Saratoga.com logo
Saratoga.com logo
  • Places to Stay
  • Things To Do
  • Food & Drink
  • Events
  • Businesses
  • Travel Guides
Saratoga Business Journal
  • Home
  • New Businesses
  • Business News
  • Business Reports
  • Business Briefs
  • Business Registrations
  • Personnel Briefs
  • Contact Us
Home  »  Business Reports  »  Business Report: Be Prepared For Audits
Business Reports

Business Report: Be Prepared For Audits

Posted onNovember 5, 2014
ellwanger steve.jpg
Steven Ellwanger is a CPA, PLLC practicing in Saratoga Springs

BY STEVEN ELLWANGER CPA, PLLC

Its time for accountants and business owners
start thinking about their 2014 tax returns and
do planning and some projecting for the coming
year. It’s infinitely easier to strategize and put a
plan into place now than to run around at year end
or after year-end tying to pick up the pieces.

There are standard year-end tax planning
strategies, such as buying new equipment now
instead of waiting till after Jan. 1; starting a
retirement plan; and accelerating deductions
and deferring income. But small business owners
already know these strategies. Here are a
few topics that are much more useful.

Take some time with your accountant to
evaluate your legal structure. If you are a sole
proprietor, does setting up an LLC make sense?
Or does an S corp or C corp make more sense?
Did you know that if you have an LLC already
in place, you can elect to be treated as an S
corp for tax purposes without changing your
legal structure?

This is an especially important consideration
if your business is netting at least $60,000
per year. That choice has to be made up to 12
months prior to the effective date, or 75 days
after. So most taxpayers, have until March 15 to
be effective for Jan. 1. Reporting your income
as an S corp can save money by treating a portion
of your income as passive income, and not
subject to self-employment tax. Discuss with
your tax professional if electing to be treated
as an S corp would save money.

Always be prepared for an audit. The most
common audits are sales tax and unemployment.
New York state is still struggling financially
and is looking closer at these areas for
revenue. Sales tax audits can be stressful for
everyone involved. Sales tax law can be very
complicated,and the methods used to audit
a business can be surprising, like the classic pizzeria audit, where the auditor counted pizza
boxes purchased to determine how many pizzas
were sold.

Contractors have a difficult time with sales
tax laws regarding capital improvements vs. repairs
and maintenance, and must be very clear
on their invoices of what work was done. Tax
professionals are well versed in audit methods
and can strategize to minimize the taxes due
if anything is found.

Unemployment audits were, up till last year,
very uncommon. But the classification of employee
vs. contractor has become the hottest
topic of 2014.

Small businesses are being audited by
Unemployment more than ever, and sadly
employers are losing the battle. Auditors are
looking much closer at the factor of control. If a
business has any control of someone that works for them, they want to classify that worker as
an employee.

Make sure that if you have people who work
for you, that you treat as a subcontractor, that
you are following certain rules regarding control.
If someone works an hourly basis, they are
an employee. If they have to be at your office
during certain hours, they are an employee. If
you give them benefits or expense reimbursements,
they are employees.

If you tell them where to go, what to do, and
how to do it, they are employees. Just because
you give them a 1099-misc at the end of the year,
and they agree to it, does not mean they are considered
a subcontractor in an audit situation.

Business can save a lot of money by not paying
employment taxes, unemployment taxes,
workers’ compensation insurance, and disability
insurance with subcontractors, but it’s
important to talk with a tax professional if you
have concerns that you might be pushing the
envelope when it comes to your subcontractors
who may be employees.

Most importantly, get a good bookkeeping
system. This seems like a no-brainer, but many small business do not have good bookkeeping
systems in place. Once you have a good bookkeeping
system, you can use that information
on a weekly or monthly basis to see exactly how
you are doing and react accordingly.

Compare the numbers to the prior year to
see where you are doing better or worse, and
make adjustments instead of waiting till after
year-end. Bookkeeping should not only give
your tax professional information, it should be
a vital part of running a business.

Whenever there is substantial change in the
business’s bottom line, it’s time to visit a tax
professional. When things are going well, it’s
time for tax strategy. When things are going
bad, there are ways to strategize to make sure
you get all the credits you deserve, as well as
being able to make the best use of losses. It’s
getting harder to run a business in New York.
Stay educated, and surround yourself with
professionals that can help take your business
to the next level.

Ellwanger runs his own office in Saratoga
Springs, offering accounting, auditing, consulting,
and tax services.

Photo by Tammy Loya

Previous Article Beekman Street Arts District Gives Local Shoppers Other Alternatives For Holidays
Next Article Business Report: Flexibility With Home Office Deduction
Subscribe to Our Newsletter View the Latest Virtual Edition

Categories

  • 50-Plus
  • Banking
  • Banking / Asset Managment
  • Building Trades
  • Business Briefs
  • Business News
  • Business Registrations
  • Business Reports
  • Commercial / Residential Real Estate
  • Community Services
  • Construction
  • Construction Planning
  • Corporate Tax / Business Planning
  • Cyber / Tech
  • Dining Guide
  • Economic Development
  • Economic Outlook 2016
  • Economic Outlook 2017
  • Economic Outlook 2018
  • Economic Outlook 2019
  • Economic Outlook 2020
  • Economic Outlook 2022
  • Economic Outlook 2023
  • Economic Outlook 2024
  • Economic Outlook 2025
  • Education/ Training/ Personal Development
  • Entrepreneurial Women
  • Entrepreneurship
  • Environment / Development
  • Financial Planning / Investments
  • Fitness / Nutrition
  • Health / Community Services
  • Health & Fitness
  • Health & Wellness
  • Healthcare
  • Holiday Guide
  • Holiday Shopping
  • Home / Energy
  • Home / Insurance
  • Home & Real Esate
  • Insurance / Employee Benefits
  • Insurance / Medical Services
  • Legal / Accounting
  • Meet The Chef
  • New Businesses
  • Non-Profit
  • Office / Computer / New Media
  • Office / HR / Employment
  • Office/ Technology/ E-Commerce
  • Outlook 2021
  • Personnel Briefs
  • Retirement Planning
  • Senior Living / Retirement
  • Summer Construction
  • Uncategorized
  • Wellness
  • Women In Business
  • Workplace / Security / Legal
  • Year-End Tax Planning

Archives

  • April 2025
  • March 2025
  • February 2025
  • January 2025
  • December 2024
  • November 2024
  • October 2024
  • September 2024
  • August 2024
  • July 2024
  • June 2024
  • May 2024
  • April 2024
  • March 2024
  • February 2024
  • January 2024
  • December 2023
  • November 2023
  • October 2023
  • September 2023
  • August 2023
  • July 2023
  • June 2023
  • May 2023
  • April 2023
  • March 2023
  • February 2023
  • January 2023
  • December 2022
  • November 2022
  • October 2022
  • September 2022
  • August 2022
  • July 2022
  • June 2022
  • May 2022
  • April 2022
  • March 2022
  • February 2022
  • January 2022
  • December 2021
  • November 2021
  • October 2021
  • September 2021
  • August 2021
  • July 2021
  • June 2021
  • May 2021
  • April 2021
  • March 2021
  • February 2021
  • January 2021
  • December 2020
  • November 2020
  • October 2020
  • September 2020
  • August 2020
  • July 2020
  • June 2020
  • May 2020
  • April 2020
  • March 2020
  • February 2020
  • January 2020
  • December 2019
  • November 2019
  • October 2019
  • September 2019
  • August 2019
  • July 2019
  • June 2019
  • May 2019
  • April 2019
  • March 2019
  • February 2019
  • January 2019
  • December 2018
  • November 2018
  • October 2018
  • September 2018
  • August 2018
  • July 2018
  • June 2018
  • May 2018
  • April 2018
  • March 2018
  • February 2018
  • January 2018
  • December 2017
  • November 2017
  • October 2017
  • September 2017
  • August 2017
  • July 2017
  • June 2017
  • May 2017
  • April 2017
  • March 2017
  • February 2017
  • January 2017
  • December 2016
  • November 2016
  • October 2016
  • September 2016
  • August 2016
  • July 2016
  • June 2016
  • May 2016
  • April 2016
  • March 2016
  • February 2016
  • January 2016
  • December 2015
  • November 2015
  • October 2015
  • September 2015
  • August 2015
  • July 2015
  • June 2015
  • May 2015
  • April 2015
  • March 2015
  • February 2015
  • January 2015
  • December 2014
  • November 2014
  • October 2014
  • September 2014
  • August 2014
  • July 2014
  • June 2014
  • May 2014
  • April 2014
  • March 2014
  • February 2014
  • January 2014
  • December 2013
  • November 2013
  • October 2013
  • September 2013
  • August 2013
  • July 2013
  • June 2013
  • May 2013
  • April 2013
  • March 2013
  • February 2013
  • January 2013
  • December 2012
Connect With Us

Follow, like and subscribe to Saratoga.com on social media

Account Sign In Submit An Event
Saratoga.com logo
  • Home
  • Places To Stay
  • Things To Do
  • Food & Drink
  • Events
  • Real Estate
  • Businesses
  • Guides
  • Contact Us
  • Blogs
  • Sweepstakes
  • Advertising
Visit Saratoga.com For Everything Saratoga
Full-Service Internet Marketing: Search Engine Optimization, Website Design and Development by Mannix Marketing, Inc.
Mannix Marketing, Inc. is headquartered near Saratoga Springs in Glens Falls, New York
Saratoga.com All Rights Reserved © 2025
Disclaimer & Privacy Policy / Terms of Use / Copyright Policies
[uc-privacysettings]

We strive to insure accuracy on Saratoga.com however accuracy cannot be guaranteed. Information is subject to change.
Please alert us if there is any inaccurate information here.

Having trouble using this site? Accessibility is our goal, please contact us with site improvements.