Who Needs to File BOIR Report?

On July 2, 2024 / starting a business

A Beneficial Ownership Information Report (BOIR) is crucial for ensuring transparency in business ownership. The BOIR is mandated by the Corporate Transparency Act (CTA), which aims to combat illicit activities like money laundering and terrorism financing. It is essential for certain entities to understand whether they are required to file a BOIR to comply with federal regulations.

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So, Who Needs to File BOIR Report?

Entities that must file a BOIR include corporations, limited liability companies (LLCs), and other similar entities created by filing a document with a secretary of state or a similar office. These entities are required to report their beneficial owners, who are individuals that exercise significant control over the entity or own at least 25% of the entity’s interests. Significant control can include having the ability to make major decisions, influence operations, or direct activities of the entity.

Reporting entities must include detailed information about each beneficial owner. This includes the owner’s full legal name, date of birth, residential or business address, and an identification number from an acceptable document such as a passport or driver’s license. This information helps authorities trace ownership and control to prevent and detect illicit activities.

However, not all entities are required to file a BOIR. Entities exempt from this requirement include publicly traded companies, certain regulated entities like banks and insurance companies, and inactive entities. Publicly traded companies are already subject to stringent reporting requirements with the Securities and Exchange Commission (SEC), making additional reporting redundant. Regulated entities like banks are similarly exempt due to their existing oversight and regulatory obligations.

Nonprofit organizations and entities that employ more than 20 full-time employees, have an operating presence at a physical office within the United States, and filed a federal income tax return in the previous year showing more than $5 million in gross receipts or sales are also exempt. These exemptions aim to reduce the reporting burden on entities that are less likely to be used for illicit purposes.

Entities must file their BOIR within 30 days of their formation or registration. Existing entities must comply by a specified deadline set by the Financial Crimes Enforcement Network (FinCEN). It is crucial for businesses to stay updated on these requirements to avoid penalties for non-compliance.

Understanding who needs to file a BOIR ensures that businesses can adhere to federal regulations effectively. By doing so, they contribute to a transparent and secure business environment that discourages illicit activities. Entities should consult legal or compliance professionals to ensure they meet all reporting obligations and stay compliant with the Corporate Transparency Act.

How To File Taxes for a Small Business and W2

On February 21, 2024 / IRS, starting a business

What to do if you receive a W-2 and a 1099?

The majority of American taxpayers fall into one of two categories. Self-employed individuals are paid by a company for work or services performed and receive a 1099 tax form. People who are employees on a company’s payroll and receive a regular paycheck receive a W-2 tax form. Some people receive both. In any of these cases, questions like “What are W2s” and “What’s a W2 vs W9,” as well as information on how to file w2 and 1099 taxes together, become really important, especially as tax deadlines near. Understanding the 1099 vs W2 vs W9 (and many more) is crucial when filing an accurate tax return. Knowing the differences between the 1099 and W2, especially, is important so you can know your tax obligations throughout the year.

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Key takeaways

A W-2 form reports employee income, a 1099 reports freelance income
Both W-2s and 1099s are needed for a taxpayer to file an accurate 1040 form
W-2 taxpayers have taxes withheld from their paychecks, 1099 taxpayers do not

Taxes in 1099 vs W2

The main differences between a 1099 vs W2 situation are how payment is made for work and how income tax gets paid to the IRS. Employees who work for a corporation receive a regular paycheck, and the income and Social Security tax they owe are automatically taken out, or “withheld,” as the IRS says.

1099 and W2 in same year

Some people have a W-2 job and a side gig or small business where they’re the sole proprietor. If you’re on the schedule each week at Home Depot, and you get a paycheck from the company every two weeks, but you also do carpentry work for clients on the side, you will receive a W2 and 1099 from these different employer entities. The 1099 will come from clients, and the W-2 will come from Home Depot at the end of the tax year. It might happen that one of your clients is a construction company that really likes the work you did as a freelancer and offers you a full-time W-2 job. So, How To File Taxes for a Small Business and W2? In that case, you’ll receive both a 1099 and a W-2 from that company, and you’ll be reporting both types of income when you file your 1040 form at the end of the year.

When do W2 have to be sent out?

There is no difference in the sending deadlines for 1099 vs W2 forms. The IRS requires companies with W-2 employees to send W-2 forms no later than January 31 each year so those employees can file their tax returns accurately and on time. Companies who pay self-employed people have the same deadline to send 1099s to the IRS and to people they have paid. But anyone self-employed needs to pay self-employment taxes on the income. The difference between 1099 and W2 forms is that W-2 employees have already paid tax in the form of withholdings from their earnings, and 1099 workers have yet to pay income tax to the IRS.

5 Steps To Start An LLC in Michigan

On October 30, 2023 / Michigan Taxes, starting a business

Michigan may be known for its lakes and other natural wonders, but it also represents some good business opportunities as well. If you’re thinking of starting a limited liability company (LLC) here, you’ll have a number of steps to complete before you’re set up. Learn how to start your Michigan LLC below.

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An LLC is a popular business model due to its taxation flexibility and the personal asset protection it offers. Michigan is gaining attention as a good place to do business, thanks to factors like regulatory friendliness, technology and innovation availability, and a low cost of doing business. The state has also been investing in cutting-edge advancements, like electric vehicle production and climate change initiatives which may help make for a promising future.

Steps to Set Up an LLC in Michigan

Different states have different rules for setting up an LLC. Understanding the requirements in your chosen state before you get started will make the process easier. Here’s what you need to know about starting an LLC in Michigan.

Step 1: Pick a Name for Your Michigan LLC

When you complete the Articles of Organization needed to register your Michigan LLC, you’ll be asked to give your LLC’s desired name. The name must be unique and can’t be the same or similar to another business name existing in the state. There are also restrictions regarding certain words that can’t be used; for example, the word “ambulance” can’t be used unless the business is licensed by the Department of Community Health.

If you have a business name in mind that you really want to use and you’d like to reserve it, you can complete a form to save the name. This might be necessary if you aren’t yet ready to file the actual Articles of Organization, for instance. You can save a name for an LLC for up to six months. The cost is $25.

Step 2: Find a Registered Agent

Michigan requires that every LLC registered in the state designates a registered agent with a registered office. This individual or business entity must be named when filing the Articles of Organization. A registered agent is an individual or entity appointed to receive formal notices or documents on your business’ behalf. This could include anything from IRS notifications to lawsuits.

Michigan requires that the resident agent be a legal Michigan resident or Michigan corporation. A foreign corporation with a certificate of authority to do business in the state can also be the registered agent, as can a Michigan LLC or a foreign LLC approved to do business in the state. The registered agent must have a street address in Michigan; you can’t use a P.O. box.

Step 3: File the Michigan Articles of Organization

To officially register your LLC with the state of Michigan, you have to submit the Articles of Organization to the Michigan Department of Licensing and Regulatory Affairs. This paperwork requires you to provide your LLC’s name, describe its business purposes, and designate the name and contact details of your registered agent.

When you submit the document, you’ll have to pay the $50 filing fee (plus expedited fees, if desired). Finally, make sure to include the name and contact information, including a business telephone number, of the “preparer” (your or whoever is completing the paperwork). In case of any issues while processing, it’s important that you can be contacted. There are many LLC services that can help complete all of these paperwork items for you if you do not wish to do it yourself.

Step 4: Draft an Operating Agreement

When completing the Articles of Organization for a Michigan LLC, you’ll see a section of the application where you can add “any desired additional provision.” This gives you the option to attach additional pages to your application, if needed. This is an ideal opportunity to include an operating agreement. Michigan doesn’t require an LLC to have an operating agreement. However, it’s recommended to create one.

An operating agreement includes details like the LLC’s members and what percentage of the LLC they own; the members’ voting rights; the members’ duties opposite the LLC; the frequency of holding meetings; how profits and losses are distributed; and buy-out and buy-sell rules. It can also detail what happens to a member’s shares in case of death. By laying all of this information out in an operating agreement, it’s possible to firm up verbal promises, reduce the risk of misunderstandings, and help protect your liability in case of legal issues.

Step 5: Get Your Employer Identification Number (EIN)

An EIN is a special number that’s similar to a Social Security Number (SSN) except that it’s for a business instead of an individual. The EIN is used by the Internal Revenue Service (IRS) to identify your business. You will include your EIN on tax paperwork. You’ll also need your EIN in case you ever hire employees for your business.

Getting an EIN is easy and fast. The quickest route to getting your EIN is to apply online through the IRS’s dedicated website. Alternatively, you can request an EIN via mail, fax, or telephone. That said, the IRS prefers online applications. Best of all, requesting an EIN doesn’t cost you a thing. It’s free!

Author: Allison Killian, US NEWS, 2023.

Tax Tips for Starting a Business

On August 14, 2015 / starting a business, Uncategorized

When you start a business, a key to your success is to know your tax obligations. You may not only need to know about income tax rules, but also about payroll tax rules. Here are five IRS tax tips that can help you get your business off to a good start.

Business Structure. An early choice you need to make is to decide on the type of structure for your business. The most common types are sole proprietor, partnership and corporation. The type of business you choose will determine which tax forms you will file.
Business Taxes. There are four general types of business taxes. They are income tax, self-employment tax, employment tax and excise tax. In most cases, the types of tax your business pays depends on the type of business structure you set up. You may need to make estimated tax payments. If you do, use IRS Direct Pay to pay them. It’s the fast, easy and secure way to pay from your checking or savings account.
Employer Identification Number. You may need to get an EIN for federal tax purposes. Search “do you need an EIN” on IRS.gov to find out if you need this number. If you do need one, you can apply for it online.
Accounting Method. An accounting method is a set of rules that you use to determine when to report income and expenses. You must use a consistent method. The two that are most common are the cash and accrual methods. Under the cash method, you normally report income and deduct expenses in the year that you receive or pay them. Under the accrual method, you generally report income and deduct expenses in the year that you earn or incur them. This is true even if you get the income or pay the expense in a later year.
Employee Health Care. The Small Business Health Care Tax Credit helps small businesses and tax-exempt organizations pay for health care coverage they offer their employees. A small employer is eligible for the credit if it has fewer than 25 employees who work full-time, or a combination of full-time and part-time. The maximum credit is 50 percent of premiums paid for small business employers and 35 percent of premiums paid for small tax-exempt employers, such as charities.

The employer shared responsibility provisions of the Affordable Care Act affect employers employing at least a certain number of employees (generally 50 full-time employees or a combination of full-time and part-time employees). These employers’ are called applicable large employers. ALEs must either offer minimum essential coverage that is “affordable” and that provides “minimum value” to their full-time employees (and their dependents), or potentially make an employer shared responsibility payment to the IRS. The vast majority of employers will fall below the ALE threshold number of employees and, therefore, will not be subject to the employer shared responsibility provisions.

Employers also have information reporting responsibilities regarding minimum essential coverage they offer or provide to their fulltime employees. Employers must send reports to employees and to the IRS on new forms the IRS created for this purpose.

For help starting a business or with any income tax question call one of our offices:

Plymouth 734.454.4100, Allen Park 313.388.7180, Grayling 989.348.4055, Royal Oak 248.399.7331, Saginaw 989.782.1985, St. Clair Shores 313.371.6600

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