Quarterly Tax Returns

     

     If you make quarterly tax payments, the due date for the 2nd quarter is fast approaching; June 15. There are a few possibilities that mean you are required to make quarterly tax returns.

1. Self-Employed sole proprietor filing Schedule C.  As part of your personal return, you may be required to make quarterly estimated income tax payments.  Use Form 1040-ES.  Your payments will be in compliance with the federal “pay as you go” system and will save you from any underpayment penalties that you may incur even if you pay the full balance by April 15.  These payments include federal income taxes as well as self-employment taxes.

2. Payroll taxes.  You must issue and withhold taxes from any employee paychecks.  You are given a certain timeframe to pay, usually using Form 941.  They must be paid one month after each quarter.  The next deadline coming up is July 31.

 

3. Some LLCs, S Corporations, partnerships.  If you’re performing services for your company, you are required to pay yourself “reasonable compensation.”  That means giving yourself a paycheck and filing payroll taxes.

     Make sure you’re in compliance before the next quarterly due date!   

Tax Time - Last Minute Considerations

When you’re running a business it’s hard to do it all. Filling your taxes in a timely manner can be difficult and if you’re a business owner this is especially true because you typically have a lot on your plate. The problem with waiting until the last minute to file your taxes is that you may miss some things that will work to your advantage. Here are some of the things you want to pay attention to when you’re filing this year:

Free Filing

If you made less that $57k in the past year, you are eligible to use free e-filing software. What’s great about this is that there is little to no out of pocket expense to you and it's typically self-explanatory. You get asked questions about your business and finances, and you fill out the form like you would any other questionnaire. 

Start-Ups

Did you start your business last year? You qualify for a $5k deduction since starting a business is considered a capital expense. This may not apply to everyone but it definitely applies to some, and if you did start a new business last year, congrats! It’s not easy. 

Education

Did you take a class or course to receive training to improve your business? If so, that also qualifies as a deduction. Things like seminars and conventions count too!

Driving

Mileage is one of the easiest deductions for you to qualify for. Whether it’s meeting clients, getting supplies or doing research around town, you can get a deduction for using your own vehicle to run your business. Most business owners have to do this at some point or another, just make sure that you keep track of your miles and maybe even use a helpful app to do it for you!

Working from home

Being your own boss is great, but if you also get to work a lot from home and have a dedicated space just for that, that also qualifies as a deduction. You do have to specify square footage but that shouldn’t take too long to figure out. 

Insurance

There’s no one looking out for you but yourself when you’re self employed, this is why getting health insurance is on you. Not to worry though, IRS knows that this can be a costly expense on someone who has their own business and sometimes either offers assistance or a tax break to ensure you’re healthy enough to run your business. 

Software and subscriptions

Quickbooks, Photoshop, Paypal - if you’re a business owner you may be familiar with some of the these software programs. Most of these require a monthly subscription which can end up costly hundreds of dollars a year, take this as a deduction also because it is considered a business expense.

Hotels and Meals

We never know where work will take us, but we do know that covering these expenses can get costly. That is why saving all your receipts for both meals and hotels is important. Most of these things, as long as they are a business expense, are also deductible. 

Want to know more? Accounting works will be hosting a Lunch & Learn free to members of the Richmond Business Alliance 3.3.2015. Non-members can attend for $10.00. RSVP right here.

Official Event Name: Lunch & Learn - Tax Time Sponsored by Accounting Works & Pat McAleer, CFP®, ADPA® from Kasch, Levitch, McAleer & Associates 

Also, check out our Facebook event here.

4 Money Maneuvers for 2015

2014 is not over, at least in tax-terms and most taxpayers are not as prepared as they’d like to be in order to take advantage of all the tax savings available.  Why not include being prepared for the 2015 tax season a financial priority starting now!  You can get ahead by doing some or all of these 4 things:

Make a Roth IRA contribution sooner than later.  Don’t wait for the tax deadline to contribute.  While it doesn’t seem like a substantial amount in the short term, contributing in January rather than December adds a full year of tax free growth.  Over many years, that can translate into thousands of dollars.

Donate to your favorite charities with your appreciated securities.  Those who invest consistently in most cases have stocks or property that have increased in value, consider donating them and that way neither party has to pay capital gains taxes on the amount.  If a charity only accepts cash donations, a donor advised fund can provide the same tax benefits, and you can recommend grants from the fund periodically.

Remember your Flexible Spending Account throughout the year.  If you are frantically trying to spend the rest of your FSA at the end of this year, do some accounting for 2015 and contribute a little less, perhaps.  Also, get organized by saving all of your applicable receipts and keep them in one place.  These funds can be wasted if claims or receipts are submitted in a timely fashion. Ask your health care director what qualifies for reimbursement. 

Plan your deductions at the beginning of the year.  Pay your property taxes in advance, or gain deductions by paying your January mortgage payment in December.  These are financial maneuvers are usually unavailable at the last minute to save on taxes, but if you plan ahead now, you can increase your return even more in the long run.  Just an extra excuse to save!

With a little initiative, you can increase your return for the 2015 tax year by starting to think about them now!  Add these tips into your new years resolutions, stay organized and take advantage of all the breaks and benefits available to you for the upcoming year.

 

Christmas Came Early - Know Your Tax Return Today!

Most people have a steady paycheck that they rely on, this can be true for many people along many different industries. A good tip that I offer my clients is to look to the past to know what will happen in the future. Taxes don’t really change much so as long as you have a consistent paycheck and your deductions are the same as last year’s then you should have a pretty good idea of what your tax return is going to be next year.

Have things changed since last year? Did you make any significant lifestyle changes such as: getting married, buying a house, retirement, new employment? If the answer is yes to any of those questions, then your taxes will be probably much different and you’ll need someone to help you ensure you are getting all the deductions needed.

Most simple taxes can be done and filed on your own, however if you have one of these big changes happening in your life you may to make sure that you have a tax accountant or an expert to ensure that you get the maximum deductions. Some people like to think that they can take shortcuts and save money by doing it themselves, however - hiring an expert can save you more. Sometimes covering way more, typically taking care of the fee you’re paying a tax consultant and also a bigger return.

Saving for Retirement - A Guideline

One of the questions that comes to mind when dealing with clients is retirement. It doesn’t matter whether you are self-employed, work for someone or have your own business; you should  know how much money you will need for your retirement. Most people’s long term goal is not to retire when they are older but instead to retire at a young age. 

Most people will retire around the age of 65-67 so we will use that marker to explain how much money you should have saved by that time. 

We found a very useful graph from BenefitsPro that details some minimum mile marks for retirement based on one’s age. 

In order for this logic to make sense the following financial assumptions are being made: 

• Retirement age of 67
• Living until the age of 92
• 3% employer contribution, which would have to be adjusted if you’re self employed or own your own business
• 5.5% average annual portfolio growth rate

This is by no means an absolute saving solution for everyone because each person’s lifestyle varies greatly, but instead it should be used as a way to remind yourself whether you are on track to retirement. 

As always, we’re available for clients and anyone who has questions on how to run your finances as efficiently as possible whether you are a big or small business. 

-Stephen

(804) 915-7040

To read the full article from BenefitsPro click here