101 Ways to Celebrate the end of Tax Season……

According to Traci Wheeler at Red Moon Solutions.  Now the primary audience for these are tax practitioners rather than taxpayers, whether individual, small business or corporate. However, I think many apply to all of us. Here is a sampling:

Take a day off.

Go for a run or a ride on your bike.

Take a nap.

Take your department to lunch. (or alternatively go to lunch with a friend or co-worker)

Work in the garden/yard.

Go for a sunset stroll.

Go to a concert or play.

Go to a ball game. (the NBA is still in season, or if you are a baseball fan many minor league teams still have their home openers coming up.)

Go fishing.

Take a road trip.

Blow bubbles.

Play a round of golf.

For the complete list,  follow the link.

http://blog.redmoonsolutions.com/101-ways-to-celebrate-the-end-of-tax-season#comment-315

What do you want to do to Celebrate the end of tax season?

As for me, I will continue to run, got tickets to Man of LaMancha. Now what else can I do?

Advertisements

Legal Entities – When and What Kind?

**Disclaimer: This is not to be construed as legal advice.

If you own a small business and run it as a sole proprietorship filing your taxes on a 1040 and a Schedule C, you may have at one time or another asked yourself if you should incorporate or otherwise change the business structure. Maybe it is because you need to hire one or more employees and want to manage growth, take out a business loan, any number of other factors. Perhaps you want to protect yourself from lawsuits or other liability. The question most sole proprietors have is – when and what kind. Do I form a LLC (Limited Liability Company), a Partnership, or a Corporation? What are the benefits and drawbacks of each form of entity?  A type of entity that might be right for one company might not be for another company even if that company sells the same product or service and has the same amount of revenue.

Sole Proprietorship – It is just you the owner. From a paperwork standpoint it is simpler. Taxes – just a Schedule C on the 1040 you already file. Fewer government regulations in most cases. Profits? They belong to you. But so do the negatives – things like lawsuits. All yours baby.  It is also the most common – especially in small one person businesses.

Partnership ­­­­- When two or more people join forces and pool resources, both having an ownership interest. There are multiple kinds of partnerships – general, limited, joint ventures and limited liability partnerships. If you are a sole proprietorship you are ruling this one out early unless you are bringing another owner on board. Even then until you look at your specific needs you won’t know if this is the structure for you.  From a tax perspective, you will file two returns – a 1065 partnership return (which is an information return only – all taxes are paid at the individual level) and your 1040 and Schedule C just like before you were a partnership.

Corporations – A corporation takes longer and is more expensive to set up, but has certain advantages over many other forms of legal entity. They are their own legal entity, completely separate from its owners and shareholders. There are four different types of corporations, but I will concentrate on the two most common. The C Corporation (regular or business) and S Corporation which has some of the advantages of a partnership or sole proprietorship, with advantages that regular or C Corporations have – Limited Liability. From a tax perspective, an S Corp is a flow through entity like a partnership or sole proprietorship. It can be taxed as a corporation or as a partnership. If your company is growing rapidly and you think you might want to issue stock through an IPO you may want to consider a C Corporation. But you will also have to have regular meetings of the Board of Directors and pay corporate taxes. (Form 1120 or 1120S)

Limited Liability Company (LLC) – A Limited Liability Company (LLC) is a kind of a hybrid type of entity that is designed to do what its name implies-limit owners liability. Rather than shareholders or stockholders, owners are called members. LLC’s are taxed much like an S Corporation. Owners get to choose to be taxed as a corporation or a partnership.  If you choose to file as a corporation you will file Form 1120 or 1120S, as a partnership a 1065 – assuming there are two or more members. If you are a Single Member LLC – you can choose to be a disregarded entity for tax purposes. What that means is you file a 1040 and a Schedule C.

There are other factors to consider as well of course. Management, Ownership Transition and Capitalization are some in addition to Personal Liability and Tax considerations.  Do your homework, then talk to your tax advisor and an attorney to help you determine what type of entity is going to be right for you and get the documents drawn up.

In terms of when, well that depends on you the owner. For some, choosing one of the above entities is something that you want to do before you open your doors. Others will wait until they are at least generating some revenue or hire the first employee. Others will wait even longer. There is no one size fits all right answer.

What is Ethical Behavior?

What is ethical behavior? Is it based in religion or is it based only in the secular world? Let’s look at some definitions from various sources and then go from there.

Dictionary.com defines ethics as:  a system of moral principles: the ethics of a culture. The rules of conduct recognized in respect to a particular class of human actions or a particular group, culture, profession etc.: medical ethics; Christian ethics, etc.

So according to the dictionary, ethics are not necessarily based in religion but can be based there. Certainly different faiths, whether one is Jewish, Christian or Islam or some other faith there are beliefs in moral principles that could be considered ethical behavior.

Black’s Law Dictionary defines ethics as “a consensus of expert opinion as to the necessity of professional standards.” They (Black’s) also defines ethics in terms of behavior and guidelines among the members of a profession/professional organization and their duties towards one another, clients and the public.

This would be a definition that we are all familiar with in our professional lives. But is there more to it than that? Let’s look at what others throughout history have said.

Aristotle defined ethics as “practical wisdom”. Why practical? Because it involves an action (behavior) – both at the individual and societal/corporate level.  Aristotle also believed that ethics related to what should or should not be done with regard to the things are good or bad for an individual. He also said “we are not studying in order to know what virtue is, but to become good, for otherwise there would be no profit in it.” In other words, we have to “practice” it for lack of a better term. It requires action on our part.

What comes to your mind when you hear the word or think of ‘ethics’? Is it a just list of rules that one must follow in ones professional life? Is it a set of principles – moral or otherwise that you believe in? Is it being fair and honest with others, either personally or professionally? Is it simply following the letter of the law? Does doing that make one ethical? In my opinion, one can be within the law and not act ethically.  Does/should your personal definition of ethics go beyond that just acting within the law? I think it is a combination of all of these and more.

To use a term that is often used in the tax and legal worlds, is there a bright line test that one can use to determine what is and is not acceptable ethical behavior? Do words like integrity, moral obligation, individual and corporate responsibility, truth come to your mind when you think of ethics?  Do ethics apply at the individual level only? In addition to its application to individuals, does it apply to organizations and groups such as cultures, societies, professions, corporations, among others?

Many professional organizations postulate ethical codes for their members – professional journalists, CPA’s, Attorneys, Engineers, Medical Professionals, Human Resources professionals to name just a few that I found. Other examples are government related. Two examples of these are a Taxpayer Bill of Rights and Fairness in Tax Administration. Still another is one that is one that members of Federal, State and Local legislative bodies must follow.

Many companies (including governments) have what could be considered ethical codes, which are typically called a “Code of Conduct” for their employees.

The Institute for Professionals in Taxation (IPT) has established the following Code of Ethics to govern the conduct of its members in connection with the performance of their professional duties as tax professionals and as members of IPT.

As tax professionals, the members of IPT have an obligation for the competence and integrity of their work and conduct.

Each member of IPT is bound by this Code of Ethics and agrees to report to the Committee on Professional Ethics any violation of the Code known to such member.

An IPT member having supervisory responsibility for other tax professionals should make those subordinates aware of this Code of Ethics and instruct them to adhere to its provisions.

The Committee on Professional Ethics, and in the event of an appeal, the Board of Governors, interprets the provisions of this Code in rendering opinions and in conducting investigations and hearings pursuant to regulations and procedures established by the Board.

CANONS

  1. IT IS UNETHICAL to engage in any conduct that discredits IPT, its membership, or the tax profession.
  2. IT IS UNETHICAL to engage in any activity that results in a conviction of any crime committed in connection with the member’s involvement in a tax matter.
  3. IT IS UNETHICAL to operate beyond the boundaries of an agreed relationship with an employer or client.
  4. IT IS UNETHICAL for a member of IPT to state or imply that such member represents a person that the member does not represent, or to file any document on behalf of such person without authorization.
  5. IT IS UNETHICAL to disclose confidential employer or client documents or information except with the consent of the employer or client or as required by law.
  6. IT IS UNETHICAL to offer or give anything of value to a public official to induce that official to take any action with respect to a tax matter.
  7. IT IS UNETHICAL to offer or give anything of material value to an individual in an employment, advisory or representative relationship with a business to induce that individual to recommend the purchase of goods or services by the business, and IT IS UNETHICAL for such individuals to receive such value.
  8. IT IS UNETHICAL to pay, retain, or accept a share of a fee or other monetary compensation for the referral of a person to another for the provision of tax services in which the recipient of such compensation does not participate, unless advance notice is given to the person for whom such services are to be performed. The amount of the compensation for the referral need not be disclosed unless requested by the person for whom the services are to be performed.
  9. IT IS UNETHICAL to solicit a tax assignment by assuring a specific result or to solicit, assign, accept or perform a tax assignment that is conditioned upon producing a preconceived opinion or conclusion.
  10. IT IS UNETHICAL to initiate or pursue an appeal, protest, refund claim or other action on behalf of a taxpayer for which there is known to be no basis in fact or law. When the basis is unknown, the determination of whether a basis in fact or law exists must be made as soon as reasonably possible.
  11. IT IS UNETHICAL for a member, in the performance of a tax assignment, to fail to exercise independent judgment in advising and representing a client.
  12. IT IS UNETHICAL in the performance of a tax assignment to knowingly furnish or knowingly rely upon inaccurate, deceitful or misleading information, or to knowingly withhold information which lawfully should be revealed.
  13. IT IS UNETHICAL to prepare or use in any manner, for any purpose, a resume or statement of professional qualifications that is misleading or false.
  14. IT IS UNETHICAL in promoting a tax practice or soliciting tax assignments to make misleading or false representations.
  15. IT IS UNETHICAL to use client listings or references without specific authorization.
  16. IT IS UNETHICAL to state or imply IPT authorization, endorsement or approval of any business, product or service.
  17. IT IS UNETHICAL in any representation of fact to IPT, in a membership application, renewal form, or otherwise, to knowingly furnish inaccurate, deceitful, or misleading information, or to knowingly withhold material information.
  18. IT IS UNETHICAL for a member having supervisory responsibility for another tax professional to knowingly authorize, direct, permit or ratify any subordinate’s act or omission that is declared unethical by this Code, regardless whether the subordinate is a member of IPT.
  19. IT IS UNETHICAL to represent a client if such representation would be, or would risk being, adverse to the interests of another client unless each affected client gives informed written consent to such representation
  20. IT IS UNETHICAL to have, acquire, or seek a personal interest in a matter that is adverse to the interests of a client or employer.

[The above was adopted by the Board of Governors on September 28, 1976, and amended on April 28, 1991, November 9, 2002, March 6, 2004, and November 2, 2008 (the November 2, 2008 changes became effective January 1, 2009).]

I recently had the opportunity to be a judge for the Utah State Competition for FBLA/PBL. (business students – high school and college respectively)

The topic?  Business Ethics and Social Media.

How does all this relate to Social Media? (Facebook, Twitter, LinkedIn, and other social media – including blogs like this one) Do we treat present day social media differently than media of the past (print & broadcast)? If so, what rule changes do we make? What is Ethical Behavior in that context? I don’t have any better handle on it than I did before that day.

What is your opinion on what is and is not ethical behavior? Any and all comments are welcome, I would love to hear your viewpoints.