Business protocol

Phoenix

New Member
I know my little operation is hardly what one would call "High Finance", but just to stay legal and honset with Uncle Sam, I want to decide on a payscale for myself, and take out taxes and write myself a paycheck... is that too wierd?
I want to have records showing the income, broken down to show my expenses, income, my salary, and taxes that were taken out and of course.. that "Bottom Line".
Mike Hughes supplied me with a really incredible spreadsheet to figure pricing, anyone have a spreadsheet to figure the rest of the money thing? Mike, you lookin here? lol
I want to make sure that "Ceaser" gets his... just not one penny more!
 

Mike Hughes

New Member
I use Quickbooks Pro 2002 to manage the accounting, and I use Paychex for payroll. I keep all of that tricky stuff out of my hands, and concentrate on running my business.

I also have an accountant to do all of my taxes.........I simply hand him the quickbooks disk and he does his thing from there....
 

Paul B.

New Member
If you do not have a partner or employees, you do not need to write yourself a pay check. You will be taxed on your total net income anyway, including money remaining in your company's checking/savings account at the end of the year. Writing checks is just extra work. If however, you feel better disciplined by doing so, it's your option.

Keeping receipts and track of all expenses is required by the IRS in order to be able to claim it as deduction from your gross.

An accountant/tax advisor will be able to suggest methods that are specific to your type of business. They can fill out all the forms for you on a regular basis (you just need to supply them with the info to fill the forms out with). Give them all the information you can so they can better help you (remember: garbage in - garbage out). Also remember that not all accountants/advisors are equal in quality/cost.
 

Phoenix

New Member
Money matters

Tahnks Paul, and Mike.. I guess the advice from both of you was pretty plain to say I need an accountant.. I'll take that suggestion, and concentrate on business at hand.. Thanks!
 

Bill B

New Member
When you have the discussion with your accountant, you need to decide whether you will operate as a sole proprietor, a Corporation (probably Sub S), or an LLC. The issues are taxation and reduction in personal liability. As a part of the process, you will want to talk to your insurance agent about obtaining vehicle, liability and work comp under the legal entity you are considering.

Making these decisions will help direct you in terms of the accounting system to use. However, like Mike I use QB Pro and would do so whether I was a sole P or a Sub S/LLC. It will help you keep clear on such issues as assets vs. expenses, etc.

Regardless, I personally would write myself checks to maintain recorded transactions of cash in and out of my company account(s). Lots of good books - try finding one on small business startup at the book store. Good luck.
 

Tim S

New Member
Accountant vs. do-it-yourself?

Phoenix,
My advice is if your just starting out or relatively "small", do your taxes yourself (at least for the first few years). Why? Because who knows your business better than you do? It will give you a better understanding of how to run your business more financially efficient on a day-to-day basis instead of having to look at your tax return and say "I need to change some things this next year." If you take just a few minutes each week to organize your receipts, books, info, etc then it's NOT a big headache come tax time, plus if you notice some area that needs changing prior to tax deadline, you can make those changes so that they affect you positively THIS year instead of waiting til next year.
Now, I understand that taxes/payroll are VERY time consuming and confusing to figure out, but it will benefit you to find out all you can about them. It amazes me that people will start building their business with books, BBS such as this one, training, etc, but when it comes to the important part (MONEY!) they rely on someone else to figure it out because they want to "just work on building the business" and don't have the time. Don't get me wrong! I'm not saying that you shouldn't use an accountant/CPA, only that YOU should have intimate knowledge of your finances as well. Possibly your tax situation/payroll is extremely complicated (i.e. working in multiple states, workers comp, insurances, offices, etc), then it would probably be beneficial to get some assistance. Accountants/CPA's aren't in business to make you succeed, they're just reproducing what you give them on the (hopefully) correct forms. Only you can make your business succeed.
I've always done my own taxes, both personal and business. The way I did it was to take a tax course (H & R Block) to learn the basics of tax preparation and tax law (plus it's led to a part-time job of tax preparation with them during the winter months). Very interesting. I learned ALOT even after doing taxes for 6+ years prior. I also found many tax deductions that I could have been taking but wasn't because I was uninformed. As an example, yesterday I told a friend of mine (a former real estate employee) that the capital gains tax on sale of personal residences was repealed. She was surprised and excited. She was even more surprised when I told her that that law was repealed almost 3 years ago. Talk about uninformed!
What I'm saying is if you plan to "just work on building your business", then work on understanding ALL parts of it. Get the assistance you need to figure things out (lawyers, accountants, CPA's, etc), but be cautious about letting someone else try to figure out the best financial way to run your business.

Sorry for the long post.
Good luck!
 
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Paul B.

New Member
I agree about intimately knowing your finances but I'm not sure about doing your own business taxes the first year unless you know a lot about business taxes. I think it can be too costly not to take advantage of tax breaks because you didn't know about it. Business taxes can and are complex.
For example: Do you know all the forms required for federal, state and local taxes? Are you required to collect sales taxes and how often are you required to send it in? Even if you don't make any money during the sales tax period, you still have to file? Did you know as an LLC in certain states you have to file a state tax return within 90 days after being in business? If you miss the deadline, you pay penalties and lose deductions on your assets. Can you figure out the depreciation rates for your (assets) equipment and what deductions are allowed the first year, 2nd year, etc? Or taking a deduction that may not be allowed, then maybe having to pay penalties and interest or even being audited? Now all these may or may not apply to you.

Even Tim mentions the fact he missed many tax deductions:
"I learned ALOT even after doing taxes for 6+ years prior. I also found many tax deductions that I could have been taking but wasn't because I was uninformed."

The Enron/Anderson example is out of context for this situation.

Obviously if you go to an accountant at the end of a tax year they will not be able to help you except putting down the info you give them. But if you consult with them from the beginning, they can and will guide you to avoid costly mistakes during the year.
I would recommend at least one trip to a competent business advisor/accountant.

Best Wishes!

Regards,
Paul B. (Mean Papa - Blues Meister)
Genesis Pressure Cleaning Ltd.
 

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