Business Tax Law Attorney in Reno, Nevada

Small businesses often face recordkeeping hurdles that can result in underpayment of taxes, especially if they’re a start-up just getting their feet on the ground and still figuring out tax compliance obligations.

When you fall behind on taxes, inadvertently or intentionally, the government tax collectors will step in, and you can face interest-based penalties along with possible fines. Dealing with these issues will only further complicate the job of running your business.

Sometimes, these disputes can be settled before going to court, but often litigation ensues. Your best option is to avoid falling arrears in tax payments in the first place by focusing on solid recordkeeping and tax law compliance.

For more than three decades, the Law Office of Scott N. Tisevich has been helping individuals and businesses in and around Reno, Nevada, deal with tax liability issues.

If your business is facing difficulties staying current with – or even fully understanding – its tax obligations, you can turn to Scott N. Tisevich for help. In addition to the Reno area, his firm also serves clients in Carson City, Churchill County, Lyon County, Storey County, and Douglas County, Nevada.

Federal Business Tax
Compliance Requirements

The federal government and its Internal Revenue Service (IRS) imposes a variety of tax obligations on businesses. The form of business you operate determines what taxes you must pay and how you pay them. The following are the five general types of business taxes:

Income Tax

The income your business earns is subject to an income tax, which must be paid periodically and not just at the end of the year when you file your income tax return. A partnership is a bit different since the income flows to the partners, who pay taxes as part of their personal income. S corporations and Limited Liability Companies (LLCs) also pass income along to the owners.

Employment Taxes

If you have employees, you must pay Social Security and Medicare taxes; federal income withholding taxes; and the federal unemployment (FUTA) tax. These payments have to be withheld from the employees’ paychecks and deposited periodically, not held until the end of the tax year.

Self-Employment Taxes

If you own a business and you receive income, you must pay – in addition to your income tax – self-employment taxes to cover Social Security and Medicare.

Excise Tax

The federal government taxes businesses that manufacture or sell certain products. The use of various kinds of equipment, facilities, or products can also subject you to excise taxes.

Estimated Taxes

You must pay taxes on income that is not subject to withholding. For instance, the income your business earns outside of paying salaries to yourself or others is subject to the requirement of filing estimated taxes. This includes income from self-employment, interest, and dividends. You may also have to pay estimated taxes if the amount of income tax being withheld from your salary, pension, or other income is not enough.

State Business Tax Requirements

Nevada is one of four states that do not impose a corporate tax or a personal income tax. However, this does not mean businesses are not subject to state taxes. Nevada has a modified business tax (MBT) for any business that has employees. Affected businesses must report gross wages to the Nevada Employment Security Division (NESD) quarterly and pay the MBT. As of July 2015, the state also imposes a commerce tax on gross revenue.

Common Business Tax Issues

As mentioned, inadequate recordkeeping can result in unforeseen tax compliance issues, but other actions that employers and businesses take knowingly can also result in adverse situations.

For instance, it’s not uncommon for businesses facing cash flow problems to withhold employee deductions but then not remit them to the IRS. Instead, they use the funds for operating expenses. Obviously, the piper is going to come calling if you skip making trust fund deposits for withheld taxes.

Sometimes, through personnel or procedural errors, payments for employment taxes are just not deposited correctly, which can also lead to complications and possible interest penalties. Not paying estimated taxes is another pitfall that will invariably catch up with you, resulting in possible penalties.

Finally, some business owners will attempt to write off personal expenses as company expenses, which can trigger IRS questions and denial of some deductions. This can result in late payment penalties and other consequences.

Possible Penalties

The IRS can impose a variety of penalties. If you end up owing more than you paid on your income tax return, the agency will charge an 0.5 percent per month late fee from the date it was due until the date it is paid. If you fail to file a return at all, the penalty is 5 percent per month up to a maximum of 25 percent of what’s due. So, it is always better to file a return even if you remit no payment.

If the IRS determines you were negligent and failed to take the proper care to ensure accuracy in your tax filing and payments, it can charge a penalty of 20 percent of the amount owed in addition to the late payment penalty. This can apply if the IRS decides you did not keep accurate records for your business.

Fraud and tax evasion are two areas you need to avoid. These are defined as deliberate attempts to misrepresent your tax obligations by hiding income or overstating deductions. They can result in civil or criminal charges. Civil penalties can range as high as 75 percent of taxes due. Criminal penalties can result in up to $250,000 in fines and/or five years behind bars.

Work With an Experienced Attorney

Running a business is a tough enough challenge without complicating matters through tax liability issues. The Law Office of Scott N. Tisevich can advise and guide you on all your business tax concerns, even helping with bookkeeping and making payroll withholding deposits. If matters get out of hand, Attorney Scott N. Tisevich can negotiate with the IRS and even represent you in tax court if that becomes necessary.