California Assembly Bill 5 (AB-5) took effect on January 1, 2020, and is the new standard by which employers must classify employees. Small business owners (SBOs) should familiarize themselves with AB-5 and the ABC test to avoid employee misclassification and potential penalties from the Internal Revenue Service (IRS). What is… [Read more]
Tax Season is Over, EDD Audit Season Begins
Now that the April filing deadline has passed, small business owners may be asking: what’s next? As tempting as it may be to put off thinking of taxes until next year, some small business owners may be required to respond to an California’s Employment Development Department (EDD) audit. Read on how… [Read more]
5 Misconceptions of Independent Contractors
New classification guidelines between W-2 employees and 1099 independent contractors place stricter rules for businesses looking to hire. Common misconceptions about independent contractors can lead to businesses misclassifying workers and paying high penalties and fines. Avoid these consequences by understanding the regulations your business must follow when hiring independent contractors. Let’s… [Read more]
How Far Back Can EDD Audit Your Small Business?
Employment Development Department (EDD) performs many services, but their primary role that impacts small businesses is collecting and auditing payroll taxes. Employers pay payroll taxes for W-2 employees, but not for 1099 independent contractors. The line between an independent contractor and an employee was more concretely defined with the implementation… [Read more]
Audits as they Relate to Workers’ Compensation with benchmark commercial insurance
We partnered with benchmark commercial insurance to discuss how audits relate to workers’ compensation. Benchmark offers a boutique approach to serving their clients through providing and maintaining commercial and personal insurance policies. Their goal is to establish comprehensive risk management and accident-avoidance programs to help prevent claims from arising. Get… [Read more]
California CPA’s: Questions to ask your Clients to Reduce EDD Audit Risk
Certified Public Accountants (CPAs) have the most insight into their business owner clients’ daily transactional history. You may find that your clients who have 1099 contractors are now in the grey area of worker classification since it was redefined by AB-5 in January 2020. Under the new bill, all workers… [Read more]
What Will 2021 EDD Audits Look Like?
Watch our video below to learn how the last 12 quarters affect your EDD audit criteria. Have You Received an EDD Audit Letter? The California Employment Development Department (EDD) sends audit letters through the mail. If you receive an audit letter, you have 30 days to reply. Typically, the agency… [Read more]
How Dynamex Ruined it for Everybody
Who is Dynamex and what did they do? Watch our video below: Dynamex was a nationwide same-day delivery and courier service. They employed their California drivers as W-2 employees who received the benefits, payroll taxes, and perks of being a W-2 employee. However, in 2004, the company reclassified all… [Read more]
What to expect in an EDD Audit?
If your business is experiencing an EDD audit, it’s important to know what to expect. Founder and managing attorney at Milikowsky Tax Law, John Milikowsky, breaks down the EDD audit process and the frequently asked questions that come with an EDD audit. “What you can expect from us, whether you… [Read more]
Vince B. EDD Audit Case Study
We are grateful to our client, Vince B., for sharing his story of how we were able to help him weather an EDD audit. This audit could have closed his business and had far-reaching repercussions for his personal finances as well as business finances. In 2020, Vince was hit with… [Read more]