Wednesday, March 23, 2022

Tax Preparation Guide for Artists: Understand the Difference Between Self-Employed and Small Business Tax Categories

 Artists make a decent amount of money in the U.S. They have multiple sources of income, such as from shows, exhibitions, stage performances, and personal invites. Like everyone else in the country, they have to register themselves as some sort of business identity and to pay taxes. And when it comes to taxes, there are two categories: salaried and self-employed.

Now, within the self-employed category, there are multiple sub-categories. A small business is considered self-employed in the eyes of the IRS, as is a freelancer and corporation owner. Then what is the difference between the categories of self-employed and small business? Let's find out in this tax preparation guide for artists.


Difference Between Self-employed and Small Business

When someone says they are self-employed, they are most likely referring to themselves as a freelancer, an individual artist, or a sole business owner. On the other hand, when someone says they run a small business, they are likely referring to a business that hires employees. Both are considered self-employed, but a small business also employs other people. With that comes the obligation of collecting income taxes, paying the employer share of self-employment taxes, offering sick and vacation pay, carrying workers' compensation insurance, and so on.

How to Register Your Self-employed Status with Your State

When you work as a self-employed person, you need to choose a business structure in order to register your business with the state. Then, you get a tax ID number and file for the appropriate licenses and permits. You can register your self-employed status in four primary ways:

        Sole proprietorship

        Partnership

        LLC

        Corporation

These are the most common types of business structures. If you are working as a single, self-employed individual, a sole proprietorship is the best option for you. On the other hand, if you are planning to hire employees or have a business partner, it is best to register as a partnership or LLC.



A sole proprietorship does not provide any protection of personal assets against legal claims and debts. In certain partnerships, you are protected against your partner's debts, but you do not have personal asset protection against claims. However, LLCs and corporations offer you personal asset protection.

You need to get an Employee Identification Number, EIN, if you hire employees. You can partner with income tax services for the self-employed to apply for business licenses, an EIN, and more.

Tuesday, March 1, 2022

Essential Things You Should Know About the 2022 Tax Season

Filing an income tax return is an annual chore, and you can’t avoid it. Whether it’s a federal income tax return or a state or local return, you should start preparing for taxes as soon as possible. Along with it, consider hiring super tax services and stay updated on tax laws to reduce your tax season stress. Read this blog post to learn some important things about the 2022 tax season that can make your tax filing smoother!



● Income Tax Return Deadline - The federal income tax return deadline for individuals and C corporations is April 18, 2022. So, these taxpayers must file their 2021 income tax returns by this date to avoid late-filing penalties. The deadline for partnerships and S corporations is March 15, 2022.

● Pre-Pandemic Rules – Congress suspended various tax rules through 2020 because of the global pandemic. Now, everything is back to pre-pandemic rules. Taxpayers should be mindful of such new developments when filing in 2022. It is best to speak with a tax professional to ensure that your taxes are correctly filed.

● Extension for Business Taxes – If you cannot meet the filing deadline and want more time to file your return, file an extension. Taxpayers can obtain a six-month filing extension without providing a reason for the request. Individuals can use IRS Form 4868 and entities can use IRS Form 7004 to request a filing extension.



We hope this post helps you understand these basic things about the 2022 tax season. Even if you hire a tax preparation guide for the self-employed, a taxpayer should always know about changes in the tax law and about new IRS guidance. It can help avoid costly mistakes. Moreover, you can always consult with Agro Accounting CPA to handle the complexities of filing your taxes.

Monday, February 7, 2022

Why You Should File Your Taxes Early


Are you one of those taxpayers who waits until the last minute to file their income tax returns? If so, don’t worry, because you are not the only one. Most people file their tax returns on or about April 15 each year. But do you know the many perks of filing your taxes early? Aside from avoiding the last-minute hassle and stress of finding super tax services, there are many benefits to filing your taxes early, and some of them are listed in this blog post. Let’s get started!





● Get your Tax Refunds Sooner

Filing taxes sooner means taking a step towards receiving a faster tax refund. The IRS is not as busy in the early part of tax season as in April. So when you have money to get back, file your taxes as soon as the IRS begins processing returns. This way, you will get your income tax refunds on time, and you can use them to pay your bills and other things!

● Obtain Financial Information

Preparing for tax filing can help you obtain essential information. For instance, home buyers often need a completed tax return as proof of their household income, and students need some financial information to apply for financial aid. If you get your taxes done on time, you can start your paperwork early for multiple other processes.







● Avoid the Risk of Tax Fraud

Identity theft is a common problem that taxpayers face while filing their taxes. Someone else can file taxes in your name and take your refund. Such cases increase at peak time. But when you file your taxes sooner, there are fewer tax frauds and, even if something happens, you have more time to solve the issue.


So, avoid the last-minute rush and reduce the chances of mistakes by filing your taxes on time. You can also get help from income tax services for the self-employed at Agro Accounting CPA, to make your tax preparation smoother.

Monday, January 31, 2022

Incredible Income Tax Tips for the Self-Employed



Being self-employed increases the amount of record-keeping you have to do for tax purposes. However, having your own business will give you some tax breaks that your employed friends can’t get. Managing income taxes as a self-employed person can be overwhelming. Follow the tips below to make tax time less painful and take advantage of some of the tax benefits that come with working for yourself:


  • Estimate your business income and determine where you stand taxwise
  • Time your income near the end of the year to your advantage
  • Mindfully time your expenditures
  • Make the most of medical insurance deductions
  • Keep the structure of your company simple, especially as a sole proprietorship
  • Automate your record-keeping and sync your bank accounts
  • Understand the differences between business deductions and itemized deductions
  • Set aside some money for your children’s college, as this amount can be deducted from your taxable income
  • Increase your self-employed retirement contributions
  • Hire professionals at Agro Accounting CPA

If you can’t find the time and energy to manage your tax-related tasks, reach out to Agro Accounting CPA and get best-in-class assistance on income taxes for the self-employed.

Tuesday, January 25, 2022

Understanding a “CPA Letter for Verification of Self Employment”


A CPA letter for verification of self-employment is a document issued by the CPA of a loan applicant. In this document, a CPA verifies that he or she has prepared the applicant's tax return and that the applicant is self-employed. So, this letter verifies the self-employment status of the loan applicant. Usually, banks, landlords, and lenders ask the self-employed person for a CPA letter for verification of self-employment for the approval of a loan. Read this blog post to learn more about this document!


What Should the Letter Include?


The letter should be signed by the CPA, and it should be on the CPA's letterhead. In addition, it should contain the following things:

● Name of the applicant
● Business name, address, and phone number of the applicant
● Nature of business
● Number of years applicant has been in [this] business
● Percentage of ownership
● Time since the CPA has prepared tax returns for the applicant
● Applicant reviewed his/her tax returns prior to their filing by the CPA

In most cases, professionals like independent contractors, people owning a single-member LLC, and other small business, freelance, and self-employed individuals are asked for such a letter.

Things a CPA Should Consider Before Issuing the Letter


CPAs should check their professional code of conduct and ethical standards before issuing such letters. They should verify the factual information on hand and avoid forward-looking statements, projections, and opinions. Also, the CPA should not assure the credit-worthiness of the borrower. Along with that, applicants should also obtain a copy of their CPA’s letter and ensure the accuracy of the information in the letter.

If you ever need help with such letters or other accounting and tax-related tasks, you can get in touch with Agro Accounting CPA and hire accounting professionals for the self-employed. Our skilled and experienced CPAs can help make your tasks hassle-free.

Thursday, January 6, 2022

How Artists can Benefit from Doing Income Taxes with Online Accounting


Online accounting or e-accounting is the application of internet technologies to the business accounting function. Everything is the same in online accounting: the entire process has simply moved online. Many well-reputed income tax service firms for the self-employed have shifted to online accounting. Have a look at the five main benefits of online accounting for artists.



1. Get Rid of Paperwork

Online accounting reduces your reliance on paperwork. It eliminates the need to print information on physical sheets, store it, and deal with a bundle of paperwork. You can access all of your information online and download digital documents by logging into your account.

2. Affordable

Online accounting companies have online platforms that allow them to directly transfer documents to their clients, which removes the costs of printing and postage. This eventually reduces the price of online accounting services and offers affordable accounting for artists.



3. Mobile Access

You can access key accounting information anytime, anywhere. Online accounting uses cloud servers to safely store data and records in encrypted form. You can easily access all your information by using your smartphone or laptop.

4. Secure Document Transfer

You can send all of your documents to your accountant online, through a secured exchange portal. You get all the accounting services from the comfort of your home! Accounting firms that do income taxes for artists have document exchange portals fully compliant with IRS security requirements.



5. Easy Tracking

You can easily track your expenses and income with online accounting. All of your information is available on easy-to-read sheets where you can easily go through all your financial information for the last months. For example, you have all information about your outstanding debts and a clear breakdown of how much you owe in taxes. This helps give you improved control of your core finances and taxes.

Monday, December 20, 2021

A Brief Small Business Taxation Guide: What You Should Know

Just like any business, small businesses must pay taxes. However, there are some benefits afforded to small businesses in particular... Here’s what you should know! First, before that: if you are looking for a comprehensive tax preparation guide for artists, entrepreneurs, or the self-employed, do not hesitate to contact the Agro Accounting CPA experts, as we excel at rendering top-quality accounting and income tax services.




Choose your legal structure wisely


If you own an unincorporated business, you are a sole proprietor, also known as a small business owner. This is common for most people in the United States, accounting for 23 million people. Sole proprietorship taxes are convenient since you only have to report your income, profits or losses, and overhead charges on IRS Form 1040 plus Schedule C. It is strongly advised to choose your business’ tax structure as a sole proprietorship, S corporation (“corp”), C corp or LLC.

Use tax deductions to reduce your taxes


As a small business owner, you have to expand your financial resources! Your business expenses include business travel, business utilities, donations, medical insurance, depreciation, and much more. Luckily, you can claim small business tax reduction benefits to minimize your taxes owed.

Pay taxes in three-month intervals


If you owe taxes of $1,000 or more, you must pay taxes quarterly. However, unlike a salaried person (employee) whose employer withholds some amount of taxes with every paycheck, sole proprietors, freelancers, and small business owners assume the full tax “self-withholding” burden. Also, if you are paying taxes every three months, you don’t have to submit an obscene amount of taxes together at the end of the tax year.



List of business taxes you might have to pay:


  • Self-employment tax
  • Excise tax
  • Sales tax
  • Payroll tax
  • Property tax


Conclusion


Having an expert accountant by your side can help you throughout your small business’ growth. They can help you avoid common pitfalls that you might overlook. Heed the points mentioned above or hire income tax services for the self-employed and small business owners from Agro Accounting CPA. We can help you with accounting services, tax deduction tactics, and more.

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