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Partnership formation: almost too easy

Due to popular demand, this is a re-post of a prior posting as posted May, 2012 Usually accountants shy away from legal topics, but one topic keeps coming up in our profession.

The creation of partnership agreements.

This is a particularly interesting topic now that the IRS has significantly increased late-filing and non-filing penalties for partnership returns...

Most people don't realize it, but a partnership is easier to create than most things in life. In most States, a partnership can be formed between two individuals with a verbal agreement. This means if you are in business, you may have a partnership formed and not even know it. In practice this creates many problems. I will give you one real life scenario:

Ryan and Matt are best friends they decide one day to open up a bicycle repair shop, out of Ryan's garage. They begin by fixing their friend's and family's bikes on the weekends. Before long their word of mouth business is making so much money that Matt and Ryan …

Take control of your financial life!

To celebrate financial literacy month (not nearly as cool as cupcake month) financial advisors, estate planners, CPAs and attorneys are teaming up to talk about finances and how being in charge of your financial life is essential.

Did you know your credit score impacts a lot more than just your ability to secure a loan. In most cases your insurance company will run your credit score and base part of your monthly auto and homeowners insurance upon your credit score! Also, renters beware, many rental companies are basing whom they rent to upon your credit score! Being financially responsible is the baseline for getting ahead with your personal finances.

Businesses are also effected by financial metrics. Here are two examples:

1. Many businesses that are in the start-up phase do not have enough business history in order to qualify for a business loan without personally guarantying that loan. For this reason, it is often hard for businesses to secure start-up financing if the owners have l…

Also...

If you are interested on my most recent post relating to starting a business you might also be interested in a former posting regarding partnership returns. See: Partnership formation: almost too easy

Started a business, now what?

Congratulations you are now the person in charge of your very own LLC, Partnership or Corporation. Whether you formed a limited liability company, started a partnership or created a Corporation, you now have more responsibilities than ever. So you may find yourself asking, now what?

For some of you the answer is nothing, for some of you the answer is a lot of things, but to keep things simple we will keep the conversation to the most basic level. Assuming that you have no employees and have just opened your LLC, Partnership or Corporation and need to know about your year end filing requirements.

1. Limited Liability Company or LLC:

An LLC is not a federal recognized organization, and for this reason, when you open an LLC (also known as organizing) you may not have any additional filing requirements beyond filing your personal return and including a Schedule C with that filing for this entity. However, if you have an LLC with more than one owner, then the default taxation treatment is …

Starting an LLC or Corporation

If you ever wondered about the legal steps you should take to propel your idea from a concept to a legal entity. You have to check out this article. You may have many reasons why you want to start an LLC or open a corporation, but may have worried about the process. Click on this link to connect to the article.

Also, if you ever wondered about the tax effects of creating one of these entities, check out my blog post tomorrow: Started a business, now what?

Three instances when you should amend your return

With tax season over we turn our focus to other things in our life, like more taxes :)

Seriously, now that tax season has come to a close we have a chance to reflect on tax seasons now past. For most of us, we assume when the return is filed that the case is closed and we look forward to next year when we can get our taxes out of the way (yeah right). But, if you have one of these instances you might want to seriously consider having someone review your return, before you get a love letter from the IRS.

1. You did not report your stock sales on your return. Stock sales, bond sales, and sales of investments outside of retirement accounts are like the gift that keeps giving for the IRS. I cannot tell you how many times during the year I get that phone call. It usually starts out like this, " Hey Tony, yeah, I forgot to tell you that I sold some stock (bonds, whatever) during the year, but I lost money on the sale and the IRS says I owe a bunch of money. What's the deal?" R…

State of Michigan warns Michigan businesses of scam

The State of Michigan has alerted business owners of a new scam designed to trick businesses out of $125.

The Michigan Licensing and Regulatory Affairs Department issued a release that reminds business owners that they are not required to send in annual minutes of meetings, and under no circumstance should you reply to correspondence received from the "Michigan Corporate Compliance Company". This is not a State of Michigan regulatory body, but is a scam set up by a company that is trying to defraud businesses.

The State also warns taxpayers and businesses to be diligent in their review of forms, noting that fraudsters are able to make these and other forms look very official. These types of scams are a new and growing business for fraudsters, so the State is reminding individuals to be hyper-vigilant.

ANY BUSINESS THAT RECEIVES A NOTICE TO HAVE ANNUAL MEETING MINUTES PREPARED AND PAY A FEE TO AVOID DISSOLUTION OF THEIR CORPORATION ARE ADVISED TO DO THE FOLLOWING:

1. Keep the not…