Category: Taxes

If you sell tangible and sometimes intangible goods, you are more likely to have collected sales tax from customers on behalf of the state. Before diving into the subject, you should be aware that some states do not collect sales tax after purchases. These states are commonly called NOMAD, which stand for New Hampshire, Oregon, Montana, Alaska and Delaware. But for states that do collect sales tax, many wonder where to begin. First, you need to acquire a seller’s permit from your state website. This permit is usually free of cost and requires the individual, corporation or partnership personal information, such as the social security, EIN, mailing address and the manager information. Businesses can designate an experienced and trustworthy individual who works in the company to handle the sales tax filing on each due date.  Second, it can be tiring and time consuming to keep track of the sales tax collected in a company that has high sales volume. Businesses can use a point of sales software that tracks the sales tax collected at each purchase and an accounting database to report the sales tax collected to accurately manage sales tax. Learning to properly record and keep track of sales tax will differentiate you from your competitors and prevent you from accrued sales tax penalties and liabilities. Third, save the deadlines on your calendar for the sales tax filing to avoid accruing penalties and interest. Some states, like California, suspend your seller’s permit after omitting to file for 4 consecutives quarters or a year. Per California state requirement, businesses should file a $0 income sales tax return, even if they did not make any sales.  State Tax Agencies Cheat Sheet (NOMAD excluded): Alabama – link Arizona – link Arkansas – link California – link Colorado – link Connecticut – link Florida – link Georgia – link Hawaii – link Idaho – link Illinois – link Indiana – link Iowa – link Kansas – link Kentucky – link Louisiana – link Maine – link Maryland – link Massachusetts – link Michigan – link Minnesota – link Mississippi – link Missouri – link Nebraska – link Nevada – link New Jersey – link New Mexico – link New York – link North Carolina – link North Dakota – link Ohio – link Oklahoma – link Pennsylvania – link Rhode Island – link South Carolina – link South Dakota – link Tennessee – link Texas – link Utah – link Vermont – link Virginia – link Washington – link West Virginia – link Wisconsin –link Wyoming – link Eneya Accounting provides sales tax management services. In order to maintain accurate books, you should accurately keep track of your sales tax liabilities. Schedule your consultation here or give us a call 949-529-0740. 

Tax season does not only stress accounting professionals, but business owners find themselves alarmed during the tax season as well. Accounting professionals are efficient when their clients (individuals and businesses) are time and work efficient on their end as well.  Businesses find themselves penalized from the IRS after tax season for several reasons. A few of the reasons to be penalized could be omitting to issue 1099s, W-2, or not filing the business tax returns on time due to unclosed or unclean books, but the list goes on. Some business owners do not connect or record all transactions from the business banks or credit cards, only to realize that the business is missing quite a few transactions by the closing period. As soon as the business is approved for a new credit card, the owner or the person responsible for accounting should include the new card in the book database for accuracy of their books.  As businesses incur daily expenses, many have repeated vendors, suppliers and one-time vendors that cost them more than $600 for the entire year. Those suppliers are entitled to receive a 1099 by the end of January. It is cautious for business owners to request W-9 from US suppliers before the disbursement of the first payment. Issuing the payroll documents on time is vital because the failure to do it could result in penalties on the business owner’s side. It is the client’s (business’ responsibility) to file and mail the employees’ form commonly known as the W-2 by January 31st of the following year. For example, in tax year 2019, the deadline to send employees their W2 would be January 31, 2020. Closing the books by the end of each month is the best solution to maintain clean books and accurate financials until the end of the year, before filing for the business tax return. Making monthly adjustments and adding the last adjustments at year-end can save the client time and money when it comes to having clean books.  

Many self-employed business owners have specific questions about their bookkeeping. For clarification purposes, we will define the terms and the criteria first, so you can directly know how to position yourself as a business owner and obtain bookkeeping services. For tax purposes, we will refer to self-employed individuals as independent contractors who file their business tax return in a Schedule C form, which is attached to their 1040 form.   Owners of S corporation, C corporation, multi-member LLC or LLP are business owners who file for taxes separately from their individual tax return, which explains why they do not qualify for the self-employment appellation.  Do’s – What you are allowed for your bookkeeping You can deduct your mileage for all business errands while excluding the commuting mileage, which means the mileage used to leave your home to go to the place of service. However, when the taxpayer (the self-employed business owner) moves from one client to another, that driving mileage can be deducted from his/her gross income. Your home space used as an office space, including garage, greenhouse, cabin, cellar or basement, can also be deducted, as well as furniture and equipment. The storage space can also be used as deduction as long as the business owner uses it on a regular basis. The deduction would include utilities and home insurance expenses. It is important for business owners to know that they do not qualify for home space deduction if they have a defined business location. Expenses for painting and repairs done for your office can be deducted. A telephone line exclusively used for business operations can also be deducted. The security system can be deducted, and this would also apply to the home office deduction. Don’ts – What you are not allowed to do as a Schedule C filer There are quite few factors that self-employed business owners should take into consideration for bookkeeping purposes.  As a self-employed business owner, you should not add yourself in payroll, even if you are fully responsible and liable to add employees on payroll for recordkeeping purposes.  You cannot claim deductions on your regular office space and home office at the same time. The main location where the business owner processes the operating activities and administrative tasks can be claimed as a deduction. Self-employed individuals cannot claim the first telephone landline of their homes as a deduction. They can only claim the telephone exclusively used for the operating activities of the business. The IRS has published the following publications for reference and guidance:  Publication 587 Publication 463 Eneya Accounting has the expertise to train independent contractors on how to do their bookkeeping in order to maximize their deductions. This will reduce their tax liability at the end of the year. Schedule your consultation with us for better guidance on your bookkeeping.