Although the Internal Revenue Service might send an audit letter to a California resident’s home, that does not necessarily mean the taxpayer did anything wrong. The IRS could request proof to substantiate deductions, and the taxpayer may present receipts. Most taxpayers would likely wish to avoid an audit, so it could be helpful to avoid making mistakes that raise audit red flags. Common red flags Six red flags often draw attention to a tax return and could trigger an audit.

California estate planning is a critical component of an overall financial plan. Talking about estate planning can be a sensitive and difficult conversation with your parents. However, discussing the details can ensure that your parents’ plan best reflects their current wishes and needs. Approaching the conversation Many families either avoid discussing estate planning in California altogether or delay it until something happens to a parent. Nothing is certain in life, so tal

Whether you’re trying to start a business in California or keep one alive, both tasks are difficult for entrepreneurs. Keeping a business alive may be even more difficult, sometimes requiring the infusion of new capital into the company. Mergers and acquisitions are a prime way to keep struggling businesses alive. Explaining the difference between mergers and acquisition Knowing the difference between mergers and acquisition is essential when you’re trying to keep a business

Complying with tax laws is a complicated task, and errors can be made. Due to slowdowns and disruptions in processing tax returns in recent years, both the IRS and the California Franchise Tax Board have increased collection and enforcement actions to catch up with their backlogs. People or businesses receiving notices about unpaid taxes or failure to file returns need to explore all of their options for correcting errors or paying their taxes. Otherwise, they can lose their

If you’re like many Californians, you rent instead of own. However, if your landlord suddenly decides to sell your home, it can create fear and confusion. This is what to know if you’re in this situation and what you can do. Understanding what can happen if your landlord sells Landlords are well within their legal rights when they wish to sell; they can do so regardless of how many tenants rent within their property. Depending on your lease, this situation can have different

Landlords in California have a lot of work to do. Ultimately, they want tenants who are going to mean as little work for them as possible. This means someone they can trust to pay the rent on time, won’t damage the property and won’t cause issues with the other tenants. Of course, landlords can’t know the future, but they can look into the past of potential tenants to seek out patterns. For potential tenants, this means opening themselves up to a fair amount of scrutiny. As p

Corporate bylaws are internal rules and guidelines that dictate how to run a corporation. In California, these bylaws outline the duties and responsibilities of the corporation’s directors, officers, and shareholders. They also outline the procedures for holding meetings, voting on important matters, and making changes to the bylaws themselves. Why are corporate bylaws important? There are several reasons a corporation needs to have clear and comprehensive bylaws. These inclu

One of the most important aspects of estate planning in California is protecting assets for future generations. Since the owner of the assets won’t be around to ensure that their estate is administered according to their wishes, finding the right executor is essential. There might be a snafu, though, if the executor needs to be removed during the probate process. What is an executor? An executor is the person charged with filing a will and administering the estate after a per

Private homeowners in California have to follow certain guidelines when renting by a room. An independent landlord has to compete with owners of hotels, hostels and other homeowners. There are several considerations to make when working to profit from residential real estate. Costs There are correct costs for renting out a room based on the type of residence, its size, value and the range of amenities. The rates for condos, apartments, townhouses and single-family homes vary

A 1099 form provides an end-of-the-year record of income paid to an independent contractor by the companies or individuals who used their services. Sole proprietors, self-employed business owners and sole LLC owners also file 1099 forms to report the income they earn throughout the year. Despite their widespread use, some taxpayers make common errors when filing their 1099 forms. Failing to report all income A common business law problem involves underreporting the income you

End-of-life planning in California is a multi-faceted issue that involves legal, financial, emotional, and practical considerations. It is important to plan ahead so that your family will have an easier time dealing with difficult decisions during an already emotionally trying time. Careful planning also helps ensure that your wishes are respected after you die. Gather the necessary documents Comprehensive estate planning involves several key steps, including drawing up a Las

Most people in California think that it’s enough to have a will. However, wills only formalize your final wishes. Adding a trust to your estate plan can result in significant protections for your heirs. What is a trust? A trust is a legal entity that’s created in order to manage assets and see that they’re protected for the future benefit of people or organizations. As part of an estate planning strategy, trusts constitute an agreement between the person who established the t

The IRS conducts tax audits in California and all around the United States. On average, the IRS audits four out of every 1000 taxpayers. If you’re chosen for an audit, you might get an IRS field audit. Here are a few things to keep in mind. The basics of an IRS field audit A field audit is a tax audit that can occur in several different locations. The IRS might conduct the audit in your home or place of business. If you have an accountant, the audit might take place in the ac

When a tenant moves out of a rental unit in California, the landlord and tenant have to resolve the matter of the tenant’s security deposit. If the tenant hasn’t broken the terms of the rental agreement, the landlord is obligated to return the security deposit. However, if the tenant has violated the terms of the lease in some way, the landlord is able to withhold part or all of the security deposit to cover the repair of damage to the property, cleaning services, back rent o

The Inflation Protection Act has set aside a whopping 45.6 billion dollars to hire a slew of new IRS agents. How will this affect companies and organizations in California? Some believe the most impactful change this legislation will bring is to drastically increase audits. Potential Issues One grave concern regarding this new law is the level of audit inexperience new IRS agents will have. If you are one of the lucky companies to receive a tax audit, you could spend a pretty

Many acquisitions are doomed to failure because the purchasers failed to do appropriate research into the target. Luckily, most business leaders in California have enough sense to thoroughly investigate companies before they decide to merge or purchase them outright. After all, unforeseen consequences are difficult to overcome if you wait until the deal is done to start asking the right questions. What does “due diligence” really mean? In professional terms, it simply means t

It might seem like a dispute is the end of a partnership, but it doesn’t always have to be so. Here are some key ways that real business partnership issues have been resolved in California. What leads to a partnership dispute? Human beings are complex animals, and the business realm tends to have high stakes. This leads to a highly reactive combination that may make it hard to maintain healthy, positive relationships. Everyone wants to be friends with the people they work wit

When California residents pass away without a valid will, they are said to have “died intestate.” This lengthens and often complicates the process of settling an estate. Appointing an administrator When someone writes a will, they designate an executor. The executor's role is to manage the estate by settling debts and ensuring that heirs receive what they are entitled to under the will. In California, a probate court judge will appoint someone to act as administrator of the e

Special needs trusts allow you to provide loved ones with additional funds without causing them to lose their government benefits. This can help them pay for the increasing cost of living in California without worrying about losing their Supplemental Security Income or Medicaid benefits. If you want to provide a special needs trust for someone, you can choose from three options. Consider first-party trusts if you are a relative Someone with special needs may establish a first

Choosing an attorney-in-fact in California can impact your experience in the last months or years of your life, and it can impact the experiences of your children and other family members. Suppose you’re unsure of how to undergo the process. In that case, there are a few things that you should look for when you’re trying to make the decision, including the geographical location and personal characteristics of the person. But first, you should know what power of attorney entai

Companies in California and throughout the country may agree to be acquired by other firms for various reasons. Occasionally, businesses are required to sell their assets in the future. However, there is also a chance that ownership changes hands without input or permission from the company’s leadership. Understanding takeovers As a general rule, any merger or acquisition can is a takeover as long as it is successful. A successful takeover means an outside entity becomes the

All California residents should plan for their futures. Estate planning is one of the best ways to do that. Your estate plan should include documents that address the possibility of incapacity. Explaining incapacity planning Although many people are living longer, their quality of life may not be ideal. No one knows what the future holds, but incapacity planning can help protect you in the event that you are ever affected by an illness or injury that leaves you unable to comm

Most California residents are required to file their personal federal income tax returns by the middle of April each year. The deadline to file is pushed back by six months if requested extension requests are approved. You may experience many negative consequences if you fail to file by the deadline or fail to file at all. The consequences of not filing a return The IRS will charge a failure to file penalty equal to 5% of what you owe in the tax year that you didn’t file a re

All businesses will face the issue of mergers and acquisitions at some point because of the business life cycle. To remain in business, owners must find a way to innovate, revitalize or transition. To assist the transition, California moderates mergers and acquisitions to protect both entities from unlawful practices. You and the other business entity may have to sign an agreement of merger document. You may want to consult with a Merger and Acquisition (M&A) Advisor to navig