SFA

H&R Block & Liberty may be flirting with the CPA act in the state of Pennsylvania. The problem with bookkeeping is that many clients expect "financial statements" to be included with the service. When bookkeepers start issuing financial statements they have crossed the line into public accounting, which is regulated and controlled. I wonder what professional credentials each of the franchise firms will need to have to be able to participate as "bookkeeping" service providers?

Form 2290: Heavy Highway Vehicle Use Tax Return. We don't have many clients who are needing to file this form, but for the few that we have, we would like to e-file their returns. However, CCH/ATX is not on the list of participating e-file providers. I know this is perhaps a small niche market, but if we must be proficient and knowledgeable to complete only a few, then we should promote this service and become an e-file option. We are looking to attract new clients in this area. I am interested in the experience of others here on the Community with Form 2290 and if you are e-filing this form?

Came to Lititz, PA undercover. He's planning a tour. http://lancasteronline.com/news/local/rock-lititz-gets-rolling-tait-towers-clair-global-begin-work/article_d8c3c464-b6b7-11e3-b66c-001a4bcf6878.html

My parents bought me and my brother a horse. No helmet, no lessons, an old english saddle, no restrictions, no supervison. We fell off so many times I can't even count. We loved that horse! We made it! Now I have five!

I've been off our site for a few weeks--mostly because of working some long hours. Sometimes the combination of taxes and politics just gets a little too intense. I have some pretty strong political ideas of my own. It was hard to like someone on the general chat forum, then see another side of their personality on the politics forum that totally changed my perception of them--sometimes in a negative way. So I just didn't go there. I am interested in coming to this site and leaving feeling a little better, a little richer for the experience. These changes will be a refreshing upgrade.

Ok, I agree with you Pacun to a degree. We all take our breaks differently. Some check out their favorite sites on the internet throughout the day, others make personal phone calls, some cultivate relationships with the clients, and some do all of the above. (That would be me). At my age, I have built a practice around my lifestyle, and have attracted clients and employees who fit my business model with all of it's imperfections. I'm ok with that. That's the beauty of self-employment. Those who don't fit my style, move on. My bills are paid. There's plenty of fish in the sea, there's plenty of fish for me!

Too much to read. I worked 12 hours yesterday. Would have been 10, but I was listening to clients talk--about his new beard, her mother's recent illness, his wife's hospital stay and now his hip replacement; his car insurance; her employees disability troubles; answering if we like our new office, on and on. It was steady traffic and telephone calls all day. One client even brought us a bag of goodies from their deli and a new employee brought in the most beautiful rose from his garden for us to enjoy. Yes, working long and sometimes hard hours. Could be making more money, but hey, I had a great day!

The "distribution" is not the same as the K-1 income that he will report on his return, which will be assumed to be earned evenly throughout the year. As for any "wage/bonus" it may be fair to wait until the end of the year (from a management point of view) to see the full year's performance before issuing an employee bonus. Wage income is also assumed to be earned equally throughout the year, unless the penalty form is completed and income is scheduled out throughout the year. How many employees does the company have? The more employees that help to earn the bottom line profit, the more likely that his compensation may be correct for the work that HE is performing. It is perfectly acceptable to earn a profit on each employee and that profit can go to the bottom line without affecting the salary of the shareholder.

Excellent suggestions. At first when I read about the IRS voluntary classification settlement program, I thought my client is ineligible because they have already been audited by our states department of labor. On second read, I see that there may be a path. I will suggest this course of action to my client. Thanks to you all. If we go this route, what about the 2nd qtr 941 which is due on July 31st? I was going to recalculate gross wages and file the 941 on time to avoid late penalties. Perhaps there is guidance from the IRS on this. I will research more tomorrow.

Good idea John. We are planning to have a company-wide meeting to review all options. We are also planning to slightly adjust/reduce future compensation to factor in the benefits of employee status.

Thanks everyone for your help. Not ruling out help from a qualified tax attorney, but for now, will gross up net pay in 2014, prepare 1st & 2nd quarterly payroll returns and issue only W-2's. Catherine, you make a good point. Employer's can go under in these circumstances. When all their past products and services were priced and sold based on different pay structures, then to retroactively recalculate payroll, penalties, interest. Well that debt can drag a business to the bottom of the river. The penalties alone can kill a fragile company. It may happen in this instance too.

Argh! Ok, so if the company pays the employees share of the social security and medicare tax (for January through July 2014 wages)--is that additional compensation to the employee? Should the compensation be "grossed-up"?

Sometimes the answer really is that they truly are employees. So this situation is not about the argument of whether the determination is correct or not. I think we are past that. The question here is what to do going forward and back to January of this year? So far, we are having each employee complete a W-4 and related forms, then we are immediately setting them up to receive payroll checks. It is the pay from January through today, that have no withholdings and no prior payroll returns have been filed in 2014. Should they receive a 1099-Misc and a W-2 in 2014?

Pennsylvania

Ok, I am sure this is not the first time this topic has been raised, but I need some fresh thinking . . . I have a new client who has contacted me as a result of an unemployment audit raised after a 1099-Misc worker was severed and applied for unemployment benefits. The result is a reclassification of almost all of their 1099-Misc workers. For unemployment they are now employees, and the business owner is being assessed for delinquent returns going back to 2010. What is the correct way to handle the "wages" that have been paid to these "employees" since January of 2014, as well as prior years? 1099-Misc statements were filed. Must those be amended and replaced with recalculated W-2's? The business has never had "employees" before and is now applying for an EIN, and registering with the various taxing authorities (state and local withholding). Since this was a state unemployment audit, will this be reported to the IRS? Please let me know of your experiences on this topic.

Thanks KC. Your message is perfect timing for me.

We have a few FBAR forms to complete that we pushed off until after April 15th. It is surprising who actually may need to submit it and perhaps not be aware of their obligation to report. We try to be proactive in asking questions during our interview, even if there is not enough interest or dividends to require a Schedule B.

we go to: http://www.minespress.com/tax-folders We order varieties of folders from them. Some with the current tax year, others generic for different purposes. Reasonable prices. Nice selection. Also, we go to a local printer who designed a large 12" x 13" envelope that we use to return the folder and all client materials. We save a lot of money going local for those.

I've taken a few days off, and just scanned some "General Chat" to catch up on what I've missed. Interesting that those who commented on this thread are so upbeat about the future of our industry and the upward trajectory of growth in your practices. We also had a successful tax season, but when I look closer, like everyone else, it is a mix of new clients with some attrition. ATX delivered this year. No question. But in the end, I was exhausted and wonder how many years I can wreck my mind and body doing this kind of work. I am determined to diversify our services and to invite more employees to join our practice. To do that, I need to cultivate work to attract young talent and to pay the wages that keep them in my employ full time, year round. Not exactly sure exactly how I am going to accomplish this feat, but that is my goal going forward.

By 7:30 on the 15th I was the last to leave the office. Then went to our local pub and played trivia and drank 7&7's. Followed up with a second pub and saw a lot of friends and just had fun. Yeah. That's how it's done! (Picked up my truck the next day).

Our industry is changing. Many "former" clients now use TurboTax to self-prepare. They take pride in the fact that they can do their own and "save" money. What's left are more complex returns that take more research time, and better trained staff to assist with the completion. We are raising our rates, but also, looking to aggressively increase other services related to our business and senior clients that allow us to keep our employees year-round, full-time. I believe that the income tax preparation business has flat-lined and will continue to decrease as a cornerstone service of our office. I am interested in how some of you are handling these changes.

Just did a Google search on 1099-R code U distributions. Wha Lah, best answer found on ATX Community 1099-R CODE U Started by MOBEE, Feb 15 2010 10:50 PM This is not the first time that ATX Community has had the best answer when I've Googled. Thanks everyone!

Joan, I am with you. Yesterday, I had a woman who has a very prestigious equestrian center contact me for tax and accounting services. So cool, because I have horses and do accounting work for several other stables and show barns. I love clients who are in businesses that interest me; I can learn from and they provide year-round work. A+++

I am Happy. Yesterday, we had the office doors open for fresh air, clients picking up returns; silly humor from being tired; AND I found a fantastic new office to relocate to. Just a few more days . . .

Yes. Everything is on the table. It may take two moves. One temporary spot, then a second permanent location. I even thought of merging with another practice in my area. We talked, but are each too busy to figure anything out. Will keep you posted . . .