Episode 151: BEST OF BELLA: Interview with a Small Business State Auditor
This episode is part of the "Best of Bella" series. Bella chose this episode with a former state auditor as one of the best, because she loves being able to bring unique experts to you. If you missed this episode the first time around you'll be pretty surprised by what you hear.
Bella and Katrina first discuss a big controversy in the pet sitting industry, which is misclassification of employees as either independent contractors or employees. Katrina outlines some key indicators that auditors look for in making that determination:
- Is there an actual contract between you and the contractor?
- Are your payments to them regular in nature?
- How much control do you have over them with regards to work hours, uniform, training, etc.?
- Do they offer the same services to other companies through their own business?
- Are you providing them all the tools, training, and supplies they need?
- Basically, consider how loose is the relationship?
They also discuss why they think business owners are so apprehensive about audits, what documents a business owner should have at their disposal if they are being audited, and whether business owners should take their lawyer and accountant to the audit. Katrina also gives some insight into what triggers an audit.
- Who is Katrina Kadyszewski? [4:10]
- How does interpretation come into play with auditors? [6:20]
- Which documents should you have when being audited? [10:55]
- What is the goal of an auditor? [15:20]
- Should you get your lawyer or CPA involved when being audited? [17:15]
- How are businesses chosen for audits? [22:40]
- How far back should you be keeping records? [24:45]
- What is the VCSP (Voluntary Classification Settlement Program)? [26:00]
Original Show Notes
In this episode of “Bella In Your Business”, Bella talks with Katrina Kadyszewski, a former state auditor with the State of Connecticut.
Katrina has over 16 years of experience working in a variety of financial positions. She started in the brokerage industry with a Series 7, 63 and 65 and life and health license, and then transitioned to audit work for the CT Department of Revenue Services. She then left to support small businesses in their efforts to get organized for expansion.
Katrina spent 3 of her almost 8 years with the CT Dept. of Revenue Services in the Business and Employment Tax Audit Unit, focused primarily on payroll tax issues. The last 5 years she has worked as a Corporation Tax auditor, traveling across the US auditing largely Fortune 500 companies.
There are resources out there to help small business owners. Katrina and Bella suggest a few, like the IRS’s 20-factor test to help you determine employee or independent contractor status and amnesty programs that exist to help encourage business owners to make the right switch.
Have you ever been audited? Want to hear about pet sitters who have been audited? I have interviewed a handful and reported about it all here.