the creditors are calling. Or even worse when the phone stops ringing or the doors are not swinging open. If you must go into business with a family or friend, be sure to put everything in writing. I can’t stress the importance of knowing how you will handle the tough situations before they happen.

3. Plastic – As soon as you get a business license, incorporate in your state, or register for a Tax ID number using your business name, you get on the dreaded marketing list. Everyone will try to offer you something, i.e. merchant accounts, uniforms, marketing postcards, free checking accounts, phone service, and the biggest culprit of all….a Business Credit Card! Though a business credit card can be useful to the growth of your business, be careful of the trap. The interest rates on credit cards are outrageous and it’s a very dangerous way to finance your business. I recommend, if you do use a business credit card that you pay your balances off each month. That way the interest rate is not an issue.

4. Time Clock – Salaries and wages often times accounts for over 50% of all business expenses, mostly because the payroll taxes. As an employer you are responsible for not only matching your employee’s Social Security and Medicare Tax but you must remit them to the IRS. If you don’t, you will be in serious trouble. Failure to remit payroll taxes could result in the IRS coming by and shutting your doors for good. So it’s a good idea to subscribe to a payroll service or hire a professional to handle the payroll.

Owning a business includes more than just selling your product or service. Seek professional advice on areas that are not your area of expertise. Call us today for a free consultation 678-608-2775.

PAYROLL TAXES NOT BEING PAID ON TIME

[WARNING:  All check signers on company Bank accounts

can be held responsible for payroll taxes!]

If you are a check signer on the company checking account, it is your responsibility to make sure all payroll taxes are paid to the IRS monthly.

Sometimes businesses get behind on the payroll taxes due to cash flow problems. The penalties and interest assessed by the IRS are excessive for this type of delinquency. These problems worsen with IRS penalties and interest, and the total amount owed can grow by 50% to 75% in a short period of time. If the Company is in cash flow trouble or is approaching the DANGER ZONE, it may never be able to pay off the total amount owing. Each check signer listed on the bank signature card is responsible for the tax; this often includes spouses, secretaries, employees, relatives, office managers or yourself.

HEADS UP:  You should get all non-essential check signers deleted from the bank signature cards before the company gets into trouble.

The IRS takes a very serious approach to collecting delinquent payroll taxes and may levy or seize company assets in short order. The best advice I can give to you if you find yourself in this situation is, DO NOT meet with the IRS Revenue Officer who calls or comes to the door to collect these taxes. Often, how you answer the first 5-10 questions they may ask you will determine whether you stay in business and if you or others will become personally responsible for the payroll taxes. One of the most important services we offer our clients is to meet with the IRS officers ourselves. This allows our clients to continue concentrating on running their business and improving the cash flow.

In my experience, I rarely have seen a good outcome when the Client meets with the IRS Revenue Officer.

DO NOT PAY IRS PENALTIES!

The IRS has close to 200 different types of penalties, and they like to hand them out like a salesman does his business card.  The worst part is that the IRS also charges interest and additional penalties on the original penalty.  (This is where the big bucks pile up!)

TIP:  Always try and get all penalties reduced or completely abated.

It makes sense (in almost every case) to request penalty abatement before you pay the IRS. If you have already paid the bill, it will not hurt to ask for penalty abatement and refund. Remember:  Your chances of getting a rebate is greatly reduced after you have paid the IRS.

These penalties can, however, be reduced to ZERO if you have “REASONABLE CAUSE”.  What makes up REASONABLE CAUSE you ask? Well, in my experience in negotiations with the IRS, anything may qualify as long as it is reasonable.

I’ve seen the IRS abate penalties for medical reasons, bad accountants, ignorance of the tax laws, ex-spouses, helping to provide care for a loved one, military call-ups, fire, floods, alcoholism, drug abuse, death, and even for relying on IRS advice.  (Did you know the IRS gives out the wrong tax advice over the phone almost 40% of the time?)

Penalties can be such a high percentage of the total amount owing to the IRS; it usually makes sense to consider requesting the IRS to reduce all penalties to Zero.

YOU MAY BE PLEASANTLY SURPRISED YOU HAVE NOTHING TO LOSE AND THE SAVING COULD BE HUGE!