McGirl
Tax
Service
1 in 3 small businesses will receive a tax penalty this year.
Accountant’s fees are usually 100% tax deductible for businesses, farms, rentals, corporations, partnerships, & trusts or estates!
Small Business covers lots of things...Child Day Care Providers, Ministers, Contractors, Truckers, even Farmers and Landlords, and they all sometimes need help with taxes, but you can help yourself by keeping good records and planning ahead.
Make your records as detailed as you can with supporting documentation for any deduction you take. Don’t assume that because you have a cancelled check in your records that IRS would allow a deduction for the expense you incurred in writing that check. Always maintain receipts to support your deductions!
Try and keep notes of any unusual transactions or occurrences as they happen. You will find that such notes could be invaluable in helping you explain an expense or other deduction to your tax preparer or an auditor many months later.
Don’t be afraid to ask for guidance from your tax advisor when facing an expense that is out of the ordinary. Doing things right the first time saves you both time and money.
You may not realize the sheer number of rules and regulations you have to worry about -- tax filing requirements, payroll records maintenance, electronic tax payments, and management of payroll tax costs. Just one mistake and you could face stiff penalties. And a single penalty could easily cost more than an entire year of our services.
Business Start Up
Business Can Be Risky
Don't spend your time and resources calculating, filing, depositing, and reconciling your federal, state and local taxes. It's our specialty. We have the systems and expertise to do it quickly and accurately.
The average small business owner spends at least 36 hours
a year doing payroll.
Why Outsource?
We are the leading area provider of payroll services to mid-size, small and emerging businesses, and the only firm in Potosi with a CPA and Enrolled Agent on staff.
We’re conveniently located with great parking, next to Edward Jones, just down the way from Dollar General.
Over 95% of our clients have fewer than 25 employees, so we understand the unique needs of small business owners like you.
Our services are designed to simplify your business life.
Our prices are always competitive, and remember, you really do get what you pay for.
Why Choose Us?
Call or come by today to learn about how we can help you better manage your time and responsibilities.
You really can’t go wrong in having us perform professional services for you, either on a monthly or quarterly basis. The fees you pay us are deductible; your taxes are tracked and calculated for you, so you don’t have an enormous balance due on your tax return; you’ll know, in advance, if you are making or losing money and where to apply preventative measures; and most of all, the time you’re investing in doing all this yourself is freed up so that you can focus on your day-to-day operations.
Self-employment (or SE) tax is basically the tax you’re paying on your own behalf for income and retirement. The only time you owe this tax is when your business has made a profit over the course of the year, otherwise known as “net profit”. You must pay SE tax on any profit over $400 annually. When you lose money on the year, that’s called “net loss”. If you have net loss, you owe no taxes, but this is not as good as it sounds, because obviously you’ve made no money this year. Remember that if you’re paying taxes on your business, you’re probably making money, and that can’t be a bad thing, right?
What is Self-Employment Tax?
It is generally accepted that people prefer to make a living doing something they like. A hobby is an activity for which you do not expect to make a profit. If you do not carry on your business or investment activity to make a profit, there is a limit on the deductions you can take.
You must include on your return income from an activity from which you do not expect to make a profit. An example of this type of activity is a hobby or a farm you operate mostly for recreation and pleasure. You cannot use a loss from the activity to offset other income. Activities you do as a hobby, or mainly for sport or recreation, come under this limit. So does an investment activity intended only to produce tax losses for the investors.
The limit on hobby losses applies to individuals, partnerships, estates trusts, and S corporations. It means that you can take losses that are no more than the income from the activity.
In determining whether you are carrying on an activity for profit, all the facts are taken into account. No one factor alone is decisive. Among the factors to consider are whether:
1. You carry on the activity in a business-like manner,
2. The time and effort you put into the activity indicate you intend to make it profitable,
3. You depend on income from the activity for your livelihood,
4. Your losses are due to circumstances beyond your control (or are normal in the start-up phase of your type of business),
5. You change your methods of operation in an attempt to improve profitability,
6. You, or your advisors, have the knowledge needed to carry on the activity as a successful business,
7. You were successful in making a profit in similar activities in the past,
8. The activity makes a profit in some years and the amount of profit it makes varies, and
9. You can expect to make a future profit from the appreciation of the assets used in the activity.
Business or Hobby?
L L C stands for limited liability company.
Furthermore, an LLC has no tax standing in the eyes of the IRS—corporations, partnerships, and even sole proprietorships have their own special tax forms: LLC’s do not! Therefore, you must decide when you form your LLC how you want them to tax you, or in other words, which kind of form do you want your LLC to file? So...what are the options?
You can choose from disregarded entity (which means single-owner self-employed small business); partnership (you and at least one other member); or corporation. Partners are not allowed to draw paychecks from their companies, and neither are sole members, but corporate members can get a paycheck and have their company pay in the payroll taxes for them.
These, and other things, are points you must consider and discuss with your financial advisor before forming an LLC.
"My buddy formed an LLC so that, if he gets sued, they can't take his house."
Well, no disrespect to your buddy but there is no attorney anywhere who’ll tell you that forming an LLC or a corporation will insulate you completely from litigation.
The process is called “piercing the corporate veil” and what that means is that the officers and members of a company are liable for its debts if they have a say in how it’s operated.
So unless your company is going to have a full Board of Directors who tell you when and how to operate, you’re still on the hook for the company’s actions, no matter what your buddy tells you.
Your best bet is to carry a lot of insurance, just in case, and keep good records.
So is it worthwhile to form an LLC?
Again, that depends….
A sole proprietor or partner in a partnership has to pay an extra tax called: self-employment tax. It’s 15.3% and it’s for Social Security & Medicare Taxes paid to the government for your old age pension. When you work for someone else, the boss pays half this tax for you, and the other half is held out of your paycheck. When you work for yourself, you pay the whole amount.
But...! When you form an LLC and make the proper elections, there is a way to only pay a portion of this extra tax.
Is it a huge savings? Our philosophy is simply this: if you can keep even one dollar and not give it to the government, why wouldn’t you?
When you make these elections, you are setting yourself up as an employee. This means you have to take a regular payroll check and have taxes held out of it. (You can also elect to have extra money held out to cover your regular income taxes and never have to pay Estimated Taxes again!) Your company then pays those taxes to the government for you. The savings comes in by controlling the amount of payroll you take, and drawing the rest of the company profit out, and pay only income tax on it. You still pay tax, just not as much, and that’s always a good thing, right ?
What's an LLC?
Do I Need One?
Dear Taxpayer,
Some of the information that you provided to us does not agree with the information we received from other sources.
-- The Internal Revenue Service.
You've just joined an elite club, one whose initiation ritual is an IRS audit. Unfortunately, you can't refuse membership -- and the dues could be astronomical.
When the IRS Reform and Restructuring Act was enacted in 1998, lawmakers ordered the agency to focus more on taxpayer rights instead of collection activities. Not surprisingly, the number of audits -- or examinations, as the agency prefers to call them -- dropped dramatically.
The first year of the kinder, gentler IRS, about one of every 79 tax returns were audited. By 2003, it was even easier for tax scofflaws; that year, according to IRS data, only one of every 150 individual taxpayers were audited.
According to Accounting Today (https://www.accountingtoday.com/list/ten-major-trends-in-irs-tax-audits)
Most taxpayers envision Internal Revenue Service audits as intrusive investigations resulting in criminal sentences. Today, nothing could be farther than the truth: The IRS’s auditing power has been greatly diminished in the past decade. IRS audit resources have been reduced by 28 percent in the last decade and the audit rate has dropped from 0.9 percent in 2010 to 0.5 percent in 2018. In fact, the number of IRS audits in 2018 (991,168) dropped by almost half compared to 2010 (1.735 million).
So what if you do everything right, and you still get that IRS letter in the mail....
It's the most dreaded letter a taxpayer can receive...