Before the advent of the S Corporation in 1958, entrepreneurs had two options for forming a business entity. They could form a partnership or form a C Corporation. But neither of those business structures fulfilled the needs of many people seeking to start their own businesses. To help encourage small businesses in America, Congress and President Eisenhower created the Subchapter S Corporation.

You may be thinking, “That’s really interesting, Nellie, but unless I’m attending a business trivia night anytime soon, why should I care?”

Hang in there—we’re getting to that! Whether you’re a business […]

The New Year (a.k.a. 2020) is moving along swiftly. Martin Luther King, Jr. Day has passed, the Grammy’s have come and gone, and many a person has already given up on their well-intended New Year’s resolutions. Fortunately, if requesting S Corporation tax treatment for your business in 2020 is on your list of resolutions, there’s still time to make it happen.

Why Consider S Corporation Election?

S Corp election is a tax treatment option available to eligible limited liability companies (LLCs) and corporations (C Corporations). Entrepreneurs should discuss with their attorney and […]

Does your business need to collect sales tax and remit it to the state or local tax authority? And if it does, how do you go about getting a sales tax license? Moreover, what if your business is selling your products across state lines? Do you need to charge and remit sales tax in those states, too?

These are all valid and important questions! We’re going to delve into them in this article to give you some helpful food for thought as you research what requirements apply to your business.

Please keep in mind […]

In 2020, the hot topic is California’s Assembly Bill 5, often called the “Gig Economy Bill.” This is because AB 5 makes it difficult to be an independent contractor in California.

Before we examine AB 5 in detail, let’s understand why California legislators passed the bill in their own words:

THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:

SECTION 1.

The Legislature finds and declares all of the following:

(a) On April 30, 2018, the California Supreme Court issued a unanimous decision in Dynamex Operations West, Inc. v. Superior Court of Los Angeles (2018) 4 […]

Whether you work as an independent contractor or your business hires independent contractors, California’s new AB5 law, which went into effect January 1, 2020, forces your hand on becoming an employer or an employee depending on how you conduct your business.

The Existing Employee vs. Contractor Designation

Up to now, you’ve probably made sure you’re adhering to the IRS classification rules for independent contractors, which are as follows:

• Behavioral Control: A worker is an employee when the business has the right to direct and control the work performed by the […]
  

Among all the decisions and actions a small business may need to take, one of the more important is deciding whether to incorporate or form an LLC.

January is the most logical start date for a new LLC or corporation since it eases the paperwork burden. Your clients can start fresh in the new year with their new legal structure and don’t have to worry about reporting taxes as two different entities for the tax year.

At this time of year, sole proprietors and general partnerships may be wondering if it’s time […]

The decision to change an LLC name is one not to consider lightly. After all, your business name is one of your most important brand assets. But sometimes, a name change is in order for one of many reasons. Perhaps there was a mistake in your formation paperwork, so you need to correct the name. Or perhaps the name was fine in the past, but now it’s not because it includes the name of a business partner who just retired. Or maybe your business has expanded into other products or services, and […]

For more than a decade, I (and probably you too) have typically advised small businesses to opt for a Limited Liability Company over a C corporation due to its ease of administration and tax advantages. However, the 2017 Tax Cuts and Jobs Act now creates the opportunity for big tax savings for C corporations and should make us rethink our general guidance.

We’ve got a full tax season under our belts since the Tax Cuts and Job Act was enacted. It’s a good time to take a fresh look at corporate structures […]

“Business compliance” is a phrase that makes many an entrepreneur cringe. But despite the lack of affection for those two words, business owners MUST take them seriously. The possible consequences for noncompliance range from “mild inconvenience” to “devastating disaster.” Most critical is that noncompliance by Limited Liability Companies and Corporations can lead to “piercing the corporate veil,” which puts business owners’ personal assets at risk. (More on that later!)

Before I get into the penalties for noncompliance, let’s first take a moment to discuss what it is exactly.

What is Noncompliance in Business?

Nearly every […]