I get asked lots of questions during a month so I thought I would put together a list of my most frequently asked questions. Here are just a few…
I don’t want employees so I will just classify everyone as independent contractors. Is that ok? No, you can’t just label someone as an independent contractor because you don’t want them as an employee. They don’t get to choose either. Many employers think because an individual wants to be an independent contractor or 1099 worker that it is ok to pay them that way. The IRS has guidelines to determine if the person you want to pay is an independent contractor or an employee. Click here to view the IRS guidance. No one item determines which classification. The IRS looks at three categories – behavioral, financial and type of relationship. If you are ever in doubt consult your tax professional or accountant to help you determine which is appropriate.
Do I need to keep paper receipts if I have scanned them into “the cloud”? The IRS provides guidance on what types of records you must keep, how long and what rules apply to those records including software programs and scanned receipts. In short, yes, you can throw away paper receipts as long as your scanned receipts are legible, contain the same information that is required on the paper receipt and states the business purpose for the purchase (you can write this on the receipt before you scan it). If you want to see the IRS guidance on records, click here.
Bookkkeeping is only for taxes, right? No, the biggest myth is to keep records for taxes. Yes, we all must keep receipts and records for our taxes as we must comply with the tax laws and we also want to only pay what we must but bookkeeping is more than for taxes. Complaince with tax laws is only the tip of the iceberg. When you go deeper and start analyzing your expenditures, income and habits of your business you can uncover a wealth of information that can not only guide you in decision making but also help you reach your goals for your business. I have put together a checklist outlining the top five mistakes we make as business owners and how to avoid them. If you would like a free copy of this checklist, click here.
Let me here from you! What are your stuggles as a business owner? What questions do you have?