How often do I have to pay my employees?

The Texas Payday Law ("Texas Payment of Wages Act") governs how and when employees of private employers get paid. Executives and professionals (like lawyers or doctors) must be paid at least once per month (i.e. monthly). All other employees must be paid at least twice per month. Each pay period should include about the same number of days. Therefore, most employers pay on a set schedule like biweekly, semimonthly or weekly.

If you have other small business questions, please feel free to contact us through our website, BrazosLawyers.com, if we can be of assistance.

I just started a business. What does it mean that I have to pick an "accounting year" and "accounting method?"

This is often confusing for folks who are just starting a business. The IRS website helps explain the different options available:

"All taxpayers – including small businesses – must report income and expenses on an annual basis.

"The most common accounting period is the calendar year – January 1 through December 31.
The other option is a fiscal year which is 12 consecutive months ending on the last day of any month except December – for example July 1 through June 30.

"An accounting method must also be established and generally does not change.
The most common is the cash method where you report income in the tax year you receive it and deduct expenses in the tax year you pay them.

"Another option is the accrual method where you report income in the tax year you earn it, and deduct expenses in the tax year you incur them, regardless of when payment is made.

"Related Links:
Recordkeeping
Publication 538, Accounting Periods and Methods
Tax Years "

I usually suggest that most small business owners use a cash accounting method and a calendar year because these are the same method and year that are usually used for personal income tax returns.

As always, feel free to contact us through our website, BrazosLawyers.com.

Can I collect a real estate commission?

In Texas, only a licensed real estate agent or a licensed attorney can collect a real estate commission. Chapter 1101 of the Texas Occupations Code specifies as follows:


§ 1101.806. LIABILITY FOR PAYMENT OF COMPENSATION OR COMMISSION.
SUBTITLE A. PROFESSIONS RELATED TO REAL ESTATE

SUBCHAPTER Q. GENERAL PROVISIONS RELATING TO LIABILITY ISSUES

(b) A person may not maintain an action to collect compensation for an act as a broker or salesperson that is performed in this state unless the person alleges and proves that the person was:

(1) a license holder at the time the act was commenced; or

(2) an attorney licensed in any state.

To find out more about becoming a licensed real estate agent, check out the Occupations Code, Chapter 1101 or the Texas Real Estate Commission website.

To find out more about Peterson & Swearingen, click here.

Veterans Long Term Care Benefits

The following article from the National Care Planning Network gives a good summary of the programs available:

The Department of Veterans Affairs provides three types of long term care benefits for veterans.

The first type is benefits provided to veterans who have service-connected disabilities. These medically necessary services include home care, hospice, respite care, assisted living, domiciliary care, geriatric assessments and nursing home care. In order to receive the services, a veteran must be enrolled in VA's health care system. Veterans with service-connected disabilities have priority for health care enrollment acceptance.

Some of these services may be offered to veterans in the health care system who do not have service-connected disabilities but who may qualify because of low income or because they are receiving pension income from VA. These recipients may have to provide out-of-pocket co-pays or the services may only be available if the regional hospital has funds to cover them.
Currently, veterans desiring to join the health care system may be refused application because their income is too high or they do not qualify under other enrollment criteria. Increased demand in recent years for services and lack of congressional funding have forced VA to allow only certain classes of veterans to join the health care system.

The second type of benefit is state veterans homes. The Veterans Administration in conjunction with the states helps build and support state veterans homes. Money is provided by the Federal Government to help with construction, and a subsidy of a little more than $63 a day is provided for each veteran using these nursing homes. These homes are generally available for any veteran and sometimes the nonveteran spouse and are run by the states, often with the help of contract management. There may be waiting lists in some states.

Most state homes offer nursing home care but some may offer assisted living, domiciliary (a form of supported independent living), and adult day care.

State veterans homes are not free but are subsidized and the cost could be significantly less than a comparable facility in the private sector. Some of these homes can accept Medicaid payments.
The third type of benefits for veterans is disability payments. These include Compensation, Pension, survivors death benefits associated with compensation and Death Pension.
Compensation is designed to award the veteran a certain amount of monthly income to compensate for potential loss of income in the private sector due to a disability or injury or illness incurred in the service. In order to receive compensation a veteran has to have evidence of a service-connected disability. Most veterans who are receiving this benefit were awarded an amount based on a percentage of disability when they left the service.

However, some veterans may have record of being exposed to extreme cold, having an in-service non-disabling injury, having tropical diseases, tuberculosis or other incidents or exposures that at the time may not have caused any disability but years later have resulted in medical problems. In addition, some veterans may be receiving compensation but their condition has worsened and they may qualify for a a higher disability rating. Veterans mentioned above may qualify for a first-time benefit or receive an increase in compensation amount. Applications should be made to see if they can receive an award. There is no income or asset test for compensation and the benefit is nontaxable.

Pension is available to all active-duty veterans who served at least 90 days during a period of war. There is no need to have a service-connected disability to receive pension. To be eligible the applicant must be totally disabled if he or she is younger than 65. Proof of disability is not required for applicants age 65 or over. Apparently, being old is evidence in itself of disability.
The purpose of this benefit is to provide supplemental income to disabled or older veterans who have a low income. If the veterans income exceeds the pension amount then there is no award. However, income can be adjusted for unreimbursed medical expenses and this allows veterans with household income larger than the pension amount to qualify for a monthly benefit.

Compensation and pension claims are submitted on the same form and VA will consider paying either benefit. Generally, for applications associated with the cost of home care, assisted living or nursing home care, the pension benefit is a better option.All active-duty veterans who served at least 90 days during a period of war are eligible for pension and additional disability allowances -- aid and attendance or housebound allowances. Surviving single spouses of these veterans are also eligible for lesser benefits and for the allowances.

Veterans' service would include World War II, the Korean Conflict, the Vietnam Conflict Period and the Gulf War conflict.

Pension can pay up to $1,800 a month to help offset the costs associated with home care, assisted living, nursing homes and other unreimbursed medical expenses. The amount of payment varies with the type of care, recipient income and the marital status of the recipient. There are income and asset tests to qualify.

VA claims this benefit is only for low income veterans but a quirk in the way the benefit is calculated for recurring medical expenses (long term care costs associated with home care, assisted living or nursing homes) could allow veteran households earning between $2,500 and $5,000 or more a month to qualify.

Estimates are that up to 30% of all Americans over the age of 65 might be eligible for a pension benefit.

Where should I go for tax return preparation?

We use a certified public accountant in our local area who commonly deals with small business owners. However, there is no right or wrong answer to this question. The IRS website does offer some very practical tips on choosing a tax preparer. They recommend the following:

• A paid preparer must sign the return as required by law.
• Avoid preparers who claim they can obtain larger refunds than other preparers. If your returns are prepared correctly, every preparer should derive substantially similar numbers.
• Beware of a preparer who guarantees results or who bases fees on a percentage of the amount of the refund. A practitioner may not charge a contingent fee (percentage of your refund) for preparing an original tax return.
• Understand that the most reputable preparers will request to see your receipts and will ask you multiple questions to determine your qualifications for expenses, deductions and other items. By doing so they have your best interest in mind and are trying to help you avoid penalties, interest or additional taxes that could result from an IRS examination.
• Choose a preparer you will be able to contact and one who will be responsive to your needs. Ask who will actually prepare the return before engaging services. Avoid firms where your work may be delegated down to someone with less training or some unknown worker. You should know exactly who works with your tax matters at all times and how to contact him or her; after all, you are paying for it. Determine if the preparer is exporting your return to a foreign country for preparation. Foreign countries do not have the same security and privacy laws as the United States nor is there any recourse should your information be compromised as a result of lax or nonexistent privacy procedures.
• Investigate whether the preparer has any questionable history with the Better Business Bureau, the state’s board of accountancy for CPAs, the state’s bar association for attorneys or the IRS Office of Professional Responsibility (OPR) for enrolled agents.
• Determine if the preparer’s credentials meet your needs. Is he or she an Enrolled Agent, Certified Public Accountant (CPA) or Tax Attorney? Only attorneys, CPAs and enrolled agents can represent taxpayers before the IRS in all matters including audits, collection actions and appeals. Other return preparers may represent taxpayers only in audits regarding a return that they signed as a preparer.
• Find out if the preparer is affiliated with a professional organization that provides or requires its members to pursue continuing education and holds them accountable to a code of ethics.
• Check IRS.gov for information regarding abusive shelters and other tax schemes and scams. Remember, if it sounds too good to be true, chances are it is.
• The IRS can help many taxpayers prepare their own returns without the assistance of a paid preparer. Before seeking a paid preparer, taxpayers might consider how much information is available directly from the IRS through the IRS Web site.

For the full article from the IRS website, click here.

As always, please feel free to contact us through our website, BrazosLawyers.com, if we can be of assistance.