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Cost of Workers Compensation:
Most business owners believe that employees with lower salary reduce the cost of a worker's compensation policy, which is false. The reality is that insurance companies have their own way of calculating risks when salaries do not meet the adequate salary amounts based on government regulations. With that being said, there is a possibility that a dollar increase to the salary of employees could save businesses hundreds of dollars in insurance premiums and also be an incentive to employees for a higher pay and better performance. Each situation varies depending on each business owner.
Retailers and most stores deal with particular situations with sales taxes audits. It is very important for business owners to know the severity of these situations. In the case that a business has no records of sales, and an audit takes place, a tax auditor has complete discretion on how to estimate sales taxes that have been miscalculated. The auditor can use which ever method is considered appropriate to find proper calculations. Businesses lose full rights to calculate taxes due to non-compliance. This situation could be easily prevented if a simple point of sale system is implemented when sales start taking place.
Forming a corporation is a smart way to protect business owners or investors from liabilities and save on certain taxes. However, picking the wrong moment to do it could be counterproductive. Businesses should be aware of what the annual costs are, as well as new legalities businesses will be compromised to before considering such change. A quick analysis of the specific situation could be sufficient for an accountant or tax professional to determine or recommend if it is the right moment to form a corporation based on tax numbers. However, businesses have to keep in mind all factors in determining if their business ready.