business taxes?

Question

I am starting a business. Do I take my expenses off before I figure the tax I should pay? Or do I figure taxes off the top? I know I need a cpa.

Answer 1

Yes, you should talk to a CPA at least at the start, so you can find out exactly what records you need to keep, and what forms you need to file when and where.

But to answer your question, you'll take your expenses off of your gross income BEFORE you figure your taxes - you just pay taxes on the net income after expenses.

Answer 2

Get NOLO's book Starting and running a small business. Different entities handle taxes differently. You typically will pay estimated quarterly state and fed. taxes. At the end of the year you will add up all your expenses to determine gross profit, etc. It is not that difficult. If you are a sole prop., you just file your estimated taxes on a quarterly basis, a 1040, schedule, C and SE (self employed). There is a ton of great info. online and on the IRS website. Do some reading and you might be able to tackle this- you might be more current that a CPA- you don't necessarily need to pay for a CPA($$$). There are a lot of good business tax professionals but again, if you spend a little time you could probably figure it out yourself and save a lot of $. Before you get ahead of yourself- a better question might be, have you made a formal business plan yet?

Answer 3

First of all, if you are starting a business, I would form a disregarded entity, assuming you already haven't. This way, your personal assests won't be at risk in case someone ever wants to come after your business for whatever reason. Second of all, depending on how your business is formed, your business may not need to pay taxes at all. that's not to say that you won't. It's a long explanation, but simply put, if you for an S Corp as a single owner or a disregarded entity (Single Member LLC), all the profits and losses from the business flow directly to you on your personal tax return. Now, what you pay in taxes will depend on your mariginal tax rate, among other things. A CPA should be able to go into more depth with you on this, but check out the journal of accountancy March issue for an article entitled "Chouse of Entity Maze", it will give you a better idea of what I'm talkig

Answer 4

What kind of tax are you referring to? For income tax purposes, there are many legitimate business expenses that can be deducted. In general, you are liable for tax on the profit or "bottom" line. For sales tax purposes, you are taxed on your gross sales or the "top" line.
Sales tax is different from state to state, and in many cases from city to city. You may need a sales tax license. For state differences, refer to your State Dept of Revenue. For local differences, refer to your city tax department. Definitely check with a CPA.

Answer 5

Any answers you get from this Yahoo forum will be suspect.

The best advice I can give you is what you yourself have mentioned..... go and see a competent CPA.

There's no substitute.