In order to qualify as a “crowdfuning transaction”, the issuer of the investment cannot sell more than $1M of securities in a 12 month period. Additionally, the amount that can be invested depends on the income or net worth of the investor. For investors with net worth or annual income less than $100,000, they can invest the greater of $2,000 or 5% of their annual income or net worth. For investors with annual income or net worth greater than $100,000, they can invest up to 10% of their annual income or net worth not to exceed $100,000. There is no requirement that investors be “accredited investors” and anyone can invest at least $2,000 in a “crowdfunding transaction”.

In addition to the restrictions on the amounts raised, the transaction must also be conducted through a broker of “funding portal” that provides risk disclosures and other information to investors. A funding portal is a new system of exchange that has been used in recent years by many small companies but has only recently been recognized in law under the JOBS Act. A funding portal is defined as a person that acts as an intermediary in a transaction involving the offer or sale of securities for the account of others. There are a number of restrictions placed upon funding portals such as prohibitions on investment advice or recommendations, they cannot solicit offers or transactions, they cannot compensate employees based on the sale of securities, and they cannot hold, manage or possess investor funds or securities.  Funding portals must register with the SEC as a funding portal but they do not have to be registered as broker-dealer.

The SEC has 9 months from the signing of the act in April to adopt regulations and guidelines. Crowdfunding will be an important and commonly used funding mechanism for many new small businesses and should be considered as an option in every business or investment where the funds being raised are $1M or less.

If you are involved in a Crowdfunding project, either raising money or investing money, please give us a call to discuss this issue with an attorney at KKOS Lawyers.

By: Mathew Sorensen, Partner KKOS Lawyers

I certainly understand you want to save money in this area of your business, employment taxes, workers comp, unemployment, etc… can be a pain AND expensive.  However, just because you ‘say’ they are a sub and give them a 1099, doesn’t make them a sub-contractor.  Basically, if they walk like a duck, act like a duck and look like a duck… they’re a duck!!!  I’m sorry.  Here are the two concerns we need you to know about:

First, the IRS is cracking down on this practice. As reported in the New York Times “Federal and state officials, many facing record budget deficits, are starting to aggressively pursue companies that try to pass off regular employees as independent contractors.” The IRS consistently warns taxpayers that if you are caught paying ‘employees’ as ‘sub-contractors’, you will pay stiff penalties on top of the taxes and interest owing for payroll withholdings that should have taken place. Here is a helpful article posted on irs.gov that can explains the distinction:

http://www.irs.gov/businesses/small/article/0,,id=99921,00.html

Second, is the asset protection/liability issue; a Workers Compensation claim could be worse than the IRS. If you are paying an ‘employee’ as a ‘sub-contractor’ and not carrying Workers Compensation Insurance, who do you think is going to be liable if they get hurt on the job? That’s right!!! – YOU. More than likely, you will also be personally liable and your corporate veil won’t protect you either. This is because in the eyes of the Court, you should have known better and were acting recklessly or negligent in not carrying insurance.

PLEASE be careful and please know that between the two firms we can set you up with the payroll service, 1099 system, then the employee or sub-contractor agreements. Please give us a call to discuss this issue with your accountant at Kohler & Eyre or an attorney at KKOS Lawyers.

Essentially, if you are at “Full Retirement Age” based on your year of birth, then no wages OR income would affect your social security benefits and you will keep all your benefits.   Here’s a link to figure out whether you are at “Full Retirement Age”: http://www.ssa.gov/retire2/retirechart.htm.

As this page shows, if you are less than full retirement age then there is a limit to how much you can earn and still receive social security.  “Earnings” only mean income from wages or self-employment. Thus, other government benefits, interest, capital gains, etc. would NOT count.   So many real estate investors are happy to hear that receiving “rent” or “capital gains” from their rental properties, by themselves, won’t affect social security benefits.

The only impact capital gains might have is whether you have to pay taxes on your social security benefits.  If you make more than $25K (single) from all income sources including capital gains or $32K (joint), then a portion of your social security benefits will be taxable.  For this calculation, the IRS includes income from all sources including capital gains.  See this link for more info: http://www.ssa.gov/pubs/10069.html#a0=2.

If you need a consultation in this matter, please talk with your Personal Tax Consultant here at K&E CPAs.  Call 435-865-5866 or visit www.ke-cpas.com.

Here are five facts about claiming injured spouse relief:

1. Do you qualify?

To be considered an injured spouse; you must have paid federal income tax or claimed a refundable tax credit, such as the Earned Income Credit or Additional Child Tax Credit on the joint return, and not be legally obligated to pay the past-due debt. This is a pretty straight forward proposition for those of you that have paid tax in the past.  Don’t over think this requirement.

2. Special rules apply in community property states.

So for those of you in Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin, consult with your tax advisor and see IRS Publication 555, Community Property.

3. So you may have a refund coming back to you.

For those that want their refund and NOT have it allocated to their Spouse’s debt, you may request your portion of the refund by filing Form 8379, Injured Spouse Allocation. SO not only can you get out of your spouse’s tax debt, you can and should be able to get YOUR refund due to YOU! You may file form 8379 along with your original tax return or you may file it by itself after you receive an IRS notice about the offset.

When you file a paper tax return you can include Form 8379 with your return, and make sure to write “INJURED SPOUSE” at the top left of the Form 1040, 1040A or 1040EZ. IRS will process your allocation request before an offset occurs. You can file Form 8379 electronically, but I recommend you file it with paper to make sure you make the proper claim with your return and it isn’t missed.

If you are filing Form 8379 by itself, it must show both spouses’ Social Security numbers in the same order as they appeared on your income tax return. You, the “injured” spouse, must sign the form, but you don’t have to get the signature of your spouse.

4. I just don’t want to pay my Spouse’s Tax Debt.

Do not use Form 8379 if you are claiming innocent spouse relief. Instead, file Form 8857, Request for Innocent Spouse Relief. This relief from a joint liability applies only in certain limited circumstances. However, in 2011 the IRS eliminated the two-year time limit that applies to certain relief requests. IRS Publication 971, Innocent Spouse Relief, explains who may qualify, and how to request this relief.

5. Get Professional help.

I hate to say it, but this is a serious matter. I too wish the tax code was simpler, but it’s not.  If you are getting notices from the IRS and your spouse didn’t pay his or her fair share and you’re getting stuck with the bill, this could be a solution to your mess. Pay for just a half hour with a tax professional that can guide you through your options.

If you need a consultation in this matter, please talk with your Personal Tax Consultant here at K&E CPAs.  Call 435-865-5866 or visit www.ke-cpas.com.

HERE is my AMAZING, yet SIMPLE list:

1. Make a Goal.
• Set a deadline to purchase your first rental. Stay committed. Let friends and family know your goal. Write it down and set short deadlines to be looking at property and making decisions, rather than just ‘buy rental by X date’. Set more manageable goals to get you to closing.
2. Start Shopping.
• Just get out and start looking at rentals. Engage two or more realtors or investors in the markets you are looking at to send you leads and options. Once you start looking you’ll get more motivated and the juices will start flowing.
3. Get a Spreadsheet.
• Develop a spreadsheet, even if you have to buy one OR create one, to analyze your properties. This should set forth criteria to ‘rate’ your possible properties by rent rates, operating costs, debt service, property management, etc.. and create an ultimate ROI or Return on Investment calculation.
4. Look at lots of Property.
• Take your time and look at lots and lots of property. There is NO RUSH. I have told clients time and time again, there will always be a deal next week. Follow your gut and don’t get sucked into a deal you don’t feel good about.
5.  Make an Offer and Start Due Diligence.
• Once you find a property that ‘fits the bill’, make an offer contingent on due diligence. If you don’t like the deal…get out. Don’t get emotionally attached to the transaction.
6. Do more Due Diligence.
• Look at the property from every angle. Learn how to do good due diligence. Read books and talk to others on nightmare experiences so you can look for any possible problems. Be patience, but DON’T GET discouraged.
7. Open Escrow.
• Once your happy with your due diligence and the property looks like a winner, start reviewing docs, move to closing and begin forming an LLC. In MOST states I will always recommend an LLC to hold your rental. Get a consult so we can discuss the matter and help review docs if necessary. Don’t do your first deal on your own.
8. Close and Deed the Property to an LLC.
• Don’t stress about closing in your own name or having the LLC finished before closing. There are only a few states where this is important to consider. When we have a consult, we’ll indicate if there is going to be transfer tax problem later. Don’t worry about the ‘due on sale clause’ when deeding to your own LLC. The bank is worried if you transfer the property to someone else after closing, not if you just transfer it to your own entity or trust.
9. Track Expenses.
• Keep track of everything for tax purposes. This includes the closing statements, costs you incurred BEFORE you closed and expenses after. Everything related to the purchase and management of the property is a tax-write off. Look at the list at the end of my new CPA book if you need some ideas as to what might be a write off.

10. Manage the property, Tenant AND your Property Manager.

• Don’t think this property will run by itself. Stay involved. Take lots of regular pictures. Keep good records on your tenants, and your property manager if you are using one. Visit the property regularly.

They are the #1 small business entity for entrepreneurs with ordinary income. Staying up to speed on the reasons why and how to maintain your S-Corp is critical. For example, there is your first important deadline of 2012 this month!

First, there are two major reasons why you may form an S-Corporation.

1) Shareholders and officers of an S-Corporation are not be personally liable for corporate debts and liabilities, and

2) Your share of the S-Corporation’s income will not be subject to self-employment tax, but your wages will be subject to social security taxes.

However, it is important that business owners realize that if they have ‘passive’ income, such as a rental property, an S-Corporation should generally NOT be used, but a Limited Liability Company (LLC) or Limited Partnership (LP). The S-Corporation is best suited to manage ‘ordinary income’, even if it is a ‘partner’ in an LLC with other S-Corp partners because the LLC is an operational business.

In order to receive the asset protection an S-Corp can afford you, it is important that the corporation be adequately financed, that various formalities required by our state be observed (e.g., filing articles of incorporation, adopting by-laws, electing a board of directors, and holding organizational meetings), and that the existence of the corporation as a separate entity be maintained.

KKOS Lawyers has a Company Maintenance Program to help you keep this ‘corporate veil’ strong. Please contact Holly Butterfield at the KKOS office if you have questions about this service.

In regards to the wage and net-income planning, we have consistently encouraged our clients to allocate at least 1/3 of their net-income to ‘wage earnings’ and the remaining amount can flow out as a ‘dividend’ or ‘net-income’ not subject to SE Tax. It is important to maintain this procedure through proper payroll planning. Quarterly reports are required, but the system can be simple and affordable. Please contact Cynthia at Kohler & Eyre CPAs for more information on this service.

If you expect that the business will incur losses in its early years, an S-Corporation is preferable to a C-corporation from a tax standpoint (amongst a number of other reasons). Shareholders in a C-corporation generally get no tax benefit from such losses.

In contrast, as S-Corporation shareholders, each of you can deduct your percentage share of these losses on your personal tax return to the extent of your basis in the stock and in any loans you make to the entity. Losses that cannot be deducted because they exceed your basis are carried forward and can be deducted by you when there is sufficient basis.

Once the corporation begins to earn profits, the income will be taxed directly to you whether or not it is distributed. It will be reported on your individual tax return and be aggregated with income from other sources.

Finally, always remember that the S-Corporation could inadvertently lose its S status if either of you transfers stock to an ineligible shareholder such as another corporation, a partnership, or a nonresident alien.

If the S election were terminated, the corporation would become a taxable entity. You would not be able to deduct any losses and earnings could be subject to double taxation–once at the corporate level and again when distributed to you.

This is of course a short summary of the benefits of an S-Corporation and how to maintain such a company in good standing with the State and IRS. For a consultation to see if this type of entity is best for you, please call and schedule an appointment with one of our Attorneys at KKOS Lawyers.

If you choose to have us set up your entity, we will apply the cost of the consultation to the set-up cost. Also, don’t forget that when you set up an entity with KKO Lawyers it includes the Attorney’s support for a whole year to answer questions regarding the set-up and structure you chose.

I am SO EXCITED about this week’s Radio Show! I LOVE to use my ‘smart phone’ and iPad, but even love it MORE when it saves me time AND money. With today’s access to technology we are really losing out if we aren’t constantly looking for the newest and best software available.

Well to help in this effort, below is an article, as a preview for the Radio Show tomorrow.  I’m sure there will be aspects and additional information regarding these resource we will cover on the Radio Show, in addition to the article.  Please see the details below on how you can listen in.

Hope to see you there!

Dmitriy Kozlov

Radio Show, Tuesday, March 27th- “The Hottest Apps and Software for Your Small Business”... Please join me for an incredible show with IT experts, featuring Dmitriy Kozlov, President of the web design firm Purpose Inspired Marketing www.purposeinspiredmarketing.com. Dmitriy is an Internet Entrepreneur and graduate of Brandeis University. Using the latest technologies and strategies, his team helps businesses dramatically improve their online presence and make a return on their investments. Dmitriy’s will share with us the hottest Apps for entrepreneurs and save all of us time and money in our operations.  Please come and join us on the show. Show time is always on Tuesday at 11am PST/ 2 EST- Set Your Calendars for future shows! You can call in and listen LIVE on the road at 646-200-4285 or you can listen in here from your computer.

Last Week’s Radio Show – “Asset Protection Strategies in 2012″…  This was a show where we laughed and cried as we talked about the proper method to plan for your Estate. We listened to horror stories from those who have passed on and the advice they would give.  Voices like Jimmy Hendrix, Anna Nicole Smith, and Heath Ledger, just to name a few. If you missed it, you can listen to it here.

“The Hottest Apps and Software in the Market Place Today- Enhance Your Small Business NOW!!”... Of course our list will not be comprehensive a week from now, I think new Apps and Software comes out even faster than new computers and gadgets.  HOWEVER, we feel this list is the best RIGHT NOW and can dramatically help your business in 2012.  If you have any suggestions, let us know and we’ll add it to our list and publish it for everyone.  Email me at mark@markjkohler.com with your ideas.  

Smart Phone/iPad Apps:

   * EverNote - The BEST way to take notes, audio notes, picture notes, documents, video notes, etc that syncs automatically with EverNote on your computer. You can share notes or notebooks with others.

* DropBox - The easiest way to sync files between your iPhone, iPad and your computer, or share with others

* PayPal app - Even better than using the site on your computer!  Get your money faster.

* Battery XL - Keep a longer battery life while doing all that you do.

* QuickBooks app - If you using another accounting software, they probably have an app.  But who uses anything else.

* Square - The absolute leader in processing credit cards on the road and with your iPad or iPhone.

* WordPress app - If you blog, setup your WordPress blog (or have your tech guy do it) to allow post by proxy, then you can blog and publish directly from your phone!

* Siri - If you paid to upgrade to the iPhone 4S. If you didn’t, get Vlingo! It’s a free app that works like Siri… allows talk to text, talk to email, looks things up for you, etc. Saves a lot of time over typing and is much safer while driving!

* TeleNav GPS (premium version) – The best GPS Mileage tracking app out there. It can even log your mileage directly into a spreadsheet for you, which is great for keeping track without thinking about it.

* Currency Converter - A perfect free app for those small business owners doing international travel.

* Mint app. or Mint.com - A great service to organize your personal finances, and you can use it for business too. Instead of check multiple accounts and credit card balances through individual apps, check it all at once through Mint for a networth summary, account balances, and transactions.  If you think this is competition to Quickbooks, think again, they own it too.  It’s just their way of differentiating their services and good marketing.
* Zecco - For you stock traders out there, use this to manage your brokerage account.

* Reminders app - Is great for mini-project management and personal time-management and lists. This comes standard on iOS5 and works great with Siri.

* FlightTrack Pro - Again, for you small business owners on the road and in the air…make sure you’re always on time and know what’s going on with your flights.

* Quickoffice Mobile Office Suite - Quickword, Quicksheet, Quickoffice files… best way to edit documents and spreadsheets on the go.

* Time Manager Pro - Excellent for keeping track of your personal activities and improving time management.

* ClockIn - If you bill by the hour, this can be a great tool for tracking hours per client and per project.

* Business card reader - the best app for taking contacts from business cards directly into your iPhone contacts and connect with them in LinkedIn. Can save you hours of data entry and improve follow up significantly.

Do I even need to mention Skype, Facebook, Twitter, etc…. I don’t think so. <:)

Software

* QuickBooks - Hands down the best software package on the planet for small business owners.  If you don’t know this, you are operating in the stone age and HAVE to get on board.  It will save you time and money, including taxes.

* Neat Receipts - Probably the coolest way to track your receipts and have it fully integrated with QuickBooks.  Get rid of the paper.

Just Cool to Know About

* www.join.me - The fastest and easiest way to share your screen with someone quickly

* Logmein.com- An easy way to access your computer while on the road and simple to set-up.

* Basecamp.com - this is actually a mobile site, not an app, but works just like an app. This is the best project management system out there. There are other free and lower priced project management systems that also have mobile apps.

* Any QR code reader app is necessary to have. Dmitriy will talk about this more on the Radio Show.

***IMPORTANT TAX DEADLINES- BIG DAY COMING UP!!***

   April 17 - Individual Tax Returns Due -Due date for 2011 personal income tax returns (Form 1040).  An automatic six-month extension may be obtained by filing Form 4868. Give us a call to get on our list and your Extension filed.

   April 17 - LLC / Partnership Tax Returns Due -Due date for 2011 personal income tax returns (Form 1040).  An automatic five-month extension may be obtained by filing Form 7004. Give us a call to get on our list and your Extension filed.

   April 17 - Estimated Tax Payments for 1st Quarter 2012 -Make sure you have a strategy for your deposits THIS YEAR.  If you are an entrepreneur…you have 2 options:  1) Use your S-Corp Payroll to withhold enough from your salary to cover your overall taxable income, or 2) make a quarterly deposit using form 1040ES.  The deadline for the 1040ES Form is April 17th.  Payroll reports are due by April 30th for you S-Corp owners.

   April 17 - Retirement Plan Contributions -Last day to make a retroactive contribution to traditional IRA, Roth IRA, Health Savings Account, SEP-IRA or solo 401(k) for the 2011 tax year. However, if you get an extension, you have until October 17th to fund a SEP-IRA or solo 401(k).

   April 17 - Amended Tax Returns for 2008 -Final deadline to file an Amended Tax Return (Form 1040X) for tax year 2008 and still claim a tax refund. Be sure to mail the amended return well before April 17th and obtain proof of mailing, such as a certified mail receipt.

   April 17 - CALIFORNIA RESIDENTS!! - Franchise Tax Payments Due -If you have an entity Registered to do business in California (domestic or foreign) your $800 minimum tax is due by April 17th. If you are a S-Corp or C-Corp, use Form100-ES, and click here are the Instructions.  If you are an LLC, use Form 3522 and the Instructions are included with the Form.  If you need help making sure you fill out the right Form, send the correct amount and mail it to the right address, please call us at 435-865-5866 and ask for the Personal Tax Preparer assigned to your account.

COMPANY FORMATION SERVICES - Don’t waste your time or money with an incorporation service like LegalZoom.com.  Get a consultation with a REAL Attorney that will tailor your entity to YOUR situation.  ALL of the consulting time you need is included with an attorney, over the phone or in person, until you are comfortable with your entity.  We set up ANY entity in ALL 50 States for $800+ filing fee.  If you need a Registered Agent, we can do that too- only $125 in ANY State.  Take the guess work out of ‘which entity is best for you’ and get the support and training on how to operate by scheduling time with an Attorney at KKOS Lawyers.  Please contact Alisha Evans to schedule an appointment with any of our attorneys.  You can reach her at alisha@kkoslawyers.com or 888-801-0010. She can explain our procedures, services and/or fees. We look forward to working with you!!

TAX RETURN PREPARATION-  While it’s tax season, we wanted to leave this message in the Newsletter for those of you that aren’t already clients.  If you would like to know more about our services or get started, please contact Cherie Pearson on our Client Services Team. You can also reach her at cherie@ke-cpas.com or 435-865-5866. They can explain our procedures, services and/or fees, as well as send you an Engagement Letter immediately and as list of what we need to get started.  Our team is AWESOME this year and we look forward to working with you!!

********

     First and foremost, I don’t pretend to be a marketing genius. There are many incredible experts that have written books, taught, and consulted on the topic of marketing for the small-business owner.

     However, I’m convinced that millions of small-business owners don’t have an affordable and practical contact to help give them support and direction with their marketing needs.

     Most business owners make their best guesses as to what may work for marketing and take a shotgun approach to finding a method that may work for them. This is never a desirable approach.

     With no one to turn to, I feel the CPA can oftentimes be best suited to give their clients some initial guidance on general business management, including marketing.

     Personally, I believe that I have something to share in this area of business and hope that many of you find this information helpful.I have been a business owner since I was eight years old when I opened my first lemonade stand and tried to entice customers to buy my product.

     Today I own several businesses where I am personally involved in the marketing decisions each day, and several Marketing Plans.

     Now, what do I mean by a “Perfect” Marketing Plan?

     Essentially, I am trying to say that the “Perfect” plan is what is best for you in YOUR business. Every marketing plan will be different. Even businesses that are selling the same product or service may use a different strategy to reach their customers and close sales.

     I simply share this section and these resources with you in the hope of helping you better reach the sales goals you have set for yourself in your own business. Bottom line, I feel the most important step you can take to increase your sales is to develop and maintain a real plan and follow it.

Here are the basic outline and steps to creating the Perfect Marketing Plan for your business:

Good Luck!!

     According to a recent NBC/Wall Street Journal poll over 76% of Americans rated 2011 as below average, and some even rated it the worst year ever.  This is certainly a disheartening statistic and my heart goes out to the many who are desperately struggling in their attempt to reach the American Dream, let alone to make ends meet.

     I am EXCITED for the New Year and am going to make it one of the best year’s of my life.  One of my New Year’s Resolutions is to speak with more affirmative and positive statements.  If we don’t SAY IT, BELIEVE IT, and ACT IT, how can we expect to have an amazing result?

     I want to encourage you to do the same, speak with POSITIVE words and never catch yourself saying anything negative about your skills and possibilities.  Just as you wouldn’t tolerate someone speaking negatively of you, don’t catch yourself talking negatively about your potential.  Sometimes we can be our own worst enemy, but we can also be our best cheerleader.

Many of us are looking for cash. We’re all looking for ways to create wealth and save taxes. But when a prospective tax scheme or business strategy sounds too good to be true, it usually is.

That’s especially true in these trying economic times, when the wolves come out in sheep’s clothing. There are more crooks out there, and they’re looking for an edge. It’s a recipe for disaster.

Here are some of the most common scams you should watch out for:

1. The corporate credit “shelf corporation.” I have had numerous clients come through my office wondering what they might do with a “shelf corporation” they paid $5,000 to $15,000 for.

They were sold on flashy terms like Dunn and Bradstreet numbers, Paydex scores and unsecured credit, and how they would somehow win larger loans by using the shelf corporation name. The truth is there is no short-cut process. Building corporate credit takes time.

2. The “I have a deal for you guy.” It’s called “affinity fraud.” A friend or relative tells you that someone in their neighborhood or church has found a “great new business” to invest in, and you should chip in big money, too.

On its own, investing in a start-up can be a great idea if you can stomach the risk, but watch out if someone says you don’t need a lawyer or makes big promises. Be realistic, and make sure you use a lawyer to properly document the investment. Suing to recoup losses can often prove too costly to make a lawsuit worth it.

3. The nonlicensed business coach, or tax adviser. “Coach” is a title someone often uses when they weren’t smart enough to finish school and get a graduate degree. Now there are great reasons for “coaching” in certain areas of business, but when they start giving tax and legal advice, watch out.

There are a plethora of call center operations that rope would-be entrepreneurs into paying money to talk to someone wearing sandals and a headset who has no business offering tax and legal advice, or doesn’t know anything about running a business.

4. The bogus state filing fee bill. You register a corporation or LLC in your state, or make the other required filings. Then, all of a sudden you get a piece of mail with a state insignia on the envelope, telling you that you owe another fee.

Plain and simple, these can often be a scam. There are so many times I’ve had clients call me and say, “We got this piece of mail about a state fee. What’s this all about?” And I say, “It’s a scam. Don’t pay it.” And they say, “Really?” Don’t ignore any notice you receive that looks official, but make sure you get a second opinion.

Unfortunately the list could go on and on. So what’s the best way to avoid a scam?

Ask for credentials, make sure you understand who is actually going to be doing the work for you or giving advice, perform due, and get a second opinion from a trusted licensed adviser when tax and legal matters are at stake.

Finally, don’t forget, if it’s too good to be true, it probably is.