tax questions you need to answer to start and run a successful business

1. Presented by:
Tammy S. J. Schneider, CPA
Director of the Women in Business Practice
at Glass Jacobson

2. Self employment taxes consist of Social Security and Medicare
taxes primarily for individuals who work for themselves.
The 2011 self employment rate is 13.3% and consists of two parts:
10.4% for Social Security and 2.9% for Medicare.

3. The most common options include:
Sole Proprietorship, Partnership, Limited Liability
Company, S Corporation and C Corporation.

4. If you are filing as a sole proprietor, partner, S corporation
shareholder, and/or a self-employed individual,
you generally have to make estimated tax payments if you
expect to owe tax of $1,000 or more when you file your return.
Estimated tax payments are typically due quarterly on
April 15, June 15, September 15 and January 15.

5. To be deductible, a business expense must be both ordinary and
necessary. An ordinary expense is one that is common and
accepted in your trade or business. A necessary expense is one
that is helpful and appropriate for your trade or business.
Generally, you cannot deduct personal expenses. However, if you
have an expense for something that is used partly for business
and partly for personal purposes, divide the total cost between
the two and deduct the business part.

6. If you use part of your home regularly and exclusively for
business, you may be able to deduct expenses for the business use
of your home. These expenses may include mortgage interest or
rent, insurance, utilities, repairs, etc. You do not have to be a
home owner to take this deduction.

7. Register with the state for withholding and
unemployment tax accounts.
Have your employees complete the appropriate paperwork.
Decide if you want to prepare the payroll and required reports
yourself or hire a payroll service.

8. An information report required to be issued to
unincorporated entities that you pay more than $600 in
any year for services performed by people not
categorized as your employee.

9. The official word from the IRS is:
“You may choose any recordkeeping system suited to your business that
clearly shows your income and expenses. Except in a few cases, the law
does not require any special kind of records. However, the business you
are in affects the type of records you need to keep for federal tax
purposes.”
What does that really mean?

10. Other Frequently
Asked Questions:
 Do I need an EIN?
 What is a capital asset?
 What is depreciation?
 What is the difference between cash and accrual
accounting?
 What is EFTPS?
 How long do I need to keep my tax information?

11. Tammy S. J. Schneider, CPA
Glass Jacobson
410-356-1000 Ext 125
Tammy.Schneider@GlassJacobson.com