Tag Archives: Tax Tips

Tax season is here

December 30 2018

Despite the ongoing government shutdown, tax season is essentially upon us.  If not resolved, the shutdown could delay the official start of tax season, as defined by the date the IRS begins accepting and processing tax returns.

But even though the government may allow themselves to ignore their responsibilities, that privilege does not apply to me and you my friends.  So in the interest of helping you make sure you timely fulfill your tax filing obligations I call your attention to this list of items to bring to your tax appointment. It’s an oldie but a goody.

Otherwise there is not much more you can do right now.  However, you need to be aware that the TCJA (Tax Cuts and Jobs Act) has imposed substantial changes on the tax system.  Everything from the look of the tax forms to the way claiming your dependents impacts your refund has changed.  Almost everything will be different.  So if you are one of those people that just kind of copies everything from last years return onto the current years return, that won’t work this year.

We are here to help.  If you have any questions please do not hesitate to contact Tax On Wheels, LLC at 803 732-4288.  We will be glad to answer your questions free of charge.

The Right to Retain Representation: Taxpayer Bill of Rights #9

April 19, 2018

The right to retain representation when dealing with the IRS is one of ten rights in the Taxpayer Bill of Rights. Taxpayers who interact with the IRS should be aware of their rights.

The right to representation means:

  • Taxpayers have the right to retain an authorized representative of their choice to represent them in their dealings with the IRS.
  • Taxpayers who are heading to an interview with the IRS may select someone to represent them.
  • Taxpayers who retain representation don’t have to attend with their representative, unless the IRS formally summons them to appear.
  • In most situations, the IRS must suspend an interview if the taxpayer requests to consult with a representative, such as an attorney, certified public accountant or enrolled agent.
  • Any attorney, CPA, enrolled agent, enrolled actuary or other person permitted to represent a taxpayer before the IRS, who’s not disbarred or suspended from practice before the IRS, may submit a written power of attorney to represent a taxpayer before the IRS.
  • Taxpayers have the right to seek assistance from a Low Income Taxpayer Clinic if they cannot afford representation.
  • Taxpayers with income below a certain level may ask an LITC to represent them in their tax dispute before the IRS or a federal court. Help from an LITC can be free or for a minimal fee. Many LITCs offer services in languages other than English. Although LITCs receive partial funding from the IRS, they and their employees and volunteers are completely independent of the IRS.

As an enrolled agent, I am enrolled to practice before the IRS and can assist you with all matters pending before the IRS. When you get THE LETTER, give Tax On Wheels, LLC a call at 803 732-4288 so we can assist you in resolving your tax issues.

More Information:
Publication 1, Your Rights as a Taxpayer
Taxpayer Advocate Service

#IRSTaxTip: The Right to Retain Representation: Taxpayer Bill of Rights #9 https://go.usa.gov/xQbnA

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Tips for Taxpayers Who Owe Taxes

June 25, 2017

The IRS offers a variety of payment options where taxpayers can pay immediately or arrange to pay in installments. Those who receive a bill from the IRS should not ignore it. A delay may cost more in the end. As more time passes, the more interest and penalties accumulate.

Here are some ways to make payments using IRS electronic payment options:

  • Direct Pay. Pay tax bills directly from a checking or savings account free with IRS Direct Pay. Taxpayers receive instant confirmation once they’ve made a payment. With Direct Pay, taxpayers can schedule payments up to 30 days in advance. Change or cancel a payment two business days before the scheduled payment date.
  • Credit or Debit Cards. Taxpayers can also pay their taxes by debit or credit card online, by phone or with a mobile device. A payment processor will process payments.  The IRS does not charge a fee but convenience fees apply and vary by processor.

Those wishing to use a mobile devise can access the IRS2Go app to pay with either Direct Pay or debit or credit card. IRS2Go is the official mobile app of the IRS. Download IRS2Go from Google Play, the Apple App Store or the Amazon App Store.

  • Installment Agreement. Taxpayers, who are unable to pay their tax debt immediately, may be able to make monthly payments. Before applying for any payment agreement, taxpayers must file all required tax returns. Apply for an installment agreement with the Online Payment Agreement tool.

Who’s eligible to apply for a monthly installment agreement online?

    • Individuals who owe $50,000 or less in combined  tax, penalties and interest and have filed all required returns
    • Businesses that owe $25,000 or less in combined tax, penalties and interest for the current year or last year’s liabilities and have filed all required returns

Those who owe taxes are reminded to pay as much as they can as soon as possible to minimize interest and penalties. Visit IRS.gov/payments for all payment options.

IRS YouTube Videos:

You can find this information on Tips for Taxpayers Who Owe Taxes on The IRS Website by clicking this link — #IRSTaxTip

Please feel free to contact Tax On Wheels, LLC if we can be of assistance to you.  We can be reached at 803 732-4288

IRS Offers Last-Minute Tips for Those Who Haven’t Filed

IRS YouTube Videos:

WASHINGTON –The federal income tax filing deadline has arrived and the IRS estimates it will receive approximately 12 million 2016 federal income tax returns and nearly 8.4 million extension requests in the final days of the filing season.

For those taxpayers who have yet to file, the IRS offers this advice:

  • E-file The IRS encourages taxpayers to file electronically. E-file vastly reduces tax return errors, as the tax software does the calculations, flags common errors and prompts taxpayers for missing information. Free File partners make their brand-name software products available for free to taxpayers earning $64,000 or less. Taxpayers who earned more may use Free File Fillable Forms. For the first time, taxpayers also can prepare their taxes from their mobile phone or tablet as well as computer. Taxpayers who changed tax software products, either using Free File or other software products, this year may be asked for their Adjusted Gross Income to verify their identity. See Validating Your Electronically Filed Tax Return for details.
  • Refunds The fastest way for taxpayers to get their refund is to e-file and have it electronically deposited into their bank or other financial account. The IRS issues more than nine out of 10 refunds in less than 21 days. Taxpayers waiting to receive their refunds can use the “Where’s My Refund?” tool on IRS.gov or check the status of their refund through the smartphone app, IRS2Go. The “Where’s My Refund?” tool is updated once daily, usually overnight, so there’s no reason to check more than once per day or call the IRS to get information about a refund. Taxpayers can check “Where’s My Refund?” within 24 hours after the IRS has received an e-filed return or four weeks after receipt of a mailed paper return. “Where’s My Refund?” has a tracker that displays progress through three stages: (1) Return Received, (2) Refund Approved and (3) Refund Sent.
  • Payment Options Many taxpayers who owe money often wait until the last minute to file. Taxpayers who owe have many payment options. They can pay online, by phone or with their mobile device using the IRS2Go app. Available payment options include Direct Pay; Electronic Federal Tax Payment System (EFTPS); electronic funds withdrawal; same-day wire; debit or credit card; check or money order; or cash. Some of these options are free; others require a fee.
  • File an Extension Taxpayers who are not ready to file by the deadline should request an extension. An extension gives the taxpayer until Oct. 16 to file but does not extend the time to pay. Interest and penalties will be charged on all taxes not paid by the April 18 filing deadline. Although some people automatically get an extension – such as those in a federally declared disaster area – most people need to request one. One way to get an extension is through Free File on IRS.gov where some partners offer free electronic filing of the extension request. Extensions are free for everyone, regardless of income. Another option for taxpayers is to pay electronically to get an extension. IRS will automatically process an extension when taxpayers select Form 4868 and they are making a full or partial federal tax payment using Direct Pay, Electronic Federal Tax Payment System or a debit or credit card by the April due date. There is no need to file a separate Form 4868 when making an electronic payment and indicating it is for a 4868 or extension. Electronic payment options are available at IRS.gov/payments. Taxpayers can also download, print and file a paper Form 4868 from IRS.gov/forms. The form must be mailed to the IRS with a postmark on or before midnight on April 18.
  • Penalties and Interest Taxpayers who are thinking of missing the filing deadline because they can’t pay all of the taxes they owe should consider filing and paying what they can to lessen interest and penalties. Penalties for those who owe tax and fail to file either a tax return or an extension request by April 18 can be higher than if they had filed and not paid the taxes they owed. That’s because the failure-to-file penalty is generally 5 percent per month and can be as much as 25 percent of the unpaid tax, depending on how late a taxpayer files. The failure-to-pay penalty, which is the penalty for any taxes not paid by the deadline, is ½ of 1 percent of the unpaid taxes per month. The failure-to-pay penalty continues to accrue on any unpaid tax balance and can be up to 25 percent of the unpaid amount. Taxpayers must also pay interest, currently at the annual rate of 4 percent, compounded daily, on taxes not paid by the filing deadline.
  • Installment Agreements Taxpayers who find they are unable to pay the entire amount of taxes due should consider filing the return and requesting a payment agreement. Most people can set up a payment plan with the IRS online in a matter of minutes. Those who owe $50,000 or less in combined tax, penalties and interest can use the Online Payment Agreement application to set up a short-term payment plan of 120-days or less, or a monthly payment agreement for up to 72 months. With the Online Payment Agreement, no paperwork is required, there is no need to call, write or visit the IRS and qualified taxpayers can avoid the IRS filing a Notice of Federal Tax Lien unless it previously filed one. Alternatively, taxpayers can request a payment agreement by filing Form 9465. This form can be downloaded from IRS.gov and mailed along with a tax return, IRS bill or notice.

No matter how or when they file, taxpayers are reminded to keep a copy of their tax return and all supporting documents.

And if all of that is too much to bear, remember, Tax On Wheels, LLC will be glad to handle it all for you.  Just give us a call at 803 732-4288.

New York State highlights sound ways to use your tax refund

March 30, 2016

The New York State Department of Taxation and Finance, and the New York Department of State’s Division of Consumer Protection, are highlighting five ways that the seven million New Yorkers who receive tax refunds can make smart decisions with their money.

  • Save–Use your tax refund to bolster your emergency savings. This could help you avoid credit card debt and resulting interest payments if something unforeseen happens. Financial experts suggest having at least three months’ worth of savings to cover all your fixed expenses, such as mortgage or rent, utilities, food, and insurance.
  • Maintenance–If you’ve never had the extra money to build that new deck or put in those new kitchen cabinets that you’ve always wanted, now might be the time. In addition to improving the look and functionality—and possibly increasing the overall value—of your home, many home improvements qualify for tax benefits as well. Any project considered a capital improvement is exempt from sales tax.
  • Avoid debt–Your tax refund can put a sizable dent in—or even erase—your credit card debt. If you pay it off now, you won’t continue to pay interest charges. Your tax refund can also help to pay off your student loans earlier.
  • Retirement planning–Investing your tax refund now for the future is smart financial planning. There are many ways to save for retirement, including adding your refund money to your 401(k). If your employer doesn’t offer a 401(k) option, then consider opening an IRA. The sooner you start saving for retirement, the more time your money has to grow.
  • Training–To earn that promotion or switch career paths you often need additional training and education. You can spend your tax refund on college courses to help you in your career. You could also invest in a 529 College Savings Plan to help pay for your child’s future education.

“There’s no harm in treating yourself, of course—you’ve earned it!” says New York State Commissioner of Taxation and Finance Jerry Boone. “But making a smart decision now can help pave the way to a better financial situation down the road.”

“Foresight and education are keys to being a smart consumer,” said Acting Secretary of State Rossana Rosado. “These suggestions provide New Yorkers with some of the options available to help them secure a better financial future.”

For more information contact Tax On Wheels, LLC at 803 732-4288

How to choose a tax preparer

March 22, 2016

Although we are located in South Carolina, we prepare tax returns for clients all across the country including the state of New York.

For the past few weeks, the state of New York has been on a bit of a tear locking up rogue tax preparers, as have many other jurisdictions including the IRS.  But New York has made a special effort to post the name and image of tax preparers who have been arrested for various scams involving bogus tax returns to the tune of about one a week. (Scroll to the bottom of this article for more details on the arrests).

In light of their recent activities, the state of New York has posted what we think is a pretty good guide to choosing a tax preparer and we would like to share their guide with our readers.  Of course, we think Tax On Wheels, LLC is an excellent choice for your tax preparation needs and we will be happy to assist you with your tax return.  Simply give us a call at 803 732-4288 and we will take it from there.

Following Recent Statewide Tax Preparer Arrests, NYS Tax Department and the NYS Division of Consumer Protection Issue Alert

Tax Department launches new webpage and checklist for taxpayers who are considering hiring a tax preparer.

The New York State Department of Taxation and Finance and the Division of Consumer Protection today issued a consumer warning to the seven million taxpayers who have yet to file income tax returns.

“In light of the recent arrests of tax preparers across New York State, we’re urging taxpayers to ask the right questions before trusting someone with their private information,” said New York State Commissioner of Taxation and Finance Jerry Boone. “Each year, we receive thousands of tax returns based on stolen identities, some of which are submitted by unethical tax preparers. If you choose to hire a tax preparer, follow these easy steps to ensure that the preparer is honest and qualified.”

“The Division of Consumer Protection strongly urges all New Yorkers to practice due diligence when selecting a tax preparer,” said Acting NYS Secretary of State Rossana Rosado. “Always get the terms and total cost of the service in writing. Avoid any tax preparer who charges a percentage of your tax refund as part of the fee. Most important, if you suspect you’re being defrauded by a tax preparer, report that individual to the Tax Department immediately.”

Before you hire a tax preparer

While millions of New Yorkers prepare their taxes without the services of a paid tax preparer, the Tax Department and Division of Consumer Protection encourage taxpayers who are considering a paid preparer to ask these four questions:

  • Are you registered with the IRS and New York State? New York State registered preparers must meet continuing education requirements and minimum qualifications. Attorneys, certified public accountants, and IRS enrolled agents aren’t required to register but do have other professional requirements. Ask to see the preparer’s registration certificate or proof that he or she isn’t required to register. (You can also verify that a tax preparer is registered online.)
  • How much will it cost? Ask to see a list of fees. The fees should be directly related to the services provided and not the refund amount. Also, by law, preparers cannot charge to e-file in NYS.
  • How will I receive my refund? A refund should never be deposited into a preparer’s bank account. The fastest and safest way to receive your refund is to have it directly deposited into your bank account.
  • Will you sign the return? A completed tax return must be signed by both the taxpayer and the preparer. Preparers must also include their federal preparer tax identification number (PTIN) or social security number, and either their NYS registration number or exclusion code. You should never hire a preparer who won’t sign your return, and never sign a return before it’s fully prepared.

Taxpayers should also ensure that the preparer will:

  • base the tax return on actual records and receipts,
  • e-file the return, and
  • be available after the tax return is filed in case questions arise.

Taxpayers can also contact the Better Business Bureau to see whether a tax preparer has a history of consumer complaints.

New York is one of only four states to regulate the tax preparer industry. While most tax preparers are honest and provide excellent service to their clients, taxpayers must remain vigilant to protect themselves from individuals who file fraudulent returns or misuse personal information.

New webpage and checklist for taxpayers

To help taxpayers screen potential tax preparers, the Tax Department published a new checklist available at its Tips for hiring a tax preparer webpage. Before hiring a tax preparer, use the checklist as a guideline when visiting or calling prospective preparers.

File a complaint

If you’re aware of a tax preparer who has engaged in illegal or improper conduct, contact the NYS Tax Department’s Office of Professional Responsibility at (518) 530-HELP (option #2) or file a tax preparer complaint online. The Tax Department will review your complaint promptly and, where appropriate, take corrective action, which may include sanctions.

Recent arrests

Include a Few Tax Items in Your Summer Wedding Checklist

June 29, 2015

If you’re preparing for summer nuptials, make sure you do some tax planning as well. A few steps taken now can make tax time easier next year. Here are some tips from the IRS to help keep tax issues that may arise from your marriage to a minimum:

  • Change of name. All the names and Social Security numbers on your tax return must match your Social Security Administration records. If you change your name, report it to the SSA. To do that, file Form SS-5, Application for a Social Security Card. The easiest way for you to get the form is to download and print it on SSA.gov. You can also call SSA at 800-772-1213 to order the form, or get it from your local SSA office.
  • Change tax withholding. When you get married, you should consider a change of income tax withholding. To do that, give your employer a new Form W-4, Employee’s Withholding Allowance Certificate. The withholding rate for married people is lower than for those who are single. Some married people find that they do not have enough tax withheld at the married rate. For example, this can happen if you and your spouse both work. Use the IRS Withholding Calculator tool at IRS.gov to help you complete a new Form W-4. See Publication 505, Tax Withholding and Estimated Tax, for more information. You can get IRS forms and publications on IRS.gov/forms at any time.
  • Changes in circumstances. If you receive advance payments of the premium tax credit you should report changes in circumstances, such as your marriage, to your Health Insurance Marketplace. Other changes that you should report include a change in your income or family size. Advance payments of the premium tax credit provide financial assistance to help you pay for the insurance you buy through the Health Insurance Marketplace. Reporting changes in circumstances will allow the Marketplace to adjust your advance credit payments. This adjustment will help you avoid getting a smaller refund or owing money that you did not expect to owe on your federal tax return.
  • Change of address. Let the IRS know if you move. To do that, file Form 8822, Change of Address, with the IRS. You should also notify the U.S. Postal Service. You can change your address online at USPS.com, or report the change at your local post office.
  • Change in filing status. If you are married as of Dec. 31, that is your marital status for the entire year for tax purposes. You and your spouse can choose to file your federal tax return jointly or separately each year. It is a good idea to figure the tax both ways so you can choose the status that results in the least tax.

Even if you don’t have room on your guest list for us, still make sure you give us a call at 803 732-4288 so we can help you with all the tax items on your check list.  Tax On Wheels, LLC specializes in helping new couples coordinate their finances so there’s one less thing for you to worry about.

IRS YouTube Videos:

IRS Podcasts:

Key Tax Breaks Retroactively Reinstated

December 29, 2014

The clock is ticking … is opportunity knocking?

Provided by Milton Cooley

If you hurry, you might realize some nice tax breaks before 2014 runs out. Once again, Congress has acted at the eleventh hour to bring back some expired tax perks. H.R. 5771, the Tax Increase Prevention Act, was passed and signed into law by President Obama on December 19. Here is a rundown of the key tax provisions it retroactively reinstates for 2014.1

The IRA charitable rollover is back – again. Do you own a large traditional IRA? Are you age 70½ or older? By any chance, have you still not taken your Required Minimum Distribution (RMD) for 2014? If the answer to all three questions is yes, you could partly or entirely fulfill your RMD by donating up to $100,000 from that IRA to a qualified charity or non-profit organization. The gift may be made tax-free and it could help you hold your 2014 taxable income under thresholds at which you would be subject to higher Medicare premiums and taxes on your Social Security benefits. You also get the satisfaction of helping a charity. (If you have already taken your 2014 IRA RMD, you aren’t allowed a “do-over;” you can’t take back the RMD and make an IRA charitable rollover instead.)2,3

You have the option to deduct state & local sales tax once more. If you live in a state that doesn’t tax its residents, the option to deduct state and local sales tax in lieu of state income tax is a big break. It applies again for the 2014 tax year thanks to the passage of H.R. 5771.1

Two mortgage-related deductions were revived by the new law. H.R. 5771 extends the mortgage insurance premium deduction that went away at the start of the year, and it also retroactively reinstates the tax exclusion for canceled mortgage debt – the perk that gave households a chance to exclude as much as $2 million in such debt from gross income.1

So were some key education deductions. The above-the-line tuition & fees deduction that lets parents (and students) lower taxable income amounts by up to $4,000 is back in place for 2014. So is the $250 classroom teacher expense deduction.1

Home upgrades could still bring you a tax break. If you know a handyman or vendor who wouldn’t mind doing some work for you between now and New Year’s Day, this or that upgrade might make you eligible to claim the reinstated dollar-for-dollar tax credit for qualifying energy-efficient home improvements.1

The enhanced easement incentive applies to land donations. Farmers, ranchers and other landowners have long realized tax breaks by gifting real property to land trusts for conservation. H.R. 5771 makes the recently enhanced incentive for such land gifts applicable to the 2014 tax year (it applies to conservation easements donated anywhere within TYs 2006-14). Under the enhanced incentive, a landowner can take a deduction as large as 50% of his/her income as a result of a conservation easement donation (it would be 30% otherwise). For qualifying ranchers and farmers, the permitted deduction may be as large as 100% of their incomes. The enhanced incentive also allows a donor to carry forward their deductions for 15 years as opposed to 5 years.1,4

Mass transit commuters get the size of an important tax break restored. In 2009, Congress equalized the tax breaks for employer-provided mass transit and parking benefits at $245 per month. That lasted through 2013. This year, the parking benefit was adjusted slightly upward to $250 per month, but the mass transit benefit shrunk to $130 per month. H.R. 5771 puts both the parking and mass transit benefit at $250 for TY 2014. If you put in for 100% of your transit costs via your employer’s payroll deduction program, you are already in line to claim this retroactively restored benefit, which could provide as much as $576 in 2014 federal tax savings.1,5

Milton Cooley may be reached at 803 732-4288 or taxonwheels@att.net

taxonwheels@att.net

 

This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. This information has been derived from sources believed to be accurate. Please note – investing involves risk, and past performance is no guarantee of future results. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment.

 

Citations.

1 – forbes.com/sites/ashleaebeling/2014/12/19/obama-signs-2014-tax-extenders-money-in-your-pocket/ [12/19/14]

2 – chicagotribune.com/business/yourmoney/sc-cons-1225-journey-20141222-column.html [12/22/14]

3 – blogs.marketwatch.com/encore/2014/08/12/will-retirees-get-their-ira-tax-break-back/ [8/12/14]

4 – landtrustalliance.org/policy/tax-matters/campaigns/the-enhanced-easement-incentive [12/22/14]

5 – forbes.com/sites/ashleaebeling/2013/12/10/commuter-tax-break-set-to-plummet-for-2014/ [12/10/13]

 

Make Plans Now for Next Year’s Tax Return

Most people stop thinking about taxes after they file their tax return. But there’s no better time to start tax planning than right now. And it’s never too early to set up a smart recordkeeping system. Here are six IRS tips to help you start to plan for this year’s taxes:

1. Take action when life changes occur.  Some life events, like a change in marital status, the birth of a child or buying a home, can change the amount of taxes you owe. When such events occur during the year, you may need to change the amount of tax taken out of your pay. To do that, you must file a new Form W-4, Employee’s Withholding Allowance Certificate, with your employer. Use the IRS Withholding Calculator on IRS.gov to help you fill out the form. If you receive advance payments of the premium tax credit it is important that you report changes in circumstances, such as changes in your income or family size, to your Health Insurance Marketplace.

2. Keep records safe.  Put your 2013 tax return and supporting records in a safe place. That way if you ever need to refer to your return, you’ll know where to find it. For example, you may need a copy of your return if you apply for a home loan or financial aid. You can also use it as a guide when you do next year’s tax return.

3. Stay organized.  Make sure your family puts tax records in the same place during the year. This will avoid a search for misplaced records come tax time next year.

4. Shop for a tax preparer.  If you want to hire a tax preparer to help you with tax planning, start your search now. Choose a tax preparer wisely. You are responsible for the accuracy of your tax return no matter who prepares it. Find tips for choosing a preparer at IRS.gov.  Tax On Wheels, LLC is currently accepting new clients and we look forward to answering your questions.  Call us today at 803 732-4288.

5. Think about itemizing.  If you usually claim a standard deduction on your tax return, you may be able to lower your taxes if you itemize deductions instead. A donation to charity could mean some tax savings. See the instructions for Schedule A, Itemized Deductions, for a list of deductions.

6. Keep up with changes.  Subscribe to IRS Tax Tips to get emails about tax law changes, how to save money and much more. You can also get Tips on IRS.gov or IRS2Go, the IRS’s mobile app. The IRS issues tips each weekday in the tax filing season and three days a week in summer.

Remember, a little planning now can pay off big at tax time next year.  Tax On Wheels, LLC is here to help call us at 803 732-4288 if we can be of assistance.

Tax Tips if You’re Starting a Business

If you plan to start a new business, or you’ve just opened your doors, it is important for you to know your federal tax responsibilities. Here are five basic tips from the IRS that can help you get started.

1. Type of Business.  Early on, you will need to decide the type of business you are going to establish. The most common types are sole proprietorship, partnership, corporation, S corporation and Limited Liability Company. Each type reports its business activity on a different federal tax form.

2. Types of Taxes.  The type of business you run usually determines the type of taxes you pay. The four general types of business taxes are income tax, self-employment tax, employment tax and excise tax.

3. Employer Identification Number.  A business often needs to get a federal EIN for tax purposes. Check IRS.gov to find out whether you need this number. If you do, you can apply for an EIN online.

4. Recordkeeping.  Keeping good records will help you when it’s time to file your business tax forms at the end of the year. They help track deductible expenses and support all the items you report on your tax return. Good records will also help you monitor your business’ progress and prepare your financial statements. You may choose any record keeping system that clearly shows your income and expenses.

5. Accounting Method.  Each taxpayer must also use a consistent accounting method, which is a set of rules that determine when to report income and expenses. The most common are the cash method and accrual method. Under the cash method, you normally report income in the year you receive it and deduct expenses in the year you pay them. Under the accrual method, you generally report income in the year you earn it and deduct expenses in the year you incur them. This is true even if you receive the income or pay the expenses in a future year.

Tax On Wheels, LLC specializes in helping entrepreneurs get started on the right footing.  Please contact us at 803 732-4288 if we can help you start your business.