How do I file my taxes correctly?

Question

I have been running my small business with no employees for a year and someone told me that I could recover some of my money that has been spent on supplies to build the company and I don't know when or how to do that. I file monthly for my tpt license, and I think I need to do the end of year taxes and show no sales to recover some money.... please help if you know!?

I am a sole proprieter and I have not made any money this first year. If this helps narrow down my question... I don't feel like I need an accountant per say but I don't want to botch my taxes, I just want to know what I need to do at the end of this first year, I file monthly as is but I want to recover some of my cost that I have put in.

Answer 1

You are considered to be a sole proprietor, and will file a Schedule C with your personal income tax return (1040). IF you have no sales, but your intent is to produce income, you do still have a business. The IRS won't let this go on forever, but does understand that starting a business takes some time.
You certainly can deduct almost all of your expenses, however, some things can be deducted now, and some things must be depreciated, or taken over the expected life of the item. For instance, office supplies and utilities can be taken in one year, but buildings and equipment must usually be depreciated. What you can deduct and how it is deducted depends on what the business is, where it is located, and how it operates. I'll agree that you don't need an accountant, as long as you are keeping good records on your own. I do business taxes all the time for people who do their own books. I also own my own business (seperate from my tax job), and am familiar with deductions.
On the Schedule C, you'll need to show whatever sales you actually made, and then take your deductions from that in order to stay legal. The Sch.C has lines for all of that information, and I'll attach a copy, as well as instructions. Be aware: it is possible to have what is called a Net Operating Loss, allowing you negative income. This can be carried from one year to the next because you typically cannot take it all in one year.
You also need to be aware of the Schedule SE for what is called Self-Employment tax. This is the form that has you pay your Social Security and Medicare taxes which would otherwise be withheld form your paycheck. While you don't pay this tax if you have zero or negative income, you will eventually - 'cause your business is going to take off:)
Also, when you're looking at things you can deduct, keep in mind that you may have the ability to put money into an IRA, SEP, or SIMPLE plan, depending on your income and needs. Your contributions to these are generally deductible, and this helps you plan for your future as well.
And now to defend myself. One of the other answerers suggested that you not go to an "H&R Block or Jackson Hewitt type place". I do not know what it takes to work at JH, so please don't take this as a slam on them. However, to work for H&R Block, you must be able to do a basic Schedule C and SE. To work for HRB for more than one year, you must take continuing education of at least 24 hours (going to 30 soon) in the off-season. I don't usually promote HRB on here, because I do work for them, but in this case, I'd hate to see you pay a lot to an accountant if you don't have to. Call ANY reputable tax preparation service and ask for someone who is knowledgable about Self-Employment. Talk to them about what you can and cannot deduct specific to your business. This information should be available to you at no charge (if someone wants to charge you for this, I'd leave and go elsewhere). And finally, tax preperation fees are indeed deductible for both individuals and businesses in different ways. So are any legal fees or professional association fees you may encounter. Please let me know if I can be of further assistance. You can e-mail me through the Y! Answers site... keeps me accountable so that I'm not accused of trolling for clients, which I hope is not how this is taken :)

Answer 2

I have worked for both H&R Block and for CPAs. I would recommend a CPA who specializes in taxes. There are plenty of small firms who will not charge you out of the you-know-what. Frankly, you should have had an accountant before now. Have you made any money? If you made more than $7,500 in profits (total income received less allowable expenses) you will most likely owe interest and penalties. Speak to an accountant as soon as possible. Right now most CPA firms are relatively quiet so you should find it easy to get a convenient appointment.

Edit: You say you are a sole proprietor and are filing monthly. That suggests to me that you are charging and paying sales tax. Please remember that not all of the money you paid in to start the business is deductible against income. Some of it will be treated as capital expenditure. Now, much of that can be deducted in the year the expense was incurred, but you will never be sure until you speak with a professional.

Have you considered if a sole proprietorship is appropriate for your business. There may be some sense in incorporating, if no other reason than to benefit from limited liability.

Answer 3

What type of business are you running? Partnership, sole proprietorship? If it is only you who owns the company, at the end of the year file a Scheule C with your tax return. On that form, you will report all of your income you have received and subtract any/all expenses that you paid throughout the year to reach a gross profit. An accountant is going to charge you out the you know what. Call your local H&R Block before January when they get really busy. Talk to the manager/owner and ask what expenses you need to bring in, what is legally deductible, and money saving tips. We have alot of trouble with mom and pop accounting services taking deductions that are not allowed.
Larger companies are more careful because they have much much more to lose.

Answer 4

the only unfastened tax service is thru IRS, in spite of the undeniable fact that, over 70% of the information they provide is incorrect besides. Your dad is self-employed. Has he been paying his quarterly anticipated taxes as he ought to? no longer paying or underpaying might determine that he "by no skill gets something lower back" and is in consistent debt to IRS. Why did no longer he circulate to a different tax preparer long until now this if he has questions? Who does he circulate to besides? regardless of if this is a set this is in basic terms open for the duration of tax season (Block, Jackson Hewitt, etc), that replaced into an extremely dumb theory initially in case you have a corporation! they do no longer look to be corporation-tax preparation professionals. He desires to employ a CPA good now to check his tax difficulty and confirm why he keeps on having tax problems. of course his past tax preparer and/or he himself are fouling up the equipment. because of the fact that he can't determine it out, he incredibly ought to get a CPA urgently or he's going to lose very numerous funds and finally end up in worse hassle than he's already in. A CPA is costly, yet at this element, unlikely to a sturdy CPA is going to fee you all very plenty extra.

Answer 5

You need to go to a certified accountant. Do not go to a Jackson Hewitt or H.&R. Block type of place. Make an appointment with an accountant and take all of your reciepts and paper work with you. It will be well worth it to have someone who knows what they are doing work on it with you. In some cases, even their fees are tax deductable. A lot of your expensess are going to be tax deductable, not just the office supplies but the rent and electric and things like that too.

I was a bookkeeper and later an accountant for years. Believe me it will be well worth it.