SouthJersey.CPA

Category: small business

  • Business Formation Services

    Business Formation Services

    Over half of my work in recent years has come from fixing problems that started with misinformation, misconceptions, and simple errors. Many of those problems trace back to the very first decisions a business owner made, often through a $99 online formation service that filed the paperwork and offered no advice about whether it was the right paperwork. The savings on that first day frequently cost thousands of dollars to correct later.

    For that reason, I am expanded the business formation services that I offer, in the hope of helping more people start on the right path. The intent is to prvide a simple, all-inclusive, turnkey service for starting a new business.

    These services include review of the basic business plan, choosing a name, choice of entity, formation, operating plan, control procedures, state registration, bookkeeping setup, and preparation of a banking package. Sometimes local business registration is also required, for example, in Philadelphia or Wilmington.

    It is worth noting that some of these services are classified as legal services. I am not an attorney. I can provide specific legal services as recognized by the Opinion 47 of the Supreme Court’s Committee on the Unauthorized Practice of Law and itemized in our engagement agreement. You should consult an attorney for all legal matters.

    I charge much more than the AI-powered services, usually $1,500, but the personal professional service saves time and money in the long run.

    Will it make a noticeable difference? I intend to find out by tracking whether the businesses I help form arrive at their first tax season with fewer problems than those that started elsewhere. I will share what I learn.

  • How Do I Bridge the Local Small Business Language Barrier?

    How Do I Bridge the Local Small Business Language Barrier?

    Requests for small business startup support from Hispanic neighbors are increasing, and I expect that to accelerate. Likewise, requests for more complex tax problem resolution are increasingly coming from individual Spanish-speaking folks as well. Hispanic students are the largest group in our local public school systems. My estimate from the most recent district reports to NJDOE for the year ended 2024 puts countywide public school enrollment at roughly 55% Hispanic, against a county population figure closer to 35%. That gap is the forecast. Those students will be the business owners and employees I serve over the next fifteen years.

    A majority of the workers in the industries I serve, which are farming, contracting, and fishing, also appear to be Hispanic based on surnames in the payroll records I process. That is an impression rather than a count. Language matters most in that setting, because payroll and benefits communication has to reach every employee, not just the owner who hired me.
    I think the local conversation goes wrong by treating this as one problem. Many Hispanic families here are long established, fully bilingual, and English dominant. When I fail to connect with a business owner in that group, language is rarely the reason. The reasons are that nobody in the family has paid for advisory work before, that the trades run on cash and the records are imperfect, and that my fee is a real number against a thin first year. Those are trust and pricing problems. Translating my engagement letter does not touch them. For more recent arrivals, the language barrier is genuine, and translation is necessary but nowhere near sufficient.

    The standard answer is to bring bilingual young people into the profession. I believe in it and yet I cannot fund it. My estimate from the last interns I hired is roughly two years of negative cash flow, and I rarely keep an associate longer than that. I would love to see tighter integration of education and internships, but the current system seems ineffective for my industry. A few years ago I tried working through the NJCPA to find an internship for a student interested in working with a CPA firm and the closest opportunity was an hour’s drive north of Cumberland County. The NJCPA is heavily involved in recruiting for the accounting industry, but internship opportunities are lacking in this region.

    My current workaround is communicating through a client’s family member, meeting face to face to pick up non-verbal communication, and speaking slowly. This works, but it carries a risk. Family interpreters soften hard news, and some folks lack the vocabulary for a full understanding of the legal issues. The exposure from that gap stays with me.

    Many suggest leaning in to translation technology. I am skeptical based on limited past experience, and on the fact that the legal or technical words I need to get right in tax and benefits work may not have reliable equivalents in another language. I will test some new tools this month rather than argue about them, and will welcome discussion on what I find with neighbors and peers.

    Over the longer term, I hope to pursue a co-engagement with an established bilingual bookkeeper, where that person controls intake communication and I handle the technical work.

  • How a tax representative actually works

    The City of Philadelphia sent a small business client a proposed assessment for delinquent Business Income and Receipts Tax. The total was about $16,000. The notice offered the familiar incentive: pay now and avoid additional penalties. The Revenue Department stated that it had evidence of taxable business receipts for the year in question.

    The client had no Philadelphia receipts subject to that tax, and the income we did know about would not produce a tax of that size. I said so in writing, and I asked the Revenue Department to produce the evidence it claimed to have. The department responded by sending the proposed assessment again. I asked again. Meanwhile the client asked whether they had to pay it, and I said I saw nothing that would sustain the assessment. The exchange ran close to four months before the city conceded the error and closed the matter. No tax was paid.

    I want to be careful about the moral of that story, because the obvious one is wrong. The obvious one is that persistence pays. Persistence had very little to do with it.

    What the Philadelphia business tax notice does not tell you

    The letter arrives with an amount due on it, and the amount is what everyone looks at. The amount is the least important thing in the envelope.

    A proposed assessment of this kind generally begins with a gap in the city’s file rather than with information about your income. An open business tax account and a missing return give the Revenue Department authority to estimate a liability and bill it. The estimate does not require the city to know what you earned. Knowing that changes the entire conversation, because it means the department may hold no evidence at all, and that asking for the evidence is not a stalling tactic but the center of the case.

    The department never produced any. Over four months of correspondence, it did not identify a payer, a return, an information document, or any other source for the receipts it had asserted.

    Then there are the dates. A petition to the Philadelphia Tax Review Board contesting the principal of an assessment must be filed within 60 days of the notice from the Department of Revenue. Informal correspondence with the department does not extend that window. This matter took four months to resolve. A taxpayer conducting the same patient, reasonable, entirely sensible correspondence without knowing about the 60 days would have watched a wrong assessment become a final one while doing everything that felt right.

    That is the difference between someone who knows this territory and someone who does not. It is not effort. It is not nerve. It is knowing which of the many things in front of you is the one that can hurt you.

    The unrepresented business owner

    Most people who receive a notice like this do one of two things. They pay it, because $16,000 is frightening and the letter implies that paying now is the less expensive option. Or they set it aside, because they know they do not owe it and they assume the matter will correct itself. Both responses end badly, and both are completely understandable from someone who has never seen one of these before.

    A representative changes the outcome in three ways. Someone who has handled these matters recognizes the shape of the assessment on sight and knows what it is likely built on. Someone who works in the deadlines protects the appeal rights while the informal conversation plays out. And someone who is not the taxpayer can press the department for months without the exhaustion and self-doubt that wear down a business owner who has a business to run.

    Thirty years of tax controversy work is what made four months of letters feel routine rather than terrifying. The value was never in the letters. It was in knowing, on the day the notice arrived, that the city probably had nothing, and knowing exactly how long we had before the matter would need to be escalated into a formal protest.

    If a notice like this is sitting on your desk, the useful question is not how much you owe. It is whether the person reviewing it with you has seen one before and knows how to respond.

    Tony Novak, CPA, MT, MBA, handles tax controversy and representation matters at SouthJersey.CPA. This account is published with the client’s permission and omits identifying details. It is general information and not advice on your specific situation.

    For a no obligation discussion of a tax matter with the City of Philadelphia or another jurisdiction, text 856-314-5625 with the words TAX PROBLEM. Do not include any personal information in the text. I will respond with an invitation to a secure messaging and document sharing platform so we can discuss it safely.

  • You don’t have to deal with business stress alone

    You don’t have to deal with business stress alone

    Diesel hit a record national average of $5.85 a gallon this week, up more than $2 since January. Farm bankruptcy filings nationally reached a six-year monthly high in April. South Jersey owners feel this before the headlines do, and most have no one to call who knows both the numbers and the law.
    Here is the pattern I see repeat. An owner who cannot cover payroll pays the net wages, holds back the withheld taxes, and plans to catch up next month. Those withheld dollars were never company money. The IRS can assess them personally against the owner under the trust fund recovery penalty, they survive bankruptcy, and a long enough pattern stops being treated as a cash-flow problem and starts being treated as intent.
    Every one of those stages has an exit, and the exit is widest at the beginning. Installment agreements, penalty relief, and a documented change of course are all still available to an owner who moves early. They narrow considerably for an owner who waits.
    This past week I heard stories from two local business owners who wasted money on expensive legal solutions that will not solve their problems. They did not want to talk with anyone about their business problems, and this led to poor, emotionally-driven actions that hurt rather than helped.
    If your business is under this kind of pressure, text me the words BUSINESS STRESS to 856-314-5625. Please send no details by text. I will call you, at no cost and with no obligation, and if what you describe belongs with an attorney first, a business change, debt restructuring, or tax resolution. If I think you should consider something else, I will tell you that too.