Three (Incredibly Simple) Rules To Keep The IRS Away

Avoid An Audit We all have to pay taxes and no one wants any trouble. Follow these three simple rules and you’ll reduce your chances of grief from the IRS:

1. Keep Good Records. You might think good records help only if you’re audited. Actually keeping good records can keep you out of trouble in the first place. See Keep Tax Records In The Vault! Most audits are by correspondence: your deductions will be disallowed unless you produce records substantiating them. To respond quickly and thoroughly, be prepared. See Got A Tax Notice? Here’s What To Do.

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Considerations in Selecting a Form of Business Organization

Business Classification One of the first decisions that an artist will have to make as a business owner is how the business should be structured. Until the artist sets up a formal entity, he or she is by default a sole proprietor. Most businesses begin as a Sole Proprietorship because it does not require any formal filings with a state or federal agency and requires no separate Federal Identification Number (FEIN) and most artist’s businesses begin without giving much thought to its legal form. However, if they have some degree of success and ownership and taxation become paramount factors, more consideration is given to the best form to conduct business.

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Independent Contractor or Employee

Independant Contractor or Employee The classification of workers as independent contractors or employees can be nebulous at best -- there is no bright-line test, but the consequences of misclassification, whether inadvertent or deliberate, can be severe. That’s why there is a safe harbor (Section 530 relief) and a Voluntary Classification Settlement Program.

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