How do accountants compute for the business tax and individual tax for a single proprietorship?

Question

I was just wondering if it will be better to have 2 accountants where one will do my business tax while the other will prepare my tax return...

Answer 1

Sole proprietorships are not taxable entities. They are simply an extension of the individual. In other words, if your business makes a profit of $50,000 this year, your personal taxable income (before deductions) is that same $50,000. The business pays no tax itself.

Any CPA firm will be able to guide you through the process. Even the tax specialists (H&R Block, Jackson Hewitt, etc) will be able to handle these types of returns. TurboTax or TaxCut (even the basic versions) are also set up to deal with sole proprietorships.

My wife runs a home day-care out of our house as a sole proprietorship (in our 7th year) and I am an auditor for one of the Big 4.

Answer 2

@firewater "or a LLC (additionally a corp)" i'm sorry, yet you're incorrect. An LLC is a constrained legal accountability agency, not a company. it is a legal entity, yet in basic terms companies (xxx, Corp. or xxx, Inc.) are companies. They report an 1120 except it has elected to be taken care of as a sub-S organization. this could be a perfect technique that demands submitting a style with the IRS. "additionally I pay attention it is totally tax heavy in comparison to sole Proprietorship. is this authentic" An LLC is a handed over entity meaning the IRS and maximum states do not comprehend it. consequently the LLC must be certain on (settle on) the way it desires to be taken care of for tax applications. Many single member LLCs choose for to report as a sole proprietorship. yet there are in lots of circumstances annual submitting expenses the LLC has to pay in spite of the tax medical care. In MA, to illustrate, the LLC has to report each and in line with annum with the Secretary of State's place of work; that's $500. AND if the LLC chooses to report as a company (usual or sub-S) the DOR expects the necessary $456 minimum "earnings" tax imposed on companies. " i'm going to have possession of my call " in basic terms interior the state you sign in the LLC. each and each state regulates agency entities (LLCs, companies, and partnerships) so which you have gotten 50 distinctive Joe's LLC and there may be not something you ought to do approximately it. the only way you could defend your agency call is thru trademarking. or maybe that doesn't assure some vast national organization won't sue you because of the fact they desperate they had to apply it, too.

Answer 3

I use an accounting office that has both skills on site (2 different people; 1 invoice). I like your thought process, and I like my solution to it.