Wednesday, February 3, 2016

Avoiding tax hassles in January.

We are still alive here at E&S Entrepreneur Advisors LLC!  It was a hectic couple of months so no time for blogging.  We got all the payroll taxes filed including all the W2s.  The State of Wisconsin changed its requirements so we had to submit the W2s to the SSA by the end of January instead of the end of February as the State required employers to submit the W2s to them by the end of January and it has to be the SSA file.  That added a lot of work for us in January.

We also ran into some snags with 1099 filings as the State of Wisconsin has obviously tightened its screening of 1099 submissions.  What we ran into was the EIN or Wisconsin ID numbers and business names on the 1099s not matching the State of Wisconsin's records.  A few of these were typos on our part which we corrected at no cost to the client, but several were due to the names in the state records not being accurate.  We have several clients who set up their own My Tax Accounts for the state and did it in their personal names instead of their business name.  When we filed the W2s or the 1099s, the state kicked them out because the names didn't match.  We will be working with our clients to fix this, but a lesson for all you new entrepreneurs out there: get expert help setting up your tax accounts.

We also ran into some issues with the W9s our clients have for their service providers.  For years, sole proprietors and single member LLCs obtained EIN for their businesses so they wouldn't have to use their social security numbers on the W9s and other official documents. This was a great way to prevent identity theft.  Unfortunately, the IRS wants to match the dollars on the 1099s to the dollars reported on income tax forms and the numbers used on the income tax forms for sole proprietors and single member LLCs are social security numbers.  So, all you sole proprietors and single member LLCs and all of you who collect W9s from them: they must have the person's social security number on them and that is the number used on the 1099, not the EIN.

For all you newbies: a W9 is a document which lists your name, your business name, address and tax ID number.  It is used for a business to business relationship much like a W4 is used in an employee-employer relationship.  A business is required to send a 1099 form to the state, the IRS and the individual to whom the business has paid $600 or more for services in a year. Service includes rent which many are not aware of.  This must be sent to any provider who is not a corporation so that is why the W9 is important and it is important that it is filled out correctly and completely.  You don't need to send a 1099 if the service provider is an S Corp or C Corp but you do need the W9 on hand to show that is why you didn't send one.  Another tip: this only pertains to providers you paid via check, cash, ACH transfer, bill pay (money came directly out of your bank account).  If you paid with a credit card, you don't have to send the 1099 so if you don't want to bother with 1099s, pay with a credit card!  The best time to get the W9 is when you owe the provider money-tell them you can't pay them until they provide the W9.  That will give them the motivation to provide it to you.  Make sure you look it over and verify that it is a social security number if necessary instead of a EIN.  Social security numbers are 999-99-9999 while EIN are 99-9999999.

Any questions: just ask an expert like us.


Wednesday, December 23, 2015

Handling changes

It is hard to believe that 2015 is almost over!  There is no snow here in Wisconsin and the temperatures are very mild for December which makes the disbelief even stronger.  It has been a year of changes for E&S Entrepreneur Advisors and for my family.

My husband was offered a promotion in March and accepting it meant moving 100 miles south of home and family.  It was a great opportunity for him so he accepted the offer and we got our house ready for sale (I don't recommend living in the same house for 27 years without doing some periodic weeding out of belongings!) and found a home to buy in the Waukesha area.  We moved two months later and settled into a new life.  I commute back to the Fox Valley twice a month to work with clients who need to see me in person.  I get to see friends and family as well which is nice, but the drive is tedious.  The unseasonable weather this fall has made it easier so far.

Moving has not only created the need for me to travel more, it also required Beth and I to rethink our processes.  I was responsible for the banking and bill paying for our business and moving meant either changing our bank and mailing address or changing who was responsible.  We elected to stay at our bank and Beth has assumed more of the administrative tasks.  We did opt to offer online invoice paying to our clients which has reduced the number of trips Beth has to make to the bank and the clients love the convenience.  The service charges we have to pay to offer this service have been offset by the convenience for Beth and for our clients.

The move has also changed my work schedule.  I was able to be quite flexible in the dates I offered my clients for appointments.  With my need to travel, I am no longer able to offer this flexibility which has been hard for me.  I liked being able to run over to a client's business if they were having a problem.  I can still do a lot of problem solving via phone or email, but I miss the opportunity to see clients in person.

Changes can be hard to handle, but with planning and flexibility it doesn't have to be difficult.