income tax!

[TKK]

Is coming soon. Can someone guide me through it? What exactly should I have ready? Does ur business get a type of w2? Since this is my full time job and full time student, do I get a w2? Help please, im used to doing turbo tax would pay like 25$ for the long form and just used my w2 and school form...what expenses do you guys report?

[havending]

We make tax deposits every quarter

[TKK]

I mean actual income tax, not sales tax?

[Grazing Hippo Vending]

If you are self employed then you should generally be paying income taxes every quarter. There are some exceptions though. Íf you are not making very much money or you are running a loss then you generally won't pay quarterly (not a lot of money would be like $500 month). On the flipside, if you are making ALOT of money then you may be required to pay monthly (a lot of money would be like $30,000 month roughly).

The sales tax schedule and the income tax schedules do not coincide. Sales tax periods are: Nov-Jan, Feb-Apr, May-Jul, Aug-Oct. Sales tax due May 20, Aug 20, Nov 20, Feb 20

Some basic deductions are: Mileage, the product you sell (chips, soda, candy), the machines you buy (unless you are depreciating them), equipment for your business (hand cart, totes, cash bag, coin counters, office supplies, etc).

Frankly, you should consult a qualified CPA to ensure you are in full compliance. You should save and file all receipts. You should keep a ledger. You should keep a mileage log. You may want to get a Dome Book or use some business software like quicken to track expenses.

If you just dump a shoe box of receipts on your CPA's desk then he/she will charge ALOT more than if you had kept organized books yourself during the year.

If you have not done so yet, you must consider HOW to legally establish your company. That is certainly another topic though! Good luck and don't take my word for it; consult a CPA asap!

[TKK]

My route started like at $2000 a month in the begining of the year and.now is at about $9000. Im not good at taking receipts. I have boughten 3 dif vehicles this year. But how do u put all the machines purchased and all?

Pay income tax how though? I dont pay myself with checks I just take a monthly chunk...pretty much net...I know everyone says go to a tax guy but I want the info from you guys first. Can this be done in turbo tax? Lol

[AZVendor]

You really need to take the time to figure out how much money came in, preferably by month, how much went out each month and where it went.  Without this information you can't do your taxes, period.  Having no info will make it impossible to do taxes with either an accountant or in Turbo Tax.  This is a business and you need to run it like one, for your own benefit.  Without proper receipts, deposit records, and income and expense records you are dramatically increasing your chances for an IRS audit because your tax return numbers won't make sense.  Do the work now before tax time hits and you can save yourself some taxes and future wasted time, not to mention possible tax deductions.  And stop tossing the receipts you get, they are your only proof of payments sometimes.

 

The first thing you MUST do is separate your person finances from your business finances.  Where there is an overlap, such as removing all profits from the business (as you're doing when you say your pay is whatever money is left goes in your pocket) you are leaving yourself open to IRS interpretation of what you are doing with your all-cash business.  The IRS hates and suspects all cash businesses as they are prime targets for hiding or stealing funds from.  You are just asking for trouble if you continue to ignore this.  If you aren't capable of running the financial side of things (as your too-clean desk might show) then you need to find someone (your girlfriend perhaps or a bookkeeper) to track all of your finances for you.

 

If you want to be smart about this then start with the assets of the business.  You can't depreciate any of them unless you have details to plug into a tax return.  You need models and serial numbers of all machines and vehicles that have been used for business purposes.  The vehicles must be tracked by purchase and then financial gain when sold or traded.  Ultimately, if you switched vehicles multiple times in one year, you should be able to show the beginning vehicle, mileage bought and sold, the replacement with mileage and the final vehicle with mileage.  You also have to show how much each was paid for and sold for.  The same goes for the value of the vending machines.  You can depreciate all the machines and your business vehicles, but I would advise using a CPA who is also an IRS enrolled agent to fill out and file the returns for you.  As an enrolled agent, he is allowed to represent you in front of the IRS in the event anything on your tax returns is questioned.  You are a prime candidate for the services of an enrolled agent.

 

Get yourself a copy of Quicken for Business and start using it faithfully.  There is no time like the present!

[TKK]

The receipts I throw away are like simple stuff like food when I service, gas, and products. Why? My friend said milage depreciation. He said they dont care about the vehicle insurance, gas, repairs etc. I made a gain on all vehicles. Lunch receipts I fo out to eat virtually every other day and I use.my debit cards 100% I dont use cash so all my stuff is in statements. I have a business checking and savings, every month I do.leave about $300 In savings and keep the rest. All my purchases r made from sams club and I dont like those huge receipts as they said it can be all seen online. Plus I have statements. So everything that I almost buy for the.business is all in my statements. I spent about $30,000 in sams this year so far which is kinda cool cuz I have $600 cash rewards I can withdraw thos month

The stuff I dont have alot of track on are cash transactions. As in my machines. I have the bills of sales from routes I boight. But not all my machines. Repairs, upgrades, also my friend said since I operate from home I can deduct a certain amount like my office (which I bought cash) my storage shed I built which I have receipts of.over $1400. and he said even some bills I could, my laptop etc. But what about UN trackable expenses? My dutro, trailer, coin counter, office, used cl vending machines, etc?

And I do track every locations monthly sales.

[Grazing Hippo Vending]

So I am not in front of a computer right now so my response will be short. I can provide more details later if you like. Keep in mind I am not a CPA and the information I am giving you is based upon my business experience and what little I actually retain from college.

A home based business is a massive red flag for the IRS. I am not suggesting that you do not take EVERY deduction allowed by law, but rather, you MUST have evidence (receipts, deposits, card statements etc). With a home based office it must only be used for business. If you also use it as a guest bedroom, a video game room, a place to store your pots and pans, or a place to sit and ponder why the world turns, it WILL be disallowed as an allowed deduction.

If you take the standard mileage deduction (55.5 cents/mile) then you cannot deduct auto insurance, gasoline, repairs, etc. You can still write off tolls though. If you want to deduct everything auto related then you CANNOT also take the standard mileage deduction.

In short, I advise you to contact a CPA asap for further advice. If you like, you can call me and I will try and give you some more feedback. Keep in mind that this is an exhaustive topic with a fair number of discerning opinion. I always err to the side of caution in my businesses with all matters regarding the IRS. Is it a hassle? Sure, but not nearly the hassle you will face upon being audited. Give me a shout if yoh are so inclined. Im on the East Coast.

-Mark

585-298-1174

[havending]

I mean actual income tax, not sales tax?

We do both

[TKK]

When do you guys file

[Rick]

My route started like at $2000 a month in the begining of the year and.now is at about $9000. Im not good at taking receipts. I have boughten 3 dif vehicles this year. But how do u put all the machines purchased and all?

Pay income tax how though? I dont pay myself with checks I just take a monthly chunk...pretty much net...I know everyone says go to a tax guy but I want the info from you guys first. Can this be done in turbo tax? Lol

 

TKK, you're in a world of hurt.  And I'm not saying that to be snarky or scare you.  You have a lot going on here and this is an area I'd beg you to not "wing it".  Pay top dollar and have a qualified pro help you out.  One thing's for sure...when you're done with this process you'll be good at taking receipts from now on.  

[sherlock]

Listen to Rick.

 

If you needed complex medical attention, would the right choice be that you look to a forum for a remedy?

No. You'd go see a doctor.

If you were being sued, would the smart choice be to rely on legal advice found online to prepare your case?

No. You'd hire an attorney.

 

The responsibilities business owners have to the IRS are just as serious as the 2 scenarios above.

Even if vendors are meticulous in their record-keeping, I recommend vendors who do this full-time get a pro to prepare their taxes.

I would especially stress that advice to you given that you are already in a bit of a mess because of improper record keeping.

 

 

[musser]

Holy Cow! better contact a CPA dude and not some wankers like Liberty or HR Block. Throw away turbo tax and get a new copy of Quick books and have the CPA set up the accounts for you. SAVE EVERY RECEIPT!!!

 

Auto expenses will hang you every time. You MUST keep a real record of auto use. In most cases using the standard mileage rate is okay but if you are in an urban area you need to use actual expenses.

 

Man have you got a mess.

 

BTW travel expenses like meals are only deductible if you are away from home overnight and then there are restrictions. The IRS reall looks at travel expenses for fraud closely.

 

CPA CPA CPA ASAP

[dogcow]

Get tis thing called neat desk,its a little scanner that tracks reciepts and expenses its easy to use and u won't worry about missing receipts at tax time. I scan all my purchase reciepts and route cards. Its pretty basic but well worth the $ if u aren't organized. It automatically reads the vendor, date, total, etc

Sent from my T-Mobile myTouch Q using Tapatalk 2

[TKK]

We dont get a w2 right? Or some kinda form?

[AZVendor]

W2's are only issued by an employer.  If you are using a payroll service and they are paying you as an employee then they will send you a W2 on behalf of your business.  If you are paying yourself a regular income and paying taxes deducted from those payments then you can issue yourself a W2.  If you are not using any payroll service and don't issue yourself payroll checks then your won't have any W2 coming.  If you pay yourself as an independent contractor you could issue yourself a 1099 but since you are the only employee why bother? 

 

Just take all your income records and expense records to your accountant and let them do your taxes for you. 

[Pyrodude]

We dont get a w2 right? Or some kinda form?

No you wont get a W-2.  A W-2 is used by a business to report the wages paid to an employee.  As you are not an employee of any specific business you will not receive a W-2. It is possible that you will receive a 1099-misc or other 1099 form from someone you received monies from.

 

Some excellent advice was given above.  If you dont run your business like a business, the IRS is happy to figure it out for you and you wont like the results.  As long as you dont get caught you have nothing to worry about.  But trying to save a buck by ignoring/skimping on professional CPA help is a recipe for long-term disaster.  The IRS WILL eventually catch up to you.  It may take a while but they usually get their man.  Take the time and spend the resources to get your business set up properly and get your accounting practices established.  It will save you so much headache and heartburn down the road.

 

The mere fact that you are asking about receiving a W-2 shows you dont really know whats going on regarding accounting.  Listen to Sherlock and seek the professional guidance you need before you dig your financial grave any deeper.

[treadmill]

Also this is very important. When deciding on which way to deduct your vehicle (mileage or expenses) once you start with one way you cannot change back and forth each tax year. It must stay the same as long as you have that vehicle. So make sure you make the right decision about the mileage vs expense option.

[TKK]

Im thinking of going llc this year, do I have ro change anything?

[Grazing Hippo Vending]

Im thinking of going llc this year, do I have ro change anything?

Hey TKK I was wondering if you had consulted with a CPA yet? If yes, did you find it useful? If you have not yet consulted one, how come? My CPA only charges me when paperwork needs to be completed. I have never been billed for ANY consultation work. The peace of mind is WELL worth the cost.

[sherlock]

My CPA only charges me when paperwork needs to be completed. I have never been billed for ANY consultation work. The peace of mind is WELL worth the cost.

 

That's a great point. Mine is the same.

I believe many CPA's are like this.

Clients can call for advice and to review financial issues with the CPA throughout the year.

You will not have them for help only at tax time.

[Pyrodude]

Im thinking of going llc this year, do I have ro change anything?

 

Basically, if you set up an LLC all of the paperwork (i.e. bank accounts, licenses, insurance, credit, etc.) will need to be changed into the LLC's name.  You would need to create a paper trail showing the transfer of ownership of your assets (machines) to the LLC.  Dont know if its the same in TX but here in the Peoples Republik of Kalifornia your LLC can be structured as a sole proprietorship or partnership or corporation depending on your desire.  An LLC will also shield your personal assets from being attached if your business ever had a judgement placed against it.

 

Not to sound like the proverbial broken record (I guess that shows my age), but again these are things a CPA will help you with.

[TKK]

Im in.accounting classes.so I am going to a cpa and maybe.hnr block for the.2013 taxes. I want to.do.my.own.accounting in 2014

Which QuickBooks do.u.guys use? I see a ton of different ones.

[AZVendor]

You should do your own accounting all year long but plan on using a CPA for your taxes at year end as they know more about depreciation, deductions and other important tax issues.  Don't use HR Block or any other tax return mill.  They don't know all that they should.  Spend the money on a CPA and they will probably save you money on your return.

 

I use Quickbooks Pro and that is all that you would need.  There are other more expensive versions but you won't benefit from them.  I also would not recommend the online version as there are limitations to it and it could end up more expensive than buying one copy of QB Pro that you can use for 3 years.

[sherlock]

You should do your own accounting all year long but plan on using a CPA for your taxes at year end as they know more about depreciation, deductions and other important tax issues.  Don't use HR Block or any other tax return mill.  They don't know all that they should.  Spend the money on a CPA and they will probably save you money on your return.

 

 

I agree.

 

Your CPA will also know of any changes to tax code that you may otherwise be unfamiliar with.

This is important as there can be major changes that most of us are unaware of from one year to the next.

 

Also, as AZ said, stay away from places like H&R Block.

Some folks working at tax filing services don't know enough to file their OWN taxes at Halloween, and yet right after Christmas, there they are filing taxes for others!