Music CPA

Taxes

We have extensive experience in doing business and personal tax returns. We can help you navigate the often complex  laws that pop up each year and help you get the most deductions that you are eligible for, including some that you may not even be aware of. Among the many tax services we offer –
  • Tax Advice
  • Federal and state business tax returns (including LLC’s. S corporations, and partnerships)
  • Federal and state individual tax returns
  • Payroll tax returns
  • State sales tax returns
  Don’t get behind on your income taxes – If you are an unincorporated sole proprietor or single member LLC, you should pay your estimated taxes quarterly on the following dates – April 15th, June 15th, September 15th, and January 15th. Form 1040 ES is the form to use to send in your estimated payments. Estimated tax paid in at each date should be 1/4th of your estimate of what your federal income tax and your self employment tax will be for the year. You can use your actual previous year’s tax as a guide if you think it will be similar to your current year. The IRS mailing address is right there on the 1040 ES form. The main goal is to not owe a big chunk of taxes on April 15th when you file or extend your taxes. If you underestimated your tax for the previous year, you will have to come up with the rest of it on April 15th along with some interest and penalty. Note that when April 15th arrives, you may not only  still owe tax for the previous return you filed, but if you underestimated for the previous year, you will need pay that with an extension, and it will also be time to pay in your 1st estimate for the current year. You should get in the habit of writing a check on each of the 4 quarterly estimated tax due dates and mailing it in. Face it – paying in something is better than paying in nothing at all. You can apply any overpayment showing on your tax return to your first estimate for the following year. If you fail to pay in the estimates, you don’t get a letter from the IRS – they don’t know if you’re making taxable income during the year or not. If a tree falls in the forest and no one is there to hear it, did it make any noise? Do it for yourself. Getting your tax return done each April is hard enough. Don’t complicate it with a large tax debt at the same time. The income tax basics – Remember, if you are self-employed, you have 2 taxes to calculate – federal income tax and self-employment tax (SE tax). The SE tax can be a real surprise in your first profitable year as an music business entrepreneur. Figure the SE tax at about 13% of your net business income. Your income tax will be a mix of a 10%, 15% and possibly 25% or 28% rate on your total net income less your standard (or Schedule A itemized) deduction and personal exemption(s). Since you have various tax rates at work, it is a challenge to estimate the amount to actually pay in at the quarterly due dates. It’s also hard to know how much your deductions will be in order to arrive at an estimated taxable income. A rule of thumb is to hold back and pay in some %, maybe 5% – 10% of gross income – you don’t have to be a tax expert to know how much money comes in the front door. So, there’s really no excuse for getting behind.