Are You Confused About Your Tax Responsibilities After Obtaining Your EIN?

This morning I ran a 5k with my son. At 8:30am it was already 83 degrees with 100 percent humidity and since I only like to run outside when the weather is perfect, I was a bit out of my element.

Thank goodness my son wanted to run, because otherwise forget it! I would have stayed at home in the A/C on my treadmill. However, my workout wouldn’t have been nearly as rewarding!

Guess what? I won the race! Actually I didn’t really win the race in the traditional sense, but I did win because I jumped out of my comfort zone.

This 5k was my son’s first. Of course I think he did fantastic, but you know how competitive some people can be. I shared that this race wasn’t about beating other people but rather pushing ourselves further out of our comfort zone so we experience improvement. Isn’t that what life is about as well; racing against ourselves so we continue to grow and learn. Sometimes, we fall but as long as we get back up we never fail.

I think he understood, but you know how teenagers are! Anyway, I learned that I need to re-shift my thinking. This journey towards helping as many people as possible unfolds as it is supposed to as long as I don’t push it so hard. What do I mean by pushing too hard: well, when you allow basic self-care to move down the priority list. I did that, I was pushing myself so hard that I wasn’t working out, or eating as healthy as I like. My tummy started hurting and the scale started inching up. I am working hard to implement and implement fast, but today I learned something; my body mind and soul are to be nourished first otherwise my movement will be built on some shaky foundation.

Are You Confused About Your Tax Responsibilities After Obtaining Your EIN?20873Are You Confused About Your Tax Responsibilities After Obtaining Your EIN?So you’ve recently started your business,filed for an EIN, perhaps you’ve even opened your business bank account, now what? If you’re like many new entrepreneurs of today who have transitioned from working a traditional job, you may be feeling a little lost.You might be asking yourself questions like:

– Am I responsible for paying quarterly taxes?

– What is the amount I should send to the IRS every quarter?

– What about FICA, Medicare, and State taxes?

– If I hire help, am I supposed to withhold taxes from their payroll?

Answers to these questions and many more can be quite confusing to a new business owner.Once you file for an EIN, the IRS now recognizes your business and they expect you to be compliant and file appropriate tax returns. But what are the appropriate tax returns? That all depends on your business structure.

– A sole proprietorship, or LLC, should file a Schedule C along with your Federal form 1040.

– A Partnership, should file Federal form 1065.

– An S Corporation files Federal form 1120-S along with a Schedule K-1 and the information from the K-1 gets transferred onto your Federal form 1040.

– A C-Corporation, files Federal form 1120.

If you hire employees to work for you, or even if you own a Corporation and employ yourself, you are required to file Employer’s Quarterly Tax Returns and Employer’s Annual Tax Return. As an employer, you are also required to issue a W-2 to your employees. If you’re working with independent contractors and you pay them $600 or more for the year, you are expected to issue them a 1099-MISC.

Quarterly Sales Tax Returns are only required if you are required to collect sales taxes on the products or services you sell. (Check with your State).Being your own boss now, you are now responsible for paying your own Federal, State, FICA, and Medicare taxes. In most cases, the best way to handle paying any Federal or State taxes you may, is to file quarterly estimated taxes. Unfortunately, what many entrepreneurs don’t know is that not every business is required to file and pay quarterly taxes. Estimated taxes are owed against profits of the business. The key word here is profit.’ Often times, after you complete your annual tax return and have legally claimed your business tax deductions and any tax credits you are entitled to, you may end up with a loss and therefore no taxes will be due.Some business owners will ask how much quarterly estimated taxes should they pay? I usually suggest roughly 25% of their gross revenue earned for the previous three months. Paying your taxes every quarter helps to reduce what you may owe when you file your annual return, and if you’ve overpaid you may even qualify for a refund. You should check with your State to determine what you should pay. FICA and Medicare are paid when you file your annual tax return.Many times I have come across small business owners who were operating as employers and were not aware that they were required to file Quarterly Employer Tax Returns and pay any employer taxes owed on wages paid. Because so many entrepreneurs are running solo operations, they sometimes don’t understand why they have to file more than one type of return. So keep In mind, what type of taxes you are responsible for along with which tax returns you are required to file and whether or not you employ yourself and/or others.

Ktasha Nicole Hardge is a Tax Professional who has been helping small- and home-based business owners to keep more of what they make. Don’t be confused any longer about your tax responsibilities now that you’ve started a business. My free report will reveal the 5 Biggest Mistakes Most Taxpayers Make When Choosing a Tax Professional => http://hardgeconnections.com/joinourmailinglist.aspx