Phone Calls from the IRS

Just recently one of my clients got a threatening phone call from  an IRS official saying she owed $40,000 in taxes and had to report to federal court within 72 hours. She also was given an option to pay the tax immediately which I think was the point of the scam. In a weak moment she gave the official her social security number. She then realized it was a scam but the damage had been done. These criminals may also sell social security numbers to others. She is now considering getting an identity pin number from the IRS and freezing her credit. Don't let this happen to you. The IRS will not ever call to demand immediate payment, threaten to arrest you, or ask you to verify tax return information. If some one calls and says they are from the IRS, don't give them any information and hang up immediately. Call TIGTA at 800-366-4484 or the IRS at 800-829-1040 to report the phone number of the call.

Starting a Business

One of the biggest questions you first face is what type of business entity do you want to be. You have 5  choices: sole proprietorship, C corp, S corp, partnership, or LLC. There are advantages and disadvantages to each type which are too complex to really get into in this short blog. All of the choices except the sole proprietorship require separate tax forms each year, fees to set up, and annual state registration fees of usually $50. In other words there is a lot of annual care and feeding that goes into the more complex structures. I recommend that for most start ups you go with the simplest structure, the sole proprietorship and move on from there if you survive and get bigger .  With the sole proprietorship you just file a schedule C with your form 1040 each year. My philosophy is to keep it simple if at all possible.

Another Obamacare Penalty

This one is a business killer. Beginning July 1, 2015, any small business that directly reimburses their employees for health insurance or medical bills can be hit with a $100 penalty per day per employee up to $500,000. This penalty can hit employers with as few as two employees. The purpose of the penalty is to force employers to set up company group health insurance plans or drive employees to the health exchanges. It is beyond belief that employers are being punished for trying to help their employees with health insurance. I haven't heard of any enforcement actions yet on this issue, but watch out.