Choosing The Right Small Business Accountant
As we mentioned, in the best cases, a business accountant does more than just file your small business taxes.
Theyâll have an understanding of how your business operates and manages its money, so a great business accountant can give valuable advice and guidance for managing your businessâs financials.
Therefore, when youâve found a few good business accountants to consider, youâll want to take the time to figure out which one will be the best match for your business.
When youâre interviewing a candidate, here are a few questions you can ask:
- Whatâs your experience working in my industry?
- Have you worked with a similar business entity before?
- What are your services beyond small business taxes?
- How often will we communicate?
- What are your rates?
Although not a comprehensive list of questions, you can ask these first to get a sense of whether the accountant will be a good match for your business.
This being said, if you donât want to go through the process of finding a specific business accountant for help with your taxes, you might choose to utilize an online service, like BenchTax from Bench Accounting, for example, that matches your business with a professional or team of professionals to provide you with tax assistance, advice, and even file your taxes on your behalf.
Business Taxes: When To Pay
No matter what type of small business entity you have, you have to pay quarterly estimated taxes if you expect to owe income taxes of $1,000 or more. Corporations only have to pay quarterly estimated taxes if they expect to owe $500 or more in business taxes for the year.
Before you owned a business, filing taxes was a once-per-year occurrence. But as a small business owner, on the other hand, youâll have to pay the IRS four times per year. Although this means there are four deadlines to keep track of, it also means by the time your yearly tax deadline comes around, youâll have already paid three-quarters of your tax return.
This being said, though, to make things even more complicated, if your businesses has employees, it must deposit federal income tax withheld from employees, federal unemployment taxes, and both the employer and employee social security and Medicare taxes. Depositing can be on a semi-weekly or monthly schedule.
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;1;Certified Public Accountants
Our team is run and directed by Certified Public Accountants which is the highest level of certification you can attain in accounting. Guaranteeing you are in good hands when it comes to tax and financial planning. Dont trust your tax preparation with someone who is not certified!
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We specialized in small business tax preparation services. We truly work to make sure your taxes are prepared correctly and work with you to help your small business succeed at every level.
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Our goal is to have the best customer service team and give strategic and technical support when needed. We strive to educate our clients by providing more than just your tax report but helpful tax planning tools.
;1;Certified Public Accountants
Our team is run and directed by Certified Public Accountants which is the highest level of certification you can attain in accounting. Guaranteeing you are in good hands when it comes to tax and financial planning. Dont trust your tax preparation with someone who is not certified!
;2;Small Business Success
We specialized in small business tax preparation services. We truly work to make sure your taxes are prepared correctly and work with you to help your small business succeed at every level.
;3;A+ Customer Service
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Tips On Future Tax Planning
- Overpaying isn’t a huge problem from the standpoint of the IRS. However, if your business is cash-intensive, then paying too much in taxes could force you to have to borrow more during the year, costing you more in interest and finance charges.
Underpaying can be a more serious issue. Interest and penalties can apply if the underpayments are too large, and even in the best case, you may find yourself having to come up with a lot of money all at once to pay your tax bill.
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You have found the perfect business idea, and now you are ready to take the next step. There is more to starting a business than just registering it with the state. We have put together this simple guide to starting your tax preparation business. These steps will ensure that your new business is well planned out, registered properly and legally compliant.
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Tips On 1099s And Other Information Returns
- Anyone with workers in their business will need either Form W-2 for employees or Form 1099-NEC for independent contractors. These forms tell workers about their income and allowed deductions.
- In some cases, there are minimum amounts below which you won’t have to file an information return. For instance, if you make payments to an attorney, you don’t have to file a 1099-NEC form unless the amount you paid is $600 or more.
Do I Need A Tax Preparer
A very simple small business with no cost of goods sold or assets to be depreciated might be able to use a tax software program. but most small businesses need a tax preparer. Even a simple Schedule C might be more difficult than you think.
Before you enlist the help of a CPA, enrolled agent, or another qualified tax preparer, use the information in this guide to help you get ready for business taxes.
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Fill Out The Right Forms
There are different forms for different business structures. For example, if you employ contractors, youll have to 1099-MISC Form for Small Business Owners, If youre a sole proprietor or or single-member limited liability company, youll be responsible for reporting all business income and expenses on a Schedule C attachment to your personal income tax return.
If youre uncertain about which forms you need to complete, visit irs.gov and talk to your accountant or tax professional.
Also, dont forget to gather your employees W-4 whenever you hire a new employee and a request 1099-MISC form during tax season.
Bonus Tips: Once youre aware of which tax forms youll need, create a tax folder so that youll have them at your disposal, such as 1099s.
And, when you do file your taxes, go the electronic route. It will speed up the process and ensure that your forms werent lost in the mail. And, in some cases, its actually the law to file online.
How Much Does Small
Hourly rates for tax consultants usually range from;$100 to $400. Some companies charge a minimum fee of $500. When you work with Ignite Spot, you can combine small-business tax preparation services with other accounting needs, and well create personalized payment plans in accordance with your needs. Our minimum fees for annual tax support starts at $295 for a personal return and $495 for a business return.
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How To Save Money On Accountant’s Fees
Accountants get paid by the hour, so the harder you make their job, the more it will cost you. Fees vary based on the size of your business and how much depth your accountant or preparer may have to go through to complete your return. These fees can range from a few hundred dollars to thousands.
Here are some tips to cut down on your accounting bill:
And remember, having a tax professional prepare your income tax return isn’t costing you as much as you think when you see the bill. It’s a legitimate business expense!
Hire A Small Business Tax Professional
As an individual, you may be your own bookkeeper or tax preparer, but it’s relatively easy to file your own tax return thanks to accounting software applications and other services willing to provide worthwhile tax advice. For a small business owner, however, it might be better to have a tax expert prepare your taxes.
American tax law is incredibly complex. While failing to properly file your income or payroll taxes as an individual can become an untenable tax situation, it can spell doom for your small business. Falling behind with your business taxes can lead to tax liens or levies, wage garnishment and the end of your company altogether. According to the IRS, if you owe more than $1,000 in taxes, you must make estimated tax payments in the amount of 100% of last year’s tax liability, or 90% of the current year’s liability, whichever is smaller.
If you do your business taxes on your own, Gross said the same tax forms apply that were around before the Trump administration’s bid at tax reform â the Tax Cuts and Jobs Act of 2016 â passed. Even though that piece of legislation was sold as a way to simplify the entire process, Gross said it made things more difficult. “The latest changes actually made things more complicated for small businesses, since it changed how and what you can deduct.”
Key takeaway: While these tips are a good starting point, it’s not a substitution for working with an experienced tax professional.
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Why Prepare Your Taxes Yourself
Youâll save money doing your taxes yourself. Tax pros charge at least $500 to prepare a business return. You could have to pay much more depending on your complex your business is.
The fees you pay to prepare your business taxes are a deductible business expense. But this deduction will reduce only part of the entire cost. How much depends on your top tax rate.
By the way, the fees you pay to prepare your personal tax return are not deductible. If you hire a tax pro to do your personal and business taxes, make sure to get a separate invoice for the business portion. You can deduct that amount.
Another benefit of doing your taxes yourself is that it helps you understand the tax law and how it affects your bottom line. Youâll have a better understanding of what expenses are and are not deductible. And you may come up with ideas on how to save on taxes in future years.
Look For Tax Deductions And Credits
Next stop on the tax preparation train is finding out if you qualify for a tax break. Business tax credits and deductions are a great way to lower your tax liability. And depending on your business, you may qualify for a few.
Businesses can claim tax deductions and credits for qualifying expenses. Generally, tax credits encourage businesses to take some sort of action that benefits others .
Take a look at these tax credits you might qualify for:
- Small employer health insurance
- Disabled access
- Work opportunity
And, here are some examples of expenses you might be able to claim a tax deduction for:
- Home office
- Bad debt
Before claiming a credit or deduction, make sure you have the records to back it up. And, you must understand the IRSs rules. For example, you cant claim a home office tax deduction unless you meet certain IRS requirements.
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The 3 Most Common Business Tax Deductions
There are some tax deductions that no small business owner should miss when filing their business tax returns.
These are the deductions that apply to almost all small businessesâand therefore, if you donât take advantage of them, youâre overpaying your taxes each year.
1. Vehicle Expenses
Most small business owners use a car, van, or truck for their company.
If you can prove that you use the vehicle for business purposes, then you can deduct the cost of operating the vehicle.
There are two ways to deduct your vehicle expenses on your small business taxes: standard mileage rate and actual car expenses. With the standard mileage rate method, youâll deduct the cost of operating your vehicle based on the amount you drive it for businessâabout $0.58 per mile in 2019. If you go the actual car expenses route, on the other hand, youâll deduct the actual cost of your vehicle that is related to your business by reviewing all the costs you incur from operating it: gas, oil, repairs, auto insurance, and so on. This requires more recordkeeping as youâll need to separate your vehicle costs between personal and business use.
Whichever deduction method you choose to use, youâll want to make sure itâs the one that saves you the most money on your small business taxes.
2. Insurance
3. Rent
Strategize And Prepare Your Taxes
Finance Pal offers bookkeeping and accounting services to help small business owners get back to owning. Our finance experts ensure all of your books are in order and help you strategize to save as much time and money as possible when it comes to filing your taxes. And most importantly, we make sure youre in compliance with business tax regulations so you and your business are always in good standing with the IRS and never worrying about unexpected additional fees. While we cant always predict an IRS audit, Finance Pal can certainly help you prepare your books so youre always ready with accurate bookkeeping and accounting throughout each tax year.
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Register with IRS as a Tax Preparer Get Your Preparer Tax Identification Number Apply for IRS Electronic Filing Identification Number so you can e-file tax returns. Before you can electronically file tax returns, you must apply to become an Authorized e-file provider with the IRS. This process is facilitated by the IRS in three phases:
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Filing Small Business Taxes If You Have A Home Office
Many entrepreneurs now work from home. If you have a;dedicated home office, you have the option of taking a simplified or regular deduction. The simplified method allows you to multiply your office square footage by a set tax rate. The regular method allows you to deduct portions of your overall home-related expenses as business costs.
If youre entitled to deduct expenses related to a home office, youll need to double check the size of your office, and calculate the percentage of your homes square footage the office occupies. You can then deduct that percentage of overall home expenses that serve that home office, such as utilities, repairs, homeowners or renters insurance, and more. The;IRS Publication 587, Business Use of Your Home;includes all the details. If you work with a tax professional, they can help you determine these costs.
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Some 2021 Tax Due Dates Extended
The due date for 2020 returns has been extended from April 15, 2021 to June 15, 2021, for residents of Texas, Louisiana, and Oklahoma in response to the 2021 severe winter storms. June 15 is also the extended deadline for the estimated tax payment for the first quarter of 2021 for these residents, which would normally be April 15. Taxpayers in all other states have until May 17, 2021 in response to the ongoing COVID-19 pandemic.
Separate Business From Personal Expenses
If the IRS audits your business and finds personal expenses mixed with business expenses, regardless of whether you reported business expenses correctly, the IRS could start looking at your personal accounts because of commingled money, Blake says. Always get a separate bank account and credit card for your business and run only business expenses through those accounts.
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Keeping The Right Records
Determine If You Need A Filing Extension
Things happen. Maybe you get caught up in other responsibilities and are rushing to file your return.
Instead of putting together something questionable, you may decide to file a business tax extension. A filing extension gives you more time to complete and file your small business tax returns.
If you need an extension on your tax return, you have to submit the IRS extension form before your tax return due date.
Use the chart below to determine what form you need to file and your due date:
Include information about your business and the taxes you owe on the extension application form.
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What Type Of Business Tax Returns Are Best To Prepare Yourself
Youâre a good candidate to prepare your business tax return yourself if, like most self-employed people, youâre a sole proprietor. Meaning you have a one-owner business and have not formed a corporation or other business entity.
If you form a one-owner limited liability company, youâre ordinarily taxed the same as a sole proprietor.
When youâre a sole proprietor, you report the income you earn or losses you incur from your business on your personal tax return . If you make a profit, you add the money to any other income you haveâfor example, interest income or your spouseâs income if youâre marriedâand that total gets taxed.
If you prepare your taxes yourself when youâre a sole proprietor, youâll need to include some additional forms with your individual return. These include:
Schedule C: To show whether you have a profit or loss from your business, you must file IRS Schedule C, Profit or Loss From Business, with your individual tax return. On this form, you list all your business income and deductible expenses.
Schedule C is relatively simple to complete, especially if you have good records of your income and expenses. It includes preprinted categories for the most common deductions.
Form SE: You must file IRS Form SE with your return to calculate and report your self-employment taxes. These are the Social Security and Medicare taxes all self-employed people must pay.
