Quarterly Filings

[Jax Snacks]

I am getting mixed signals about quarterly federal filings from different accountants.  Some say you always need to file them.  Others have said that if you start filing them, you need to be very close to the actual tax owed each year, otherwise you will be penalized.  A fellow business person has told me this and she never files a quarterly tax return and has never paid a penalty.  She said 3 different accounts told her to not file quarterly and that the money owed at year's end, was not significant enough for the IRS to care about any penalty.  The key (they say) is to always file every year and square up with what you owe.  Any comments?  Thanks.

Jax

[kawoodard]

The rule is that you have to file quarterly and the IRS rules further state that you have to pay at least 90% of your tax owed for the year with your quarterly payments. So if at the end of the year you owe taxes and your quarterly payments only cover 75% of your total tax due they will charge you a penalty. You really want to follow the rules because if you get on their radar it is hard to get off.

[Bravo Duck]

Disclaimer: I'm not an accountant. My understanding is that if you are a full time employee doing something else and derive most of your income from your job , then you just file a schedule C at the end of the year. If vending is where most of your money comes from then you must file Quarterlies.

I'll be seeing my CPA in the next week or two and ask her about it again.

[alyssamma]

Jax, your answer isn't simple

It depends on if you have an S-corp (or an LLC taxed as one), and if you have underpaid taxes before.

I believe you are talking about estimated taxes...is this correct? If so, in *general* you don't have to pay these unless you withheld too little before (I think it is withholding less than 90% of what you owe or $1K less than what you owe...too lazy to check the IRS website right now ).

Can you answer...

1) Are you talking about estimated payments?

2) What is your business entity (LLC, sole prop, S-corp, etc.)

3) Have you withheld <90% or <$1K of what you owe before?

Thx.

Kevin

[Quarter Master]

Jax

Under Vending Regulatory Affairs there is a section for Florida laws.Maybe it will give you some direction. Link:

http://www.vendiscuss.com/forums/view_topic.php?id=217&forum_id=17

Scroll down to view your state.

[JPVendCo.]

I have two businesses and I do not file quarterly. as long as these conditions exist you should not need to either.

kids?

mortgage?

regular job?

wife working?

what I do is i have my wife fill out her withholding to cover the amount i would normally have to pay in taxes.(which isnt much)  I normally end up with a little refund at the end of the year.

so I fill the withholding as follows: claim no exemptions, or dependants and add $10 per pay period.

by the end of the year we are good!

[jaharra]

Kevin,

You got me curious of what the IRS website had to say. This link describes both the differences between the entities and also the filing periods for each type. There is also a link at the bottom of the page for IRS Pub "Tax Issues For LLCs".

http://www.irs.gov/newsroom/article/0,,id=183918,00.html

On page 12 of this link "Tax Guide for Small Business": http://www.irs.gov/pub/irs-pdf/p334.pdf  it talks about Accounting periods and methods for Sole Proprietors.

Or you can search on the IRS site under "corporation filing requirements", etc.

Does anyone know much about the different tax accounting methods for the vending business?

[alyssamma]

Wendy, I'm not 100% sure what you are asking. In general there are 2 accounting methods - accrual and cash. 90+% of small businesses will chose cash. However, you can choose whichever one works out best for you - there isn't one that is for "the vending business".

For cash if someone owes you $100 you record that when you deposit it. For accrual you record it when you write the invoice (note, you don't need to actually write an invoice - the idea is that when you recognize someone owes you $ you record it).

Cash is much simpler so that is why most businesses choose that.

As for filing periods, that is simple too. The rule is you can't owe the IRS too much money at the end of the year. If your vending business makes $1000/yr, you don't need to worry about anything. If it makes $1000/mo, then you might need to make estimated filings.

With a sole prop or LLC being taxed as a sole prop the estimated filings are sometimes needed because otherwise you'll end up owing too much when you file your 1040. This is because you don't make any withholding payments during the year. So there is a good chance you'll owe too much, unless your business had a small profit.

With a corp or LLC where a salary is drawn (unusual), you make withholding payments throughout the year, so there is (usually) no need to make estimated payments.

Again, the bottom line is just don't owe too much $. I withhold a small amount throughout the year and then calculate my tax liability in Dec. I then make a withholding payment equal to that. The IRS doesn't care how they get the money, just that they get it

If this isn't clear, PM me

Kevin