Amy Northard, CPA, Author at Amy Northard, CPA - The Accountant for Creatives®

Check Tax Refund Status

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How to check your state and federal tax refund status.

You (and/or your accountant) has put blood, sweat, and mostly tears into getting those darn taxes finished, and by some miracle, you get money back!! If this is you, you may be wondering when that money is going to hit your bank account.

Our friends at the IRS have created this handy dandy tool where we can check on it (instead of bugging them).

Check Federal Tax Refund Status

To check the status of your federal tax return, visit https://www.irs.gov/refunds.  You will need the following information to check on your return:

  • Social security number or ITIN
  • Your filing status (single, married…)
  • Your exact refund amount

Check State Tax Refund Status

Want to check your state tax refund status? Click on the state below and follow the instructions to check on your refund status.

Everything you need to know about 1099s

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EVERYTHING YOU NEED TO KNOW ABOUT FILING A 1099

What’s the deadline?
The 1099 deadline (specifically 1099-MISC) is January 31, 2018. You must send all 1099s to the recipients AND file them with the IRS by this deadline. This is a change from previous years, so take note!

Who receives one?
If you paid $600 or more to an unincorporated person or vendor for services related to your business using cash, check, or bank transfer (ACH) you need to issue them a 1099-MISC.

What if I paid them with PayPal or credit card?
If you paid an unincorporated vendor using PayPal, credit card, or other third party merchant, the payment service is responsible for reporting this information (usually by issuing a 1099-K). You don’t have to do a thing!

What if I paid them with the PayPal Friends and Family option?
If you paid a person or business via PayPal’s Friends and Family option, you will need to issue a 1099-MISC to them. When you use this method to transfer funds, PayPal assumes it’s a non-business transaction and doesn’t include it in their 1099-K.

How do I file a 1099-MISC?

  1. Make a list of those who meet the qualifications for receiving a 1099-MISC.
  2. Send them a W-9 to collect their Taxpayer ID Number, address, and business name.
  3. Create an account with 1099Online.com.
  4. Create a payer which will be your business information.
  5. Create the payees. This is everyone who needs to receive a 1099 (Use W-9 info).
  6. Enter the amount of “nonemployee compensation” each person received.
  7. Choose the option to have the 1099 mailed to the recipient. Huge time saver.
  8. File the 1099s after carefully reviewing them.

What happens if I’m supposed to receive a 1099, but don’t?
You should report all income received, whether you receive a 1099 or not. No need to file one for yourself or delay your tax filing if someone doesn’t send you a 1099 or sends you a late one.

What happens if I’m supposed to issue a 1099, but don’t?
You may have to pay a penalty to the IRS. The amount of the penalty is based on when you file the correct information with the IRS and the contractor.

Make Your Financial Goals Happen This Year!

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How to make financial goals happen

I’ve already heard from so many small business owners that finally taking control of their business finances is one of their New Year’s resolutions. They recognize that this stuff has been a huge source of stress in their life and they know it doesn’t have to be that way.

Just like trying to lose weight or reaching a fitness goal, having accountability and guidance can make a huge difference in the results.

Accountability

So, you probably know where I’m going with this. If you haven’t been able to make yourself keep up with bookkeeping on a monthly or quarterly basis, it may be time to reach out for help. Start by finding an accountability buddy.

For me, it’s my husband. He’s interested in how my business is doing, so I like to have my books up to date when he checks in. For you, it may be another business friend who you report into once you’ve finished your monthly bookkeeping.

Money Date

In addition to finding an accountability partner, schedule a money date with yourself each month. It could be the first Monday of the month where you knock out your bookkeeping and review your business’s income and expenses. Check in with your financial goals to see if you’re on track to meet them.

If you’re looking for a little kickstart to get your finances in order, I’d love for you to join me and my small business friends over at Be Your Own CFO.

The Be Your Own CFO program includes access to a Certified Public Accountant and a membership site which includes short videos and beautiful, downloadable guides that will walk you through the main topics in each lesson. Each lesson will be released on a weekly basis to ensure that you don’t get overloaded with information, and you have time to review and ask questions before proceeding. We have a private Facebook group for check-ins, questions, and accountability!

How to Create an Employer ID Number

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How to Create an Employer ID Number

A lot of business owners think the first thing they need to do to start their business is to get a Federal Employer ID Number, also known as an Employer ID Number (EIN). While it won’t hurt if you do, you may not necessarily need one.

The EIN number essentially gives the IRS a way to link your business income to you as a person. Using an EIN allows you to fill out tax forms like 1099s and W-9s without handing over your social security number to everyone who requests it. I know the name is a little misleading but remember; you don’t have to be an employer to have one.

You won’t need an EIN number if you’re a sole proprietor and don’t mind giving out your social security number when it’s requested for 1099 forms. You’ll be asked for your social security number for the 1099 form if you provided services and received $600 or more from another business owner.

If you have any other business structure or you are planning to hire employees or contractors, you can set up an EIN right now for FREE in about 10 minutes or less. Make sure you only use IRS.gov. There are many scammy sites out there that will charge you to set this up! But if you are on an authentic government website it should be free, only takes a few minutes, and you will instantly receive your EIN. This number can now be used in place of your social security number when dealing with all business tax forms.

To apply for an Apply for an Employer Identification Number (EIN):

  • Your business must be located in the United States or U.S. Territories.

  • You must have a valid Social Security Number (SSN) or Individual Taxpayer Identification Number (ITIN)

  • You must complete the application in one session, so have your full name, address, SSN or ITIN, and business structure readily available.

APPLY FOR AN EIN

Pros and Cons of a Partnership Limited Liability Company (LLC)

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Pros and Cons of a Partnership LLC

Here is a quick overview of a Partnership Limited Liability Company (LLC):

  • Must have two or more owners

  • Protection of personal assets if business is sued

  • Separate tax return is filed for the partnership (form 1065)

  • Depending on your state, there can be high renewal fees or publication requirements.

  • Many states have a franchise or capital values tax on LLC’s

The LLC for a partnership is created the same way as an SMLLC – by registering with your state. It has all the same limited liability protection as the SMLLC, but it’s for two or more owners.

You would report your annual income and expenses on a Form 1065 partnership return, which is completely separate from your personal tax return. No tax is paid with the return; the income and expenses flow through to your personal tax return through a K-1 form, where it’s taxed.

To picture this, imagine your accountant has finished preparing the partnership return. No tax is due with the return because the partnership itself isn’t taxed. Your accountant gives you a paper called a K-1. On this form, it reports your individual share of the business’s income and expenses. When it’s time to complete your personal tax return, you or your accountant will enter the information from the K-1 form into the tax program. Now, when you look at the front page of your federal tax return, you’ll see your share of the income or loss generated by the partnership on line 17.

If you decide a partnership is the best option for your business, it’s a good idea to set up a partnership agreement to decide on ownership percentages and how much each of you will be paid when it’s time to distribute the income. You may even consider working with a lawyer to create the agreement so if any tricky situations come up, you have a rock solid agreement to reference.

Do I have to prepare a 1099-Misc for a foreign contractor?

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Do I need to issue a 1099-Misc to foreign contractors?

As a virtual accountant for creative business owners, I see a lot of really impressive remote employer/contractor relationships.  As my clients continue to grow their business, they often time seek virtual assistants and other talented contractors abroad.  One question that always comes up around tax time is “Do I have to prepare a 1099-Misc for a foreign contractor?“.

Answer: If the foreign contractor is not a U.S. taxpayer, and all of the contracted services were performed outside the U.S., a Form 1099 is not required. Instead, you will need to ask the contractor to complete a Form W-8BEN.  The Form W-8BEN certifies that they foreign contractor is not a U.S. taxpayer.  The Form W-8BEN is never submitted to the IRS, however it needs to be held in your files in case of an audit.  If you are audited by the IRS, the Form W-8BEN will support your reasoning for not issuing a 1099.

Pros and Cons of a Single-Member LLC

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Pros and Cons of a Single-Member LLC

Here is a quick overview of a Single-Member Limited Liability Company (SMLLC):

  • For businesses with one owner

  • Must keep business and personal funds separate

  • Protection of personal assets if business is sued

  • Income taxes filed with a Schedule C attached to your personal tax return

The single-member LLC is a great option for a single owner, who wants more liability protection than a sole proprietorship, but isn’t ready to take the leap to become an S Corporation. 

If you properly keep your business and personal purchases separate, the LLC will limit your liability in the event that something happens and you are sued. It doesn’t make you invincible though. If the court decides that you haven’t kept things separate enough, it could break down that protection, and your personal assets could still be taken.

To create a SMLLC, you will register with your state. Each state has their own form, but it’s usually called “Articles of Organization” or something similar. In some states, the annual fees can be minimal (less than $200), but in others, like California, fees can be closer to the $1,000 range.

You would report your annual income and expenses exactly like a sole proprietor, by using the Schedule C.

3 Simple Ways To Reduce Your Taxable Income

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3 Simple Ways to Reduce Your Taxable Income

I LOVE paying taxes!

Ok, I may have embellished this title a little bit. But, the bottom line is – if you’re paying taxes, you’re making money! As a small business owner I can’t say I’m the happiest about the amount of money that goes to taxes, so I make every effort to lower my taxable income. Today, I’m going to share a few ways that you can lower your taxable income.

Expenses are not the answer.

Every so often a client will ask me if they should make a big purchase (buy a new camera, subscribe to a new online course, buy the new fancy tool) at the end of the year so that they don’t have to pay taxes. I always answer this question with one of my own – do you need this to succeed and grow your business, or are you trying to avoid paying taxes on your income?

Ultimately we became small business owners to sustain our lives doing what we love. This means making enough money to support ourselves, and have a little extra profit left over for growing our business and planning for our future.

Are you running a business or a hobby?

If you have not turned a profit in at least three of the prior five years, the IRS can categorize your business as a hobby. If the IRS considers your business a hobby, it would prevent you from claiming a loss related to the business. There are some exceptions to this rule, but I’m confident that if you’re reading this post you do not work your butt of all year just for your business to be considered a hobby. There are better ways to lower your taxable income without increasing your expenses at the end of the year.

3 Simple Ways To Lower Your Taxable Income

If you have “extra” money at the end of the year and want to do something with it besides rack up more expenses or pay the government taxes on the profits, here are my recommendations.

  1. Contribute to your retirement. As a small business owner, you may consider contributing to a SEP IRA, solo 401k or a SIMPLE IRA.  All of these plans are great options for lowering your taxable income while saving for your (and your employees’) futures. Choose a SEP IRA if you are a small business owner who wishes to make a tax deductible contribution into an IRA for yourself and on behalf of your employees. Choose a SIMPLE IRA if you are a business owner with a workplace of 100 or less employees and will fund the bulk of their retirement. Choose a solo 401k if it’s just you.
  2. Contribute to a health savings account. This may not be the sexiest of options, but if you’ve ever experienced medical bills, you know how important it is to have an emergency fund dedicated solely to medical expenses. If you have a high-deductible medical plan, you may have the option to contribute to an HSA. The unused contributions can roll over indefinitely and grow tax-free.
  3. Further your education. The best business owners are lifelong learners. If you took time throughout the year to learn a new skill, you may be eligible for the Lifetime Learning Credit. This credit is worth a maximum of $2,000 per year, and helps pay for college and educational expenses that improve your job skills. An eligible educational institution is any college, university, vocational school, or other postsecondary educational institution eligible to participate in a student aid program administered by the U.S. Department of Education.
    Invest in your children’s education. Almost every state now offers a 529 plan. This plan is designed to help families pay for future expenses associated with college or other qualified post-secondary training. Although contributions are not deductible, earnings in a 529 plan grow federal tax-free and will not be taxed when the money is taken out to pay for college. In addition to the federal tax savings, over 30 states currently offer a full or partial tax deduction or credit for 529 plan contributions.

Pros and Cons of a Sole Proprietorship

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Pros and Cons of a Sole Proprietorship

Here is a quick overview of a Sole Proprietorship:

  • Easiest business structure to form

  • Income taxes are filed with a Schedule C attached to your personal tax return

  • Owner is personally liable for any financial obligations of the business

A Sole Proprietorship is the easiest business structure to form because it’s just you, and it begins when you make your first sale. On the federal level, you don’t need to do anything to create a sole proprietorship, but your state or city may require permits or licenses enabling you to operate. Many people do not think that they are considered a business unless they form a Limited Liability Company (LLC), but that’s not true. According to the government, a sole proprietorship is just as much a business as anything else.

The tax reporting is pretty straightforward with this structure. You report your annual income and expenses on a Schedule C that’s filed with your personal tax return. If your state has an income tax, then the info you reported on your federal return will just flow right onto your state return.

The big downside to the sole proprietorship structure is that the owner is personally liable for any financial obligations the business may have. This means if the business gets sued, the plaintiff can come after your personal assets like your home, car, personal bank accounts and any future income you make in order to satisfy the court’s ruling.

Top 5 Reasons to Be Your Own CFO

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Be Your Own CFO

Can you relate to these business goals? You’re not alone. This is why I created Be Your Own CFO. The Be Your Own CFO program includes access to a Certified Public Accountant and a membership site which includes short videos and beautiful, downloadable guides that will walk you through the main topics in each lesson. Each lesson will be released on a weekly basis to ensure that you don’t get overloaded with information, and you have time to review and ask questions before proceeding.

Top 5 Reasons to Be Your Own CFO

Bookkeeping & taxes are not optional
If you own a business, you need to understand the ins-and-outs of your business financials. Be Your Own CFO makes this easy.

Ongoing Membership
Membership includes instructional videos, and beautiful, downloadable guides that will walk you through the topics in an easy-to-understand format with an actionable checklist. The lessons will be continuously expanded and updated based on member feedback.

Members Only Facebook Group
You will receive access to a Facebook group where you can ask questions to a CPA and small business owners like you.

It’s a tax deduction
Save your receipt for this course. This course is an investment in your business. Tax deductions lower your taxable income, which puts more money in your pocket during tax season. This course covers tax deductions in lesson 5.

You’re supporting another small business owner
I’m not your parent’s accountant. I work out of my home office, and I’m passionate about helping small business owners, like you. When you become a member, you will be treated with care during every step of the process.

Visit Be Your Own CFO

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