Originally posted by Pizpoppa
...how do you go about making this transition from under-the-table to professional?
you may find the transition easier than you think.
let me run this example by you. let's suppose you are a lawn care company that runs "under-the -table" (your words, not mine).
and there is another company out there that is "professional", read that to mean: conducts his/her operation legally.
let's further suppose that the "professional" guy is getting tired of busting his keester to make a living while the other guy rakes in huge profits from failing to report federal income tax, state income tax, fails to report sales tax-both state and local. you get the picture.
finally, after having a belly full of this illegal operator scamming everybody, he calls the IRS RAT LINE and spills the beans. a 1-800 number, by the way.
as the IRS is a very big agency with lots of things going on for them, it takes them a couple of years to get around to the complaint. but finally, the "under-the-table" guy gets a notice of audit. they can go back three or more years I think.
an audit? hey no problemo, right? just take all your records down there in a shoe box and dump 'em on the auditors desk and tell him to figure it out, right?
let's end the story here. suffice it to say that these people are trained to ferret out unpaid tax. very important: THEY AUDIT THE TAXPAYER, NOT THE RETURN! THEY WILL ASK YOU FOR ALL OF YOUR RECORDS, STATEMENTS, YOU HAVE ALREADY LISTED YOUR TOTAL INCOME FOR THE REPORTING YEARS AND THEY WILL GO IN AND ATTEMPT TO SHOW THAT YOUR LIFESTYLE HAS EXCEEDED YOUR INCOME. THEY CAN HAVE THE BANK REPRODUCE A RECORD OF EVERY TRANSACTION THAT HAS GONE THROUGH THE SYSTEM. HAVE YOU EVER TAKEN A CHECK TO THE HOMEOWNERS OWN BANK TO CASH, ONLY TO FIND THAT YOU HAD TO PUT A DRIVERS LICENCE NUMBER ON IT TO CASH IT? ever wonder why they care? HHMMMM?
once they establish that you have unreported income, they will ask for your client list.
so, sorry for being so long here. just giving a little food for thought. so to answer your question:
Originally posted by Pizpoppa
...how do you go about making this transition from under-the-table to professional?
you may find the transition easier than you think.
have a great day.
GEO