By outsourcing your bookkeeping you only pay for the hours worked, at a rate that is affordable, reasonable from an individual with over 30 years of experience. I have experience in several industries from retail, to cafes, to Mortgage brokers and real estate agents, to home building, general service industries and finally Job Cost tracking for a multi-million dollar manufacturing company.
Please call me today and lets talk about your financial needs and your expectations from my services!
This section is dedicated to new articles that I will be posting periodically.
IRS Mileage Rate Increase as of 7/1/08
IRS Tax Update
The 5 Most Frequently Asked Bookkeeping Questions
- Why Should I keep records? Keeping complete, accurate, timely records will help you track the progress of your business, prepare your financial statements, will track where most of your sales are coming from, keep track of your expenses and save you money when it is time to have your tax returns.
- What Kinds of records should I keep? There are several accounting software packages on the market, you can keep manual books. Except in a few cases, there is no law that you have to have special kinds of records. However, depending on the business you are in affects the types of records you need to keep for federal tax purposes.
- How long do you have to keep records? You must keep your records as long as they may be needed to prove the income or deductions on a tax return. So it really depends on the action, expense, or event the document records. A good general rule is 7 years.
- How long should I keep employment tax records? As before, you must keep all of your records as long as they may be needed. However, keep all records of employment taxes and employee files (current and terminates) for at least 4 years.
- How and what records should I record for my business transactions?
- Cash purchases
- Credit card purchases
- Debit card purchases
- Manual checks
- Computer generated checks
- Sales Incomes created and sent out to customers
- Payroll information
- Fixed Asset Purchases
- Notes taken out by the business
- Owner’s personal funds invested into the company
- Vehicle mileage and expenses
In other words,
“EVERY SINGLE PENNY YOU SPEND OR RECEIVE WITH BACK UP DOCUMENTION.”
12 Tips for Starting Up a Business
- Decide on the name of your business.
- Research the County DBA files to make sure the name you have picked out is available.
- Fill out the DBA application. This can be downloaded from the internet at your counties website along with the directions. The cost is approximately $14.00.
- Open a Business checking account. It is very important to keep your personal finances separate from your business finances. You will need the DBA certificate from the county to open this account. It can be titled as:
Dba Smith Window Installation
Or, just Smith Window Installation
I prefer using your name and company name, so if any one wrote the check out to you personally you would not have a problem getting it cashed or deposited into your account. Banks have become very careful about only allowing items with the name of the account to be processed through that account.
- Do you need an EIN number? The EIN number is your federal Id number. If you are to have employees, you will need to apply for this number also. If you are only going to be paying non-employees or contract labor, then at this time you do not need an EIN. The EIN application can be found at www.IRS.gov
- If you are selling retail items for other products, you will need to research if you are required to charge sales tax. This can be done at the website of the State Comptrollers website under “Business” and “Sales Tax” If you are required to collect and file sales tax returns, then you can apply on line for that number also.
- Find a good full charge bookkeeping company. Your time needs to be out working and growing you business, not trying to do all the paperwork. Getting a good support time is how you are going to grow and expand you business.
- Purchase an accounting software package or use a bookkeeping company where you set up a weekly, bi-weekly, or monthly appointment to drop off you documents for that period of time at their office and save yourself an additional start up cost of $200.00 to $500.
- Define your business needs. Are you going to want Profit and Loss for different Revenue Centers or just one?
- Set up a 12 month “Budget” and a 5 year “Growth Budget”.
- Work with your bookkeeper to set up your books in QuickBooks.
- Hire a Website Designer to start a small website. Set up a Budget to work with on this project, tell him or her that this is the amount available and stick to it.
I hope theses few tips help you start up your business. Next publication will be about what receipts you need to keep. Defining what a “Receipt” is as per what IRS wants to see if you are every audited.
Employee vs Independent Contractor
How do you determine if a person is an employee or an independent contractor?
As Quoted from the Internal Revenue Service:
The determination is complex, but is essentially made by examining the right to control how, when, and where the person performs services. It is not based on how the person is paid, how often the person is paid, or whether the person works part-time or full-time. There are three basic areas, which determine employment status:
1) behavioral control
2) financial control and
3) relationship of the parties
People such as lawyers, contractors, subcontractors and auctioneers who follow an independent trade business, or profession in which they offer their services to the public, are generally not employees. However, whether such people are employees or independent contractors depends on the facts in each case.
The general rule is that an individual is an independent contractor if you, the person for whom the services are performed, have the right to control or direct only the result of the work and not the means and methods of accomplishing the result.
Each company, contractor, etc. must fill out a W9 when a contract or proposal has been accepted. At the end of the fiscal year, if $600.00 or more has been paid to this entity a 1099Misc will be sent out at the end of the year. This protects your company from any tax liability if the associated company does not file and pay taxes, because you have done your duty to get the signed W9 form. If the W9 is marked as a corporation there will be no W9 sent out at the end of the year, but you have your confirmation that this is a company and not a LLC, Sole Proprietorship or Limited Partnership.
Generally as an Independent Contractor, there is no tax withholding on this income. Thus, you may have been subject to the requirement to make quarterly estimated tax payments. If you did not make timely estimated tax payments, you may be assessed a penalty for an underpayment of estimated tax.
Under common-law rules, anyone who performs services for you is your employee if you can control what will be done and how it will be done. This is so even when you give the employee freedom of action. What matters is that you have the right to control the details of how the services are performed.
Therefore, you decide the amount you are going to pay hourly or salary. You set the work schedule and hours of operation. You define the job description and you hire them as employees.
Forms W4 and I9 need to be filled out and copies made of appropriate forms of ID provided, before the first check can legally be paid to this employee.
These forms can be found usually on the “Home Page” of the IRS website at www.irs.gov.