Tax questions... - Cleaning Talk - Professional Cleaning and Restoration Forum
 
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post #1 of Old 09-22-2013, 08:46 AM Thread Starter
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Tax questions...

In Texas here...

I have had a Residential/Commercial cleaning business since 2003. I had always been the only cleaning tech up until a month ago. Always insured and bonded of course. I decided to expand the business, have employees (not independent contractors) and eventually not personally clean except to fill in for employee absences, mostly managing the business. I have always filed my own self-employment taxes and it was fairly simple, never having any problems doing it myself. Now that I have employer taxes, sales/use tax, 50% more clientele etc, I am overwhelmed. Every time I sit down to research my obligations so that I can continue to properly file my taxes myself I just want to run and hide. So my question is this... Now that I have employees and sales tax (although I am still a sole proprietor, which will change to LLC with the right amount of business growth)... Do I still file my personal/business tax as one, self-employed (1040 with schedule C) or are there now 2 separate filings?

I want to add that I only decided to expand about a month ago and the business has taken off much quicker than I thought it would. Since the official decision I have gained 10 new clients and 2 employees in 2 different service areas. So I wasn't trying to skip this step ... its just happening so fast. Which I'm grateful for but I needed more time to get the tax end of the business squared away.

Last edited by eScentialCleaningServices; 09-22-2013 at 08:57 AM. Reason: adding info
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post #2 of Old 09-23-2013, 10:30 AM
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Location: Colorado Springs, Colorado
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First, I am not a tax specialist, so make sure to double check my info. I also have a CPA that checks my taxes.

With an LLC or sole-proprietor or partnership; you only have to pay income taxes once. If you create an s-corp then you would have to pay income taxes on the company and your personal taxes.

DON'T FALL BEHIND ON YOUR TAXES. This will cost you your business and personal life.

I can't comment on Texas' taxes, but I can give you federal tax structure info.

941 paid quarterly until you have over $2,500 in taxes due for the quarter (then monthly payments when over $2,500) -----> http://www.irs.gov/pub/irs-pdf/f941.pdf
940 paid yearly -------> http://www.irs.gov/pub/irs-pdf/f940.pdf (this is 2012, 2013 paperwork not out for this)
1040-ES paid quartarly for personal taxes, you are taxed on all profits in the business------> http://www.irs.gov/pub/irs-pdf/f1040es.pdf
W-3 filled out yearly -------> http://www.irs.gov/pub/irs-pdf/fw3.pdf (see below website for filling this out)

Pay your 940 and 941 online, but you still have to file a paper 940 and 941 -----> https://www.eftps.gov/eftps/index.jsp
Fill out the W-3 online -----> https://secure.ssa.gov/acu/LoginWeb/...?SUITE=IRESBSO

With all of these taxes, make sure you take them out of your account BEFORE you pay yourself. Otherwise taxes will "sneak up" on you at the end of the quarter. Here is the steps you should take:

1. Open a checking account for the business and only do business out of that account. (no personal stuff out of this account and no business out of your personal account)
2. Put the money you take in from clients into this account.
3. Pay bills for the business out of this account (tools, solution, etc.)
4. every time you pay your team members, make sure to deduct the taxes withheld (both company and employee) from your checking account. Our bank allows us to open as many savings accounts as we want for free. I take the taxes from every paycheck into the savings account so I have the money when it is due.
5. At the end of the month the balance in the checking account is your profit. Take 20% of that to pay for federal income taxes (your 1040) and then write yourself your own check for your income and deposit that into your personal account. Again, I have a separate savings account for the taxes, so in total I have 2 tax savings account, income taxes and then one for business taxes.

Hope that helps

-Crista

Last edited by Maid to Shine; 09-23-2013 at 10:44 AM. Reason: spelling mistakes
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post #3 of Old 09-23-2013, 04:00 PM Thread Starter
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Wow... thanks Crista! That helps so much. I am really in a panic over here about this. I am so scared of this part of the business Also the main reason I hadn't expanded sooner. I have the business checking but no business savings accounts yet. I will open them tomorrow. Thanks again for taking to time to respond with such detail!
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