Ask a CPA

Payroll taxes include Social Security, Medicare, federal and state taxes that are withheld from an employee's check, as well as the taxes which are due by the employer for having employees.
For example, an employer must match the amount of Social Security and Medicare tax withheld and remit those taxes in a timely manner.

A responsible party which includes the sole shareholder, officer, or authorized signatory is personally liable for the "trust funds".
Trust fund money includes payroll taxes that were withheld from the employees and sales tax which was collected from customers.
Business owners should never spend trust fund money, nor temporarily borrow this money. Business owners get into trouble this way every year.

CPAs which service small businesses usually provide "post facto" payroll services. These include preparing the mandatory quarterly Federal form 941 and state wage reports. Other quarterly reports can also include state unemployment, disability and workers compensation reports.
These reports vary from state to state. CPAs can advise their client as to when tax payments must be made.
Penalties for making payments late can exceed any fee the CPA could charge for these services by thousands of dollars. Penalties for late payment of payroll taxes are extremely harsh. A CPA can advise you as to state and federal payroll requirements that apply to your given situation.
Annual routine audits by the state unemployment agency, the workers compensation and disability insurance company are handled by the CPA.
Some CPAs provide even more extensive day-to-day payroll services for their clients, but most CPAs prefer to work with a payroll service company for their larger clients. These payroll service companies take the responsibility for producing employee checks, withdrawing the money for the government from the client's bank account and making the timely tax payments to the government agencies.

A Short Sale, or selling short, refers to when a person sells a stock before he or she owns it.
The person wants the stock price to go down, so it can be bought back at a cheaper price.
When you sell short you must borrow money to cover the sale. Usually, the seller's brokerage firm arranges to borrow stock to make delivery to the buyer until the seller "closes" the position by purchasing stock and turning it over to the brokerage firm.

A limited liability company, like a corporation, is set up and created under state law. Its owners are referred to as members. The entity gives its members the best of both worlds - Corporate liability protection with the advantages of partnership taxation. Forming a limited liability company is more expensive than forming a corporation and may not be necessary for your situation. Speak to your local CPA in detail to determine if forming or changing your entity status to a limited liability company is the correct choice for you.

It is to a small business' advantage to compute taxable income under the cash basis of accounting?. Special relief from the accrual method is available to some taxpayers with average annual gross receipts of $1 million or less. However, many businesses are required to maintain their books and records on the accrual basis of accounting. For example, if a business has inventory, the accrual basis of accounting must be used. The accrual basis of accounting means that the business records income when the product or service is invoiced, not when it is collected. The actual receipt of money is not required. Likewise, bills not paid by the business are recorded in the period incurred. The limitations on the use of the cash basis requires further discussions with a CPA in your community. Many businesses don't realize their exposure with the IRS until they are audited. Failure to comply with accounting rules initially when setting up your business can prove disastrous in later years.

Tax software programs are only as good as the user. Almost all CPAs use professional tax software packages to prepare their clients' returns. A CPA is licensed by the state in which he or she practices. CPAs are required to take continuing education courses every year to keep current. As you know, tax laws are always changing. CPAs spend twelve months a year actively preparing individual and business returns. While there is no guarantee, having a CPA prepare your return can often save you additional money on that return. Also, your time with family and friends is important. Having a CPA do your taxes means you do not have to waste hours or even days preparing your own return. Finally, when meeting with a CPA, you will be given advice and tax planning tips so that on next year's return you will be able to take advantage of various tax saving opportunities previously unknown to you.

You are entitled to an automatic extension until October 15 by filing form 4868. An extension to file is not a extension of time to pay.
By filing an extension, you avoid the late filing penalty, but will have penalties on any money you owe after April 15. (April 17, 2012)

The underlying rule is that you should keep documents such as receipts, cancelled checks and other income and expense items for three years from the date the return was due or filed, whichever is later.
There is no statute of limitations when a return is found fraudulent or when no return has been filed. The burden of proof of filing is unfortunately upon the taxpayer.
As a result, we recommend that records be saved as long as practical(at least ten years).
Some records should be kept indefinitely, such as property records, since when the property is sold, you will need to compute your gain or loss.
Also, you may not want to discard anything that refers to mutual funds and stocks that have capital gains or dividends reinvested, so you can prove your basis.

Basically, you will have to file an amended return (IRS Form 1040X)to include or exclude items of income or expenses that you didn’t include on the return already filed. If you know you are waiting for some information, do not file your return on 4/15/XX.) You are entitled to a six month extension to file(not to pay). Try to avoid filing amended returns. They are subject to additional scrutiny by the IRS.