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When do I need to file my taxes?

2017 tax filings will soon be coming due.

Filings submitted after this date may incur penalties and fees for a late filing. Of course, it’s always smartest to have your taxes prepared and filed as early as possible in the event there’s any issues—or simply to get the stress off your back. Filing earlier reduces the chance of someone filing a fraudulent return before you—a headache no one wants to deal with.

Since January 31st is the cut-off date for receiving W-2s, the earliest you can file is February 1st. If you have investments, you’ll likely receive 1099-DIV and 1099-INT forms sometime in mid-February to early March.

If you are self-employed, you should have received 1099-MISC forms from each required party by January 31st. If so, we can get started on your filings immediately.

Due dates for filing your taxes and the deadline for submitting your tax information to me is as follows:
Taxes: Due Date: Deadline for Submitting Your Information to Me:
Individual 4/17/18 3/15/18
Partnership 4/17/18 3/15/18
S-Corp 3/15/18 2/15/18

Note that if you are filing S-Corp taxes, the deadline for submitting your information to me is less than two weeks away in order to guarantee your taxes will be filed on time.

While the IRS permits extensions for filing, I do not recommend making use of extensions except in specific circumstances, and as such, require all information be submitted by the above deadlines.

TL;DR: You need to get moving on your taxes, the sooner the better. If you are still looking for an Accountant, schedule a meeting with me here.

 

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Federal Taxes aren’t the only taxes?! B&O Explained.

At what point do I have to register my side business or freelance work?

A business registration is a simple form to license your business with the state. Various states require this at different asset or income levels. Washington State does not have an income tax, but it does have Business & Opponency(B&O) tax along with Personal Property taxes.

Step one is registering your business with the Department of Revenue(DOR). Yes, you need to register with the State of Washington, if any of the points apply to your business:

  • Your business is required to collect sales tax
  • Your gross income is $12,000 per year or more
  • Your business is required to pay taxes or fees to the DOR
  • You are a buyer or processor of specialty wood products

The common reason for registration is the $12,000 or more in gross income. If you are looking at this number and thinking that you have been over that for the last couple of years, you have some more work to do. (Get in touch with me and I can help you, or you can use the Voluntary Disclosure Program)

Registering your Business, it is a fast process online. When you are done they will send you an Unified Business Identification(UBI) number for your business. This number will be needed when you go to pay your different taxes.

The DOR will send you information on Washington B&O taxes in a nice booklet, though it is a bit long. I’ve provided the main gist of information here:

Washington B&O Tax is based on the classification of your business. The common ones are the following:

B&O Classification Tax Rate

Retailing:                                           .00471
Wholesaling:                                   .00484
Manufacturing:                              .00484
Services & Other Activities:    .015

There are also a few different credits that are available. One is a small business credit, which is based on how much B&O tax you owe. There are tables to calculate this, but if you are filing electronically it automatically calculates this. I do recommend electronically filing as it simplifies the process.

Example time: You are a service organization and made $50,000 of gross income this year. You are a small business and get the small business credit. The tax calculation is simple:
50,000 x .015 = $750

Based on the table the small business credit is $750, so you won’t owe any B&O tax for Washington State.

Now, let’s say your business grows to $100,000 in gross income. The new tax calc is:
100,000 x .015 = $1,500

Based on the table the small business credit is $150, so your tax is $1,350.

Washington Personal Property Tax (What does that even mean?)

Every year you fill out a form with your equipment and you pay a tax based on its value. An example of personal property would be that computer that you use in your business.  This is done with your county department of assessments. Click on the Assessor for your county, then find the eform online. The process isn’t hard but it does mean you need to keep track of your business assets. When you file this online, they will tell you how much you owe.

Seattle B&O Tax

The State isn’t the only one with B&O taxes – Seattle requires them as well. If you do business in Seattle, you must have a Seattle Business license and file the business license tax return, which is the B&O tax. You only have to pay tax if your gross revenue is $100,000 or more. It is another online filing, which should be pretty quick

Links are available to all of the online forms and tables in this post to make it easier to keep all of this information in one place.

TL;DR: You have to register your business and pay taxes at 3 levels: State, County, and City
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I paid for someone to do my website – What do I do?

How do I know if I need to report it?

Alright if they aren’t an employee, and they are an independent contractor, yes you do have to report it if you meet certain thresholds.

  • Was the amount over $600?
  • Was the payment to an individual or an entity that is not incorporated?

If you answered yes to the two questions about, then you need to file a 1099-Misc for the payment.

To do that you need info from the person you pay. Usually, you collect this info before you pay the person via a W-9, but if you didn’t you should now:

  • Name
  • Address
  • SSN Or EIN
  • Total amount paid

Example:

You have Jane do some website work for you. She is a freelancer and it costs you about $750.
The incorrect way to do it:
You wrote her a check in 2016 for $750.

The correct way to do it:
Ask for a W-9. Once you received the W-9 enter the data in your accounting software. Then cut the check to Jane, once you get her invoice.

Now it is January and you are ready to the Form 1099-Misc for Jane for the $750.

You can file them on paper or you can use software, just keep in mind the deadline. They are due JANUARY 31st, 2017 for non-employee compensation. Do not file them late with the IRS, or the copy that you need to provide to the person that you paid.

As always consult your tax advisor.

TL;DR: If you paid someone over $600, you need to file the 1099-Misc ASAP.