If you are newly self-employed, you will want to take steps throughout the year to prepare for the filing of your income taxes. Since federal and state income taxes are not withheld year-round by your employer, it is up to you to figure out what percentage of your income will need to be socked away if you need to make a payment when taxes are due. For 2015, self-employment tax is 15.3% of your pay. This number should be used as a starting point in figuring out how much to save in future years. Here are a few tips you can use to make sure you are not caught off-guard when tax time comes around.
Keep Detailed Records
From the beginning of your self-employment endeavors, you should keep accurate records of your incoming payments and outgoing expenses. Purchase a reliable accounting program to set up on your computer. Make sure to input information pertaining to each job you complete to show where your money is coming from and what expenses you need to pay to do your job. These programs allow you to filter information by job, date, or amount, making it easy to print out reports when needed.
Besides your income and expenses, if you have a home office where you do your work, you will want to use it as a deduction at the end of the year. Often, people using an office may be audited. It is to your benefit to have photographs of your office, a layout of the office plan including measurements, and copies of any utility bills you pay throughout the year. This information can be given to a tax consultant to help determine how much you can deduct. It will also be in safekeeping should you need to prove you do indeed have a physical office if you are audited.
Hire A Reliable Accountant
Having an accountant to make heads and tails of your paperwork can save you a bundle of time when it comes time to file your taxes. Giving them the information you input into your program can be very beneficial. They will be able to help you with strategic tax planning by letting you know what your tax outlook appears to be for the following tax season.
Since your workload may fluctuate during the year, this amount will regularly shift up or down. However, the more months you have pass, the more accurate the estimate will be. This estimate will allow you to save money from your earnings to use to pay the taxes when they are due. Your accountant will be able to tweak the estimate according to your income and give you a running balance at any given time to help you make your preparations. Contact a local accountant, like Karla Dennis and Associates, for more information.
A wage garnishment issued by the IRS is processed by an employer somewhat differently than other garnishments. Employers who receive a notice of levy from the IRS have a specified time period in which to respond to an IRS levy and submit the requested garnishment amounts.
Unlike most other issuers of levies, the IRS is not required to obtain a court order. A wage garnishment may be received by an employer with no prior notice. Although the employee has likely had prior correspondence with the IRS regarding the tax matter, the responsibility for processing the levy falls on your company when an IRS levy is received.
Official notice of levy
At some point in the tax collection process, the IRS has the authority to issue Form 668-W(ICS) or Form 668-W(C)(DO). The form is an official notice of levy and is likely to be received by certified U.S. mail. The levy form consists of multiple pages, and some pages need to be quickly forwarded to the affected employee.
It is essential that your employee has the opportunity to claim all allowable amounts that are exempt from the levy. From the date you receive the certified letter, your employee has three days to complete the employee portion of the form to claim allowable exemptions. The employee selects a filing status and enters the name and Social Security number for each of their dependents.
Calculation of garnishment
Along with the notice of levy, you also receive a copy of IRS Publication 1494. Although most IRS publications are lengthier, Publication 1494 consists of a single page and is used to determine the exact exempt amount. The exempt amount is based on filing status and number of exemptions. If your employee does not complete the form, only one exemption is allowed, and the exempt amount is calculated as if the employee is married filing separately.
Other levy factors
If your employee is already subject to a garnishment for child support, an additional exemption is not allowed for the same child. An additional exemption is allowed if your employee or their spouse is at least age 65 or blind.
An IRS garnishment remains in effect until the tax is fully paid or the IRS releases the levy. Employees subject to tax levies sometimes enter into a direct payment agreement with the IRS in order to obtain a levy release.
As an employer, you are allowed a full pay period after receiving a levy to send in the first garnishment amount. Each payment is made by mail on the same day the employee is paid. The check is mailed to the address provided with the notice of levy. Contact an accountant for more information about payroll services (such as one from Blueback Accounting) and the processing of wage garnishments.
Becoming an online merchant can be a lot of fun and bring some extra money into the household. This is one small business opportunity that many people have taken advantage of and have done very well with. The first year or so can be a struggle to earn a profit because of the expenses of getting started, but don’t worry, you can recover some of that loss come tax time.
Create a Spreadsheet
You want to get organized as soon as you possibly can. If you haven’t done so already, you must start a spreadsheet to keep very careful documentation of your expenses and profits. Your spreadsheet should include 7 columns:
Note: If you sell a variety of items, you may want to start different spreadsheets for different categories – clothing, toys, kitchenware, etc.. This will help to make it easier for you to find what you need when you sell the product and need to complete the input.
Document Your Mileage
If you go out looking for the things you will sell, document your mileage. If you drive to the post office to send the packages out, document your mileage. Any driving that you do to complete business-related tasks should be documented. Keep a little notebook in your car and write the mileage before you leave your home and again when you return. Take those numbers and input them on a separate spreadsheet. At the end of the year, you will be able to quickly look at that spreadsheet and know exactly how many miles you have driven for the business and claim it as a tax deduction.
Office and Storage
Unless you are completing your sales through drop-shipping methods, you will have inventory to organize. Have one area of your home dedicated to the organization of your inventory. This will help you in two ways – you can find what you need more easily and you can use the square footage of that space as a business write off.
Don’t forget to document your home office expenses. You probably know that you can qualify for a home office deduction if you have an office that is dedicated to the business.
The most important element of successfully operating an online sales business from your home and being able to take advantage of the tax breaks is organization. If you are unable to stay organized on your own or just need a little help, talk with your tax preparation specialist or call HBE Becker Meyer Love LLP.
When you open your first small business in Mechanicsburg, PA, you will find yourself faced with a great many tasks and responsibilities that you are now in charge of. One of the most challenging aspects of running a small business for may first-timers is the financial side of running a small business. Before you become one of those small business owners who becomes overwhelmed by financial burdens and issues, get to know some of the ways that you can make running your small business finances easier for you. Then, you will be able to devote more of your time and attention to other elements of your small business venture.
Balance Your Books Completely At Least Once A Week
Many people do not go into business for themselves because they enjoy spending their time going over receipts, crunching numbers, and balancing the budget. However, this is a very important part of owning and operating a small business if you want it to be successful.
While you should do some book balancing on a daily basis (i.e. counting down the money in the cash register compared to cash receipts, and the like), you will also want to sit down and have a good look at your overall numbers once a week. This does not have to be an all-day task, but it should be more than a quick glance.
You will want to take a look to make sure all of your expenditures and income are marked in your accounting records, that you have paid all necessary bills, and that there are no errors in the records you have been keeping throughout the week. This will also help give you more of a big picture of your business finances than your daily records, so that you can make adjustments as needed.
Hire A Professional Accountant And/Or Business Manager
When you have numerous bills and income streams to consider, your small business accounting can get a bit overwhelming. And when tax season rolls around, you may not have the slightest idea of what to do.
As such, it may be helpful for you to hire an accountant or business manager from a company like Waggoner Frutiger & Daub CPA’s to help you oversee your finances and especially to help you with tax season. They will be able to balance your books, advise you on wise investments or where you should make cuts, and of course, prepare and file your business taxes on your behalf. This extra help can free up large amounts of your time and give you the boost you need to really get your business running smoothly.
Now that you have a few ideas of how you can better run your small business finances, you can get started implementing the changes you need to make to better manage those finances.
When tax season rolls around, most people think of it with loathing. They know that they are going to need to find an accountant that they can take their taxes to, and they want to make sure that they find a good one. Thankfully, most certified public accountants (CPAs) are ready and willing to help you out with your taxes. The key to making tax season a pleasant time is to prepare ahead of time for all that is going to take place. This article will discuss 3 tips for taking your taxes into a CPA.
1. Find An Accountant That Specializes In Your Specific Needs
Whether you are filing taxes as an individual with a regular job, a small business owner, or a college student with a part time job, there is an accountant out there that can help you with your specific needs. If you own a small business, you can find an accountant to work with you throughout the year so that you are not paying a lump sum of taxes once per year. If you are filing regular taxes, you can likely go to almost any accountant in your area, and they will be able to meet your basic tax needs. Lastly, if you are a college student or someone else that makes a very small income each year, you can often have your taxes done by an accounting student for free or for a discounted price.
2. Take Them In As Early As Possible
Since accountants can become overbooked very quickly, it is important that you get a jump on getting into see one. Before tax season ever rolls around, start doing your research and choose a few different accountants that you really like. Call them and see which ones have openings at the times that you need. This can reduce a huge amount of stress when tax season rolls around because you know that your taxes will get done on time by an accountant that you have handpicked.
3. Bring All Of Your Necessary Documents The First Time
When you go into the accountant you will need to bring in a variety of different documents. Since these documents can differ depending on what type of job you have, if you are married filing jointly, the number of dependents that you have, etc., you will want to ask your accountant exactly what you will need to bring in. Generally speaking, you will need to bring in your W-2s, charity donation receipts, social security cards, etc. You may also need to bring in receipts or other expense forms if you are self employed.
When you file your taxes, you may claim fewer deductions than you are entitled to. This can lead to you paying much more than you have to if you pay taxes every year or making your tax return much smaller if you typically receive money back. Who wants the government to get or keep more of their hard-earned money than they are entitled to? Here are two tax deductions that tax experts report are often skipped or under-utilized due to misunderstandings about how they work.
1. Medical Expenses
Like most people today, you likely have a health insurance policy that pays for a portion of your medical bills and for at least part of the cost of your medication prescriptions. When you see that you can deduct medical expenses on your income taxes, you may think that they can only be deducted by the uninsured, but that is not true.
While the portion of any medical expense that your insurance company pays for you is not tax-deductible, anything that you pay out-of-pocket is. That means you can deduct your co-pays, out-of-pocket costs for medications, and any payment to any medical provider that is not covered by your insurance company, such as fees for psychological counseling, eye exams, and dental visits.
Additionally, you can deduct the cost of your transportation to and from visits to health-care providers, whether it is the cost of the gasoline you use getting to and from the facilities or costly taxi-cab fees.
Also, don’t forget that all medical devices not paid for completely by your insurance company can be listed as deductions, including eyeglasses, contact lenses, wheel chairs, and even dentures. If you visit medical providers often or have a large family, these expenses really add up, so don’t forget them this year when filing your taxes.
2. Dependent Deductions
While you likely know that children can be claimed as dependents on your tax return, you may not realize that children are not the only people who qualify as dependents. Dependents don’t even have to live with you to qualify. For example, if you are helping support a parent in your house or out, as long as you pay at least half of their living expenses, they are considered a dependent. The IRS has a handy guide for determining whether a person you help support, yet does not live in your home, can be claimed as a dependent. Many in-laws and “half-relatives,” like a half-sister, are listed on the guide as eligible dependents.
If you determine that you have an eligible dependent, then the deduction does not end there. You may also be able to deduct many of the expenses of what you provide for the dependent on your taxes, including their medical expenses.
For more information, contact The Callen Accounting Group, PLLC or a similar firm.
You are ready to get started with your accounting career, but you are not sure where to find a job and how to make yourself stand out as the prime candidate for the job. The following simple guide will show you how to stand out to your future employer and a few tips to help you find a job.
Where To Find Opportunities
The first thing you should do is make sure you narrow down your choices, because a blind search on the internet will give you too many results, which could be time-consuming. You might also want to opt against using a general job searching tool, as you may still have too many choices. So consider the following:
Make Yourself A Desirable Accountant
You still need to make sure that your resume is strong, no matter how proficient you are at finding potential employers. Consider the following tips to help you stand out:
Those are just some suggestions that may help make sure you are noticed in the job market; hopefully you’ll find an accounting job as soon as possible.