Death, Taxes, and my LLC

After all, I really want to concentrate on the business, not this tax junk. Then let your accountant concentrate on your accounting, especially taxes. I owned a business for 13 years. If you're worried about what major areas of taxation there are for a small business, my list would be: - payroll. THIS TAKES DOWN MORE BUSINESSES THAN ANYTHING ELSE. It's not hard to grasp, and probably your CPA can help you set up payroll and then you can do it yourself, but many business owners rather stupidly see this as an area where ignorance is bliss. Trust me, it isn't. We did it right; an amazing number of small business owners I have known didn't. A leading mistake is to not set aside the money EACH PAY PERIOD. Treat it like it doesn't belong to you, because really, it doesn't. Set up a separate checking account and keep the reserves for the quarterly payments - sales tax. Assuming you sell a taxable item, you must report and pay sales taxes to the appropriate authorities. This is also a LARGE area for enforcement, as governments get a lot of their revenue out of this, especially cities. If you sell everything over a counter locally, it's pretty easy - your local State, county, and city. Any other scenario (shipping packages out, having sales reps in other areas), ask your CPA. - business licenses. Make sure you've got all those you need; some are affected by revenue so you will need to keep good records so that you can, for example, plug in a good gross sale number to pay your fees based on. Not precisely in the tax category, but this is where you need to make sure you either have industry gurus to talk to, like a trade association, or a CPA who knows your industry. Make sure you have all permits and licenses you need to legally ply your trade. This too is a major enforcement area. - income tax. Too complex for words, but the good news(?) is this category tends to catch any other forms of taxes that aren't in the buckets above. Get with your accountant NOW because there are all types of records you must be keeping all year long to get your deductions, and especially for a business, you will get killed if you don't. It's not like an individual 1040 where you can be sloppy and just take the "standard deduction." I can't think of any other areas to worry about (but I'll be happy to stand corrected by the hive mind, and remember - IANACPA), but there is one area of sales tax that you need to make sure of as a consumer of equipment, goods, etc. - a resale permit, if needed (to buy goods at wholesale and not pay tax on them since you're reselling), and to ensure that you have paid any applicable USE tax on major equipment purchases. A friend of mine got hung on this latter one to the tune of about $20K because she purchased capitol equipment out of state, they did not charge sales tax, and she failed to report and pay USE tax to her state. A few years later, they caught it, and she had to pay interest and possibly penalties. You indicate that you've done business in some form in the past. Did you do it all as a sole proprietorship/Schedule C with no employees? Just be very honest with your CPA about your history to ensure that you don't have any problems stemming from your past - probably not, but it's a good time for a checkup.

I believe one of the main benefits of an LLC is that you enjoy the liability protection of a corporation, but generally handle taxes much like a sole proprietorship, i.e. avoid the double-taxation that comes with a corp. This statement confuses a bunch of things. First off an LLC is a Limited Liability Company. It has nothing to do with a corporation. Second, an LLC is an entity created and recognized by state law for liability purposes. It is not recognized by the IRS. The IRS does not care whether a company is an LLC or not. It makes no difference. The LLC doesn't exist. As far as the IRS is concerned, there are only four choices -- sole proprietorship, partnership, S-corp or C-corp. That's it. No LLC. So first you decide if you want to be an LLC for state purposes or not. Second you decide how you want to be taxed by the IRS. They are independent decisions. As far as double taxation, only a C-corp has an independent level of taxation. A sole proprietorship, partnership and S-corp pass though all income to the owners for taxation at a single level.

These are all things that your accountant will have the absolute best answers for. I have a few small businesses. My accountant is the one expense that I don't begrudge every month. He makes sure that I do what's best tax-wise for the business and myself, and he makes sure that everything is sent in on time, and on those rare occasions where I screw something up, he negotiates with the state or IRS to get the penalties waived. Seriously, a good accountant will be worth his fee in just having peace of mind. When I started a business that was going to have a more complex payroll than I was used to dealing with, he took that over and charged me $25 a week to do it on top of his monthly fee (I see him monthly for all the businesses, I do the daily books, he deals with all the taxes, insurances, corporate stuff, licenses, etc.) Ideally, find an accountant who specializes in the type of business that you're running. They will know all the ins and outs, and will advise you on things that you don't even know that you need to know. Don't worry about making it easy on the accountant. It's his job to make all that tax stuff easy for you.

Single member LLC here. You generally don't "pay" yourself in a single member LLC. I have a business account and a personal checking account. I "pay" myself a sum from my business account, into my personal account each month but the only real benefit is that I keep my bookkeeping neater since my business account will track all my business expenses. My business doesn't have a lot of cash flow transactions (I get large chunks every so often) so I track my expenses in a spreadsheet. I'd start there and then later on look at something like QuickBooks if that becomes difficult. For reciepts a shoebox is technically fine (I also have all transactions tracked via my business account). For something a bit nicer check out the receipt scanners from http://www.neatco.com/. I don't do payroll, can't help much there. The rest have your accountant help out. You do want to pay taxes quarterly but they will have to help determine how much you should be paying based on anticipated income your first year. Later years will be based on how much you make the previous year.

In an effort to save on fees you might want to sit down with your accountant and ask him/her if there is things you can do that might help save him/her time. Alot of times they can set up spreadsheets the way they want them and you can fill in.

Also while payroll is theoretically easy there are alot of small components and details to look out for. They may be able to walk you through a couple of months of payroll (again with some templates they have) and then you can take over after that.

I think a major misconception is that the typical CPA WANTS to do all your bookkeeping work. Most of them realize that the average business does as much in-house as possible; they want to get paid for consulting and advice. Most CPAs are very supportive about helping you set up your business bookkeeping so you can do it in-house using Quickbooks or Peachtree or the like. If not, run.

Sorry as i read your post i think of more things...do you keep you own books ie. with quickbooks etc? This might be something you can do. The "tax stuff" is simply an extention of your normal accouting. You might be able to do all your bookkeeping and then give to your accountant at the end of the year for polishing up and tax return. Also your accountant should sit down with you and tell you about how to take money out of the comany and probably go as far as doing a projection for you next year so you have a roadmap. These thing all depend on your specific situation so a meeting with them in the beginning of the year will be enough to give you an idea of what you should be doing.

Sorry randomkeystrike covered everything in his posts...hire him!!