Taxes

[tbowers8403]

How would you go about doing your taxes for your business? Do you just do it once a year with your personal taxes? Can you do them on turbotax or should I go to someone? I'm so nervous about this part and afraid I'll screw it up.

Part 2 to this question is for the first year I know I can deduct my supplies I bought to start the biz. Is it okay if the receipts are dated 1-2years ago?

I don't plan to get everything started until 2013, I just want to make sure I'm prepared for everything.

Thanks for the help!

[ChrisR]

Hire & talk to a good accountant, they will be able to tell you if you can use old receipts and anything else you have questions about. It was money well spent for me!

[David Fields]

We have been in business for fifteen years, and I have always done our taxes. I use Turbo Tax and love it. I also do our personal taxes on it as well. You can only use receipts for business purchases in the same tax year; prior years' receipts can only be used if you file an amended return for the year in which you bought the item(s), Tax preparers charge way, way too much for a simple task. Once you start doing your own taxes you will see. HTH

[JAVAEBOY]

I look at taxes as 2 separate entities. You have your sales tax and your income tax.

In New York where I live, when I first applied for my Tax Exempt certificate, I had to pay my sales taxes quarterly. Since this is only a hobby, and I don't really sell enough, or collect enough sales taxes to file so frequently, NY last year, sent me a letter telling me I only had to file my sales tax receipts once a year.

As for my Income taxes, depending on the amount of your actual income from your sales, you can generally file your income from your sales right along with your individual taxes. I'm fairly sure, it would work the same if filing jointly. If I remember correctly, there is a max amount of income from sales you can claim (I believe the amount was $5000) without having to get into more extensive forms, but even at that, I am sure something like TurboTax would be able to handle those forms for you.

Disclaimer: Your mileage may vary, and it never hurts to talk to a tax professional.

Hope that helps.

SteveG.

Edited March 31, 2012 by JAVAEBOY

[tbowers8403]

Thanks for the replies. I was looking at the Turbo tax packages and looks like I will go that route. They have tax professionals you can talk to if you get stumped. I usually file free that way but come 2014 when I do 2013 taxes I will have to purchase the personal & business combo. I hate paying for people to file my taxes when I can do it myself.

[PAgirl89]

I see you're from PA, me too! You'll have to register the business with the state of PA and because I didn't want to pay the extra $70 for the fictitious name, I used my own name and am running the business through my personal SS#. But you'll have to decide what's best for you. I would suggest going to this link - http://www.paopen4business.state.pa.us/portal/server.pt/community/pa_open_for_business/7176 and reading up on the laws for PA. Since I also have a regular job that pays the bills, and I'm considered self-employed, I pay quarterly taxes. I also pay quarterly sales tax for my candle business. You will have to get a PA sales tax ID # and you can get the tax ID # for the entire state of PA or select the counties you will need. Philadelphia counties pay an extra % of tax so keep that in mind when getting your ID #.

I file my sales tax online - https://www.etides.state.pa.us/default.asp - you can pay the sales tax with electronic transfer, personal check or credit card. It saves time and a USPS stamp.

As for deductions, anything you use for your business would be considered an business expense. Labels, hang tags, cello bags, wax, dyes, molds, down to your computer, phone and the mileage on your car if you deliver your products. Also can deduct your shipping expenses if you ship products to your customers. You can also deduct equipment, like your melt pots, utensils, tables, and among other things. It really depends on how involved your business is going to be. Craft shows will be another deduction, your fees, display units, mileage, tents ....etc.

I also suggest making a list, so you know what's coming in and what's going out. When you register the business with the state of PA, they will send you all kinds of information about doing business in PA. Visit the link above and read about taxes and registering the business, there is some really good info there.

[JAVAEBOY]

... when I do 2013 taxes I will have to purchase the personal & business combo. ...

Again, I think it all depends on how much business/income you are going to be making from your candle business. If it is less than $5000 in income, you shouldn't need anything more than the personal package. I was actually able to do all my taxes online for free this past year, since my combined net income was under a the amount needed to file like that. I have been trying to take advantage of putting as much money into my 410k and IRA's to prepare for retirement.

[David Fields]

Here's the deal with using a professional to do your taxes. YOU still have to gather all of the data they will need and give it to them in an organized way (or they charge more). You have to do the exact same thing to file using Turbo Tax. Then you simply fill in the blanks, same as the professional does with their computer program. Once, a long, long time ago my wife said we could save a lot of money by using a professional rather than me. So, we paid $225 ( long time ago ), and I did it by hand (before Turbo Tax). The results were identical. If you are just starting out, IRS requirements will be few and your knowledge of business taxes will be small. Over time your knowledge will grow with your business till it's no big deal. Plus, in doing your taxes yourself, you will know each year where you can save tax dollars.