Insights From Dale R. Smith

Dale R. Smith, Master Tax Preparer and Business Strategist with The Business Net, will share his experience, insights and cautionary tales to help you keep your personal and company's tax and business strategies on track toward success.

Issue: Does Filing and Extension Cost Penalties & Interest?

Question: I am so confused. This is the first time I have not filed my personal income tax returns on time.

Knowing that I was not going to be able to meet the deadline date, I filed an extension for my return. Then in June I received the last bit of information and was able to complete the return. I mailed the return well before the extension deadline and included a check for the amount of tax due.

Now I have received a notice from the IRS that I owe additional penalties and interest. Why would I be liable for penalties and interest if I filed the extension timely and filed the return before the deadline and paid the taxes due? And what is an underpayment of estimated tax penalty?

Issue: If I have special skills, can I be an Independent Contractor?

Question: I am an individual with some special skills.Because of those skills I have been offered work but as an independent contractor.

Can I be an independent contractor? How will this income be taxed? Are the businesses that I work for required to give me a form 1099, and what is that exactly?

Answer: As an individual your business would be a sole proprietorship. A business will usually have a business name other than the name of its owner. The first sticky point with “independent contractors” is that the business looking for services from an individual needs to contract with that individual’s business and not that person. A contract with a person for their services is automatically an employment agreement.

Meet Dale R. Smith

Dale R Smith, Master Tax Planner and Business Development Expert My name is Dale Smith. I am the owner and CEO of The Business Net, Ltd. a company that provides business set-up and coaching services, assistance with accounting, and tax planning and preparation.

I’ve been working with, and in, small businesses in various ways for the past 40 years. As an employee my jobs have included: construction worker, electronic technician, tools developer, janitor, dish washer, bookkeeper/accountant, salesman, corporate business manager, distributor office manager, bar tender, real estate broker, insurance salesman, tax preparer, and CEO. I have a BA degree (major physics/math), an MBA degree (major business management), and hundreds of hours of tax law and practice. Currently my jobs include: CEO, senior accountant, senior tax preparer, tax strategy and planning consultant, business coach, accounting software set-up consultant, finance manager, general manager of all aspects of the administration, and Client go to person.

Realizations

realization is an “aha” moment when you learn something that changes the way you see your world. Once you have a realization you can never go back to the way you thought the world operated.

One of my realizations

In working with all of the businesses listed above, I have had the opportunity to deal with most if not all of the problems and issues that all business owner/operators must handle. So many people jump into a business blindly with only the dimmest idea of how the business will work. They have little or no foundation on which to build their business. And, they try to do the whole process on their own with no one to look to when problems come up.

Business Basic Foundation Pieces

Writing out your vision is a powerful tool to truly understand your financial world map Previously I spoke about building a foundation for your business.

So, let’s talk about the 4 basic foundational pieces; How they are created, and What information will be needed to create them.

The four pieces are:

The Vision
Makeup of your financial world
Shelf assets
Three pre-startup business strategies based on the vision

Creating your business vision (click for PDF worksheet)

A business is designed to achieve the vision for that business. The vision is not the goal for the business. A vision is how the business looks once it is complete. A goal is looking to the future, a vision is a look back to how you arrived at the results.