Do you pay individuals to provide services for your business? If so, it’s good to know the IRS’s point of view (IRS Classifications) so you can assess the situation. Even if your contractors are only working a few hours a week or month, or are seasonal there is a good chance you have not classified them correctly.
There are many online resources on this topic but here are few quick requirements:
- Do you instruct the worker about when, where and how to work? – EMPLOYEE
- Do you train the worker? – EMPLOYEE
- Do you provide tools or equipment? – EMPLOYEE
- Does he/she do the work on your premises? – EMPLOYEE
- The worker is free to work when and for whom they choose – CONTRACTOR
- The worker hires, supervises and pays their assistants – CONTRACTOR
- The worker makes their services available to the general public – CONTRACTOR
- The worker provides their own tools, equipment or facilities to provide the service – CONTRACTOR
Do you need to re-classify someone as an employee or set-up payroll? Do you need to collect the appropriate forms for hiring and paying Independent Contractors or need to file 1099’s?
Tiger Accounting & Bookkeeping Services can assist with these needs!
Question – Are you required to keep that $2.99 receipt from your coffee purchased while on the road for business?
Answer – YES!
As a business owner, you are required to keep receipts for anything purchased as a business expense regardless of the amount.
Whether you have a box of receipts for the year or a file of scanned images, make sure you’re keeping those records.
Of course, it’s always best to keep up with this on a monthly basis instead of a yearly one. Some tips that might help:
- Take a photo with your phone. Create a file for that year/month and file it electronically – done!
- Utilize cloud storage such as Google Drive. Sync with your phone to store receipt photos or file on your computer later.
- File paper copies in a folder or envelope each month. Write information such as the client’s name whom the expense pertains to on the receipt.
- If you’re using QuickBooks Online you can upload the receipt as an expense with the phone app. Then your expense is recorded AND your receipt is filed!
If you’re filing/storing receipts electronically, you aren’t required to keep the paper copy. Make sure you have those files saved and ideally stored by month & year.
What’s the value of a bookkeeper?
I personally know a handful of independent contractors who do work for various clients throughout the year, then visit their CPA (Certified Public Accountant) come tax season. They give their CPA a stack of receipts along with a personally calculated income amount. Depending on the type and size of your business this may work for you – especially if you don’t have any plans to grow. But, if you’re a small business owner with employees, contractors, or maybe just yourself and you aren’t able to keep up with your record keeping then a Bookkeeper can be a valuable asset.
What is your time worth?
Chances are you don’t know how to properly set-up your books along with keeping them accurate. If the books are not managed correctly your reports will not provide you with truthful information about your business.
Here are a few quick reasons you should consider hiring someone to “keep your books” as we call it:
- Staying organized
- Ability to provide financial statements
- Helps you plan for large cash expenses
- Helps you avoid interest & penalties
- Makes filing taxes easier & less expensive
Remember, the balance in your bank account does NOT reflect the status of your business. A bookkeeper can quickly and properly help you get organized and stay organized while you focus on what you know best – your business!