Your business is constantly evolving; and with that comes changes to business practices, along with laws & regulations. Maybe it’s starting a new product or service, a change in ownership, or an employee with an unusual withholding.
You are busy, and may decide to handle the situation the best you can to get by for now. “I’ll make a note and then ask Holbrook & Manter about it at tax time. I don’t want to spend the time or money on it right now”.
Without realizing it, a year or more could pass between the time of the event in question, and meeting with us to prepare your return. In that time frame, you may have been consistently mis-handling the issue for quite a long period. Meanwhile, important deadlines may have passed which could cause penalties or prevent you from qualifying for certain opportunities. It also takes extra time (and money) to correct the issue back to the time of the initial event-if it’s possible to do so. By not addressing the issue immediately it could negatively impact relationships with clients, vendors, or employees.
Consider this hypothetical scenario:
Client XYZ met with Holbrook & Manter staff members recently to finalize their 2017 tax return. When asked for copies of W2s issued to employees, we were told the individuals were contractors, not on payroll and therefore had no taxes withheld. Further discussion with XYZ determined the individuals were, in fact, employees as defined by the IRS. At this point the individuals had been misclassified for over a year, and in all likelihood, had filed their personal returns for 2017 without the proper W2.
Holbrook & Manter was able to help correct the errors, but it was costly for the client – penalties & interest were assessed, not to mention the professional fees incurred. It created conflicts with upset employees who may have had to amend their personal returns, and incur penalties & interest of their own.
At one point during the process of correcting the various issues this created, the client commented that they wondered if they were handling these individuals correctly when first bringing them on board. Had they taken a few minutes to ask our advice before heading down the wrong path, a lot of time, money, and aggravation would have been avoided.
The best time to ask a question, or obtain advice, is NOW!
Take a few minutes to give us a call or send an email with your question. We can advise you on the proper course of action so the issue is handled appropriately.