AI always use taxact software and I have been a sahm but now I have a little income but we spent a lot of money and haven't made that back yet for me to be legal. I only sold about $12000, but most of that money went back into the business and I had to buy supplies. I know I gotta pay sales taxes on it, but I don't know how to itemize and dededuct. And do the other taxes. We spent $30,000 to be legal and buy cakepans and oven and sink and stuff because we had to have a commercial kitchen but I got small kids so I needed to be close to them plus we been having snow days. I know I can go to a accountant but I want to learn myself.
AAnd I gotta learn fast! I want to do them in the next few weeks. I just have a lot of receipts in a box please help me because there are no receipts for my biggest things I bought because I was getting a lot of stuff used and already had some stuff and my grandma gave me some of her cake pans plus there is supplies like cake mix and oil and eggs and powdered sugar but other stuff like airbrush and and cabinets and cooling rack and tile and insulation. But I got some insulation off craigslist so I don't have a receipt.
ASorry for so many posts but I am using my phone and it wont let me see what I am typing wonce I get past a certain amount of lines. But my husband lost some receipts to and some got mixed up but I can remember what I paid for stuff before taxes plus you can find it online, so can I add it in and do a educated guess to what some stuff was that we spent?
I sincerely suggest that you see a tax consultant/preparer the first time around (get a CPA). They can give you advice on how to setup tracking things the right way so you can be more independent in the future with self preparation. If you've spent that much on start-up another $500-$1000 is a drop in the bucket compared to the invaluable advice you will receive if you don't know where to start (and the fees are tax deductible). You can read books and articles, but you need something more specific to your needs if you've never done your taxes with your business taken into account unless you are really familiar with the tax code and interpreting the law. Additionally minimizing your tax liability is something you need to keep in mind, and a CPA can help with that also.
To give you some background, I went to business school (MBA) took a couple of courses in Tax Accounting and I still think the use of a CPA was the best idea ever. I've prepared my own taxes since I've been paying taxes until I became a business owner.
Here's a good article from my CPA http://mycpajay.wordpress.com/2013/02/19/to-err-is-human-to-deduct-divine/
I know that's not the advice you were looking for, but I think it is your best bet!
Original message sent by tdovewings
I sincerely suggest that you see a tax consultant/preparer the first time around (get a CPA).
Agreed. If you were thinking of starting a business and you had some time to learn about doing your taxes I would recommend taking a class, but this is not the kind of thing you can learn quickly starting from scratch, especially if you have not been keeping diligent records.
I also went to business school for my MBA and took some tax accounting courses. When I started up my business I used QuickBooks to handle the accounting and track expenses/income. The hardest part was the initial QB setup, once you have it ready to go it's pretty easy to enter your receipts and orders. Doing the business taxes was relatively straightforward, you can import data from QB directly into Turbotax so it took me less than an hour to complete.
For next year, I recommend an accounting 101 class if you don't already have the background, plus a class specific to tax accounting and a tutorial class on your accounting software of choice.
the biggest problem is that you don't know what you need
it's one of those--you don't know what you don't know
you would have to learn everything in order to filter down to what would be pertinent for you--exhausting
you really need to bite the business tax preparer bullet at a minimum and a cpa of course is better srsly
you need to protect your investment
AI don't have the money right now for $500-$1000! Is that really what it costs? That is actually much worse than I thought. I am really good at math and following directions and I double check all my math. I seriously don't have it. I do think I will probably not owe much if anything.because we are still considered low income even though I am trying. We have a household size of 6 and we normally get like $8,000 back every year. We got student loans and mortgage interest. How do I even find someone reputable? Can I ask how much it costs before I go in? I did talk to one that was really nice q couple years ago and it was a free consultation and when I asked him how much it would be he didn't tell me.
even an h&r block--they have a premium/business division for more complicated returns like yours--you can get it all roughly priced out in advance too--it's priced according to how many different forms you/they use--it might not be as much as you say--i don't think it would be--you can try them
maybe you could find someone (prolly not h&r though) who would take it on and get paid out of your refund
i'm not positive about that but it's maybe
who else will know all the ins & outs--not me for sure--i need pros for that
my brain can't hold that info--small r.a.m.--needs memory upgrade--and the busses don't run on time either
I don't have the money right now for $500-$1000! Is that really what it costs? That is actually much worse than I thought. I am really good at math and following directions and I double check all my math. I seriously don't have it. I do think I will probably not owe much if anything.because we are still considered low income even though I am trying. We have a household size of 6 and we normally get like $8,000 back every year. We got student loans and mortgage interest. How do I even find someone reputable? Can I ask how much it costs before I go in? I did talk to one that was really nice q couple years ago and it was a free consultation and when I asked him how much it would be he didn't tell me.
I don't know what area you are in, but in the Northern VA area most CPAs start at ~$200-$275 per hour. I didn't call every office when I was looking for one, just asked friends for recommendations and I called about 4 places and they all seemed to be about the same. I didn't even try HR Block or Liberty Tax because I wanted consulting services as well as getting my taxes done.
Turbo tax is great for doing taxes even for business. It asks you simple questions and has drop down menus if you need greater clarification. I've used it for a property management consulting firm and independent tax collectors position. It makes depreciation and other complicated issues easy. It also pulls all of the depreciation information over for the next year so you don't have to recalculate.
When I have several items I need track, I use excel spreedsheets so I have the backup documentation for the entries. Turbo tax puts all of the information into the appropriate forms for you and then provides detailed worksheets to support the entries in your tax forms. It will also compare previous years' activities to the current one. They also have great customer service.
Original message sent by annabananana
I don't have the money right now for $500-$1000! Is that really what it costs? That is actually much worse than I thought. I am really good at math and following directions and I double check all my math.
There actually isn't a whole lot of math involved in accounting, the software handles most of it.
I don't mean to be harsh, but it is critical to have your books set up correctly...if you don't know how to do it yourself and can't afford to hire someone to do it the right way you may want to put your business on hold until you have saved enough.
ASorry, misspoke! I replied in first person because I am going trough the exact same thing and it really pissed me off! Took it a little too close to heart!
OP, I know exactly what you are going through, I am going to send you a PM.
(BREATH!) Yeah, I am going through the same thing, and I am going to try Turbo tax, and see what happens. I had to replace a car, then a furnace, and it set us back over $10,000, after not getting child support in 9 months. I made $12,000 in the first 5 months last year, and then it has trickled in, sometimes $1000 in a week, and sometimes a $44 week. Times are tight for a lot of people, but rather than putting our businesses on hold, we strap ourselves in and hunker down and work hard I know a little, not to give any advice on taxes, but some CC and business advice would be to ignore the nay-sayers, there are some rather hateful nasty people on here.
DEFINETLY get help on your taxes this time, even if you have to wait a month, or two, you can file an extension, if it comes to that. But the IRS has never gotten mad when people take too long to get their rebate, lol. just when they have to pay.
I have been doing my own taxes for over 40 years taught to me by my brother who was a CPA before he passed away, have taken accounting courses because my major was was business management and finance and I still went to a CPA when I started my business and had to file. It's easier than messing up and getting audited. I wouldn't take a chance.
ATo clarify, I suggested putting the business on hold until OP can afford to hire a CPA to minimize the potential damage from an audit, since it's obviously too late to put off launching the business. The essential components of running a business (accounting, legal compliance, and insurance) should be budgeted for before you launch the business, and if you can't afford those essential services you probably shouldn't be running a business.
As an analogy, it might not be the best idea to buy a car if you can't afford to pay for registration fees, auto insurance, and routine maintenance.
If you end up doing your taxes yourself, be as conservative as possible. If you don't have the receipt for a business expense, don't deduct it. If you're not 100% sure an expense is deductible, don't deduct it.
This is the best advice right here. I have experience preparing tax returns (about to sit for the CPA exam), and the one thing you can be sure of is that if you get audited, you must have a receipt to back up all expenses you deducted.
You could try to do your tax return yourself, but it will take a long time if you are not familiar with the Code. It's not about math at all; it's learning what's deductible and where to put it on the forms. A software will put it in the right place and may even help you determine what's deductible, but do NOT attempt to do this by hand without a software. Another note: just for depreciation purposes, it may be better to get a CPA. That stuff can get tricky in a hurry.
If you are looking at hiring a CPA, they will charge by the hour. You said that you have boxes of receipts. This will increase the amount of time needed to prepare your return, so the fee will be higher. If you want to hire someone, look for a good reputable CPA; I would steer clear of the national chains. Accountants may or may not be able to give you a quote. It depends on time, and until he/she sees your box , time may not be estimable.
I know it's a little late for this, but just a few tips for next year.
- Keep all receipts, and enter them either into Excel or QuickBooks by category of expense (Ingredients, supplies, pans, etc). (If you don't have an accounting background* and/or don't want to spend the money on QuickBooks, just use Excel. It's perfectly sufficient.) This will allow a CPA to do your return much quicker (and cheaper) if you choose to use a CPA; it will decrease the time you spend doing it if you choose to do it, too.
* The reason that I say this is because QuickBooks takes some accounting knowledge to set up; of course, you can pay a bookkeeper to set it up for you.
- Keep track of all income received including cancelled checks that you deposited/cashed.
If you go with Quickbooks, they have their own professionals that work locally and can help you with that.
Whats important is to make sure you know how to keep records going forward, to make sure you don't end up in the same situation again. That $500 you can't afford now might turn into $5,000 if you aren't following the rules, no matter how low your income is or how new you are in business.
ACould someone tell me a good way to organize my receipts? I will start in on that and see where it takes me. And we have 4 kids together and are trying to get custody of my sister's 3 kids because she is off and on drugs and the baby was found in the street with only a dirty diaper on thank heavens she wasn't hit by a car. But we had to build a building for my cakes than turn around now and have to try to add on to the house after hiring a lawyer because the state gave the kids back to her again and she says she wants them so we have to fight and hire a private investigator but we got all the pictures we need, but can't afford for him to watch the house anymore so we talked to a neighbor to just call the police when she leaves them home again by themselves.
AAnnabakescakes, I agree totally and with your pm to. This is the first time I asked a question and stuff but I have read on here lots and I seen it lots.
Original message sent by annabananana
Could someone tell me a good way to organize my receipts?
Your first step will be to set up a "chart of accounts", which is basically a list of categories (accounts) that includes income you receive and expenses you pay out. In a very simplified form you will have one or more accounts for revenue and multiple expense accounts. Your invoices that represent sales to customers will be entered into a revenue account. Receipts for purchases that are directly involved in making cakes (like ingredients) will go to a "cost of goods sold" (COGS) expense account. Receipts for overhead expenses (like insurance or advertising) are assigned to a non-COGS expense account.
More info: http://outright.com/blog/what-is-a-chart-of-accounts/
If you have a list of all income and expenses for 2012 broken out by account (with the invoices and receipts to back it up) it will be much easier to do your taxes and you will have to spend less on a CPA. If you do not have accounting software you can do this with Excel or even a pen and paper.
Since it sounds like you spent a lot of money setting up your cake business it is even more critical to find the money to spend on a good CPA. You could end up overpaying your taxes by a significant margin if you do not take the deductions you have earned, which would negate the cost savings of not hiring a CPA. On the flip side if you take deductions for large expenses incorrectly you could potentially owe back taxes and penalties in the case of an audit.
I'm sorry to hear about what's going on with your sister's kids, I have experience volunteering with an advocacy organization that deals with these kinds of situations so I know it can be very difficult. Unfortunately the IRS probably won't care about personal hardships, they only care about receiving the tax revenue they are owed.
A good accountant is worth their weight in gold.
If an issue comes up with the Infernal Revenue Service, the account handles it, not me.
She's worth every dime I pay her!