The Small Business Tax Help Blog

Archive for June, 2010

Question: Is this too much to charge for my tax return?

I am a homeowner, have work deductions, home office, work related expenses. ( both spouse and myself. ) My CPA just charged me $595 to do both my state and federal taxes…. Is this really inflated? Should I do my own next year and just use the same forms I have on my returns?

Answer: How well organized is the information you give him or her? CPAs sell their time and expertise. Pricing also varies based on your location.

I work in NYC. I’ve been in charge of tax returns for which the client pays much more than $595. In fact, the typical fee for a child is at least $500. Other clients paid $50,000, $75,000, and even $200,000 for my firm to prepare their tax returns. Yes, that’s $200K every year.

The situation you describe is more complicated than a typical storefront operation can reliably handle. I suggest that you talk to your CPA after April 15th to see if you are taking full advantage of his or her service. If that talk isn’t satisfactory, then you should check with a few other tax professionals this summer. A happy client is one that feels the service is worth whatever the fee.

I hope this helps.
Gary

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If you decide to run a business from your home, make sure you take it seriously or you could be facing a sticky tax situation.

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Question: Do you think McCain people will bother to look at how Obama voted for small Business Tax relief?

Here is a link to see how Obama and McCain both voted on a Bill to give tax relief to small businesses:

H.R. 976 (Small Business Tax Relief Act of 2007 )
Measure Title: A bill to amend the Internal Revenue Code of 1986 to provide tax relief for small businesses, and for other purposes.

http://www.senate.gov/legislative/LIS/roll_call_lists/roll_call_vote_cfm.cfm?congress=110&session=1&vote=00285

Also note how Senator Biden voted.
oldmarine: I just learned what rem_ means in urban dictionary. too funny. lol

Answer: Yeah, McCain voted for it and Obama voted against it…didn’t read it did you James….REMF!

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Tax Code Complexities for Small Businesses – 8

Question: Accounting Question?

On Jan.21.2007 these Liability accounts are presented in the ledger:
Accounts payable 42500
Sales Tax payable 6600
Unearned service revenue 19000
During January the following occured:

Jan1. Borrowed 12k in cash from Midland bank on 4 month, 8%, 12000 note
jan5. Sold merchandise for cash totalin 6,510, which inculdes 5 % sales taxes.
Jan12. provided services for customers who had made advance payments of 10,000 (credit service revenue)
jan14. paid state treasurers department for sales tax collected december of 2006, 6600
jan.20 sold 500 units of new product on credit at 48 per unit, plus 5% sales tax.

Note* during jan, company employees earned wages of 60000. withholdings inculded were 4590 for Social Sec., 5000 for federal income tax and 1500 for state income tax.

1. journalize january entries
2. ” ” adjusting entries at jan.31 for outstanding note payable and for wage expense and payroll tax expense
3. prepare current liablilites section of balance sheet.

Answer: 1. journalize january entries

Jan1. Borrowed 12k in cash from Midland bank on 4 month, 8%, 12000 note
Dr Cash 12,000
Cr Note payable 12,000

jan5. Sold merchandise for cash totalin 6,510, which inculdes 5 % sales taxes
Dr Cash 6,510
Cr Sales 6,200
Cr Sales tax payable 310

Jan12. provided services for customers who had made advance payments of 10,000 (credit service revenue)
Dr Unearned service revenue 10,000
Cr Service revenue 10,000

jan14. paid state treasurers department for sales tax collected december of 2006, 6600
Dr Sales tax payable 6,600
Cr Cash 6,600

jan.20 sold 500 units of new product on credit at 48 per unit, plus 5% sales tax
Dr A/cs receivable 25,200
Cr Sales 24,000
Cr Sales tax payable 1,200

2. ” ” adjusting entries at jan.31 for outstanding note payable and for wage expense and payroll tax expense
Dr Interest expense 80
Cr Interest payable 80

Dr Wages expense 60,000
Cr FICA tax payable 4,590
Cr Federal income tax withholdings payable 5,000
Cr State income tax withholdings payable 1,500
Cr Wages payable 48,910

Dr FICA expense 4,590 (matched)
Cr FICA tax payable 4,590

3. prepare current liablilites section of balance sheet
Accounts payable 42,500
Sales Tax payable 1,510
Unearned service revenue 9,000
Wages payable 48,910
FICA tax payable 9,180
Federal income tax withholdings payable 5,000
State income tax withholdings payable 1,500
Note payable 12,000
Interest payable 80

Rubashkin sentenced to 27 years

Sholom Rubashkin has moved on, his attorney said, and is focused on his appeal after being sentenced Tuesday to 27 years in prison. “He’s calm and at peace,” Rubashkin’s attorney Guy Cook said after the sentencing. “He knows this is one stop on a long road. He’s a very optimistic man.” Leah Rubashkin [...]

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Tax websites you need to know about

While you may turn your pile of W-2 and 1099 over to your CPA every spring, when it comes to managing your personal finances the rest of the year, thinking about your income taxes is part of it. Whether you are calculating the tax impact of capital gains tax on an investment or investigating whether a request for a charitable contribution can truly be tax deductible — which may mean you can …

Tax Withholding Calculator | Liberty Tax Service