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How Do I Do Taxes for My Small Business?

When the time of year eventually shifts into tax season, there are different ways for business owners to file their taxes. Initially, the steps will depend upon whether the business is a sole proprietorship or whether it uses a legal entity such as an LLC or corporation. Each type of entity requires a contrasting tax form for reporting. After determining this initial step, the taxable business income can be calculated. The first step for business owners is to collect and gather all relevant business records. If a computer program or spreadsheet has been utilized throughout the year to keep track of the income, the process will be streamlined already, and thus smoother. QuickBooks and Quicken are reputable.

What Kind of Taxes Does a Small Business Pay?

For both large and small businesses, business growth is the goal. This business growth translates, during tax season, into appropriate retribution for the government. There are three different varieties of taxes that small businesses pay: federal, state, and local taxes. All businesses are required to pay taxes on their income. This means that the business must pay a tax on the established profit of the company. How that tax is paid ultimately depends upon the form of the business. It is important to note that businesses don’t directly pay sales tax on services or products that they sell. However, if the business operates in a state that has a state income tax, there needs to be a system set up to collect, report and pay state sales tax.

Why Do Small Businesses Pay So Much Tax?

There have been some changes in the tax code that are worthy of note. The Tax Cuts and Jobs Act, which was signed in December 2017, came with several key changes to how small businesses pay taxes, and how much taxes they pay. According to the National Federation of Independent Business, it has been reported that most small businesses don’t pay income tax at a business rate. Instead, it is recorded that approximately seventy-five percent of small businesses are indeed not corporations. This substantial percentage of small businesses are considered “pass-through” tax entities, which means that each of these small businesses pays tax at the personal tax rate of the owner. The income tax rates that went into effect in 2018 and will continue for eight years have ramifications. Larger businesses and those taxed as corporations have the biggest tax cut under the new law. The corporate tax rate was cut from a table with the highest corporate taxes to a flat 21% and currently has no expiration date.

Can a Small Business Get a Tax Refund?

Whether or not a small business gets a tax return entirely depends on the type of business entity and the type of taxes that are paid. Typically, C-corporations are the only type of business eligible for a tax refund. Unlike other businesses, C-corporation profits are taxed separately from their owners. Subchapter C of the Internal Revenue Code specifies this. If a C-corporation pays more estimated tax during the year that is due on the final return, it can get a tax refund. A business could also get a tax refund if it overpays on payroll or sales taxes.

Business Taxes are Due

Tax filing deadlines have a habit of creeping up on business owners. Frustrations can surmount when business owners have to pay a tax-related fine that could otherwise be avoided. The first day that will be relevant for business owners is January 15th, which is the fourth and final quarterly tax payment for the previous tax year. January 31st is the next date to be aware of, as it is the form W-2 filing deadline. This deadline has been in place since the 2016 filing year. For businesses that have employees, two copies of the form W-2 will need to be filled out. Businesses that work with independent contractors need to be aware of the form 1099-MISC Copy A filing deadline, which also arrives on January 31st. February 15th is the Form 1099-MISC Copy B filing deadline. 

Business and Tax Services

There are many different tax services that are available for business owners. Millions of Americans pay a tax professional or a tax company to prepare and file their tax returns every year. One of the reasons why it is important to procure professional assistance is because Congress continues to make changes to the tax code. The changes in the tax code can be radical and certainly can leave many people confused and frustrated. Nevertheless, decoding taxes is of particular import, particularly since collecting appropriate evidence of profit margin will be a laborious activity for the small business owner.

Business Taxes Checklist

Please consult the following list to determine your business taxes checklist.

• Understand and select the tax forms that will need to be filled out for your business.
• Meet with your professional bookkeeper.
• If you use your personal vehicle for business, update your mileage log.
• Gather your financial records.
• Capture all the expenses you paid for out of pocket.
• Gather any 1099s that have been received.
• Pull receipts for asset purchases.
• Request a tax filing extension if necessary.

To get started on your service, call our office, Don R. Walker, C.P.A., at 817-905-1040 to schedule an appointment for your business tax in Fort Worth, TX.

Examples of Payroll Tax

What is an example of payroll tax? Good question. The two most prominent payroll taxes fall under the FICA umbrella. FICA stands for Federal Insurance Contributions Act and requires employers to take out taxes for insurance benefits such as:

• Social Security
• Medicare

As of right now, employers are expected to withhold 6.2% for employes and 6.2% for employers, for a total of 12.4% for Social Security. For Medicare, a total of 1.45% of all wages paid to an employee are held. On top of FICA withholdings, employers must also hold a percentage of wages for:

• Federal Income Taxes
• State Income Taxes
• Federal Unemployment
• State Unemployment

The total amount that an employer withholds from their employee wages is very important. Inexperienced accountants can overlook things and ultimately cause more stress for employees when it comes time to file their own taxes. That’s why it’s important to work with a reputable CPA like Don R. Walker, C.P.A.. It’s the same idea as if you were looking for a contractor to provide residential roofing services. In either case, you want someone that is reliable, efficient, and accurate.

Why You Have to Pay a Payroll Tax

The payroll tax to business relation is important. If employers are not paying or withholding the correct amount in taxes, it can create serious consequences for their employees. Mistakes are often made, which is why it is recommended for businesses of any size to look into CPA services if they are concerned about their payroll tax calculations. Don R. Walker, C.P.A. is a great place to turn to. We offer every kind of accounting service you need to make sure your business is running smoothly.

All that being said, it is mandatory that employers either pay from their own funds or withhold a certain amount from their employee wages. Those withheld taxes are used in finance insurance programs, income tax program, and more. They provide a blanket or a security for employees during their time with a business and afterwards when they are retired. While it can feel like a nuisance at the time, these taxes are meant to make things easier for employees.  

Payroll Tax vs Employment Tax

The employment tax is an all-encompassing term to refer to federal income taxes that are withheld from their paycheck and paid to the IRS on the employees behalf. The federal income tax is tax on the earned income of anyone employed with a business. Generally speaking, however, there is no real difference between a payroll tax and an employment tax because according to the IRS, everything falls under the employment tax umbrella. Meaning, federal income tax, Social Security, Medicare, and anything else are considered an “employment tax.” Meaning, if you are employed by a business, a certain amount of your wages are expected to go into financing for employee benefits.

The best way to break this down is as such:

• Payroll Taxes are designed to withhold funds that will provide a certain amount of insurance for current and retired employees. Funds are held for the insurance programs Social Security and Medicare.
• Employment Taxes are the taxes or finances that employees are expected to pay towards the federal income tax. These funds are withheld from an employee’s paycheck and paid to the IRS on the employees behalf.

Basically, there is no real difference because ultimately the money withheld from a paycheck all goes to the same place. But there are two terms to help identify what is being withheld for being an employee and what is being withheld to help an employee.

Frequently Asked Questions

• How much does the employer pay in payroll taxes?
  • In the current market, employers are expected to pay 6.2% in Social Security taxes for the employee and 1.45% in Medicare taxes, also for the employee.
• What taxes does the employer pay?
  • Employers are responsible for paying, or withholding, an employee’s Social Security tax and Medicare tax.
• How is payroll tax calculated?
  • The most simplistic way to explain this is that the total amount of federal tax amounts are subtracted from an employees annual wages.
• Do I need to pay payroll tax?
  • Generally speaking, if you are an employer with at least one employee then yes, you need to pay a payroll tax. But then there are things like the federal income tax which employees are expected to pay.

Bookkeeping vs. Payroll

Payroll is the process of calculating a company’s income to pay employees. While it can involve a certain amount of bookkeeping, the two are not interchangeable. Payroll accountants have to keep records of company income, employee checks, and such

Payroll duties:

• Calculate and distribute employee checks

• Keep the financial record of employee wages, salaries, bonuses, taxes withheld, etc.
• Understand the amount of money available to pay employees

Bookkeeping duties

• Documenting receipts and transactions

• Recording invoices

• Billing for services provided
• Processing employee payroll

The biggest distinction that needs to be pointed out the fact that bookkeeping will almost always refer to the recording and documenting the financial process. Payroll, on the other hand, will almost always refer to the process of calculating an employee’s wages and/or salary. At the end of the day, bookkeeping and payroll go hand in hand. The jobs are not interchangeable, instead, the two work in conjunction to make sure the finances of business are functioning.

Bookkeeping for Small Business

The office of Don R Walker C.P.A provides quality bookkeeping services. We know all too well that starting a new business can be daunting. Finances are tight and seemingly non-existent. All it takes is one accounting mistake for even smooth operating businesses to be at risk. Don’t let this happen to your business and call Don R Walker C.P.A for bookkeeping in the Fort Worth, TX area. For competitive pricing, we help you cover all your bases to help make sure your small business starts off right. And with tax season right around the corner, a Don R Walker C.P.A. bookkeeper is a great resource when filing small business taxes in Fort Worth, TX.

Frequently Asked Questions

What are the differences between accounting and bookkeeping?

Bookkeepers help to record transactions and lay the foundation for accountants to go through and do a complete audit of a business’s accounts. An account does need at least a bachelor’s degree to do their job while bookkeepers just need a basic understanding of the accounting process.

Do bookkeepers do taxes?

Bookkeepers can help pay taxes and even fill out certain tax information, but they are not qualified to provide tax information or advice.

What services do bookkeepers provide?

Bookkeepers help to keep an accurate recording of a businesses transactions as well as the income received. They create reports that help to map out a business’s financial status.  

What Are The Duties of a Bookkeeper?

A bookkeeper is responsible for keeping an accurate recording of a business’s financial transactions and income.

If you have recently received an IRS lien and would like to know the implications surrounding it, we’re here to help! Legal jargon and the steps to take to ensure that you’re handling the situation in the right manner can be stressful without proper research. At the very least, what you shouldn’t do if you get a notice for payment from the IRS is to ignore the situation altogether! There can be negative implications on your records and your property if you don’t work towards remedying and replying to an IRS lien notice.

Here is an IRS lien definition that can help you understand the main point surrounding the meaning. An IRS tax lien is when you neglect or fail to pay a tax debt and the government thereby issues a legal claim against your property including any financial assets, personal property and real estate that you may own.

IRS Lien or Levy

An IRS lien doesn’t mean that the government immediately seizes your property, it just protects and secures their interest on it. With a levy however, the government can seize and sale any type of personal property to settle the debt.

Please keep in mind, if you don’t answer the IRS to pay or at least make arrangements to pay or work towards appealing your tax debt in regards to responding to your lien notice, than they reserve the right to issue a levy.

What happens when the IRS files a lien?

Before a lien is officially created, the IRS first assesses your liability and puts your balance due in the books. You will then receive a pre IRS lien notice in the form of a bill titled Notice and Demand for Payment. After these two steps, if your tax debt has not been paid in full after 10 days than a lien is filed. If you neglect or refuse to pay the debt on time than the IRS files a public document called a Notice of Federal Tax Lien to alert creditors of the government’s legal right to your property.

How do I get rid of an IRS tax lien?

It is recommended that you respond to the bill notice either by contacting the IRS yourself through the necessary measures described on your Notice or immediately seek out legal assistance to act as the intermediary in the situation so they can conduct and offer you proper Lien solutions.

If you disagree with the IRS’s determination, you have a right to a hearing and you may *respond within the time limit of the Notice with a request for an IRS Lien Appeal.

*It is recommended by the IRS government site not to send the request to the Office of Appeals as this may delay the process but to send it to the address provided in your letter explaining your Appeals rights.

Depending on your tax history and payment status you may be eligible for Discharge of Property, Subordination or Withdrawal.

Ultimately, the best way to remove a lien is to pay the amount in full whereby the tax lien will be released after 30 days. Within the 30 days it is the IRS’s responsibility to grant you a Certificate of Lien Release as well as releasing the title encumbrance from your home. If the IRS has not given you this Certificate within the 30 after you’ve paid off your tax debt than you have the right to file a lawsuit against the IRS (but not against any specific IRS employees.)

How long does an IRS lien stay on your property?

Once the IRS has a tax lien in place, it can stay on your property for a total of 10 years.

Do IRS liens expire?

Tax liens can be extended beyond 10 years with variable amounts of time either voluntarily by you or through legal operations. There are several scenarios where extensions can take place from submitting and negotiating an Offer in Compromise, filing an IRS Form 900, having a Collection Due Process appeals hearing or even filing for bankruptcy.

How do I avoid an IRS lien?

The best way to avoid an IRS lien is to file and pay your taxes on time. Remember, if you are unable to pay, reach out to the IRS in order to make payments over time with the several payment options they have available.

As long as you are actively responding and sending in the required information asked upon you, you can only help your situation. By no means should you ignore the letters your receive altogether. Remember, if you fail to respond to make arrangements or pay once a tax lien has been filed, you may eventually risk having your property seized if the IRS decides to issue a levy!

If you have recently received an IRS tax lien and require legal assistance in the Fort Worth, TX area, contact Don R. Walker, C.P.A. at 817-905-1040!

As a business owner, you have a responsibility to the United States to pay payroll tax for all of your non-contracted employees. These wages are figured according to the IRS and are available on the IRS website. While most employers have an accounting program or professional that keeps track of these schedules, it’s important to understand the tax system in order to plan and track payments accurately. This can help keep you from accruing fines and Form 941 (Rev. January 2018)Form 941 (Rev. January 2018)other ramifications that can stem from changing laws or miscommunication.

 

What Payroll Tax do Employers Pay and When do I Pay Payroll Tax?

For employers, payroll taxes can be paid either semi-monthly or monthly, depending on your company’s tax liability amount. This payment schedule will be arranged at the beginning of the year and will be monthly for businesses who reported less than $50,000 in tax liability in the previous quarters. Semiweekly payments will be arranged for businesses with more than $50,000 in tax liability. If your business is required to pay semiweekly, your payment schedule will depend on your company payday. Monthly paid companies have a due date of the 15th of the following month. Form 941 (or 940) should be filed every quarter reporting the monthly tax amounts made as well as including any leftover balances. Late deposits accrue a 5 percent penalty for every month they are not fully paid.

Form Details

In general, employers must file a quarterly Form 941 to report each month’s withholdings from employees as well as any taxes paid by the employer. However, if you are a small business owner that paid out $1000 or less during the year in federal and state withholdings, you may be eligible to file a Form 940 Annual Payment form. It’s always best to check with a professional before completing any tax forms, payment, or audits to ensure accuracy.

These taxes will be paid at the local, state, and federal level, and include FICA. They should be paid on every employee that works at your business. Employees are defined as a worker who is controlled by the employer. This includes details such as start and end times, scheduled lunch breaks, driving a company vehicle, or being told in what manner to complete a job. A contract worker is defined as a worker that schedules his or her own work hours, is paid by the job instead of an hourly or salary rate, and drives his or her own vehicle. If you aren’t sure if a worker is contract or employee status, a skilled accountant or tax professional can help.

What is Payroll Tax Used for?

Whether you’re an employee or employer, you pay taxes on every dollar you earn. While this may seem like a nuisance, our tax dollars fund vital projects, programs, and committees that help less fortunate, ill, and elderly. Our federal taxes are collected to fund a number of government-affiliated social insurance organizations that help assist elderly, ill, handicapped, and others with disabilities. These funds are also used for programs related to our safety and well-being. Some Programs and organizations affected by taxes are:

• Social Security
• Medicare
• Medicaid
• CHIPS
• Food Stamps
• HUD
• Other Low-Income Housing Programs
• Unemployment
• Child Abuse and Child Neglect Programs

At the state level, taxes are used for multiple reasons that can include education and school funding, transportation and road work, healthcare, and much more. In fact, they help to fund:

• Low-Income Healthcare
• Correctional Facilities
• State Education Programs
• State College Funding and Grant Programs
• Parks and Recreation Facilities
• Public Employee Salaries
• State Police

While nobody enjoys paying taxes, each business in the U.S. must comply and contribute to the tax pool. In order to ensure that your business pays its taxes timely and accurately, call the professionals of Don R. Walker, C.P.A. to help. Our experts can help with:

1. Quarterly and Annual Tax Preparation
2. Business Registration
3. Tax Amendments
4. Past Tax Year Filing
5. Tax Form Review
6. Assistance With IRS Regulations and Guidelines

When your business needs payroll tax preparation assistance that can be relied on, there’s only one team to call. The Don R. Walker, C.P.A. professionals have years of experience in tax law and scheduling so you can rest assured that your company’s taxes are completed efficiently, accurately, and timely for stress-free compliance. We provide tax services throughout the Fort Worth, TX area to deliver stress-free payroll tax completion for your business that’s correct, complete, and on time so you never have to worry about fines or other consequences. When you need payroll tax preparation for your business in Fort Worth, TX, call 817-905-1040 to reach our experts today.

A lot of people tend to assume that accounting and bookkeeping are the same, but there are a couple of differences between the two. While bookkeeping and accounting deal with financials, one records financial data and the other interprets it. As a bookkeeper, the job involves recording all financial transactions that take place. As an accountant, they analyze and summarize the data that has been recorded by a bookkeeper. Both are integral in keeping the financial aspects of a business in order, but you will need a bookkeeping service in order to make sense of your financials. Below are the types of bookkeeping that are used for bookkeeping service.

Types of Bookkeeping

• Single-Entry: If you have a small business or have minimal transactions that take place, single-entry bookkeeping is the method that should be used for your business. It’s not the most detailed method for bookkeeping as it only requires you to record revenue and expenses. This wouldn’t work for a bigger business because it doesn’t require the need to record accounts payable or receivable.
• Double-Entry: For larger businesses that have two or more accounts, a double-entry system is needed. It’s more complex but considering bookkeepers have to record debits and credits of transactions. Because of how detailed it has to be, it is very reliable for financial records and you can see where you have gained or lost in profits.

To get bookkeeping services in Fort Worth, TX, call 817-905-1040 today! If you need help with an IRS Lien or need assistance with a wage garnishment, Don R. Walker, C.P.A. is at your service.

Do you want to guess what percentage of small businesses are audited by the I.R.S.? Over 2%. That means that one in fifty small business owners will have to go through this supreme headache. Your odds of being audited might go even higher if you make one of these common tax mistakes!

Common Small Business Tax Mistakes

Mishandling Receipts and Payments

Even the smallest of companies can take advantage of I.R.S. tax breaks, and all of it starts with proper record keeping. That means hanging on to your business related receipts. One of the most frequently made and very expensive mistakes to make is neglecting your expense receipts, so make sure to record them on a weekly basis.

Not Saving Tax Money

Depositing money into a separate account for your tax funds is absolutely essential. You want to store these savings in a place where you won’t be tempted to spend it, because it can be quite challenging to catch back up when you get behind.

Filing Too Many Deductions

Be very careful about what you claim as a business expense, as well as how much you claim (especially if you’re just starting your business). Instead of guessing about what you claim in your deductions, try looking at the I.R.S. website for insights.

How Not to Get Audited by the IRS

We laud creativity in the workplace, but tax season is not the proper time to get creative. There are some bad habits that will consistently come back to haunt you when you pay your taxes, such us…

• Looking for Exploits, Instead of Opportunities
• Trying to Hide Revenue
• Bypassing Taxes by Dealing in Cash
• Putting Off Tax Related Documentation
• Entrusting Your Taxes to a Disorganized Employee or Family Member

Adjusting your mindset about taxes is one of the most important steps you can take to lower your chances of being audited. Instead of looking small business tax breaks to exploit, search for opportunities to streamline your tax documentation and filing process. Tax season champions are those that consistently record and store tax information on a day to day (or at least weekly) basis. Never entrust your tax work to an employee who can’t handle basic documentation management. Finally, remember this: while they still want you to pay your taxes, federal, state, and local government organizations consistently publishes new articles and guidelines to help you take advantage of tax incentives and avoid common tax mistakes.

Partner With a Trusted Tax Consultant

Proper, consistent documentation is the best way to avoid getting audited by the I.R.S. However, if you find yourself in need of a Fort Worth I.R.S. tax settlement advocate, the helpful team at Don R. Walker, C.P.A. would love to assist you! Feel free to call us with any questions at 817-905-1040! You also find more tax tips here!

Are you dealing with tax debt? You are not alone. Many business owners and even individuals find themselves taken by surprise when they learn they have fallen into debt. This stressful situation can lead you to panic, wondering what it is you can do to resolve the situation. At Don R. Walker, C.P.A., we understand that finding a tax settlement solution can be difficult, however, we have compiled a few tips that can assist you during this time. Remember, you have some time to gather yourself and use these tips to get your debt taken care of.

Our Tips For Your Case

Organize Your Documentation

First things first: When it comes to dealing with the IRS, you will need to have all of your paperwork handy and in order. Gather together all relevant documentation, including any paperwork from the IRS themselves. This will make it easier on you as well as them and looks good for when you are reviewing your case.

Contact Your CPA

As with any other situation, you want someone in your corner to support you and possibly fight on your behalf. Contacting your CPA is the next logical step, as they will be able to tell you all of the available settlement options and review the paperwork to see if there is an error present. Don’t have a CPA? Take some time and research to find the best firm or individual for your needs to ensure you have someone you can work with. After you review with your CPA the options, they may recommend an attorney for your case.

Do Not Procrastinate

While you do have some time to get organized and review your options, do not take this to mean you do not have to get started on a solution. Procrastinating can make the debt worse and even lead to further issues. The IRS may even take more serious actions towards you. Getting everything ready and seeking a solution in a timely manner can prevent increased debt.

Tax debt can be scary, but there is good news. You do not need to deal with it alone. Don R. Walker, C.P.A. provides tax solutions for your case and will work with you and the IRS towards a tax settlement. Do you need assistance in Fort Worth, TX? Give us a call today at 817-905-1040 for your tax settlement needs.

Is hiring a CPA the right move for your small business? That’s a question that every business owner has to consider as their company starts growing in earnest. While there are numerous factors to weigh in your decision, here are three potential ways you could save by hiring a CPA.

Savings #1: Penalties Avoided

It’s an obvious, but time honored fact: most business owners hire a CPA to help them avoid costly penalties during tax season. It takes a lot of effort to arrange your taxes, especially if your business extends across state lines. While bookkeeping programs can take some of the stress off, these tools are still reliant on accurate input from your team. Hiring a certified accountant is a great way to ensure that you aren’t hit with an expensive tax penalty after filing.

Savings #2: Time Recovered

Try counting the number of hours you spend doing your accounting on your own each year. Consider the work that you could have achieved during that time and try to calculate the total potential value of those hours. By utilizing a CPA’s assistance, you can potentially recover dozens of man hours for critical work in other parts of your business.

Savings #3: Deductions Found

Unless you’re a tax-filing superman (kudos if you are), there’s a good chance you’re missing out on potential deductions. It’s not your fault either. Laws change over the years and potential deducts change with them. That’s why it pays to hire a professional that keeps up on the latest tax regulations. Who knows how much money you could be saving each year? Hint: a CPA does.

If you’d like more information about CPA’s, accounting services, or tax deductions, feel free to call our office at 817-905-1040. We’d be happy to talk with you!

America has a long history of taxing- from sugar to tea to property, we have started wars, protests, and eventual acceptance over it.

How Was It Created?

The first date of Tax Day appears in 1861 in the Revenue Act to help fund the Civil War. It was found unconstitutional and dismissed. Officially created in 1913 as the Sixteenth Amendment, America now had a law that made it legal for the government to tax citizens. For 40 years, the filing date fell on days in March, but in 1955, Congress passed a new law that declared April 15 as the official “Tax Day.” Some speculate that the government moved the date further back so they have longer to dole out refunds.

What Day Is It?

Nowadays, Tax Day almost always falls on April 15. It can sometimes take place on April 16 or 17 due to weekends or holidays. Emancipation Day is celebrated on the weekday nearest to April 16, so sometimes Tax Day can get pushed to that following Monday. In one case in 2007, the storm Nor’easter affected the majority of the east coast of the United States during Tax Day. The government was forced to extend the filing deadline all the way until June as many people were displaced and obviously had other things to worry about besides paying the government.

Whether you love it or hate it, taxes have been part of America for centuries, and have seemed to work out for our democracy for the most part. If you need tax preparation help in Fort WorthFort Worth, TX, call Don R. Walker, C.P.A. at 817.905.1040 today.