I've got some random questions regarding small business taxes.

What is the name of your state? Missouri

This may get kind of long. I appreciate any information I can get on any of these questions.


--GENERAL INTRO...

I've just this year gotten my own small business going. I use Microsoft Money and I'm very organized. All of my finances both personal and business are accurate in Money for the past 7 years or so. I've always used TurboTax to file my personal income tax at the end of each year.

That being said, I'm no tax expert. However, I find it rather annoying that I just forked over a cool $500 to a CPA here (after going through another that was a complete mess of its own) to fill out a few forms, with which I then still have to handle mailing myself, of course.

With MS Money and TurboTax combined I don't see any reason I can't handle this on my own. I went through Company Corp. when I first got my business registered and everything and they sent me a bunch of books on tax law and how to run your business. I don't see anything in there that isn't covered by MS Money and TurboTax.

Now, I know there are plenty of things that would be nice to have a CPA handle...like these questions I'm about to ask. The problem is I've been through 2 of them now and they don't seem to wanna give me the good advice. I have to ask questions about things and then they give the advice (and charge for it) and then simply fill out the forms accordingly after I decide what to do. That's not what I thought a CPA would do for me. If I'm gonna pay I want somebody to find all little quarks FOR me and just do it.

---ACTUAL QUESTIONS...

For example, here is one scenario I'm trying to figure out. The first QTR of this year I did very well with my business. I had just went and talked with a CPA just a few blocks from me who agreed to take me as a new client and handle things for me. I sent them a very accurate report for QTR 1 and they sent me back the 1040-ES forms showing how much I should pay. I did so, and then I used a large part of the remainder of my profit to pay off debt.

QTR 2 comes around and I send them the same reports I sent them the first time. I get no response. I keep emailing and calling asking about it and they say they'll get to it. Well then it's about 3 days from the due date and I call them up and say should I just find somebody else or what...and they say yeah I think you should..??!! Suddenly they're too busy to take on new clients. Gee thanks.

So I basically missed QTR2 estimated taxes because I was slow in finding a new CPA. When I did get a new CPA they informed me that I didn't pay nearly enough for QTR 1 taxes. They wound up combining my QTR 2 and QTR3 when the QTR3 payment was due. I sent everything I could, however, I'm about $15k short!

At this point I explained to the new CPA that I was short because I used the money to pay off debt thinking it was available, etc. I explained that I still have a Line of Credit at the bank I can use to buy more product and make profit and I'll just pay my profit to the taxes until I'm caught up ( I still work full time as well.) He basically just said ok.

Well then I'm reading in this tax law book I got about how you can defer tax payments until the following year. A good practice if you think you'll be making considerdably less money the following year. Smaller tax bracket, smaller percentage on less money, would save me money.

So first off, did I read that correctly? I'll have to find that again to remember the exact section number it mentioned, but if that's correct it's definitely something I'd want to do. As I said my first qtr this year was very good because of a product I can't get anymore. Next year will be like the rest of this year for me. QTR 1 really blew things out of proportion.

So if that is correct, isn't that something a CPA should have told me?? I emailed him asking about it but my worry is he's gonna charge me for the "consult" and then again for the actual work. I don't like that at all, especially if I'm on the right track and all I have to do is follow TurboTax and fill out the right forms with accurate information.

I have more questions, but I'm gonna leave this for now and see if I get a response. Turned into a novel already. Any information I can get would be greatly appreciated. Thanks!!!What is the name of your state?

Having a CAD program does not make you an engineer and having an accounting and tax program does not make you a CPA. You have read enough to make you dangerous.

however

I think your analogy is a little off track there, but that's beside the point. At $500 just to fill out a 1040 form and not give me any explanation as to where or why they got there...and when I get the same thing or better after using TurboTax...I just gotta wonder...??? What am I paying the CPA for?

and

also, is a CPA suppose to tell me stuff like that and do it without me having to ask? That's kinda what I'm getting at here. If I have to research that kinda stuff and then ask about it...and then get charged for an answer whether they do it or not...that's rediculous.

I've been through 3 of them, though. Am I just having bad luck with CPA's or is that all I should expect?

The specificity of any CPA's advice is limited by the info you give him/her. Setting up estimated tax payments is an art & taxpayers have lots of options. You can try to estimate your income & aim for a $0 balance due/refund, or you can pay the minimum to avoid a penalty & be prepared for a big bill in April, or you can aim for a refund of $x,xxx. The payments come from your withholding (which you control throught the W-4 you file with the boss) & your estimated payments. Lots of people just up their withholding from paychecks instead of sending in estimated payments. Thus, "How much should I send in as an estimated payment this quarter?" is not a question anyone can answer without LOTS of information beyond your business books.

Now, I generally steer my clients toward the minimum to avoid penalty IF their tax returns indicate they save money (significant interest & dividends), & aim for a small refund if they don't/can't save.

Do you need a CPA? I'd take a sharp non-CPA accountant any day. CPAs are generally focused on larger corps & fancy stuff. If you're just an S-corp or sole proprietorship, a good non-CPA accountant is likely a better fit. They're cheaper too.

I agree with Abezon that you probably are consulting with CPAs when you really need a practice that specializes in small business or a combination of individual and small business.

That's less likely to be a CPA, than an EA or even just a seasoned professional.

Look for a local tax office that is open all year long. Not a big CPA firm and not a single practitioner CPA. Ask them questions about whether or not they are prepared to handle your specific needs.

I honestly would not recommend that you handle your taxes yourself. If something goes wrong you need someone knowledgeable to help you deal with the IRS.

You sound very organized. If that's true, then 500.00 for a 1040 that includes a schedule C is steep.

Abezon is also correct that you could be told at the time that you file your taxes, what estimated payments need to be made to avoid penalty for the following year. Abezon is also correct that its quite complicated to determine on a quarterly basis how much should be paid to ensure that you won't have a big tax bill come tax time. However, any seasoned professional could simply look at your profit and loss report for the quarter, and for year to date, and give you a reasonably accurate estimate to be paid for the current quarter....and it shouldn't take more than 30 minutes to do it.

I have LOTS of clients who come to me for their quarterly estimates. However, most of them make appointments and we sit down and do it during the appointment. That ensures that they get a timely response. You are less likely to get a timely response when you "drop things off"...particularly if lots of other clients of the practice are making appointments.

A truly good accountant (with a well organized client) should be able to handle your issues without asking many questions, or without you having to ask any questions. If you are not well organized or not as well organized as you think you are, then a good accountant should be asking you many questions, not the reverse.

I am not sure that MS Money is the right software for you to be using. I am not directly familiar with it, but its generally not thought of as being "business" software.

True business accounting software, such as Quickbooks for example, or any one of the many business accounting software programs out there, may better serve you for the business.