QuickBooks is a very powerful tool for business owners to use in the day to day running of their business. However, it does take time to learn how to use it effectively and accurately. Setting up QuickBooks correctly is critical and often where most novices run into problems. While QuickBooks is designed for business owners with limited bookkeeping or accounting knowledge, our experience is that most owners need help at some point in their journey with the software. There are several free YouTube videos on how to use QuickBooks as well as Small Business Development centers and individual classes or consultants that you can hire for a fee.

There is no one size fits all for what structure a business should adopt. There are pros and cons to each type and a business may over time decide to change structures for various reasons. Consulting with an attorney and income tax advisor before deciding on your business structure is highly recommended to avoid any surprises down the line. Sole Proprietorships are the easiest to set up and have only one owner. Partnerships are owned by two or more individuals and should have a formal partnership agreement written to outline the terms of the partnership. Limited Liability Companies offer business owners with liability protections that differ from corporations and can be taxed in a variety of ways. Corporation issue/sell stock and take on either a C or S status, each being taxed quite differently to shareholders. This is a complex issue, and much care and investigation should be done prior to making a final decision.

If you are a business owner and anticipate owing Federal or State income tax on profits, it is a good idea to make estimated tax payments throughout the year so that you do not have a large tax balance at tax filing time. Estimated tax payments are not only for paying federal or state income tax, but other taxes like self-employment tax (social security tax for the self-employed). There can be substantial penalties and interest imposed for not paying timely and accurately estimated tax payments. These are paid quarterly and are calculated on profits throughout the year. It is important to keep good records of income and expenses so that you can properly estimate what tax you will owe. Estimated tax payments can be paid by check through the mail or on the IRS or State websites by electronic check or credit cards.

The term “CPA (Certified Public Accountant)” is a general term often used for all tax preparers. Not every CPA specializes in taxes and not every tax preparer is a CPA. Here is an exert from the IRS website describing the differences.

An important difference in the types of practitioners is “representation rights.” Here is guidance on each credential and qualification:

Unlimited Representation Rights: Enrolled agents, certified public accountants, and attorneys have unlimited representation rights before the IRS. Tax professionals with these credentials may represent their clients on any matters including audits, payment/collection issues, and appeals.

• Enrolled Agents – Licensed by the IRS. Enrolled agents are subject to a suitability check and must pass a three-part Special Enrollment Examination, which is a comprehensive exam that requires them to demonstrate proficiency in federal tax planning, individual and business tax return preparation, and representation. They must complete 72 hours of continuing education every 3 years including 2 hours of Ethics every year.
• Certified Public Accountants – Licensed by state boards of accountancy, the District of Columbia, and U.S. territories. Certified public accountants have passed the Uniform CPA Examination. They have completed a study in accounting at a college or university and met experience and good character requirements established by their respective boards of accountancy. In addition, CPAs must comply with ethical requirements and complete specified levels of continuing education to maintain an active CPA license. CPAs may offer a range of services; some CPAs specialize in tax preparation and planning.
• Attorneys – Licensed by state courts, the District of Columbia, or their designees, such as the state bar. Generally, they have earned a degree in law and passed a bar exam. Attorneys generally have on-going continuing education and professional character standards. Attorneys may offer a range of services; some attorneys specialize in tax preparation and planning.