So, you want to operate your own business?

Bill Lawitzke, JK Harris Small Business Services, LLC

Owning and operating your own business may seem like the perfect job, but don’t for a second think it’s an easy one. Now don’t get me wrong, it can be perfect if done properly. You can’t just wake up one morning and say, “Hey, I think I’ll open my own business,” and abracadabra, you’re a successful business owner.

It just doesn’t happen that way, especially if you are unfamiliar with the ins and outs of the world of business. One of the most important things to do when you start a business is to open a business bank account and if necessary get a business credit card. You want all of your business transactions to go through an account completely separate from your personal accounts.

Open a business account and you won’t have your business and personal funds commingling. If you commingle funds, the IRS is likely not to allow some deductions they would normally allow if you had separate accounts. Why is this you ask? Well, when you use your personal account for business transactions, it is much more difficult to prove the transaction was for business and not personal reasons.

Even with a business account, you still need to keep accurate records of transactions. Keep all of your receipts. Keep a business mileage log. And if you have business lunches or meetings, keep a list of the people who were with you and what the purpose of the lunch/meeting was.

And whatever you do, don’t forget about taxes, the IRS sure won’t. If you have employees, file employment tax returns or withhold taxes on certain types of income, you will need an Employee Identification Number (EIN).

One of the biggest mistakes made by business owners is failing to file the required tax forms and/or failing to pay the quarterly Estimated Tax Payments. Keep in mind, whether you make a profit or not in any particular quarter, the IRS expects you to pay the estimated taxes. Why? Well, those quarterly payments are based on the entire year, not just that particular quarter you are currently scheduled to pay.

For additional information on Estimated Tax Payments, visit www.irs.gov/businesses/small/article/0,,id=110413,00.html.

About Bill Lawitzke:

Bill began his stint with JK Harris in 2003 when he came to work in the Small Business Services department where he is currently a Supervisor. He became an Enrolled Agent earlier this year.

JK Harris vanquishing paper trail

Rick Bassak, Vice President of Information Technology

A few years back, it had become quite apparent that we were drowning in paper files here at JK Harris. We needed to stop the gobs of paper we were swimming in every day. We had more file cabinets than anything else in the company and realized that something had to be done.

We currently have a three-part paper reduction system in place in order to reduce the amount of paper we use as a company. The first part of our system is the main fax server, which is designed to receive all of the inbound faxes and store them electronically until they are viewed by our scanning department and are assigned to each client’s computerized file in CMS (Case Management System).

Part two is the scanner stations we have in our mailroom. All inbound mail from our clients is scanned and attached to each client’s file in CMS. And the final part involves all of our in-house generated documents. Whenever a document is sent to one of our clients, the paper copy gets sent to the client for their records, but the document is also sent to the fax server to be attached to that client’s CMS file.

We also have dual monitors at everyone’s workstation so they can view the scanned documents on one screen while working in another program on the other screen entering the information from the scanned documents. This allows us to keep track of everything in CMS versus having a paper file stored in a file cabinet.

We have gotten rid of about two-thirds of the file cabinets we had before starting the paper reduction system. It has also reduced the time it takes for a document get to the Case Specialist. Instead, the document gets scanned into CMS and the Case Specialist is notified when the new document is in the file.

We have been applying our paper reduction system to other areas of the company as well, such as accounting, legal, human resources and payroll.

There is no way to totally eliminate the paper. But we can and plan to reduce it by 90 to 95 percent in the coming years.

Despite Changes, IRS Feared by Many

Charlie Jones, Chief Compliance Officer

In the 33 years I spent with the IRS, I witnessed many changes. Performance in the collection activity was determined by the number of seizures made, levies served or liens filed. This provided a reckless incentive for those of us whose primary duty was to collect the revenue. That policy was changed many years ago and we were evaluated by methods that focused more on the complete job, including service to the taxpayers, than on the narrow expectation of enforcement. To put this in to proper context, prior to the passage of the Restructuring and Reform Act (RRA) of 1998, two revenue officers would make as many seizures of property than the entire collection workforce did after the passage of the 1998 RRA.

The IRS has become more “permissive” in their policies and practices. In my early experience, you were considered a wimp if you gave a client an Installment Agreement. The IRS now encourages such an arrangement. They make very few property seizures and spend a great amount of their resources on service to taxpayers. This was long overdue.

The IRS is more willing to work with delinquent taxpayers now than ever before. If taxpayers are cooperative and attend all the “meetings” and honor all their promises, the IRS will usually make some accommodation for them in terms of resolving their issues, without resorting to more drastic procedures such as seizing and selling property.

The RRA of 1998 changed the way the Collection Division carries out its duties in many ways, especially when you couple the Reform Act with the Taxpayer Bills of Rights that preceded the RRA. The IRS must spell out almost every proposed action prior to taking action that could lead to loss of property.

Revenue Officers don’t have the unbridled authority now that we had before the Reform Act. I applaud the requirement that they must get judicial approval prior to seizing real property that is the personal residence of a taxpayer. There is more management involvement in all elements of the collection process prior to taking serious enforcement actions.

The majority of America’s taxpayers harbor a fear of the IRS that is unjustified. With the knowledge, support and expertise of people who know what they are doing, that fear can be displaced. We at JK Harris, provide that knowledge, that support and that expertise to help our clients face this fear and walk away with a resolution they can live with.

Working at JK Harris has been an evolving and rewarding experience

Bernard Bandish, Executive Vice President, Operations

I have been in the business world for over thirty years, including twenty years in the financial services industry. Right before I came to JK Harris in 1999, I had set up my own private practice to provide tax and financial advice, primarily to physicians and hospital administrators. When I came to JK Harris, it was a big decision for me to move back into the corporate world. The chance to start a new nationwide financial planning firm for JK Harris was one of those once-in-a-lifetime opportunities and I could not turn it down. It turned out to be a great move for me; my years here with the company have been the most fulfilling years of my career.

After JKH Financial Services was up and running, John Harris asked me to take over the small business services affiliate of the company as well. He gave me the freedom to build both of these companies the right way. I am proud of the results these companies have achieved, excelling in delivery of services to our customers.

At the end of March 2007, John asked me to take over operations for the whole company. Going from twenty employees to nearly three hundred was a big change, but I was the go-to person for tax and financial advice at a 7,500-employee medical university and hospital, so it’s hard to intimidate me. I have seven of the most talented and experienced people at JK Harris working for me as Directors and we’re focusing all our energies on improving productivity and customer service. Taking on operations at JK Harris and Company is a challenge I am up for. I am looking forward to being actively involved in the growth and improvement of the company.

 

 

 

 

Self-employment…a dream or a nightmare?

Augie Ortega, Vice President of JK Harris Advisors, LLC

Being self-employed can be a dream for some people. And why not? There’s no “boss” looking over your shoulder, although you do have to answer to your customers. Also, not having to punch in and out and not having anyone telling you when you can or can’t take a vacation or a day off is pretty neat.

For other people, however, being self-employed can be a nightmare. This horror usually comes in the form of self-employment taxes and Estimated Tax Payments. Self-employment taxes are similar to the Social Security and Medicare taxes employers withhold from wage earners’ paychecks.

These taxes, as well as all applicable income taxes, must be paid on a quarterly basis as Estimated Tax Payments. If not paid quarterly, you will likely be hit with penalties for late payment. If you need to make Estimated Tax Payments, you can calculate the amount in one of two ways: You can pay an amount based on the total taxes paid the previous year; or you can pay at least 90 percent of the estimated taxes that will be due in the current year.

No matter what, the important thing to remember is that if you are self-employed, you still need to pay your taxes.

But, here’s a question. How do you know if you are self-employed or not?

The fact of the matter is that most people really don’t know what it means to be self-employed. Many believe that if you are self-employed you own a business. However, is that really the case?

Take real estate agents, for instance. Many real estate agents work in real estate firm’s office, wear the firm’s jacket and may even receive checks from that firm. Technically, however, these agents are self-employed because they work on commission and receive a 1099 instead of a W2.

I wonder how many people have ever considered their real estate agent to be self-employed, despite that agent not having his or her own shingle hanging on the door?

If you want to learn more about the IRS’ guidelines for self-employed individuals, try out
www.irs.gov/businesses/small/article/0,,id=115045,00.html.

 

 

JK Harris is one big happy, helpful family

Mark Monaghan, Executive Vice President of Human Resources

It takes special people to work in the tax resolution business. The challenge is finding those people, hiring them and training them. The next challenge is in providing an atmosphere that promotes growth and loyalty. Our selection process helps us predict if someone shares successful traits with those who are already doing a great job. By using that process as our benchmark, we can continue to raise the bar in finding the special people that will continue to help make this company unique and successful.

All of the success we have had in the last 10 years, is due to our amazing employees… from our sales people, who rock in selling our services, to our scanners, who perform almost error-free while scanning unbelievable amounts of data. There is also a very loyal, long-term group that keeps everything going behind the scenes.

I know there have been some not so flattering things said about JK Harris in the past. I have always believed there are at least three sides to every story – yours, theirs, and then the truth falls somewhere in between. Once we have accepted a client’s business, we have also accepted their issues. We are their advocates, and we have to support them at all cost.

While I was EVP of Operations, there were several occasions where I became personally involved with cases. One of our Case Specialists had a very difficult client. She did a great job. The clients were just scared of the IRS and tended to take it out on us. We both celebrated their successful Offer acceptance letter.

Through the years, I have been very fortunate to be associated with some special, amazing people at JK Harris. Many of these people I have actually formed close friendships with. The first person who comes to mind is the person who was running the Call Center when I started there in 2000. Where he might have seen me as competition, he actually welcomed me with open arms and began a friendship that still lasts.

I really loved working with the five directors when I oversaw Operations. Change is tough, and when I took over Operations, it could have been really rough if it had not been for their support and friendships.

Our work can often be challenging. But it’s the people who we work with that makes it all fun and worth it. And seeing a client’s case through to completion and acceptance by the IRS is what we’re here for. Knowing that, I wake up excited to go to work every morning at JK Harris.

Need some tools to help fix a tax problem?

Kelly Scott, Director of Training and Customer Service

When you think of the IRS, what comes to your mind? Some people may think of the big, bad taxman who wants to make your life miserable. Believe it or not, the IRS does not want to see people having tax problems. In fact, the IRS has its own set of online tools to help taxpayers avoid and even resolve their tax issues. That’s right. The IRS is trying to come to the aid of the taxpayer. Probably the most helpful tools are the withholding calculator, the refund lookup feature and the ability to make tax payments online. The withholding calculator can be used at any time to estimate your total tax liability and to make sure you have your W-4 filled out correctly so that you don’t end up owing money to the IRS on April 15^th. If you do happen to owe the IRS, you can make your payments online using the Electronic Federal Tax Payment System (EFTPS). It even lets you schedule tax payments in advance. If you can make your payment online, you won’t have to go to your local IRS office to hand deliver them the payment or to the Post Office to send your payment certified mail. Taxpayers who do owe the IRS $25,000 or less, can not only make their payments online, but they can request a payment agreement with the Online Payment Agreement (OPA) Application. This handy feature allows you to self qualify, apply for a payment agreement and receive immediate notification of approval. Now if you are one of the lucky ones who doesn’t owe the IRS and are, in fact, expecting a refund, you can go online and check on the status of your refund. All you need is your Social Security Number, filing status and the exact amount of your refund. Then simply go to “Where’s My Refund?” on the IRS website and get an estimate of when you can expect to receive your check. For more details about these online tools or for a complete list of online tools available, go to www.irs.gov/help/article/0,,id=143687,00.html.

Important Tax Information for Deployed Military Members

Living in a city with a large military presence, we at JK Harris are all touched in some way by the military and the service they provide our country. As the proud employer of reservists, we are well aware of the sacrifices these brave men and women make. I would like to make mention of some of the tax benefits available to members of the Armed Forces serving in combat.

·     Members of the Armed Forces serving in a combat zone are entitled to an extension of 180 days plus the number of combat days served as the amount of time they have to file most tax actions. This includes estate, gift, employment, and excise tax returns of individual, sole-proprietors in a combat zone.

·     Military members’ pay received while in a combat zone is excluded from gross income and is considered nontaxable for the period that they are in the combat zone.

·     Combat wounded enlisted military members who are hospitalized from injuries received in a combat zone receive the aforementioned benefit for two years. For wounded commissioned officers, their nontaxable income is limited to the maximum enlisted pay amount per month while in the combat zone.

·     Installment Agreements can be deferred while the military member is in the combat zone if the military member notifies the IRS they have deployment orders. The first day the combat zone is entered, penalties and interest no longer accrue and the Installment Agreement is essentially put on hold. Penalties and interest do not begin accruing again until the 180-day plus number of combat days served extension runs out.

·     Reenlistment bonuses received after leaving the combat zone are excluded from income if the necessary actions for entitlement to the reenlistment bonus were taken in a month that the military member was in the combat zone.

·     Annual leave payments to enlisted Armed Forces members upon discharge from service are excluded from gross income to the extent the annual leave was accrued during any month in any part of which the member served in the combat zone. This applies to commissioned officers as well, but is subject to the maximum enlisted pay amount.

·     Heroes Earned Retirement Opportunities was enacted to allow military members to retroactively contribute to their IRAs for tax years 2004 and 2005. Before this law, non-taxed combat pay, little or no taxable income caused service members to be ineligible to make a regular or Roth IRA contribution. If a partial contribution to the retirement fund was made during either of those tax years, an amended return can be filed and will allow a full contribution to be made.

This information is provided to alert military members and their families to the tax benefits available to them. Detailed information is provided on the IRS’ website at www.irs.gov. It is always advisable to consult a tax professional with questions regarding your own situation or your personal income tax returns.

Thank you to all of our troops and to the family members who so bravely support them.