Not ready for taxes? File an extension

Here is a link on information for individuals for filing an extension.

It's super easy.

If you think you'll owe money, send in some money. If you don't owe that much, you'll get it refunded. It's better than paying penalties.

If you think you'll owe CA as well, here's there extension form. I don't have the informaiton for other states.

http://www.taxbrain.com/taxcenter/extensions/downloads/2009/ext_ca.pdf

You only need to file the CA extension if you think owe CA money.
Otherwise it's automatic when you file your federal extension.

If you think you owe no money, put down zeroes on the extension form
along with your name, address, and social and send it in. You don't
even have to sign, it's that easy.

Extensions must be postmarked by April 15. Send certified to prove
you filed it in case the IRS / Post Office looses the form. (It's
rare, but it happens. Don't ask me how I know)

Surviving a Business Tax Audit

I've watched all manner of people and clients freak out about audits. This seems to get especially bad around tax time. One of my colleagues writes a great newsletter and I thought I'd share some of her wisdom to help get you get back to business.


From: The CPA Newsletter: www.irynacpa.com
Surviving a Business Tax Audit

A tax audit might be the ultimate nightmare scenario for many business owners. Therefore, I thought it might be helpful to provide some audit survival tips for small businesses. These tips apply whether your business is being conducted in a business entity or as a sole proprietorship.

1. Remember what an audit is all about – An audit means the IRS needs to reconcile what they think you owe to what you’ve paid. It doesn’t mean you are being accused of something or that you have done anything wrong. Many audits end with the happy letter stating that no change is necessary to your tax payment. It’s even possible that an audit can result in a refund. Therefore, don’t assume you’ve done anything wrong.

2. Provide only what is asked for – Prior to the commencement of the audit you, or your representative, will receive a letter requesting certain documents or other information to have available at the initial meeting. Provide specifically what is requested and nothing more. Make sure your receipts and invoices reconcile with each other and with your tax return. Reconciliation is an automatic procedure in every audit. If the records integrate with the return, it may well prevent the agent from expanding the original scope of his audit.

3. Some patience and understanding is in order – In recent years the IRS has been doing compliance audits for certain industry market segments. At times these audits can be prolonged. The companies in these industries are generally selected at random, so if your company is one of the chosen, it doesn’t mean that the IRS has concerns about your company in particular. However, if you know that you have been pushing the envelope with the numbers and deductions, you may need all the help you can get.

4. Be properly represented – It has been said that one who represents himself in court has a fool for an attorney. The same is true in dealing with the IRS. Your interests would best be served by a tax professional who understands the language, rituals, and even the games that can be played when one interacts with the IRS. For example, skilled IRS agents often ask questions that seem innocuous, but can have ramifications you’re not aware of. Casual, seemingly harmless conversation can be trap bait for the unwary.

5. Give the impression of total organization from the outset – Even if you are well represented, the agent at some point will likely want to question the business owner at his place of business. This should be done only with your representative present. In many cases, a tour of the facility would be Included in this visit. Not only is it important for you and your representative to be organized and prepared regarding the books and records,, but also from the standpoint of the appearance of the physical place of business. Good impressions can score many advantage points.

Taxes and payroll

I was just reading this article about what happens when you don't keep up your tax obligations. If you're an entrepreneurs and especially if you are thinking of setting up payroll, it's required reading for sure.

One of the skills that most people don't have is bookkeeping. Oh they can pay bills and follow up on invoices to get those payments, but payroll taxes and understanding the filing requirements and tax laws is beyond them (and most people don't want to track tax law). There's nothing wrong with that.

As an entrepreneur you don't have to be a genius about taxes or payroll to do it right.

He recommends having a bookkeeper or bookkeeping company and I agree. Beyond that I recommend having a bookkeeper and a CPA or Enrolled Agent (EA). At minimum I recommend having a professional help you set up your books and systems so that you're getting a good start. Even the smallest companies can benefit from having quarterly accounting services to make sure that they're on track.

A CPA is a Certified Public Accountant. It means that they are accountants who have passed the certification exam and do continuing education every year in order to keep their certification They, along with EA's, have a contract with the government which means that they have a responsibility to you and to the IRS. They can represent you in front of the IRS and have a burden of responsibility concerning getting your taxes right (based on the information you provide). Others, including bookkeepers, do not. That's one of the main reasons I don't do taxes and one of the main reasons that you ought to consider hiring such a professional to do that very important yearly task.

If you are involved in a company that does payroll or are an entrepreneur without a bookkeeper or accounting professional, it's a must read.

Remember: not understanding the tax law is no excuse in front of the IRS!

Finding The Forms You Need

You know how at the end of the year you're working on those pesky 1099 forms but find that you don't have the contractor's social security number or tax identification number?

Very small companies and companies that use a lot of independent contractors need to use for W-9 get tax ID information from their contractors. It's a simple form to have your contractors fill out bfore they start working with you.

You can find that form here. (Note: This will change in future years.)

You can search www.irs.gov for IRS forms or pulications. They are generally available online.

Now you know, so no excuses!

Tax Payer Advocacy

One of the many things that most people don't know about the IRS.

Taxpayer Advocate Service is an organization that that helps tax payers get help paying their back taxes, settle issues with the IRS and helps them get help with there is a financial hardship regarding those taxes.

From the site:
"Our mission in the Taxpayer Advocate Service reaches beyond individual cases and extends into the realm of Systemic Advocacy. The role of Systemic Advocacy is evident in the TAS mission statement: "As an independent organization within the IRS, we help taxpayers resolve problems within the IRS and recommend changes that will prevent the problems." This means we try to repair systemic flaws in the IRS and the tax code, which can cause trouble for taxpayers and IRS employees alike."

Interesting, isn't it?

Sales Tax: Do you sell things?

If you sell things, generally you need to collect sales tax.  In California you'll need to talk to the Franchise Tax Board.  They have a customer service site, that's being fairly useful, though not great. The link to information on getting a permit is here.

The site tells you about the documents you need. You can send your application in the mail or you can go in to the office to do the filing.

My experience is that many government offices, especially around taxes are fairly nice, helpful people who are willing to show you what you need and explain the process.