Serving Minnesota Taxpayers
The federal government (IRS) and the Minnesota Department of Revenue (MDR) are becoming more aggressive about auditing businesses for business taxes due and payroll withholding. If you are a business owner or financial executive and have received a notice regarding taxes or your payroll taxes trust fund, call the tax attorneys at Pridgeon & Zoss, PLLC.
The state of Minnesota has added a significant number of civil tax investigators in recent years and has increased the number of audits on privately held small and mid-sized businesses. It is very important to respond urgently to the tax authorities’ request for additional financial information, but not until you know your rights. If the IRS or MDR suspect fraud, business owners and executive officers may be held personally liable for payroll taxes due, as well as interest and penalties. Business entities and involved individuals can also be subject to criminal charges and, like the increase in civil audits, aggressive criminal investigations of taxpayers by MDR are rising in Minnesota.
Federal and state business tax laws are becoming increasingly complex. If you are the owner of a small or midsized business in the Twin Cities area, we can help you reduce your chances of a business tax audit.
Our attorneys each have more than 35 years of experience protecting employers and self-employed individuals in matters such as:
- Responding to notices
- Corporate tax audits, litigation and appeals
- Offers in compromise and tax workouts
- Trust fund assessments
- Complying with sales and use tax laws
- Failure to withhold self-employment taxes
- Independent contractor tax issues
- Appealing a tax levy action against businesses
- Innocent spouse relief for spouses of business owners
Pridgeon & Zoss, PLLC — Experienced Minneapolis Payroll Tax Lawyers
From our offices in Edina and St. Anthony, Minnesota, the business tax lawyers at Pridgeon & Zoss, PLLC advise and represent Minnesota business owners. Do not delay responding to a federal or state tax notice. Contact Pridgeon & Zoss, PLLC, for a no-cost initial consultation with an experienced tax law attorney right away.
Taxes You Might Not Expect As A Small Business Owner
You probably know that starting a small business is a lot of work. It’s satisfying to watch one of your ideas come to fruition and make a profit, but there are countless factors to consider before this happens.
Understanding your tax responsibilities is one of these considerations and the world of tax laws can be complicated, especially for small business owners. You might have a basic understanding of what taxes you’ll need to expect to pay for your company, but there are actually quite a few taxes that small business owners pay.
List Of Small Business Taxes
All types of companies are responsible for paying a variety of taxes, but as a small business owner it’s important that you know exactly which taxes you will need to pay so you can plan, especially if you are doing things mostly on your own.
Some of the taxes for small business owners are:
- Income tax
- Self-employment taxes – this covers social security and Medicare
- Payroll taxes for employees/Employer tax
- Estimate tax
- Property taxes for buildings or land owned
These can vary based on the type of business entity you establish.
A few additional taxes you may find your business responsible for include:
- Unemployment taxes
- Workers’ compensation taxes
- Capital gains taxes
- Dividend taxes
According to the Small Business Administration, small businesses are taxed at a rate of 19.8 percent in taxes per year and most anticipate setting aside 30 to 40 percent of income to pay federal, state and local taxes
Minnesota State Tax Laws to Comply With
The U.S. regulates these tariffs on federal, state and local levels. Minnesotans need to comply with multiple state statutes regarding taxes.
Sales tax laws
The Gopher State requires sellers to collect sales taxes on the state’s behalf rather than paying the taxes themselves and passing them on to customers. Vendors who fail to do so and follow appropriate procedures may end up legally liable. Currently, remote sellers from other states who deliver to locations in Minnesota must also do this. An exception is if they operate through a marketplace that performs the task for them. There is also exemption through the Small Sellers Exception. While most retail sales are taxable, not all are. There is also a use tax rate (same percentage as the sales tax rate) both businesses and individuals must pay directly to the state. It covers taxable items and services where the buyers did not pay sales tax to the merchant.
Personal income tax laws
Employers must withhold federal and state income taxes and Federal Insurance Contributions Act, or FICA, taxes from their workers’ paychecks, deposit them and file returns regularly based on factors like income tax brackets. (This does not apply to independent contractors.) These categories undergo annual adjustments to account for the effects of inflation on earnings. For example, according to a 2020 press release from the Minnesota Department of Revenue, the 2021 ones differ from the 2020 ones by 1.001%. This does not influence the Minnesota tax rate for each grouping.
Estate tax laws
Minnesota does not levy an inheritance tax. However, heirs of an IRA, annuity or other bequest holding money the decedent did not pay tax on may end up subject to income tax. There is also an estate tax.
How a MN tax law professional can help in many ways
You don’t have to wait to seek legal counsel until you’ve encountered trouble. A tax law professional can help your businesses in many different areas, including those involving:
- Business entity selection: Do you want to form a corporation or an LLC? The choice of business entity selection can feel overwhelming. If you’re getting your business plan off of the ground, a tax attorney can help with the formation and explain the tax implications of various business structures.
- Tax deductions: Business operations aren’t cheap. However, tax deductions can help offset some expenses, such as start-up costs and the purchase of business equipment. A tax lawyer can help ensure that your company receives the full benefit of available deductions.
- Employee taxes: Failing to handle employee taxes properly can put a business operation into serious jeopardy. An attorney can help address various tax considerations and the best methods for paying these types of taxes.
- Audits: An IRS audit is the last thing a business owner wants to encounter. However, an audit isn’t something you need to lose sleep over. A tax attorney can let you know what this process entails, what to expect and provide you with guidance at each step of the audit process.
A Note To CPAs And Business Tax Accountants
Pridgeon & Zoss, PLLC, does not engage in accounting work or individual or business tax return preparation. We participate in individual and business tax audits only when we are asked to do so by the client or the client’s accounting firm.
Our lawyers work directly with every client. We do not subcontract cases to other tax law firms.
Weekday office hours are 9 a.m. to 5 p.m. at our Edina office, and 10:00 a.m to 4:00 p.m. in our St Anthony office. Evening and weekend appointments may be available by special arrangement. Within the Twin Cities metro area call us at 952-232-0371 or 612-455-8948; or call toll free at 877-221-1651 if you are not located in the Twin Cities metro area. You may also use the convenient email contact form to explain your circumstances and request a consultation.