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Frequently Asked Questions

When are quarterly reports due?

Quarterly reports are due four times each year.

Quarter Report Period Report & Payment Due By:
1 Jan. 1 - March 31 April 30
2 April 1 - June 30 July 31
3 July 1 - Sept. 30 October 31
4 Oct. 1 - Dec. 31 January 31

What is a legitimate tax deductible expense?

The IRS defines a tax deductible expense as an expense that is "ordinary, necessary and reasonable." In other words, if similar businesses to yours would likely incur this expense, it would be considered ordinary. For example, if your business involves training presentations in which a large screen would be of use, then a plasma TV may be deductible — however, if it is installed in your family room, it most likely will not be a legitimate deduction.

Forms

Can I write off my car as a business expense?

You can take a deduction for the percentage of time that you use your personal vehicle for business. Business-use vehicle deductions can be calculated using the standard mileage method or actual expense method.

If a customer owes me money and I can not collect it, can I write it off as a business loss?

Most small businesses use the cash basis accounting method and therefore can not write off bad debt. However, if you use the accrual method of accounting and the debt was previously included in income, then you can write off the amount as bad debt.

For annual expenses such as liability insurance, can it be divided by 12 and then expensed monthly?

If you are using the cash basis of accounting, you should take the expense in the period when actually paid. However, if you are using the accrual basis of accounting, you should allocate the amount over the year. This will reflect the expenses in the periods more accurately.

What makes someone an independent contractor versus my employee?

If a person is on an employer's payroll and receives a steady paycheck, clearly that person is an employee rather than an independent contractor. Considerations when identifying someone as an independent contractor may include:

  • If the worker supplies his or her own equipment, materials and tools
  • If the worker can choose whether or not to come to work without fear of losing employment
  • If the worker controls the hours of employment
  • If the worker exercises control over the work
  • If the worker is not an integral part of the business
  • If the worker is reimbursed for materials, supplies and/or equipment
  • If the worker carries a burden of financial loss if the work is not completed timely or properly
  • A worker can be an employee on one project and an independent contractor on another project.  We welcome the opportunity to help you correctly classify these individuals.


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