The California Employment Development Department (EDD) conducts audits to determine if businesses are: Correctly classifying their contractors and employees, and Paying the full taxes due under California law It’s important to note that EDD is actively targeting independent contractor misclassification, which could result in a six-figure penalty per employee for… [Read more]
Assembly Bill 5 (AB-5): Your Ultimate Guide
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? Insert EDD audit season. 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 audit from the California… [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]
Workers’ Compensation Audits
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]
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]
Case Study: EDD Audit Construction
When The California Employment Development Department, EDD did a site sweep, Ryan Brown found himself facing an audit. As he did research on his own as to what the ramifications of an EDD audit might be, he saw steep fines, jail time and high conviction rates reported time and time… [Read more]
AB-5 Exemptions: Your Comprehensive Guide
California Assembly Bill 5 (AB5) has built-in exemptions for many businesses. We say “Not So Fast”! Even exempted industries have to adhere to the old 13 point Borello criteria for classifying 1099 contractors. So, while many business owners are celebrating the free pass the AB-5 exemptions seem to offer, take… [Read more]
Stop an EDD Audit of Your 1099s in its Tracks
How to navigate AB-5 Assembly Bill 5, which required companies to reclassify most independent contractors as employees, is hurting employees. California’s new AB-5 and Gig Workers Bill has employers concerned since it is unknown what EDD will do next. The bill that passed a few months back was already affecting… [Read more]