HOW DO I HANDLE TAXES?

A “tax accountant” focuses on filing federal state and local taxes. Their job is to work with those agencies to understand the intricacies of the tax laws and to file on your behalf in a way that minimizes your tax burden while staying compliant with the law.

In order to be effective, tax accountants need reliable data from your bookkeeper, company accountant, and/or CFO. The smaller and simpler the business, the easier it will be for a tax accountant to get what they need from a bookkeeper.

As your business scales, changes, or becomes larger and more complex it may become increasingly necessary for your tax accountant to work with someone who has a stronger, more detailed understanding of both your business and how it intertwines with tax law. 

Help! What do I do when the IRS is sending me letters?

Take a deep breath, this is what they do. Ignore it for a few days just to stick it to the man. Once you’ve re-established who is in charge figure out how you are going to respond.

Most of the time when you need to provide a response to the IRS, it is purely informational. The IRS often just needs clarity on something. If by chance you did do something wrong, like miss a filing or file something incorrectly, there is always a chance to fix it. You do not just send you to tax prison because you’ve made a mistake. The challenge here is to be patient and diligent in your dealings.

If you can, speak to someone on the phone to really understand the best way to rectify. When you speak with an IRS representative, do everything they advise and document the entire conversation, including time, date and name/id number of the person you dealt with. Keep in mind that it may take many calls. For any mail correspondence make sure you make copies and send certified mail, saving everything.

Wherever possible defer to your tax accountant to handle any issues with these agencies. By following these suggestions, you will eventually get to resolution.

What is a “1099” and why do I need them?

“1099’s” are “informational returns” required by the IRS to be filed annually for small businesses or self-employed individuals. You must report specific types of payments (as of 2020, anything above $600). Some exceptions may apply.

Businesses need to collect a W-9 Form from each vendor you made payments to in order to properly complete a 1099 filing. If you have a bookkeeper this is something that they should be handling on your behalf. The process is actually quite simple but can be very challenging to complete without a properly implemented process. More information can be found here: IRS Link