Category : Tax

6 tips for the 2017 tax season and to make the most from your CPA consultation

Posted on: Jun 12, 2017

One of the most important questions to ask yourself - are you really spending the right amount of time and getting the most from your CPA consultation?

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How to check status of your tax refund?

Posted on: Jul 1, 2017

Here are few frequently asked questions relating to your tax refund.

Where can I check the status of my tax return?

It is very easy to check the status of your refund online via the IRS website. Please check the following link [Read More]


Amended tax returns

Posted on: Jul 1, 2017

Below are few frequently asked questions relating to amended tax returns.

 

How long does it take to get a refund from an amended tax return?

As per IRS website, it may take up to 3 weeks for t...

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Health insurance premium tax credit letter from IRS

Posted on: Jul 1, 2017

Below are few frequently asked questions about the premium tax credit reconciliation letter from IRS.

 

 Why did I receive this letter? 

The re...

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How to file taxes for an LLC?

Posted on: Jul 1, 2017

One of the most frequent questions we get from business owners at the time of company formation is 'How are LLCs taxed'? 

This is a very interesting question as there is no single answer and may vary based on the tax classif...

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8 Mid year tax planning tips for business owners

Posted on: Jul 5, 2017

As a business owner, you are wearing different hats all through the year. And if you are like the vast majority, you probably think about the tax bill only end of the year or as it nears the tax filing deadline. This often as you know results in higher taxes and lesser options to invest in tax sa...

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Hiring independent contractors what every business owner must be aware of

Posted on: Jul 17, 2017

Independent contractor or employee- which is the right classification? 

As an employer, you are required to pay payroll taxes withheld from your employee paycheck in addition to the employer taxes. For independent contractors, you need to issue a 1099 form by Jan ...

[Read More]

Can I claim a home office deduction? Check out this article for business owners/entrepreneurs.

Posted on: Aug 6, 2017

Many business owners may use part of their home as a business office. The following post has few key points that outline your eligibility to claim this business deduction on your tax return.

 1)    Regular and exclusive use:  In general, the part of your home used fo...

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Does a single member LLC require Employer identification number if there are no employees?

Posted on: Aug 6, 2017

Yes, you will require EIN# for single member LLC. It's a unique identifier for your company similar to SSN # for individuals.

IRS has made it very easy to apply for an EIN number online. You cannot cancel the EIN once you have applied & have been approved. Therefore, you need to ensure...

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Is your new hire W2 employee or 1099 contractor?

Posted on: Aug 6, 2017

This is also one of the most frequently asked questions that we receive. 

To make it easier for employers, IRS has provided guidelines via form SS8 regarding classification of employee vs Contractor.

If you do not classify this correctly, there is a high chance of receiving notice...

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Do you need a new EIN when you purchase an existing business?

Posted on: Aug 9, 2017

You are not required to apply for a new EIN if only the ownership of the LLC or company has changed.

You need to apply for a new EIN if it was operating as a sole proprietor and now you are incorporating as an LLC or INC.

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What are the sales taxes in Redondo Beach, California?

Posted on: Aug 29, 2017

It is 9.25%. California state tax 6%, Los Angeles county tax 0.25%, Special tax 3%. The sales tax rate in Redondo Beach CA is 98 % higher than other CA localities. For sales tax, we always prefer you provide a zip code.

** Based on a question asked on quora.

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Six tax tips on estimated tax payments

Posted on: Aug 13, 2017

Six tax tips on estimated tax payments

Estimated taxes must be paid as you receive or earn any income during the year. If you are an employee, your employer usually withholds your taxes based on the data provided in the form W4. If you are 1099 contractor or you are...

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Can you write off moving expenses on taxes?

Posted on: Aug 21, 2017

Did you recently move to a new job? You may be eligible for moving expense deduction if you changed locations or moved into a new home. New home refers to the main home and not a vacation or seasonal home.

Eligible expenses may be claimed as a tax deduction if they pass three tests :

<...

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How do I pay extra taxes for the remainder of the year to make up for a lack of paying federal taxes thus far?

Posted on: Aug 25, 2017

f you are an employee, you can complete the form W4 and hand it over to your payroll department. Your employer will withhold taxes for you.

If you are self-employed or as a 1099 contractor, then you need to calculate your estimated taxes 1040-ES is the form.

Below blog article has l...

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Do US citizens have to pay annual taxes if you live abroad

Posted on: Aug 26, 2017

Yes, US Citizens have to pay taxes on world wide income even if you are living abroad.

In this scenario, especially we highly recommend that you consult a CPA or a tax professional etc. Certainly not recommended for DIY even if you are generating minimum or no income. They usually have hig...

[Read More]

How should you pay taxes for remainder of the year to make up for lack of paying federal taxes thus far?

Posted on: Aug 26, 2017

If you are an employee, you can complete the form W4 and hand it over to your payroll department. Your employer will withhold taxes for you.

If you are self-employed or as a 1099 contractor, then you need to calculate your estimated taxes 1040-ES is the form.

We highly recommend con...

[Read More]

Is there a way to avoid paying California LLC franchise tax if there was no income generated by the business

Posted on: Aug 26, 2017

As long as you are registered as LLC in California & LLC member, you are required to pay $800 franchise tax fees. There are no exceptions.

Sole proprietors do not pay LLC tax but it has many risks including personal assets may be liable to pay your business debts etc. Its not worth the...

[Read More]

How do you pay taxes as a sole proprietor

Posted on: Aug 26, 2017

A sole proprietor pays quarterly taxes based on income generated for the quarter. End of the year, he or she needs to file a form Schedule C on the form 1040 for individuals.

There will be penalties assessed at the time of tax filing if taxes are not paid by these due dates.

The qua...

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Do I have to pay short term capital gains tax if I am in the 10% ordinary income tax bracket?

Posted on: Aug 26, 2017

There is no special tax rate for short term capital gains. They are taxed at the same rate as your ordinary income. Ordinary income tax rates range from 10% to 39.6%

If you can hold your hold your assets for more than a year, you will qualify for long term capital gains rate which are 0%,1...

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What is the best tax deductions?

Posted on: Aug 26, 2017

This is a very broad question and it depends on your business situation & entity type for US- S Corp, C Corp, partnership or sole proprietor.

If you are a C Corporation or S corporation, taxes are very complex so certainly consult a tax professional or CPA.

My response below is ...

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Is there a way to reduce California LLC tax ($800) if no business was made under its name?

Posted on: Aug 27, 2017

As long as you are registered as LLC in California & LLC member, you are required to pay $800 franchise tax fees. There are no exceptions.

Sole proprietors do not pay LLC tax but it has many risks including personal assets may be liable to pay your business debts etc. It's not worth th...

[Read More]

How do small businesses pay their taxes?

Posted on: Aug 27, 2017

As a small business owner, if you are a sole proprietor or a partnership ( Single Member LLC/Multi member LLC), you are required to estimate your quarterly share of income /expenses & remit a payment to IRS if there is a tax due.

If you elected S Corporation status for your small busin...

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How will I do a tax return if my c-corp is registered in DE, but I earn money from IL?

Posted on: Aug 27, 2017

 As you are registered in Delaware as a C Corporation.Federal taxes - you will file form 1120.

State taxes - Delaware

In general, even though you are registered in Delaware, you are physically located in Illinois. Also, revenue is generated within Illinois. Therefore, most likely y...

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What general taxes do you have to pay when building a business in the US?

Posted on: Aug 27, 2017

This is a very general question. There are various types federal, state, county taxes. They are all based on your industry, type of income generated and federal/state rules by jurisdiction. In addition, the taxation rules are based on the type of your tax classification

 

 ** Our ...

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Is it okay to work on 1099 instead of W2?

Posted on: Aug 27, 2017

IRS has provided clear guidelines via form SS8 regarding contractor vs employee relationship.

Overall there are various factors -behavioral, financial, the overall perception of employer worker relationship etc play a very important role in choosing the right classification.

Your co...

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I've just incorporated an LLC (single person). I have no plans to immediately hire someone. Do I need an EIN? Should I get one anyway?

Posted on: Aug 27, 2017

Yes you will require an EIN number as a single member LLC. You will require this to open a bank account, various permits, and licenses, filing taxes, hiring employees.

EIN is the unique identification number similar to SSN for individuals. IRS has made it very easy to apply for an EIN # on...

[Read More]

Why would someone want to start a business as sole proprietorship?

Posted on: Aug 27, 2017

A simple answer to your question is its easy to start. You can be a business owner today with a small capital and start your business. Eg : You see so many consultants, freelancers, artists. Also, many are not aware of the advantages of incorporation. Therefore, many start out as sole proprietors...

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Why does an employer prefer to pay via a W2 instead of 1099 (consulting, 2 month project)?

Posted on: Aug 27, 2017

A short answer would be IRS has provided guidance on contractor vs. employee. You can also take a look at form SS8 from IRS. The classification of employee vs. contractor is based on various factors behavioral, financial, the relationship between both parties etc.

Also, employers end up pa...

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How difficult is it to prepare a tax return for an S corp?

Posted on: Aug 27, 2017

I would certainly not recommend DIY for S Corporation. There are few key items that a professional can handle very easily. Payroll accounting, owner employee compensation etc can get a bit complex.

If not handled correctly, you will receive notices from federal and state agencies which wil...

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Startup Advice and Strategy: What should startup founders be aware of before incorporating?

Posted on: Aug 27, 2017

At a high level, your CPA or business advisor should be able to walk you through some basic information on the choice of business structure and the tax implications. In addition to this, a basic course that outlines financial management would be a plus to the founders.

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Do I need to file taxes if my LLC made no money and nor did I personally?

Posted on: Aug 27, 2017

My response is assuming you are a single member LLC taxed as a sole proprietor. If so, then as you are registered in CA you need to pay the franchise tax even if you did not generate any profit.

Regarding federal filing, many businesses at start-up phase generate losses. As long as you hav...

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Top 11 business tax deductions for real estate agents and brokers

Posted on: Aug 28, 2017

As a real estate agent,  you are considered self-employed by the IRS. This applies even if you are working for a real estate brokerage firm. As a self-employed sole proprietor, you are eligible to many business deductions that you incur in your real estate sales activities. In order to claim the...

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Do I have to pay self-employment tax if I'm employed by another company and I set up my LLC at the same time? I operate in Texas.

Posted on: Aug 29, 2017

Yes, you are required to pay self-employment tax. It is better to discuss with CPA or tax professional if you have multiple sources of income and complex tax situation.

 

** Our response to a question asked on quora.

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I cancelled my California registered LLC within 12 months of opening, and I hadn't conducted any business. Why am I still asked to pay for the $800 annual fee?

Posted on: Aug 29, 2017

As long as your LLC was an active legal entity, you will be required to pay the $800 annual franchise fee for that financial year.

Once you close your LLC & federal tax filings, then you will no longer be sent notices.

Usually, most states will not issue clearance to close a com...

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If our startup is incorporated in Delaware and our server (cloud hosting) is in California, does this create a tax nexus in California?

Posted on: Aug 31, 2017

 

According to California revenue and tax code, you are considered doing business in California if you are actively engaged in transactions with a profit objective or financial gain.

While there are many conditions to qualify under this, I am highlighting few which may be more rele...

[Read More]

15 Tax tips for entrepreneurs

Posted on: Sep 3, 2017

As an entrepreneur, you are busy managing various key functions of your business. If you are like most entrepreneurs, you are thinking about taxes only around the tax filing deadline.

Around tax time you may soon find out that either you are paying too much in taxes or that you withheld t...

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If I moved out of my primary residence two years ago and since then I have been renting it out. Will I have to pay capital gains taxes if I sell it now?

Posted on: Sep 4, 2017

For real estate property sale, you can exclude up to $250,000 of gain ($500,000 if you are married jointly) on the sale of your home. In order to qualify for this exclusion, you need to meet the eligibility test.

The eligibility test is as follows :

  1. You are eligible if your hom...

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What are the characteristics of a W-4 form?

Posted on: Sep 4, 2017

W4 form is used by the employer to withhold taxes from an employee paycheck. This is based on the information provided by the employee via the W4 form. There is one important note as many employees miss out & find out only at the time of tax filing.

If you have any major life event lik...

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If I sell my primary residence at a loss, can I deduct that amount from my income?

Posted on: Sep 10, 2017

No, you cannot deduct it as there are no losses allowed on personal property like a car, personal residential property.

However, there are special rules that may apply if it was partially used as a rental property. There are also several other rules that apply to a rental real

estat...

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Can F1 student receive 1099?

Posted on: Sep 10, 2017

Usually, if you are on F1 OPT(Optional practical training) the employer issues a W2. The student then files form 1040 NR along with form 8843.

In your question, the complete facts have not been presented so it is unclear why an employer would issue a 1099-MISC without withholding taxes. [Read More]


Is Montana a good state to form an LLC for my online business?

Posted on: Sep 11, 2017

Montana has $70 as filing fees and $20 annual fees for LLC. So, costs are lower compared to few of the other states like IL or MA

Is there any reason why you are opening LLC only in Montana?

Delaware and Nevada are more popular for online businesses. However, if you open LLC in thes...

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What states besides Montana can I form an LLC and doesn't require you to charge online sales tax?

Posted on: Sep 11, 2017

In every state, as a seller, you are required to collect sales tax from a customer based on the nexus rules by state.

If you are a reseller, then you need to complete a reseller certificate and hand it over to your supplier. This is so he does not charge sales tax on your purchases.

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How does a startup handle operational tasks such as accounting, payroll, and legal?

Posted on: Sep 11, 2017

It's always best to outsource your accounting, payroll, and taxation needs to a company that specializes in these services.

This will allow you to focus on your core business.

 

** Based on our response to a  question asked on Quora.

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What's the difference between filing single and filing for head of household on you income taxes?

Posted on: Sep 14, 2017

Hi

Your marital status on last day of the financial year determines the filing status.

Below is some general information.

  1. Single vs Head of household.
    1. In order to file status of single, you should be unmarried as of last day of the financial year.
    2. To file...

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Aside from extra paperwork and incorporation costs, what is the difference in filing for a single member LLC, electing to be taxed under Subchapter S, and single member corporation, electing to be taxed under Subchapter S?

Posted on: Sep 14, 2017

Hi

There is no difference as far as taxation is concerned. Just from a business perspective, LLCs these days are very popular due to the simplicity and ease of formation. In addition, the number of compliances and annual state forms/fees are lower as compared to corporation.

Other t...

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What taxes must a nonresident running a sole-proprietorship LLC pay?

Posted on: Sep 23, 2017

In general, first determine if you are a resident alien or non-resident alien.

If you are a non-resident alien, you will need to file form 1040 NR and report your business income. This applies if your business income is directly connected to US Source income.

In order to determine i...

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What does tax compliance mean when filing your state tax return?

Posted on: Sep 27, 2017

It depends on the context which is not provided here. I would recommend that if your tax situation is complex, you should schedule time with a CPA or tax professional.

In general, it is usually

  1. Tax preparation : it means ensuring you file your required tax return on time or not...

    [Read More]

If I don't work from home nor an office but drive to meetings daily are those miles deductible business mileage?

Posted on: Oct 16, 2017

Hi

It depends. There are specific tax rules regarding this deduction and I would highly recommend you discuss with your tax professional.

If this is not your regular place of work and your business miles are significantly higher than your regular place of work, you may be able to ta...

[Read More]

What are some tax saving tricks for head of household with a housewife (unemployed) and 2 kids (playschool and 3rd standard)?

Posted on: Oct 17, 2017

There are no tricks. A better way to rephrase may be tax planning strategies.

There are no standard solutions and often times they may be not be appropriate based on your tax situation and your living expenses etc.

However, in general 401k, Roth and Traditional IRA, Health Savings a...

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What are ways to receive tax deductions in the United States?

Posted on: Oct 20, 2017

 
 
  

Hi

Agree to the answer by David Himes. You do not receive the tax deductions. A better way to rephrase may be you are eligible to claim certain tax deduct...

[Read More]

Do you declare salary as a CEO in a C Corp? What happens if you can't pay your own salary?

Posted on: Oct 29, 2017

Once you form a corporation, it is not necessary to hire employees or take a salary because you are a C Corporation.

It is a business decision & it depends on various factors.

Profit-generating years, ensure you take a reasonable salary and promptly pay federal & state taxes...

[Read More]

6 tax tips for charitable contributions

Posted on: Oct 24, 2017

As we are approaching the end of the year and close to the holiday season, many business owners and individuals donate money, gifts or other tangible items to charitable organizations. One of the very frequently asked questions are:

  1.  What are the record keeping requirements for both ...

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Can someone claim an allowable deduction for expense to secure a special seat of the flight during a 100% business trip?

Posted on: Oct 24, 2017

It depends on various factors-

  1. If you are an employee, your employer should cover all variations & upgrades as part of their travel policy.
  2. If you are an independent business owner, then there are so many other factors to consider. In general, if they are reasonable, just...

    [Read More]

Tax deductions for Information Technology Professionals

Posted on: Oct 29, 2017

As a busy technology professional, you are busy serving other departments within your company or your clients with their technology problems. While many of you may be already aware of few of these deductions, there are many who have less information on what can and cannot be deducted. So, in orde...

[Read More]

Is your new iPhone X eligible for tax deductions?

Posted on: Nov 23, 2017

iPhone X and iPhone 8 are going to be the most popular items on sale during the upcoming holiday season.  One of the questions we do receive at the time of tax filing relates to phone upgrades and tax deductions. This article provides useful tax tips regarding your eligibility.

There are ...

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Holiday Gift Giving and Tax Deductions

Posted on: Dec 10, 2017

For Business owners: You can deduct as many business gifts as you like. The amount of deduction is limited to $25 per gift recipient per year. So if you gift to six different people, the total business tax deduction would be $150.

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Year end tax planning checklist for individual taxpayers

Posted on: Dec 10, 2017

Year-end tax planning checklist for individual taxpayers

  1. Retirement distributions and contributions: Plan your final contributions to employer-sponsored 401k plans, retirement contributions to Roth, Traditional IR...

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9 Year End Tax Planning Strategies for High income earners

Posted on: Dec 17, 2017

Year- end tax planning tips for high income earners

 

1) Accelerate deductions:  Accelerate deductions in December to take the deduction in the current year. However, be aware of the items that may be subject to Alternate M...

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How the tax plan impacts your business

Posted on: Dec 23, 2017

Below are few major highlights for Corporations/ Businesses.

  1. Reduction in corporate tax rate: Under the new tax plan, corporate income is taxed at a top rate of 21% instead of 35%.
  2. Alternate Minimum tax: The bill repeals AM...

    [Read More]

2018 Tax Deadlines  for 2017 tax year

Posted on: Jan 1, 2018

Below are the tax deadlines for businesses and individual tax filers.

Form  2018 Filing Due Date (Tax Year 2017)

Form W-2 (electronic or mail)                                   January 31s...

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1099 Compliance Basics for Businesses, Corporations & Independent contractors

Posted on: Jan 6, 2018

For Businesses & Corporations

As a business owner, you may be hiring independent contractors for your business. If you have paid any amount greater than $600 during the calendar year, you may be required to file a FORM 1099-MISC with IRS. A copy is sent to the contract...

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TEN QUESTIONS TO ASK WHEN CHOOSING A TAX PREPARER

Posted on: Jan 22, 2018

 

 

It’s the time of the year when many of you are searching for a tax professional to help file your taxes. It is extremely important to choose your tax professional wisely.

As a taxpayer, you are responsible for all the information on the tax returns. S...

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TAX FORMS YOU SHOULD EXPECT TO RECEIVE BY JANUARY 31ST, 2018

Posted on: Jan 30, 2018

Stock brokers, lenders and employers will start sending you the tax forms and statements by January 31st. The Internal revenue service (IRS) gives companies time until January 31st to mail out these statements. Many currently send it out electronically instead of postal mail. The following are th...

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FIVE TAX CREDITS FOR A BIGGER 2017 REFUND

Posted on: Feb 25, 2018

Tax credits help reduce the amount of tax you owe. A refundable tax credit allows you to reduce your overall tax liability and it can also result in a refund.

  1. Child Tax credit: You are eligible to receive up to $1,000 on your tax return. You are required to file form...

    [Read More]

Deducting moving expenses in 2018

Posted on: Jun 16, 2018

The latest tax reform  suspends the moving expense deduction

The new tax law suspends the moving expenses deduction for tax years beginning after December 31, 2017 and goes through January 1, 2026. During this timeframe, there is no deduction allowed for use of an automobi...

[Read More]

Employee vs contractor- which is the right classification

Posted on: Oct 7, 2018

Employee vs Contractor – which is the right classification?

 

As a business owner, you may require hiring an expert to help you with various projects. Many employers classify employees as contractors that t...

[Read More]
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