One of the most confusing aspects of owning your own business is the issue of taxes. There are corporation taxes, sales taxes, payroll taxes, estimated taxes, and all have their own due dates throughout the year. And feigning ignorance will not save you from the penalties, late fees and interest each government agency will levy on you for failure-to-file and failure-to-pay.
Here are the three basic taxes a business can expect to incur:
A report of the income and expenses of a business is to be filed yearly.
The taxes assessed to a business will be a percentage based on the profit (income after expenses). If the corp. taxes owed are $500 or more, and no estimated tax deposits were made throughout the year, a penalty could be assessed. If in year 1, you incur a corporate tax liability of $500 or more, your tax professional should set you up to make quarterly deposits for year 2
For more info: http://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Small-Business-and-Self-Employed-Tax-Center-1
Payable to NY State, sales taxes are normally due on a quarterly basis.
If sales taxes collected are less than $3500 per year, the state may change the business from a quarterly filer to an annual filer and will inform you via mail. Do not change to annual filer until the NYS Tax Dept. has instructed you to do so. Sales taxes are based on the total sales the business makes for a certain time period, for example: taxes due based on sales from June thru August, due September 20th. Sales taxes does not consider expenses, sales taxes collected should never be considered business income or funds, it is a liability due to be paid to a government agency. As a business owner, you agree to collect sales taxes on behalf of the state and deposit those taxes collected on a quarterly basis to the state. The state offers a 5% vendor credit on the total collected (not to exceed $200), if paid by the due date. If not paid in full by the due date, the business owner is not eligible for the 5% credit and will be assessed interest and penalties.
For more info: http://www.tax.ny.gov/bus/st/stidx.htm
Collected from each employee, payroll taxes are to be deposited into each government agency on a monthly, semi-monthly or quarterly basis.
The deposit frequency depends on the total taxes collected. The more you collect, the sooner you have to deposit. Payroll figures are reported quarterly to the IRS and to the state- including wages for each employee, total payroll taxes withheld from the employee plus the employer’s payroll tax portion. Annually, the business must submit a final report with totals for all employees paid in the year. This is the form known as W-2.
While this list is not all-inclusive, it does represent the most common taxes a business must submit throughout the year. Understanding the requirements of each tax category will help you stay ahead and avoid penalties.
You can prepare the reports and make deposits yourself, if you have time. You can have your bookkeeper do the work. Or you can get professional assistance for less than the cost of an employee. CALL US.
Owning a business is a full-time job. Between selling your product or service to managing your staff, there is little time for much else. But we know that equally important is the task of record keeping (as I discussed in “Record Keeping is Essential”).
Here are 3 tips to help you stay organized:
1- Keep all receipts and invoices in either:
- folders for each vendor (ie: ‘Con Ed folder’ or ‘Jetro Receipts’)
- or envelopes labeled for each month (ie: January 2013 expenses)
Being able to locate receipts is essential, especially for preparing taxes at the end of the year.
2- Create & manage a spreadsheet to track daily income & expenses
Knowing how your business does on a day-to-day basis is important in understanding what and where improvements could be made
3- Delegate the task to a responsible, organized employee. One key characteristic of a successful entrepreneur is the ability to delegate work to a person who can complete the task.
At Accounting & Computer Solutions, we understand the needs of business owners & offer our services to help make running your business as smooth as possible. With years of business bookkeeping knowledge and office experience, we can help you get & stay organized, create customized worksheets so you can keep track of daily cash flow & even receive and organize your paperwork.
Call for a free consultation & ask for Karina! Hablamos espanol.
We install and configure IP and CCTV Camera systems. This video is a demonstration of the features available on our Geovision product line.
As we prepare for tax season, here are some tips to help you get ready.
- Although you may not reach the requirement to file for your filing status (see below) you should still consider filing a tax return. You may be able to get any taxes withheld from your paycheck returned to you or you may qualify for the earned income credit. (single or married filing separately $9,750; married filing joint $19,500; head of household $12,500)
- If you are considered self-employed, you must file a tax return if you made more than $400 in 2012.
- Don’t compare yourself to your co-workers, family or friends. Everyone has a different situation (ie: married, separated, no kids, 4 kids, contributions to retirement, student loan interest, real estate taxes, mortgage interest, medical expenses) They may get a larger refund but they may also have higher expenses.
Gather and bring in:
- Proof of identification- picture ID
- Social security cards for you, your spouse and all dependents (or ITIN), as well as birth dates
- Wage and earning statement(s): Form W-2, 1009-R, 1099-Misc from all sources
- Interest & dividend statements from banks, Form 1099
- Bank routing and account numbers, for direct deposit, found on a check
- Total paid for daycare provider and the provider’s tax ID number; either the provider’s social security number or business employer identification number
Feel free to contact us with any questions. We are here to help.
When you decided to open your business, you did it because you knew you could offer a product or service better than the other guys.
What you didn’t anticipate was the ‘behind-the-scenes’ work that comes along with owning and running your own business, specifically record keeping aka bookkeeping. With all of the confusing tax laws, accurate record keeping seems like a hassle and an unnecessary burden to add to your already huge load. But the truth is it’s very important and necessary.
Here are the top reasons you need a bookkeeper:
When you create and register your business, you accept the responsibility to comply with federal and local law. There are various forms and deadlines to keep track of and if you miss any deadline, the government will gladly remind you with a notice and additional fees.
The IRS imposes fees for late filing, for no-filing, plus penalties and interest. A $914 liability could quickly turn into a $1,987 debt, with $781 in penalties, $242 in interest and $50 late-filing fee.
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With great accounting software, like QuickBooks®, you can generate reports after accurately entering transactions. With these reports, you can:
understand where the money goes in clear numbers and percentages
identify changes in income or expenses and make adjustments in time
track customers who owe you money
foresee expenses and prepare for them
construct effective and efficient pricing of products and services
You want to be prepared to jump at the right opportunity when it presents itself. If your financial data is in order, you are one step ahead. All banks and creditors require financial reports for a loan application. Someone interested in investing in or buying your business will require financial reports also. You will lose precious time gathering all the information that should have been recorded as each month passed. Worst yet, you could loss an opportunity altogether because financial data wasn’t properly recorded on a regular basis.