January 11, 2016 Do It Yourself Guide to Prepare Your Startup’s Taxes
OK, you have a startup (let’s assume a DE C Corp) and are low on funds. You would like Accountalent to prepare your taxes for you, but cannot afford the $150 per month, yet. Here is a guide to do your taxes yourself and not get in trouble. We will even review these filings for you at no cost.
First, what taxes are due? Here is a list sorted by due date:
Form 1099s – due January 31st
DE Franchise Return – due March 1
Income Tax return – due March 15th
Form 1099s are required for independent contractors or LLCs (none are required for corporations) to whom or which you have paid $600 or more in the calendar year. They are also required for rent payments and law firms (even if they are corporations). A Form 1099 is also required for the interest (not principal) amount of any notes converted to equity during the year.
- Go to Track1099 and register for an account
- Track1099 has two modules – Track1099 and TrackW9
- Go to TrackW9 and enter your Company information and then enter the name and email address for anyone needing a Form 1099. They will send a request to enter their W9 information (name, address, SSN, etc.)
- When they have completed this process, you can then transfer the TrackW9 information to Track1099
- In Track1099, you enter the amount paid each recipient
- The following are the box numbers to use:
- Box 7 – Independent contractors and lawyers
- Box 1 – Rent
- Form 1099-INT – interest
- The recipient will then get an email from Track1099 to securely download their Form 1099
- The cost is about $2 per 1099 form
DE Franchise Return:
The DE Franchise return is required for all DE C Corporations. The amount of tax is a function of the Total Gross Assets, shares outstanding, and shares authorized. The return can be filed only online at https://icis.corp.delaware.gov/Ecorp/logintax.aspx?FilingType=FranchiseTax and the tax is calculated when you enter this information. The names of the Board of Directors and an Officer are also required. The tax for most startups is about $400 per year.
Income Tax Return:
Before you file your Income Tax return, you will need an accurate set of financial statements (Income Statement and Balance Sheet). There are many software programs to file your business taxes, though we recommend TurboTax. It costs about $150 per year for the software and includes the federal return, one state return, and e-filing both returns. If you have more than one state, you may need a professional, as multi-state taxation can get complex. You can download (PC version only) from Amazon.
TurboTax will bring you through an interview that facilitates the filing process. One of the most important elections that you will make on the first-year return is the method of accounting. You can choose either Cash Accounting or Accrual Accounting. Give this decision some thought, as it can make a big difference in the amount of taxes paid.
How Accountalent Can Help You:
You need not be a paying client to enlist our help in this process. We are here to assist you and much prefer you utilize your funds to grow your business rather than use them to pay government fines and penalties.
So, before you file any forms, save to pdf and shoot our founder, Joe Faris an email at [email protected]. We will set up a ShareFile folder where you can upload and house these filings in a secure manner. We will review and get back to you with any necessary changes. Please do not “attach these filings to an email message, as these filings may contain sensitive, personal information.
IRS Circular 230 Disclosure
To ensure compliance with requirements imposed by the IRS, we inform you that any U.S. federal tax advice contained in this document is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code, or (ii) promoting, marketing, or recommending to another party any transaction or matter that is contained in this document.