Common Tax Mistakes Made by Start-Ups

Common Tax Mistakes Made by Start-Ups

Accounting.

Tax obligations are often a dreaded aspect of starting up a business, but sorting out your tax obligations doesn’t have to feel like pulling teeth! Here are a few tips to avoid common startup tax mistakes so you can make your business—and life—easier in the long run.

  1. Pay Quarterly Taxes

Quarterly taxes are usually required by the IRS for all entities, including sole proprietors (except during your business’ first year). In some cases businesses can opt to pay annually—but it is considered much more advantageous to pay-as-you-go, since a full year’s worth of taxes is no small amount. Setting aside a percentage of your profit can help you maintain compliance easily. Continue reading “Common Tax Mistakes Made by Start-Ups”

Starting a Business? Helpful Tips for Things You’ll Need to Know.

Starting a Business? Helpful Tips for Things You’ll Need to Know.

Designer.

Are you planning on starting a business?  Maybe you’ve recently retired from your career but don’t want to hang up the towel yet.  Perhaps you are unhappy with your current job and want to work for yourself.  Or maybe you have a hobby that has turned into a business.  There are some important things you’ll need to know about taxes, entity types, how to account for your income/taxes, and more.

Type of Business:
What type of business entity are you going to establish?  A business can be a sole proprietorship, partnership, C corporation, S corporation, or limited liability company. The type of business you establish determines which tax forms you will need to file.  There are pros and cons to each type (minimum tax, liability protection, etc) so you should talk with a professional about which entity type you should form. Continue reading “Starting a Business? Helpful Tips for Things You’ll Need to Know.”

How to Avoid an Increase in your Unemployment Insurance Tax Rate

How to Avoid an Increase in your Unemployment Insurance Tax Rate

1657641The UI tax was established as part of a national program administered by the U.S. Department of Labor under the Social Security Act which provides temporary payments to individuals who are unemployed through no fault of their own.

This tax is paid by the employer and is a percentage of income up to the maximum wage limit which is determined by each state. In California, the rate is a maximum of 6.2% on the first $7,000 of wages whereas in New York, the maximum is 9.5% up to the wage limit of $10,700. Continue reading “How to Avoid an Increase in your Unemployment Insurance Tax Rate”

Mid-Year Bookkeeping Check-In

Mid-Year Bookkeeping Check-In

office-620822_1280It’s just shy of the end of June, so six months of the year are almost complete.  I suggest to my clients having a check-in with their CPA at least two times a year; once about mid-year, and once in the late fall.

It’s a time to review what is happening in your business and see if any adjustments are needed to meet your goals. Based on what you find, you can make adjustments to prepare for a change in taxes due based on your profitability.

If you set a goal for the business in terms of revenue, how are you doing in relationship to that figure?  If you are at 50% or better, that’s great!  How much over your goal are you?  Is this going to impact your taxes?  Do you need to alter your estimated tax payments (if you currently have to file) to avoid owing a large amount later?   Continue reading “Mid-Year Bookkeeping Check-In”

Your Cash Formula

As women in business we are always on the go. We know how to make the money, juggle the family schedules, take care of our sick and run the household as well as the office. But, who will be able to take care of us if we fall ill? The question now becomes: what is my cash flow formula? We are led to believe that tax deferred or precious metals are the end-all. The largest concerns for women today are “Not Outliving Our Money” and” No Loss Of Principle.”

How about liquidity? Not only do we need to diversify but we need access to funds without penalties; e.g.

Liquidity- A misnomer in that liquidity gets confused with equity.
Liquidity is immediate access to cash. Continue reading “Your Cash Formula”

How to Correct a 1099 After the Original has been Filed

So you knew 1099 forms had to be processed for vendors who met the IRS guidelines and you filed them timely. helpPeriodically, a business finds a mistake after forms were filed which needs to be corrected. What do you do if this happens to you?

If you submitted 1099 forms to the IRS and later discovered a mistake, the following steps are required:

  • Correct it as soon as possible and file Copy A and Form 1096 with the Internal Revenue Service
  • Furnish corrected statements to the recipients

When correcting mistakes, complete all information required based on the type of error:

Continue reading “How to Correct a 1099 After the Original has been Filed”

Important 1099 Information Part 3

In the last post, I discussed the exceptions to the 1099 rules.  If you missed the post, you can read it hereTo do list

Today I’m going to explain how to properly fill out the forms required by the IRS.  There is a lot of information listed in the IRS instructions that don’t apply to most small businesses, so I’ll leave that out of this post.  If you’d like to see the full instructions, they can be found at http://www.irs.gov/pub/irs-pdf/i1099msc.pdf.

In the Payer’s Name section, include the business name, address and telephone number.  In the Payer’s federal identification number box, include your tax ID number (EIN is format of XX-XXXXXXX, Social Security is format XXX-XX-XXXX).

Continue reading “Important 1099 Information Part 3”

Important 1099 Information Part 2

In the last post, I shared some basic information on who is subject to receive form 1099-MISC.  If you missed that Tax forms 1040EZpost, you can find it here.

There are exceptions to the rules listed in the prior post:

  • Generally, payments to a corporation. But see Reportable payments to corporations, below.
  • Payments for merchandise, telegrams, telephone, freight, storage, and similar items.
  • Payments of rent to real estate agents. But the real estate agent must use Form 1099-MISC to report the rent paid over to the property owner.
  • Wages paid to employees (These are reported on Form W-2, Wage and Tax Statement).

Continue reading “Important 1099 Information Part 2”

Important 1099 Information Part 1

As business owners, we are required to file 1099 forms for vendors we’ve paid if the purchases and those who have taxesbeen paid fall into certain categories.  These forms are due to the recipient by January 31, and to the IRS by February 29 (if filing paper documents) and March 31 if e-filing.

Many entrepreneurs are confused to whom to send forms, so this post will give information which will help you determine which vendors need to have the 1099-MISC form issued to them.

Continue reading “Important 1099 Information Part 1”

1099 Processing Time is Here!

1099 Processing Time is Here!

women with list1099 forms are those required by the IRS to report payments to vendors made during the year, and are due to the recipient by January 31, and to the IRS February 29th (paper) or March 31st (electronic). IRS instructions state a form 1099-MISC is necessary to file for each person to whom you have paid during the year:

*At least $600 in services (see https://www.irs.gov/uac/About-Form-1099MISC for specifics)
*At least $10 in royalties
*Any fishing boat proceeds; or
*Gross proceeds of $600 or more paid to an attorney.

Continue reading “1099 Processing Time is Here!”