The new federal tax law, which went into effect for 2018 tax returns filed in 2019, is so ridiculously difficult and complex, that our old friend the W-4 form — which is used to help W-2 employees calculate the amount of taxes that should be withheld from each paycheck — is now a giant monster that overwhelms even those of us with countless hours of continuing education on the tax code.
That said, even in their blog they recommend using the IRS Tax Withholding Estimator instead, because the W-4 is so arduous at this point. We’ve gone from a half-page easy-peasy form that anyone can follow, to a monster — but if you want your taxes withheld properly, you’ve simply got to do one or the other (the new W-4 or the online withholding estimator).
In any case, thanks for making this a little easier on folks, Gusto! You explained it better than I’ve been doing, anyway.
Each month the City of Chicago offers twice-weekly (Wed & Fri) FREE business education workshops presented by experts in private practice as well as representatives from various city departments. There are quite a few good ones this month — see the list below — and they’re all offered at City Hall (right downtown and near public transit). To register for any of them, email BACPoutreach@cityofchicago.org or call 312.744.2086.
City Inspections – Ask Questions, Get Answers
Wed, January 8, 3:00 PM – 4:30 PM
City Hall, 121 N. LaSalle St. – 8th Floor, Room 805
Presented by the City of Chicago
To operate a successful business in Chicago you need to know what it takes to maintain compliance. Officials from several City departments will provide insight on how to operate safely, stay compliant, help prepare for inspections and highlight the do’s and don’ts of operating a business.
Business Licensing 101
Fri, January 10, 9:30 AM – 11:00 AM
City Hall, 121 N. LaSalle St. – 11th Floor, Room 1103
Presented by the City of Chicago Departmentof Business Affairs and Consumer Protection (BACP)
Attendees will learn the 3 steps to obtain a business license and access free business resources to start or expand their business.
Accounting in Quickbooks
Wed, January 15, 3:00 PM – 4:30 PM
City Hall, 121 N. LaSalle St – 8th Floor, Room 805
Presented by Trak Patel, ARCC Consulting
Learn how to keep your financial record-keeping books using QuickBooks. We will identify the differences between QuickBooks Online vs. QuickBooks Desktop and list the important features and benefits.
Credit and Your Business
Fri, January 17, 9:30 AM – 11:00 AM
City Hall, 121 N. LaSalle Street – 11th Floor, Room 1103
Presented by AnnetteVega, CIBC Bank
This workshop will help the attendees understand the importance of credit,calculating their global cash flow, collateral and capitalization.
How To Really Start Your Own Business
Wed, January 22, 3:00 PM – 4:30 PM
City Hall, 121 N. LaSalle St. – 8th Floor, Room 805
Presented by Score Chicago
Do you have what it takes to start and run a successful business? If so, what first steps should you take? This workshop will help you assess your prospects, give you the initial direction you need, and inspire you to move forward to realize your dream. Workshop topics include myths, business opportunities, assessing your journey, organization, insurance, regulations, funding and cash management, business and marketing plan.
Facebook and Instagram Posts: Take Your Posts to the Next Level
Fri, January 24, 9:30 AM – 11:00 AM
City Hall, 121 N. LaSalle Street – 11th Floor, Room 1103
Presented by Francisco Ramirez, Chimbly Consultants, LLC
Have you been posting for some time, but struggling to reach or engage your audience? Are you confused by how the algorithms decide whether or not to show your posts? Participants of this workshop will examine Facebook and Instagram posts and compare what makes a post rise to the top and what knocks a post off news feeds. Participants will leave with tools to take their posts to the next level.
Resources for Women Entrepreneurs, by Women Entrepreneurs Wed, January 29, 3:00 PM – 4:30 PM City Hall, 121 N. LaSalle St. – 8th Floor, Room 805
Presented by the Women’s Business Development Center (WBDC) and Bossy Chicago
Are you a business owner tired of trying to search through all the resources that might benefit your business growth? There’s a lot of support out there for women-owned businesses, but it can be hard to find the right resources and community for your business. Join Bossy Chicago and the Women’s Business Development Center as they discuss the vast ecosystem of support services for women entrepreneurs. Participants will leave with a plan of action to start and grow their women-owned business.
Also, in case you weren’t aware, BACP offers a Business Start-Up Certificate Program, designed to give business owners the essential elements in starting and growing a business. Attend nine workshops at BACP and learn the essentials of business planning, financing, marketing, legal issues, technology and more. Complete the program workshops within six months and earn your certificate, as well as get free advice on your business plan. You can register for the Business Start-Up Certificate Program at any BACP workshop. Learn about the full set of BACP offerings here.
Happy Holidays! I’ve been meaning to write a comprehensive post about the changes in state sales taxes since the June 2018 Supreme Court “Wayfair” decision — which as many of you know, overruled the physical presence rule.
“While having a physical presence in a state still establishes a sales tax collection obligation, physical presence is no longer requisite.” As a result, states won the right to tax remote sales.
In the year and a half since the decision, 43 of the 45 states with a general sales tax (plus Washington, D.C.) have adopted economic nexus: They now require sellers with no physical presence but a certain amount of sales and/or transactions in the state to register with the tax department and collect and remit sales tax.
In the spirit of the holidays, Accounting Web reports that the City of North Pole, Alaska, is considering joining a local municipal league to tax online sales.
The Alaska Intergovernmental Remote Seller Sales Tax Agreement will “implement single-level, statewide administration of remote sales tax collection and remittance.” It will be overseen by the newly formed Alaska Remote Seller Sales Tax Commission.
During the December 2, 2019, North Pole City Council meeting, North Pole Mayor Mike Welch said “an online sales tax is something we have to do.”
Sorry for the extra administrative burden, Santa! If it’s anything like Illinois sales taxes, my guess is that it’s tougher than squeezing down a chimney — but seeing as you’ve mastered that challenge, I bet you’re up to this as well. Just make sure to consult with a small business tax professional first.
For CPAs and other Tax Professionals: please join CPA Practice Advisor on Thursday December 12, from 9 am to 7 pm EST, at www.ensuringsuccess.com — its annual free live-streaming conference — to earn up to 10 hours of continuing professional education at no cost.
This free online conference is recognized by the AICPA, and NASBA for CPE credit, and certain sessions also qualify for IRS CE credit. The first session starts at 9 am EST, with sessions starting each hour, on the hour, until 7 pm.
Check out the full session list here — https://www.ensuringsuccess.com/2019-sessions — there are courses on marketing, payroll, sales taxes, tax planning, HR, tech advisory, auditing, accounting trends, financial planning and more.
CPA Practice Advisor has released their annual estimated timeline for when a taxpayer is likely to receive their refund based on when they file, based on what we currently know about the upcoming tax season and projections based on prior years. They point out that the TCJA tax reform is still affecting many Americans’ ability to file timely, that Congress often delays tax season by issuing last-minute tax laws in December, and the IRS is also delaying refunds on tax returns that include the Earned Income Tax Credit (EITC) and the Child Tax Credit (CTC). Barring any of these issues, here’s what they’re predicting.
IRS Accepts Between These Dates===>Direct Deposit Sent (Or Check Mailed)
1/20/19 – 1/24/19 — > Friday 1/31/20 *
1/27/19 – 1/31/19 — > Friday 2/7/20
2/3/19 – 2/7/19 — > Friday 2/14/20 **
2/10/19 – 2/14/19 — > Friday 2/21/20 **
2/17/19 – 2/21/19 — > Friday 2/28/20
2/24/19 – 2/28/19 — > Friday 3/6/20
3/2/19 – 3/6/19 — > Friday 3/20/20 ***
3/9/19 – 3/13/19 — > Friday 3/27/20
3/16/19 – 3/20/19 — > Friday 4/3/20
3/23/19 – 3/27/19 — > Friday 4/10/20
* = IRS may delay tax filing season by one week or more due to changes in tax law.
** = Returns with EITC or CTC may have refunds delayed until late February to verify credits.
*** = Filing during peak season can result in slightly longer waits.
3/29/19 – 4/3/19 — > Friday 4/17/20
4/6/19 – 4/10/19 — > Friday 4/24/20
4/13/19 – 4/12/19 — > Friday 5/1/20
4/20/19 – 4/24/19 — > Friday 5/8/20
4/27/19 – 5/1/19 — > Friday 5/15/20
5/4/19 – 5/8/19 — > Friday 5/22/20
5/11/19 – 5/15/19 — > Friday 5/29/20
5/18/19 – 5/22/19 — > Friday 6/5/20
5/25/19 – 5/29/19 — > Friday 6/12/20
6/1/19 – 6/5/19 Friday 6/19/20
IMPORTANT: If you file electronically (using an online tax program or preparer), the IRS will notify you of the actual date they “accepted” your return. This is often 1-3 days from the time you actually hit the “file” button, and it is this date that you need to use for the above chart.
Taxpayers who mail a paper version their income tax return can expect at least a 3-4 week delay at the front-end of the process, as the return has to be digitized before it can be processed.
Each month the City of Chicago offers twice-weekly (Wed & Fri) FREE business education workshops presented by experts in private practice as well as representatives from various city departments. There are quite a few good ones this month — see the list below — and they’re all offered at City Hall (right downtown and near public transit). To register for any of them, email BACPoutreach@cityofchicago.org or call 312.744.2086.
City Inspections – Ask Questions, Get Answers Wed, December 4, 3:00 PM – 4:30 PM City Hall, 121 N. LaSalle St. – 8th Floor, Room 805 Presented by the City of Chicago To operate a successful business in Chicago you need to know what it takes to maintain compliance. Officials from several City departments will provide insight on how to operate safely, stay compliant, help prepare for inspections and highlight the do’s and don’ts of operating a business.
Starting a Business In Illinois
Fri, December 6, 9:30 AM – 11:00 AM
City Hall, 121 N. LaSalle Street – 11th Floor, Room 1103
Presented by LemaKhorshid, Fuksa Khorshid, LLC
Running a small business takes a lot of work. Often, a handful of employees fill a variety of roles, meaning that everyone has to bring serious hard work, dedication, self-motivation, and multitasking skills to the table. Amid all this, it can be easy to forget about the legal aspects of running a business. However, attending to these matters sooner rather than later is likely to save you time, stress, and expense in the long run. Join us in this workshop to learn our top 10 legal tips for small business success.
Level Up
Wed, December 11, 3:00 PM – 4:30 PM
City Hall, 121 N. LaSalle St – 11th Floor, Room 1103
Moderated by Kenya Merritt, Chicago Chief Small Business Officer
In this workshop, our panelists will share tips on how to take your business to the next level. Our presenters will share their personal experience and offer advice on how to properly scale and grow your business.
Construction Project Management
Fri, December 13, 9:30 AM – 11:00 AM
City Hall, 121 N. LaSalle Street – 11th Floor, Room 1103
Presented by City of Chicago Department of Business Affairs & Consumer Protection (BACP) and the Department of Planning and Development (DPD) – NOF Working with design and construction pros to make your business dream a reality takes smart planning and organization. Learn the best practices for establishing your schedule and budget, hiring the right professionals and dealing with unforeseen challenges to ensure your project is completed on-time and on-budget.
A Legal Update on Policies and Procedures in the Employment Law Landscape Wed, December 18, 3:00 PM – 4:30 PM City Hall, 121 N. LaSalle St. – 8th Floor, Room 805
Presented by Charles Krugel, a Management Side Labor, Employment and Human Resource Attorney A roundtable discussion of all of the changes that have gone into effect this year, and that will probably be in effect next year, including the minimum wage, paid time off,fair work week, overtime wage exemptions, asking job candidates about salary/wage history & sexual harassment training.
Everything You Need To Know About Business Insurance
Fri, December 20, 9:30 AM – 11:00 AM
City Hall, 121 N. LaSalle Street – 11th Floor, Room 1103
Presented by Sandra Cavoto Insurance Agency
In this session, attendees will learn the coverages needed for their business.We’ll discuss the right questions to ask your insurance professional and how to protect yourself and your business against lawsuits.
Also, in case you weren’t aware, BACP offers a Business Start-Up Certificate Program, designed to give business owners the essential elements in starting and growing a business. Attend nine workshops at BACP and learn the essentials of business planning, financing, marketing, legal issues, technology and more. Complete the program workshops within six months and earn your certificate, as well as get free advice on your business plan. You can register for the Business Start-Up Certificate Program at any BACP workshop. Learn about the full set of BACP offerings here.
Each month the City of Chicago offers twice-weekly (Wed & Fri) FREE business education workshops presented by experts in private practice as well as representatives from various city departments. There are quite a few good ones this month — see the list below — and they’re all offered at City Hall (right downtown and near public transit). To register for any of them, email BACPoutreach@cityofchicago.org or call 312.744.2086.
Designing Products and Services
Fri, November 1, 9:30 AM – 11:00 AM
City Hall, 121 N. LaSalle St. – 11th Floor, Room 1103 Presented by Kevin Smith, TEP Corporation Have you ever wanted to start a business, but don’t know where to start? This workshop is designed to help entrepreneurs craft out their business, which will position their company for the next steps of launching a business. During this interactive workshop, participants will identify what business to start and products and services to compare to their competition in their respective industries. The outcome of this workshop will equip each participant with ways to discovering their unique value proposition and SWOT analysis.
Small Business Center on the Road Sat, November 2 Malcolm X College, 1900 W Jackson Blvd, Chicago, IL 60612 The Small Business Center on the Road Expo is free and open to the public. It provides new and existing entrepreneurs resources to start or grow their business here in Chicago. For more information and to register go to www.chismallbizexpo.com
City Inspections – Ask Questions, Get Answers Wed, November 6, 3:00 PM – 4:30 PM City Hall, 121 N. LaSalle St. – 8th Floor, Room 805 Presented by the City of Chicago To operate a successful business in Chicago you need to know what it takes to maintain compliance. Officials from several City departments will provide insight on how to operate safely, stay compliant, help prepare for inspections and highlight the do’s and don’ts of operating a business.
Master Plan Workshop Fri, November 8, 9:30 AM – 11:00 AM City Hall, 121 N. LaSalle Street – 11th Floor, Room 1103 Presented by Vincent Williams, Director of Illinois SBDC at YWCA Metropolitan Chicago & Vice President of Economic Empowerment In this workshop you will learn ways to navigate and create your Master Business Plan.
Contracts 101 and Negotiation Tips
Wed, November 13, 3:00 PM – 4:30 PM
City Hall, 121 N. LaSalle St – 8th Floor, Room 805 Presented by Lauren Cichowski of 3BL, Law LLC You were always told read everything before you sign it. But what are you supposed to be looking for? Learn about what makes a contract, how to spot red flags, and important terms every contract should have. Sometimes it takes some negotiation to get the best deal for your business. Pick up some tips on how to prepare for and tackle contract negotiations before, during, and after you get to the table.
Digital Mindset for Growth 101 Fri, November 15, 9:30 AM – 11:30 AM City Hall, 121 N. LaSalle Street – 11th Floor, Room 1103 Presented by Google Digital Coaches with JinJa Birkenbeuel Learn how to change your mindset from analog to digital by translating your entrepreneurial dreams into online action for your brand and your business. We will give guidance on how to create goal-based strategies for your business that will help it become more “discoverable” and recognized online so you can connect with customers. We will touch on creative branding, social media, YouTube and content strategies. Come ready with your mobile phone to work and learn!
How to Open a Concession at O’Hare or Midway Airport
Wed, November 20, 3:00 PM – 4:30 PM
City Hall, 121 N. LaSalle St. – 8th Floor, Room 805 Presented by the Chicago Department of Aviation – Concessions Department Are you interested in operating a restaurant or shop at O’Hare or Midway International Airport, but don’t know where to begin? Come and learn about the Request for Proposals (RFP) process, how to operate a business at the airport, and a summary of the Airport Concessions Disadvantaged Business Enterprise (ACDBE) program.
Get Capital for Your Small Business with Kiva and Accion
Fri, November 22, 9:30 AM – 11:00 AM
City Hall, 121 N. LaSalle St. – 11th Floor, Room 1103 Presented by Accion & Kiva Hear from Kiva, a nonprofit that provides 0% interest loans of up to $10,000 to small business owners and entrepreneurs, and from Accion, a small business lender with loan ranges of up to $100,000 for small and existing businesses.
Also, in case you weren’t aware, BACP offers a Business Start-Up Certificate Program, designed to give business owners the essential elements in starting and growing a business. Attend nine workshops at BACP and learn the essentials of business planning, financing, marketing, legal issues, technology and more. Complete the program workshops within six months and earn your certificate, as well as get free advice on your business plan. You can register for the Business Start-Up Certificate Program at any BACP workshop. Learn about the full set of BACP offerings here.
If you have an existing Illinois tax liability, make full payments between October 1, 2019, and November 15, 2019 and your penalties and interest will be waived.
Eligible liabilities are taxes due from periods ending after June 30, 2011, and prior to July 1, 2018. If you failed to file a tax return or incorrectly reported the liability due on a previously filed return for these tax periods, now is the time to file returns, make corrections, and pay the tax. Eligible penalties and interest will be waived.
You must file an original return for non-filed periods or file an amended return to make corrections.
Reasonable Compensation is defined by the IRS as: “The value that would ordinarily be paid for like services by like enterprises under like circumstances.” or the hypothetical “Replacement Cost” of the shareholder-employee.
Reasonable Compensation is derived from the value of the services provided, not the profit or loss of the business. While Reasonable Compensation has nothing to do with Profit and Loss, it does relate to Distributions. Why? Because the IRS guidelines for Reasonable Compensation state: The amount of reasonable compensation will never exceed the amounts received by the shareholder either directly or indirectly. It does not mention profit or loss at all but instead talks about ‘amounts received’ by the shareholder. It does not matter if the company is making or losing money; what matters is whether or not the S Corp owner is taking money (e.g. a distribution or other items of value) out of the S Corp.
Depending on the company’s financial condition and business strategy, a shareholder-employee may be able to take Reasonable Compensation plus a distribution, just Reasonable Compensation, or neither. What the shareholder-employee can’t do take a distribution instead of Reasonable Compensation.
This excerpts above create by far the most succinct explanation I’ve seen so far of how reasonable compensation is supposed to work. The original blog post goes on to offer a bunch of excellent example scenarios to help illustrate the concept.
I subscribe to RCReports.com (the author of the blog and these excerpts) and advise my S-Corp clients to do a reasonable compensation interview with me (using the RC Reports tools) at least every three years; though preferably every-other year. And if their circumstances change significantly — hiring staff or investing in equipment, especially if it allows them to cut back on their own hours — then we do a re-evaluation mid-year. As the blog also points out:
Anything that compensates the S Corp owner can be re-characterized as wages, including personal expenses paid by the S Corp or loans to the S Corp owner. At the end of the day a distribution of any kind triggers the requirement to pay Reasonable Compensation for services provided. Best practice is to know what the value of those services are and pay that amount in Reasonable Compensation before taking a post-wages distribution of any kind.
With the new Sec 199A Qualified Business Income Deduction, the issue of reasonable compensation is bigger and more important than it’s ever been before — make sure you (or your clients) have a credible basis for this amount, and for goodness sake, please don’t take distributions until you’re sure you can pay out the full annual amount of salary or wages due to you.
For the record — I receive no discounts or commissions for their service; I’m simply promoting it because I love their continuing education, blog posts and products.
I’ve avoided client board meetings for years because I enjoy neither the drama nor the bureaucracy, and the feeling of being beholden to so many people who disagree with each other — and sometimes with me — gives an unenviable feeling of being stuck in the middle.
However, I’ve recently come to realize that not attending board meetings does the client a disservice. As stated appropriately in this recent Accounting Web article:
There is a role for the CPA to play concerning the plans for certain agenda items the board may be considering and to properly document various decisions that have tax implications so they are part of the corporation’s tax records. Live attendance is encouraged, as your availability can only encourage questions and provide documented confirmation concerning tax planning.
Not only does attendance encourage questions, but the CPA can help boards determine which questions to ask, and to help teach them about financial literacy. It can also foster communication between management and the board when everyone is on the same page.
Your client is the entity, not the individual owners in this setting. If dissension should surface, “adviser” is the watchword, not “advocate.” The minority position could regard you as being allied with the majority, suggesting favoritism is at play more than professional regard for a given position or action. Make your positions clear, and by all means make a note to your file concerning any such discussion. Overall, participation in an annual meeting gives the practitioner an opportunity to shine. You will remind the client of your value to the entity.
