June 2014

When navigating the potential of having employees, it can be difficult as a small business owner to keep track of whether you have actual ‘employees’ or you have ‘contract workers.’ This distinction is extremely important, and misidentifying your workers can lead to financial consequences. Fortunately, it’s possible to assess whether you have a contract worker or an employee by considering several key factors. The IRS has a list of twenty key factors to make the determination here and there are a few specifics that can help you make the determination.

As the employer of the average employee, you will be responsible for providing all necessary equipment that allow that employee to do their job. You will provide tools, materials, and software as necessary. However, a contract worker will usually provide these things for themselves. Therefore if you are hiring a new employee but expecting them to ensure they have all of the tools and materials necessary for their job, you are hiring a contract worker.

If you are hiring an employee as part of a specialized group or from another business, you are hiring a contract worker. Contract workers are often part of another business – such as painters, or commercial glass experts – and come to your business on a by-job basis. Some contract workers may be paid an hourly sum, but usually they provide a time estimate for their work and a sum is agreed upon before work begins.

If you mistakenly identify an employee as a contract worker when they are not, the consequences are usually mostly fiscal. You will need to pay your portion of all missed federal, state, and social security taxes and it may even trigger an audit. Call ATS today at 303-232-8300 and schedule your free consultation with our experts to ensure you have not misidentified any of your employees.

As an entrepreneur taking your first steps into owning a small business, a term that will come up frequently in the planning process is ‘Business Plan.’ A business plan is a guide that you create for yourself detailing your goals and how you intend to achieve them. In some cases, a business plan may be a long and complicated document including details on a management team and an exit strategy. However, for businesses that don’t need such things a business plan can be a shorter document focusing only on the pertinent concerns.

The most important, and most commonly cited, reason you will need a business plan is for the purposes of drawing investors or applying for a business loan. You are unlikely to accomplish either of these goals without a formal business plan. It’s important to understand that not everyone is able to see your vision without it being laid out before them with your goals detailed.

Another important reason to create a business plan is to reign in your own fervor. When you’re in the planning stages of your new business it’s easy to become too enthusiastic about your plans and stretch yourself and your resources too thin. A good business plan will help guide you back into what is within reason. A good plan may also provide you with a realistic assessment of the capital you will need to start out, which may help prevent a devastating moment when you realize down the line that you don’t have enough funding to create your small business.

Call Accounting & Tax Solutions today at 303-232-8300 to schedule your free consultation with one of our experts, and let us help you create a plan that will help see you and your new business to success.

When choosing your business entity, your choices aren’t limited only to S-Corp and C-Corp, nor do they stop with LLC. There is another option available to you, DBA. This is known as “Doing Business As” and may be a fourth option available to you.

A DBA, unlike an LLC, is not a legal name for your business. A DBA is simply a name that you can use to provide products or services. Another name for a DBA is a “fictitious name” or a “trade name.” Laws regarding DBAs vary, and some states require a DBA be registered before it can be used by a business owner. A major difference between a DBA and an LLC is that an LLC is not required by state law.

An important note regarding the difference between an LLC and a DBA comes to liability. As the name suggests, an LLC limits your personal liability when it comes to your business. However, a DBA is unable to offer the same protections. Any business decisions made under a DBA are solely attributed to the business owner instead of only to the business.

Registering a DBA or an LLC both require start-up fees, but a DBA is substantially less expensive than an LLC. DBA formation is also usually a one-time fee, in Colorado this fee is usually $25.00. Call ATS today at 303-232-8300 and schedule your free consultation with our business advisors to discuss what business entity is best for you!

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As a small business owner you have likely come in contact with the phrase “excise tax” at least once. This term is a simple term for a very broad tax. Excise tax is what’s called an “indirect tax” on items. This tax can be levied by federal, state, and local governments and there is no country-wide standard. An indirect tax is a tax that is collected from a by a small business and then forwarded to the government, as opposed to a direct tax which is collected directly from the consumer by the government. Most businesses include the excise tax fee in their product’s price.

Excise tax first began following the American Revolutionary War and was placed primarily on goods such as whiskey, tobacco, and refined sugar. While at first these taxes were generally raised briefly only after wars and then dropped again, during The Great Depression they rose into popularity and have remained as such since. Excise taxes are usually used to finance projects such as highways, airports, and vaccine production.

The most common places to find excise tax being charged are fuel, liquor, tires, and airline tickets. In general excise tax is charged on quantities such as a gallon of fuel or a packet of cigarettes. Many companies are expected to pay excise tax themselves initially, and then they are reimbursed by the product being purchased with the excise tax included in the cost.

If your small business is related to the production and/or sale of alcoholic beverages or gasoline, you are the most likely to face excise taxes on your products. There are laws very specific to these sorts of products and they vary from state to state and even the laws may vary from the federal laws. Call ATS today at 303-232-8300 and schedule your free consultation today with one of our experts to ensure your small business is charging and paying excise taxes in accordance with those laws!