Bookkeeper Vs Accountant
Alright, home stretch. Here we go. So we've done all of this. Do we want to hire a bookkeeper or an accountant to kind of help us with our year end work? I kind of talked about this earlier and I use a second shooter analogy, you can pay now or you can cry later. Bookkeepers are great and if they're kind of helping you do this day to day entry, a bookkeeper is fantastic, but I would not rely on the bookkeeper to make sure that you're following the generally accepted accounting principles and that your legal etcetera. So it's kind of like using a second shooter, we want to make sure that we get the best that we can afford, get somebody that knows what they're doing when it comes to tax time at the end of the year. You're gonna want to make sure that you've satisfied all of these. If you live in a state that has personal property tax, businesses have to pay personal property tax too. Make sure that you have paid personal property tax on your business equipment because if you don't and yo...
u get audited again, not something that you want to mess with. Um And the same with real property tax. Um We talked a little bit earlier about self employment tax and how to get around paying it on the full amount again. Don't forget That that 15.3% is gonna run us up to the full 113 713,700. Where did that number come from? It is what it is. About 7.6 per seven Is paid by the employer, 7.7%. changes every year. It used to be $85 5 years ago. They raise it every year. So they're charging they're charging the federal government is charging more every single year. That's set by the federal government. Zoe. Ok? Not me or Creative life. So you've got to meet your tax deadlines. This is just a quick we we've now got all of our stuff for blue steel in quickbooks. We've generated our profit and loss statements every quarter. We know what we've made. We've got to meet the tax deadlines. What are they? The 10 99. A quick note. So we use vendors we use second shooters. We use graphic artists, we use people to do our albums for us. We pay them and at the end of the year, Okay. We've got an issue at 99. Now. Quick books. When we set up our vendors, remember we can do the quick add or we can set up when I set up, lee is my vendor. It will say It's Leah 1099 employee. I checked the yes box and then at the end of the year if when I've paid my bills I've paid Lee more than $600. It prints out a for Lee. It can't be any simpler than that. I mean you don't even need to pay an accountant to do it. You can anybody can do that. Um The 10 99 strategy for success is if you use a vendor like lee go to the I. R. S. Website and print out the W. Nine form, that's what you give to somebody where they have to give you their social security number. Because if I don't know what least social security number is I can't issue her at 1099 So she'll fill that out. I'll say that in her vendor file and then I can make sure that she gets a 1099 at the end of the year. Uh again, my advice is to use an accounting software program that will generate them automatically calendar the deadlines and meet them. The 1099 is the form that goes to the employees. The 1096 is the form that you use to send the 1099s to the government. And they're not kidding about these 10 99 folks. There's there's penalties for not doing this and there's a ton of creatives that use one another back and forth all year long to do different things and they never send each other 10 99. And when you get caught for doing that, it is going to cost you money. So it's super simple, almost mindless to use the software program to generate these, Uh, definitely make sure that you take care of your 1099 responsibilities. So what are the seven common tax mistakes? The seven common tax mistakes that we get at the end of the year are not collecting the sales tax. We've talked about that already. We're all going to collect the sales tax right now. If you want some specific state advice, go talk to your accountant. Do not talk to the state taxing authority. Save your receipts because you now know by the end of the tech, the small business survival course that if you don't have a receipt again, you're out of luck. And what did we learn from Quickbooks? We can scan it as a pdf, take it and drop it in a vendor folder and now we've got that, that receipt for that, Everything that we need, we can keep inside quickbooks in to 2014. You can't deduct the full cost of meals. Again, it's only 50%. Lots of people deduct them all. Lots of people don't pay their self employment tax. Lots of people don't know how to take the home office deduction. Lots of people don't organize. And finally, in order to deduct a deductible expense, you have to have a tax form that you can deduct it on and the 10 40 EZ is very easy, but it's not good for you because you can't deduct any of your expenses. So if you were an LLC And everything's getting reported on our 1040 and that's where we have to put all of our expenses down so we can get our income level down. So we pay very little taxes. But we're using a form that doesn't let us put our deductions on their kind of, see how that's problem. Lots of people do that every year. So it's one of the big tax mistakes. Now. We talked about the Home office deduction uh in the home office deduction allows us to take the square footage of our home and figure out what square footage we're using exclusively for business use. You want to set aside a portion of your home and only use it for business use. And then you you can deduct the proportion of your expenses that are associated with that square footage of your home. So if you have a If you're using 30% of your home is a home office, then you can deduct 30% of your mortgage interest. You can deduct 30% of your utilities, 30% of um uh landscape maintenance etc. Uh you can deduct a phone line for your home office if you have a separate one for your home. Uh So there's some interesting rules about the Home Office deduction. I won't go into it today. There's a very extensive I. R. S. Publication on the Home office deduction. And if you just go to I. R. S. Dot gov, you'll locate that if you're audited, stay calm, find your receipts, call your accountant but never go to an audit meeting alone.