<p>You've established your small business in California, and things are going so well that you've hired some employees for the first time. Congratulations! Hiring employees introduces new responsibilities you must fulfill as an owner, including <a class="link" href="https://1800accountant.com/blog/small-business-payroll">handling their payroll taxes</a> and <a class="link" href="https://edd.ca.gov/en/Payroll_Taxes/Enroll_Employer_e-Services_Business" target="_blank" rel="noreferrer noopener">registering with the state</a>.<br><br>California's payroll taxes are more complex when compared to other states, which increases the importance of understanding the rules and standards you must abide by. California payroll taxes might initially seem intimidating, but you shouldn't worry. This handy guide to California payroll taxes will get you up to speed in no time.&nbsp;&nbsp;&nbsp;</p>



<h2>What is California payroll tax?</h2>



<p>California payroll tax is taken from a portion of an employee's gross earnings for a designated pay period. Like other states, taxes are withheld for Social Security and Medicare, but California adds unique <a class="link" href="https://edd.ca.gov/en/employers/" target="_blank" rel="noreferrer noopener">taxes of its own</a>.<br><br>If you've hired remote workers for your business, here's a helpful guide to assist you in navigating <a class="link" href="https://1800accountant.com/blog/navigating-payroll-taxes-remote-workers">payroll taxes for remote workers</a>.&nbsp;</p>



<h2>Who is subject to CA payroll taxes?</h2>



<p>If you've paid someone $100 or more within a quarter in California, you will be responsible for payroll taxes. If the person you've paid has been hired as an employee, you will have 20 days from their start date to report them to the California New Employee Registry.</p>



<p>Reporting is easy and can be done in a few ways, including:</p>



<ul>
<li>Filing the DE 34 form digitally with the California Employment Development Department.&nbsp;</li>



<li>Submitting a printed copy of the DE 34 form.&nbsp;</li>



<li>Submitting the employee's W-4 form with start date information.&nbsp;</li>
</ul>



<h2>What are the different types of payroll taxes in California?</h2>



<p>What are the payroll taxes in California? There are four types of California payroll taxes that every small business owner should be aware of.&nbsp;</p>



<h3>Unemployment Insurance (UI) Tax</h3>



<p>California's UI tax is taken from a percentage of the first $7000 paid to an employee in a calendar year. The current percentages range from 1.5% to 8.2%.<br><br>You are also subject to the new employer tax in California, which starts at 3.4% and typically increases over time.&nbsp;</p>



<h3>Employment Training Tax (ETT)</h3>



<p>The California ETT funds training for workers in industries critical to the state's economy. First-time employers will be responsible for this tax for the first year, although they may continue paying if their UI tax balance is positive after that.<br><br>The ETT rate is one-tenth of 1% of the first $7000 of an employee's taxable income.&nbsp;</p>



<h3>State Disability Insurance (SDI) Tax</h3>



<p>As of 2022, the California SDI tax rate is 1.1%, with a taxable wage limit of $145,600 per employee. The California State Legislature sets the SDI rates, which are subject to change each year.<br><br>While state disability insurance helps individual employees who cannot work temporarily, funds from this tax also go toward <a class="link" href="https://edd.ca.gov/en/disability/paid-family-leave/">paid family leave benefits</a>.&nbsp;&nbsp;&nbsp;</p>



<h3>California Personal Income Tax (PIT)</h3>



<p>California's PIT applies to anyone making money in the state, including non-residents. PIT is taken from your employee's pay, and the taxable amount is uncapped, meaning no maximum amount is defined.<br><br>PIT's rate is determined by an employee's withholding amount, which can be found in the Employee's Withholding Allowance Certificate section on a W-4 or DE 4 form.&nbsp;</p>



<h2>Calculating Payroll Taxes in California</h2>



<p>Before employers can calculate the various California payroll tax rates, they must first determine taxable income. California's Employment Development Department offers an <a class="link" href="https://edd.ca.gov/en/payroll_taxes/Due_Dates_Calendar/" target="_blank" rel="noreferrer noopener">easy-to-use guide</a> to help employers make that determination.&nbsp;</p>



<ul>
<li><strong>California UI</strong>.<strong> </strong>This tax is taken from a percentage of the first $7000 in taxable income an employee earns in a calendar year, and percentages range from 1.5% to 8.2%.</li>



<li><strong>California ETT</strong>. The tax rate is one-tenth of 1% of the first $7000 of an employee's taxable income in a calendar year.&nbsp;</li>



<li><strong>California SDI</strong>. The SDI tax rate is 1.1%, with a taxable wage limit of $145,600 per employee.&nbsp;</li>



<li><strong>California PIT</strong>. An employee's withholding amount determines the PIT rate and can be calculated via the Exact Calculation Method or Wage Bracket Table Method.</li>
</ul>



<p>Here are some great tips for making <a class="link" href="https://1800accountant.com/blog/make-payroll-more-efficient">payroll more efficient</a>.</p>



<h2>How to submit payroll taxes in California</h2>



<p>California offers several ways to submit payroll taxes electronically, along with submitting via postal mail. Submission methods are detailed <a class="link" href="https://edd.ca.gov/en/Payroll_Taxes/File_and_Pay" target="_blank" rel="noreferrer noopener">here</a>.&nbsp;</p>



<p><br>Regardless of your chosen method, accurate payroll tax calculations and timely submissions can be too much for busy small business owners, which is why 1-800Accountant offers <a class="link" href="https://1800accountant.com/services/payroll">small business payroll services</a>. Let our California payroll experts run payroll for you while you focus on growing your business.&nbsp;</p>



<h2>California Payroll Tax FAQs</h2>



<h3>Is payroll tax the same as income tax?</h3>



<p>California payroll tax and income tax are not the same, and employees must pay both, while businesses are responsible for paying payroll taxes to the state.&nbsp;&nbsp;</p>



<h3>Can I avoid paying payroll taxes?</h3>



<p>If you employ people in California, you must pay payroll taxes to the state. Failing to pay can result in penalties and increased scrutiny from the California state government.</p>



<h2>How 1-800Accountant’s Payroll Experts Can Help you</h2>



<p>Hiring employees for your small business is exciting, but that excitement can become frustrating when faced with difficult and ongoing California employer payroll taxes. That's why so many small business owners use 1-800Accountant, America's leading virtual accounting firm for small businesses, for their California payroll needs.&nbsp;</p>



<p>Whether it's <a class="link" href="https://1800accountant.com/services/business-tax-advisory">business tax advisory</a>, <a class="link" href="https://1800accountant.com/services/small-business-taxes">small business taxes</a>, or any of our professional accounting services, we have the solution you need at a price that works for you. Schedule a quick consultation – usually 30 minutes or less – to learn how we can help with your employer taxes in California and more.</p>

You&#8217;ve established your small business in California, and things are going so well that you&#8217;ve hired some employees for the first time. Congratulations! Hiring employees introduces new responsibilities you must fulfill as an owner, including handling their payroll taxes and registering with the state. California&#8217;s payroll taxes are more complex when compared to other states, [&hellip;]

Man reviewing documents at his desk with a laptop, under text "beginner's guide to california payroll taxes".

california-payroll-taxes

A Beginner&#8217;s Guide To California Payroll Taxes

A Beginner's Guide To California Payroll Taxes

<p>Growing your business outside your home state can be an exciting time for your company. Expansion into multiple states, though, can also present additional challenges and compliance responsibilities.</p>



<p>Here are some of the areas you'll need to be familiar with when doing business in multiple states<strong> </strong>that will be discussed in this article:</p>



<ul>
<li>What does "foreign qualification" mean?</li>



<li>Which businesses need to file foreign qualifications</li>



<li>Steps to file foreign qualifications</li>
</ul>



<p>At the end of the article, we'll answer some frequently asked questions about foreign qualifications.</p>



<h2>What are foreign qualifications?</h2>



<p>Don't mistake the word "foreign" for international. When talking about the operation of your business within the United States, "foreign" simply means "<a class="link" href="https://www.score.org/resource/blog-post/how-domesticate-your-business-another-state" target="_blank" rel="noreferrer noopener">out-of-state</a>." The term foreign qualification refers to registering your business in a state other than the state in which your business was formed.</p>



<p>In general, any business that crosses state lines to do business in a state other than the one in which it was incorporated must go through the foreign qualification process.</p>



<p>There are several reasons why foreign qualification is extremely important and should be viewed as more than just filling out paperwork and paying a fee when figuring out how to do business in another state:</p>



<ul>
<li><strong>Protects your company and employees</strong>. Qualifying as a foreign entity is the first step towards ensuring that your company will satisfy all required compliance obligations, including filing income taxes, sales and use taxes, employment taxes, workman’s compensation, etc. Meeting your compliance obligations will help legally protect both you as the business owner, as well as your employees.</li>



<li><strong>Fines and penalties.</strong> You may be subject to fines and penalties for each day you conduct business as an unregistered entity.</li>



<li><strong>Court representation.</strong> A business without foreign qualifications may have limited or no rights when settling legal disputes in some states’ courts.</li>
</ul>



<h2>Who needs to file foreign qualifications?</h2>



<p>LLCs and corporations must file foreign qualifications when expanding into a new state.</p>



<p>Sole proprietorships, on the other hand, usually don’t have to file foreign qualifications when expanding. (If you’re currently a sole proprietorship considering an expansion into a new state, consider discussing with your <a class="link" href="https://1800accountant.com/blog/entity-compliance">team of trusted advisors</a> if it’s the right time to become an LLC or a corporation.).</p>



<p>So what constitutes as doing business in a state? Here are some of the most common reasons why your business would need to qualify as a foreign entity before doing business in a new state:</p>



<ul>
<li>Establishing a physical presence such as an office building, retail store, or warehouse</li>



<li>Have one or more employees</li>



<li>Earning a substantial portion of your revenue</li>



<li>Conducting in-person meetings with clients</li>



<li>Purchasing property</li>
</ul>



<p>There are several situations that typically don’t require you to obtain foreign qualification. These scenarios include:</p>



<ul>
<li>Activities and/or transactions with a limited scope, usually less than 30 days</li>



<li>Conducting research activities within a state to determine whether your business should expand into that state</li>



<li>Certain internal business activities such as maintaining books or records</li>



<li>Having an active bank account in a particular state</li>



<li>If your business has a typical relationship with a wholesaler that doesn’t direct the day-to-day activities of that wholesaler</li>
</ul>



<h2>Steps to file foreign qualifications for your LLC or Corporation</h2>



<p>After <a class="link" href="https://1800accountant.com/services/entity-formation">creating a new legal entity</a> for your business, you’re now ready to begin the foreign qualification process.</p>



<p>Here are five steps on how to register an existing business in another state and satisfy the foreign qualification requirements.</p>



<h3>Step 1: Name availability</h3>



<p>Conduct a name search in the state for which you want to establish foreign qualification to ensure the name is not already being used by another company or that the name is extremely close to another business operating in that state.</p>



<h3>Step 2: Get a registered agent</h3>



<p>A registered agent is an individual or a company that acts on your behalf to receive important communications from the Secretary of State and other legal documents. It is recommended that your business <a class="link" href="https://1800accountant.com/blog/small-business-need-registered-agent">hire a professional registered agent</a> who can timely communicate important matters, such as if a lawsuit is served against your company.</p>



<h3>Step 3: Apply for a certificate of good standing</h3>



<p>Also known as a certificate of existence or certificate of status, a certificate of good standing shows that your business has met all necessary foreign qualification requirements for that particular state. The most common reason a business falls out of good standing is by not filing annual information reports and/or not paying the required annual fee, which is usually nominal in most states.</p>



<h3>Step 4: Register for certificate of authority</h3>



<p>After completing the first 3 steps, your business will be ready to file an application for a certificate of authority. While the name of this certificate may vary slightly by state or by industry, the end result is the same: your business will be officially permitted to conduct business within that particular state.</p>



<h3>Step 5: Pay applicable state fees</h3>



<p>Having a business that crosses state lines will always involve some sort of fee. To initially file a certificate of authority can vary from $100 to $500 depending on the state.</p>



<h2>Foreign Qualification FAQs</h2>



<h3>Do online businesses need to file foreign qualifications?</h3>



<p>Most e-commerce companies that conduct business online do not have to foreign qualify. There may be situations where you may want to qualify, for example, if most of your sales originate from one particular state. Consult your legal advisor to discuss your particular situation.</p>



<h3>Which states do not require businesses to file foreign qualifications?</h3>



<p>All 50 states and the District of Columbia require foreign qualification filings.</p>



<h3>What are the penalties for not foreign qualifying?&nbsp;</h3>



<p>Penalties for not foreign qualifying are wide and varying. A state could impose a monetary fine as well as pursue fees and back taxes (in addition to interest penalties) on the money the business would have owed had it been properly foreign qualified.</p>



<h3>Which states are exempt from foreign qualifications?</h3>



<p>Currently, there are no states that are exempt from foreign qualifications.</p>



<h3>Do I have to get a new EIN if I expand my business to another state?&nbsp;</h3>



<p>An Employee Identification Number (EIN) is a federal number that stays with the same business from state to state. A business keeps the same EIN for the entire life of the business. Some states issue a separate state-issued identification for use in that state.</p>



<h3>Work with 1-800Accountant&nbsp; to help navigate the foreign qualification process</h3>



<p>As the owner of a business that crosses state lines, it’s your responsibility to understand the steps needed to qualify as a foreign entity in the state(s) into which your company is expanding. Remember that foreign qualification is important to protect both you as the owner and your employees, helps you avoid fines and penalties, and permits your business to have legal standing in that state.</p>



<p>While there are many moving pieces of the foreign qualification puzzle that can sometimes get complicated, remember that help is just an <a class="link" href="https://1800accountant.com/">email or phone call away</a>.</p>



<p>Working with a 1-800Accountant <a class="link" href="https://1800accountant.com/services/small-business-taxes">small business expert</a>, you can rest easy knowing that you’ll have a helping hand to properly navigate the foreign qualification process for every state in the U.S.</p>

Growing your business outside your home state can be an exciting time for your company. Expansion into multiple states, though, can also present additional challenges and compliance responsibilities. Here are some of the areas you&#8217;ll need to be familiar with when doing business in multiple states that will be discussed in this article: At the [&hellip;]

Smiling woman in an apron standing in front of a café with text overlay about foreign qualification for business operation in another state.

foreign-qualifications

Foreign Qualifications: How can my business operate in another state?

<p>Bank reconciliation is a useful tool if you want to know <a class="link" href="https://1800accountant.com/blog/bookkeeping-101-keep-good-financial-records">how to keep good financial records</a>. It can assist you in significant ways to protect your finances. It can also help you determine whether there are errors in your transactions and, if so, how you can correct them.</p>



<p>However, there are several things that you should know about bank reconciliations. Continue reading to learn about the bank reconciliation process and how it can help you.</p>



<h2>What is Bank Reconciliation?</h2>



<p>Bank reconciliations occur when you compare your financial statements to that of your banking institution. This will help you notice potential discrepancies, and it will also allow you to determine how the discrepancy occurred.&nbsp;</p>



<h2>The Benefits of Bank Reconciliation</h2>



<p>Bank reconciliation is essential for <a class="link" href="https://1800accountant.com/blog/bookkeeping-101-crash-course-record-keeping-small-businesses">small business bookkeeping</a> and offers a myriad of benefits that contribute to the sound financial management of your accounts.</p>



<ul>
<li><strong>Detecting Errors and Discrepancies – </strong>Bank reconciliation acts as a detective, unveiling errors, and discrepancies between each bank record and bank statement. By identifying these discrepancies, you can rectify errors promptly and maintain the accuracy of your financial records.</li>



<li><strong>Preventing Fraud –</strong> Bank reconciliation serves as a powerful tool in the prevention and detection of fraudulent activities. By regularly comparing your records with the bank statement, you can identify unauthorized transactions and take immediate action to protect your finances.</li>



<li><strong>Ensuring Accuracy of Financial Statements – </strong>Accurate financial statements are essential for making informed business decisions. Through bank reconciliations, you ensure that your financial statements reflect the true financial position of your accounts, providing a reliable foundation for decision-making.</li>



<li><strong>Monitoring Cash Flow – </strong>Bank reconciliation allows you to monitor your cash flow effectively. By reconciling your bank transactions, you gain insights into inflows and outflows of funds, helping you make informed decisions regarding budgeting and cash management.</li>



<li><strong>Maintaining Trust and Transparency – </strong>Bank reconciliation demonstrates your commitment to financial integrity. By reconciling your accounts, you establish transparency and trust with stakeholders such as investors, creditors, and auditors, fostering positive relationships and instilling confidence in your financial management.</li>
</ul>



<h2>The Bank Reconciliation Process</h2>



<p>The bank reconciliation process comprises several steps:</p>



<h3>1. Gather Your Tools</h3>



<p>You’ll need each bank statement to complete a bank reconciliation. You should have statements for the most recent month, the previous month, and closing balances.</p>



<h3>2. Start with the Opening Balances</h3>



<p>Begin your bank reconciliation report by comparing your opening bank statement balance with the corresponding figure in your records. Any differences should be noted, as they may be crucial in identifying discrepancies later in the process.</p>



<h3>3. Record Deposits and Credits</h3>



<p>Dive into the sea of transactions, capturing each deposit and credit recorded in your bank statement balance. Compare them meticulously to your records, ensuring that no transaction goes unnoticed. Make an adjustment for any discrepancies, noting the reasons for variations.</p>



<h3>4. Account for Withdrawals and Debits</h3>



<p>With every deposit and credit accounted for, it's time to tackle the withdrawals and debits. Scrutinize each cleared transaction, matching it with your records to ensure accuracy. Don't let any discrepancies slip through.</p>



<h3>5. Reconcile Outstanding Checks</h3>



<p>Compare the outstanding checks in your records with those in your bank statement, marking off any that have since cleared. Note any discrepancies and make an adjustment accordingly.</p>



<h3>6. Factor in Bank Charges and Fees</h3>



<p>Take a close look at your bank statement, identifying any charges and fees imposed by the bank. Compare them with your records, adjusting the figures as necessary.</p>



<h3>7. Unveil the Closing Balance</h3>



<p>As the reconciliation process nears its end, compare the closing balance on your bank statement with your records. If the figures align, that’s great news. However, if discrepancies persist, delve deeper into the differences, ensuring no stone is left unturned.</p>



<h3>8. Make Necessary Adjustments</h3>



<p>With a keen eye for detail, scrutinize the discrepancies uncovered during the bank reconciliation process. Rectify any errors in your records, updating them to reflect the accurate financial state of your accounts. Remember, precision and accuracy are the pillars of financial stability.</p>



<h2><strong>Additional Bank Reconciliation Tips</strong></h2>



<p>As you complete the bank reconciliation report, you should look for any administrative problems. Administrative errors can cover a wide range of issues from banking institutions and customers. You’ll want to:</p>



<ul>
<li>Avoid bank fees for insufficient funds</li>



<li>Avoid using lines of credit</li>



<li>Avoid bounced checks</li>



<li>Catch any banking errors</li>



<li>Keep track of outstanding checks</li>



<li>Know if customer payments have bounced or failed</li>



<li>Know the cash balance in each bank account</li>
</ul>



<p>As you complete bank account reconciliation, you should look for potentially fraudulent activities. This may include:</p>



<ul>
<li>Changed checks</li>



<li>Duplicated checks</li>



<li>Missing deposits</li>



<li>Unauthorized cash withdrawals</li>



<li>Unauthorized transfers</li>
</ul>



<h2>Work with the Pros</h2>



<p>Bank reconciliation is one of the most critical bookkeeping duties. Work with<a class="link" href="https://1800accountant.com/products/bookkeeping"> </a>the pros who specialize in <a class="link" href="https://1800accountant.com/services/bookkeeping">bookkeeping for small businesses </a>to ensure that you don’t have and problems.</p>

Bank reconciliation is a useful tool if you want to know how to keep good financial records. It can assist you in significant ways to protect your finances. It can also help you determine whether there are errors in your transactions and, if so, how you can correct them. However, there are several things that [&hellip;]

A person doing paperwork with the title "bank reconciliation everything you need to know" displayed across the image.

bank-reconcilliation_blog-header

Bank Reconciliation: Everything You Need to Know

<p>Small business owners typically outsource many services that would otherwise be done in-house at larger companies, such as marketing, advertising, and accounting. But how can you ensure you're choosing the right professional to listen to your needs and provide trustworthy expertise? Some services are lower risk. After all, if you choose the wrong cleaning company for your store, it's easy to find an alternative quickly. However, other services like tax preparation are much more risky if you choose the wrong person.&nbsp;</p>



<p>It can be challenging to find the right professional, but we'll guide you through some tips on how to choose a tax preparer for your small business. Choosing a tax preparer is more than simply looking at the cheapest fees. Finding a professional who genuinely has your best interests in mind and can guide you through maximizing your tax benefits is essential. If you need help determining where to begin and what to look for, read on to learn how to find a tax preparer.</p>



<h2>Finding a good tax preparer in 8 steps</h2>



<h3>1. Define your business needs</h3>



<p>Tax preparation for small businesses can quickly become overwhelming, depending on the situation. One important thing to note is the <a class="link" href="https://1800accountant.com/blog/cpa-vs-tax-preparer">difference between tax advisors and tax preparers</a>. A certified public accountant (CPA) would fall under the category of tax advisor. These individuals hold a minimum of a bachelor's degree and are experts in taxes, litigation services, audits, etc. A tax preparer holds an IRS Preparer Tax Identification Number (PTIN), although they may or may not have a degree in higher education.</p>



<p>Some small businesses may have complex needs to help with issues like sorting out <a class="link" href="https://1800accountant.com/blog/reduce-business-debt">business debt</a> or <a class="link" href="https://1800accountant.com/blog/converting-llc-to-c-corp">converting from an LLC to a C corp</a>. Even payroll can be confusing when you factor in paying your employees that might be freelance or independent contractors. A <a class="link" href="https://1800accountant.com/services/business-tax-advisory">small business tax advisor</a> would be ideal to assist with these situations.&nbsp;</p>



<p>If your business is more straightforward without employees, a licensed tax preparer can still be a great asset to help you file the necessary tax documents. Remember that tax preparers may not represent you if <a class="link" href="https://1800accountant.com/blog/you-received-an-audit-notice-now-what">you receive an IRS audit</a>.</p>



<h3>2. Ask for referrals</h3>



<p>Another suggestion on how to find a tax advisor is to reach out to your network. It's always good to ask for references, assuming your network contains people you know and trust. You may know another small business owner with the same complex business need and successfully resolved it with a tax advisor.&nbsp;</p>



<p>When you request a referral, you'll get a first-hand account of that individual's reputation. You'll focus on positive experiences but don't forget about the negative ones. People in your network may be eager to share about tax advisors who need to be more professional or knowledgeable. Consider all feedback so you'll better understand how to choose a good tax preparer.&nbsp;</p>



<h3>3. Check their background</h3>



<p>Personal referrals are essential but remember to research when choosing a tax preparer. Experiences can vary, and it helps to look at outside reviews through the Better Business Bureau or another review site that you trust. As you check online reviews, you may discover several previous clients have similar complaints. Even if the reviews are generally positive, you might learn some helpful tips from others that have worked with this one tax professional.&nbsp;</p>



<h3>4. Verify qualifications and credentials</h3>



<p>A critical step in how to find a good tax preparer is remembering to verify the individual’s identity and qualifications. At a minimum, your tax preparer should have a PTIN, which can be verified through the <a class="link" href="https://irs.treasury.gov/rpo/rpo.jsf">IRS directory</a>. The specific qualifications and credentials will differ depending on the services you need. Here are a few other identifying features you may want to verify:</p>



<ul>
<li>CPA license for accountants</li>



<li>Enrolled agent license for tax preparers</li>



<li>Bar license for attorneys</li>
</ul>



<h3>5. Compare fees</h3>



<p>Like any other service or product, you'll want to compare the different fees when searching for a tax advisor. Some tax professionals may charge for individual services, while others are more inclusive with their pricing. A tax advisor might even discuss additional services you had yet to consider during your initial research, such as bookkeeping or payroll. Although you're probably looking to save money, don't let cost be the deciding factor. When you're trusting someone to <a class="link" href="https://1800accountant.com/blog/prepare-file-small-business-tax-return">prepare and file your small business tax return</a>, you generally don't want to have the viewpoint that "cheaper is better."</p>



<h3>6. Know how to spot red flags</h3>



<p>Understanding how to choose a good tax professional can be challenging, especially if this is your first experience. There are many details to consider, and you're probably under pressure to find someone quickly. However, rushing through the process is never a good idea, and you'll risk overlooking potential red flags. Here are just a few items that might indicate a low-quality tax professional:</p>



<ul>
<li><strong>Poor communication</strong>: If emails and phone calls are left unanswered, that's a sign that this tax advisor doesn't have your best interests in mind or is too busy with other duties to give you the attention you deserve.</li>



<li><strong>Unrealistic expectations</strong>: A good tax advisor will be realistic in providing tax estimates and timelines. If someone is making promises about speedy work and high tax refunds, you may look elsewhere for someone more realistic.</li>



<li><strong>Unethical fees</strong>: Tax advisors will charge a flat or hourly fee for their services. An advisor who estimates your return and calculates their fee is a huge red flag.&nbsp;</li>



<li><strong>Withholding a signature</strong>: Confirm that your tax advisor will sign your tax return first. All returns must be signed before filing, so it's generally a good sign if the advisor is willing to put his name on it.</li>
</ul>



<h3>7. Ensure they offer e-filing</h3>



<p>Filing an electronic tax return is a convenient and safe option for small businesses. Not only is it filed immediately, but you can have peace of mind with the electronic confirmation. Tax preparers who complete ten or more returns must offer e-filing for their clients.&nbsp;</p>



<h3>8. Review their year-round accessibility&nbsp;</h3>



<p>Tax season for the individual taxpayer is in April, but <a class="link" href="https://1800accountant.com/services/small-business-taxes">small business taxes</a> are a year-round activity. Small business owners have more tax responsibilities, such as quarterly estimated taxes. When deciding how to choose a tax advisor, ask about their availability post-tax season. You'll want to make sure that your advisor is available to answer questions throughout the year and can guide you on best practices to ensure you can maximize your refund.</p>



<h2>FAQs</h2>



<h3>Is a CPA better than a tax preparer? </h3>



<p>CPAs and tax preparers are qualified to file small business taxes, although a CPA has the experience needed to advise on auditing, entity conversion, and more. A tax preparer might be acceptable if you have minimum needs for your tax return, but anything beyond a simple return is best left with a CPA.</p>



<h3>Is it worth hiring a tax preparer?</h3>



<p>A qualified tax preparer can be an excellent investment for any small business owner who wants to ensure that taxes are filed correctly. As your business grows and evolves, it helps to have a tax professional on your side who can advise you on best practices.</p>



<h3>What are the cons of a professional tax preparer? </h3>



<p>Often, hiring a tax preparer comes with peace of mind, but there's also a monetary cost that some small business owners might not want. Choosing a tax preparer is a big decision, and you should make sure you're investing wisely.</p>



<h3>Do tax preparers get you more money? </h3>



<p>Tax preparers can help determine how to <a class="link" href="https://1800accountant.com/blog/maximize-small-business-tax-deductions">maximize your deductions and credits</a> best, which can result in a larger refund. However, it would help if you were cautious against any tax preparer who promises a lot of money.</p>



<h2>Work with experts for all of your business tax needs</h2>



<p>Choosing a good tax preparer is an important task that helps set up your small business for success. Your financial health is critical to your business's longevity, so you'll want to make sure that you find a worthy professional who can help you stay on track with your taxes. At 1-800Accountant, we have a team of knowledgeable <a class="link" href="https://1800accountant.com/services/small-business-taxes">CPAs and tax professionals</a> who can help save you money and provide continued tax support throughout the year.</p>

Small business owners typically outsource many services that would otherwise be done in-house at larger companies, such as marketing, advertising, and accounting. But how can you ensure you&#8217;re choosing the right professional to listen to your needs and provide trustworthy expertise? Some services are lower risk. After all, if you choose the wrong cleaning company [&hellip;]

How to choose the right tax preparer of tax advisor for your business.

choose-the-right-tax-preparer-or-tax-advisor

How to Choose the Right Tax Preparer or Tax Advisor for Your Business

<p>It's a great idea to start a small business in Texas. The state offers everything a business owner could want: a diverse economy, a skilled workforce, and flourishing world-class cities that would make the perfect headquarters.</p>



<p>Whether you're in the planning stages or are nearing launch, there are a few steps you'll have to take to make your business official in the state. There are also fees and other vital details you should be familiar with before moving forward.</p>



<p>Use this blog as your free guide to starting your small business in the state of Texas.<br><br><strong>Why Start a Business in Texas?</strong></p>



<p>Some of the unique and compelling reasons to launch your small business in the state include:&nbsp;&nbsp;</p>



<ul>
<li>Texas ranks as<a class="link" href="https://gov.texas.gov/business/page/why-texas" target="_blank" rel="noreferrer noopener"> the best state</a> to start a business.&nbsp;</li>



<li>Texas has no corporate income tax or personal income tax.&nbsp;</li>



<li>Texas also has one of the largest workforces in the country.&nbsp;</li>
</ul>



<h2>How Much Does it Cost to Start a Business in Texas?</h2>



<p>Be prepared to spend a couple hundred dollars while setting up your small business in Texas. The exact cost will vary and depends if you use an optional expedited service, which has a fee.&nbsp;</p>



<h2>10 Steps to Starting a Business in Texas</h2>



<h3>Step 1: Business Idea</h3>



<p>The first step to starting your business in Texas is to develop your<a class="link" href="https://www.thebalancesmb.com/small-business-ideas-2951453" target="_blank" rel="noreferrer noopener"> business idea</a>. As you do this, envision how it will stand out from competitors and businesses in similar fields.&nbsp;</p>



<p>You can also write a<a class="link" href="https://www.sba.gov/business-guide/plan-your-business/write-your-business-plan" target="_blank" rel="noreferrer noopener"> business plan</a>. A business plan covers essential aspects of your business operation, such as a company description, company management, company organization, and funding.&nbsp;</p>



<p>There are two types of business plans used by small businesses: a lean startup plan and a traditional business plan. Either business plan will provide a structure that you can use to propel your small business from an idea to a reality.</p>



<h3>Step 2: Entity</h3>



<p>Second, you’ll want to select your business entity. This may be the most crucial step in the process because it will <a class="link" href="https://1800accountant.com/blog/6-tricks-to-choosing-the-best-entity-for-your-small-business">determine your business structure</a>. In Texas, you can choose from a:&nbsp;</p>



<ul>
<li><a class="link" href="https://1800accountant.com/blog/form-c-corp">C corporation</a> (also known as a C corp)</li>



<li><a class="link" href="https://1800accountant.com/blog/business-entity-llc">Limited liability company</a> (LLC)</li>



<li><a class="link" href="https://1800accountant.com/blog/business-entity-partnership">Partnership</a></li>



<li><a class="link" href="https://1800accountant.com/blog/business-entity-sole-proprietorship">Sole proprietorship</a></li>



<li><a class="link" href="https://1800accountant.com/blog/business-entity-s-corp">S corporation</a> (also known as an S corp)</li>
</ul>



<p>There are a few things to know about business entities that are unique to Texas. First, general partnerships don't require partnership agreements to be in writing; there’s also no requirement to file the partnership agreement with the state.&nbsp;</p>



<h3>Step 3: Name</h3>



<p>A name is one of the focal points of a small business, so it’s important to know the naming procedure within the state.</p>



<p>Naming your small business in Texas differs depending on the business structure you form as. For instance, the state allows you to operate a business using an assumed name, which doesn’t include a surname.&nbsp;</p>



<p>For sole proprietors, the assumed business name won’t include the sole proprietor’s surname, and for general partnerships, the assumed business name won’t include the surname of all the partners.&nbsp;</p>



<p>If you’re using an assumed name, you’ll file to receive the assumed name certificate with the county clerk where your business will operate. If you don’t operate your business in one location, you’ll file for the assumed name certificate in every county where you’ll operate.&nbsp;</p>



<p>There are fees to be aware of when naming your business in Texas:&nbsp;</p>



<ul>
<li>Name reservations within 120 days or a name renewal have a fee of $40.&nbsp;</li>



<li>An assumed name certificate has a fee of $25.&nbsp;</li>



<li>If you want an abandonment of an assumed name, there’s a fee of $10.&nbsp;</li>



<li>If you want a transfer of name reservation, there’s a fee of $15.&nbsp;</li>



<li>There’s no cost for a withdrawal of name reservation.</li>
</ul>



<p>Finding a unique brand name and a usable domain to go with it can be a time-sink for new business owners.<a class="link" href="https://businessnamezone.com/?partner=1800Accountant" target="_blank" rel="noreferrer noopener"> This free tool</a> from Business Name Zone generates name and domain combos for you based on your input – and it only takes a few minutes.</p>



<h3>Step 4: Registration</h3>



<p>Once you've decided on your business structure, you must register with the state of Texas. This is a crucial step as it legally establishes your business.</p>



<p>If you operate your small business as one of the following entities in Texas, you’ll complete a Certificate of Formation with the Texas Secretary of State:</p>



<ul>
<li>Corporation&nbsp;</li>



<li>LLC</li>



<li>Limited liability partnership</li>



<li>Limited partnership</li>



<li>S corp</li>
</ul>



<p>The Certificate of Formation must include your business name, the purpose of your business, the address of your registered office, and the names and addresses of your owners. There are a few <a class="link" href="https://direct.sos.state.tx.us/help/help-corp.asp?pg=fee" target="_blank" rel="noreferrer noopener">registration fees</a>, but those are dependent on your business entity.</p>



<ul>
<li>Certificates of formation for all entities except cooperative associations, limited partnerships, and professional associations have a $300 registration fee.</li>



<li>Certificates of formation for a limited partnership or professional association have a $750 registration fee.&nbsp;</li>



<li>Registration or renewal for limited liability partnerships has a fee of $200.</li>
</ul>



<h3>Step 5: Obtain an EIN</h3>



<p>Once you've filed your Certificate of Formation, you'll need to obtain an Employer Identification Number, also known as an EIN, from the IRS. This is like a social security number for your business and is necessary for filing taxes, hiring employees, and opening a business bank account.</p>



<h3>Step 6: Choose a Registered Agent</h3>



<p>Another requirement for starting a business in Texas is choosing a Registered Agent. This is a person or entity designated to receive legal documents on behalf of your business. Your Registered Agent must have a physical address in Texas and be available during regular business hours.</p>



<h3>Step 7: Licensing and Permits</h3>



<p>A Texas business license isn’t a requirement, but the state has other <a class="link" href="https://gov.texas.gov/business/page/business-permits-office#:~:text=General%20Business%20License%20The%20State%20of%20Texas%20does,the%20Secretary%20of%20State%20or%20county%20clerk%E2%80%99s%20office." target="_blank" rel="noreferrer noopener">license and permit requirements</a>.</p>



<p>If your business will specialize in certain industries, such as cosmetology or motor fuel quality, you’ll need a state license or permit. To receive a<a class="link" href="https://www.tdlr.texas.gov/licenses.htm" target="_blank" rel="noreferrer noopener"> license or permit</a> in these industries, you’ll work with the Texas Department of Licensing &amp; Regulation (TDLR).&nbsp;</p>



<p>A<a class="link" href="https://comptroller.texas.gov/help/sales-tax-registration/requirements.php/" target="_blank" rel="noreferrer noopener"> sales tax permit</a> is a requirement if your business:&nbsp;</p>



<ul>
<li>Leases, rents, or sells taxable goods</li>



<li>Provides taxable services; or,&nbsp;</li>



<li>Your business acquires taxable goods or services from out-of-state suppliers without a Texas Sales and Use Tax Permit</li>
</ul>



<p>Use tax is a requirement for small businesses under<a class="link" href="https://comptroller.texas.gov/taxes/sales/use-tax.php" target="_blank" rel="noreferrer noopener"> a few circumstances</a>. First, the buyer must consume, store, or use the goods or services in Texas, and the seller doesn’t charge sales tax in Texas.</p>



<h3>Step 8: Taxes</h3>



<p><a class="link" href="https://1800accountant.com/blog/texas-small-business-tax">Texas small business taxes</a> have a few requirements. First, there’s a Texas franchise tax, a tax that companies pay to conduct business within the state. This tax is one that varies according to the annual revenue a company receives. For the years 2022 and 2023, the<a class="link" href="https://comptroller.texas.gov/taxes/franchise/#skip-scroll"> franchise tax rates</a> are:</p>



<ul>
<li>Retail or wholesale businesses with more than $20 million in annual revenue pay a franchise tax rate of 0.375%.</li>



<li>Businesses other than retail or wholesale with more than $20 million in annual revenue pay a franchise tax rate of&nbsp; 0.75%.</li>
</ul>



<p>There are also tax-due thresholds which also differ according to annual revenue.&nbsp;</p>



<ul>
<li>Businesses with under $1,230,000 in annual revenue pay no franchise tax.</li>



<li>There’s an EZ Computation available for businesses under the $20 million total revenue threshold.</li>



<li>The EZ Computation Rate is 0.331%.</li>
</ul>



<p>Franchise taxes are due on May 15 unless the date falls on a holiday or weekend. Taxes are due the next business day if the due date falls on a holiday or weekend.</p>



<h3>Step 9: Open Bank Account</h3>



<p>Opening a business bank account lets you separate your personal finances from your business finances, making it easier to track expenses and income.</p>



<p>To open a business bank account in Texas, you will need to provide the bank with documentation that proves your business is registered, such as your Certificate of Formation or Certificate of Incorporation, your EIN, your business license, and other documents that the bank may require.</p>



<h3>Step 10: Insurance</h3>



<p>Business insurance in Texas is one of the last things to be aware of. The state doesn’t have a<a class="link" href="https://www.tdi.texas.gov/pubs/consumer/cb030.html" target="_blank" rel="noreferrer noopener"> workers’ compensation insurance</a> requirement. Commercial<a class="link" href="https://www.tdi.texas.gov/pubs/pc/pcgenliab.html" target="_blank" rel="noreferrer noopener"> general liability insurance</a> is also not a requirement, but it may be helpful to have as a business owner.&nbsp;</p>



<h2>Other Considerations&nbsp;</h2>



<p>There are other additional considerations to keep in mind before taking the steps to start a business in Texas.</p>



<h3>Business Grants &amp; Loans</h3>



<p>Texas offers loans on behalf of the U.S. Small Business Administration. Depending on your industry, you may apply for grants and loans from the following organizations:&nbsp;</p>



<ul>
<li>Non-Profit Lenders, such as BCL of Texas, LiftFund, and PeopleFund</li>



<li>Product Development and Small Business Incubator Fund (PDSBI)</li>



<li>Texas Angel Investors</li>



<li>Texas Workforce Commission</li>
</ul>



<h3>Additional Funding&nbsp;</h3>



<p>There are additional funding resources available for more specific<a class="link" href="https://gov.texas.gov/coronavirus" target="_blank" rel="noreferrer noopener"> industries within Texas</a>. For example, if your business works in the following industries, funding may be available with these Texas-based organizations: </p>



<ul>
<li>Texas Department of Agriculture (which may be helpful for farm and ranch producers)</li>



<li>Texas Film Commission (which may be helpful for the creative arts and film industries)</li>



<li>Texas Music Office (which may be helpful for artists and music industry professionals)</li>
</ul>



<h3>Business Location</h3>



<p>You may also want to think about your business location. For example, Texas is one of the largest states in the country, and certain areas specialize in certain industries. When considering your location, weigh how difficult it may be to source supplies within a region.&nbsp;</p>



<h2>Start Your Texas Business with 1-800Accountant</h2>



<p>Starting your small business in Texas is exciting. Still, it can also be nerve-racking if you're inexperienced or a little rusty. This is why so many owners and entrepreneurs trust 1-800Accountant, America's leading virtual accounting firm for small businesses, for their needs.&nbsp;</p>



<p>Whether it's <a class="link" href="https://1800accountant.com/services/small-business-taxes">small business taxes</a>, <a class="link" href="https://1800accountant.com/services/business-tax-advisory">tax advisory</a>, or any of our professional accounting services, we have the solution you need at a price that works within your budget. Schedule a quick consultation – usually 30 minutes or less – to learn how we can help your Texas small business.</p>

It&#8217;s a great idea to start a small business in Texas. The state offers everything a business owner could want: a diverse economy, a skilled workforce, and flourishing world-class cities that would make the perfect headquarters. Whether you&#8217;re in the planning stages or are nearing launch, there are a few steps you&#8217;ll have to take [&hellip;]

Graphic overlay reading '10 steps to starting a business in texas' on a background image of houston skyline with a pedestrian bridge and lush greenery.

starting-a-business-in-texas

How to Start a Business in Texas: 10 Steps

<p>Tax season can be a stressful time of year, especially for business owners with competing priorities and low bandwidth. You’re expected to dig through last year’s financials, complete extra paperwork, make tax payments, and remember due dates.&nbsp;</p><iframe width="560" height="315" src="https://www.youtube.com/embed/n_1R-hyL2Ww?si=AS0dO5RhmQdigMkv" title="YouTube video player" frameborder="0" allow="accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture; web-share" allowfullscreen=""></iframe><p>Fortunately, a business tax extension can grant you some relief.&nbsp;</p><p>If you file a tax extension, you’ll have extra time to file your returns. You’ll avoid the tax notices, penalties, and interest associated with late returns.&nbsp;</p><p>You may want to file a business tax extension if you need more time to finish your return preparation activities, such as the following:&nbsp;</p><ul><li>Finding extra <a class="link" href="https://1800accountant.com/blog/maximize-small-business-tax-deductions">deductions and credits</a></li><li>Gathering final revenue and payroll figures</li><li>Getting help with complicated calculations</li></ul><p>To file a business tax extension, you’ll find the correct form, estimate the amount you should pay, and submit your payment with the extension.&nbsp;<br />Keep reading for a detailed explanation of these steps to file your business tax extension confidently.</p><h2 class="wp-block-heading">Understanding Business Tax Extension Basics</h2><h3 class="wp-block-heading">What is a Tax Extension?</h3><p>Stated simply, a tax extension requests more time to file your tax return.</p><p>If you file a business tax extension before your return due date, you’ll get an extra six months to file your tax return. For example, if your tax return is due by April 15th, you would file an extension by that date. Your return’s extended due date would be October 15th. (Your extension period might vary, depending on your facts.)</p><p>Importantly, a tax extension allows additional <em>time to file</em> your return, not additional <em>time to pay</em>. Avoid interest or underpayment penalties by paying your full tax liability before the original tax return deadline.&nbsp;</p><p>Don’t worry: We’re here to help you figure out <a class="link" href="https://1800accountant.com/blog/prepare-file-small-business-tax-return">what you should pay</a>.</p><h3 class="wp-block-heading">Types of Business Tax Extensions</h3><ul><li><strong>Federal Tax Extension:</strong> US businesses file income tax returns with the Internal Revenue Service (IRS). A federal tax extension grants additional time to file your federal tax return.<br /></li><li><strong>State Tax Extension: </strong>Most states impose business taxes; <a class="link" href="https://taxfoundation.org/state/south-dakota/">South Dakota</a> and <a class="link" href="https://taxfoundation.org/state/wyoming/">Wyoming</a> are the lucky exceptions. State rules vary, but many jurisdictions allow extensions.<br /></li><li><strong>Local Tax Extension:</strong> Certain cities and counties have business taxes, including New York City and many Ohio cities.&nbsp;&nbsp;</li></ul><p>Business owners should also consider filing extensions for their <a class="link" href="https://1800accountant.com/services/income-taxes">personal income tax returns</a>.</p><h3 class="wp-block-heading">What Is the Deadline for Filing a Business Tax Extension?&nbsp;</h3><p>Business tax extensions are only valid if filed before the business tax return's due date. Your filing deadline depends on your business entity type:&nbsp;</p><ul><li><strong>March 15th</strong>: Partnerships, S corporations, and LLCs taxed as partnerships</li></ul><ul><li><strong>April 15th</strong>: Sole proprietorships, C corporations, and LLCs taxed as C corporations</li></ul><p>If your business elected a tax year-end other than December 31st, your tax return due date will differ from these general rules. <a class="link" href="https://1800accountant.com/services/small-business-taxes">Check with a tax professional</a> if you think this applies to you.&nbsp;</p><h3 class="wp-block-heading">What Happens If You Don’t File a Tax Extension and Missed the Deadline?</h3><p>If you don’t file a tax extension, your return is due by the original due date.&nbsp;</p><p>If you miss a tax deadline, file your return as soon as possible. You could be subject to late payment penalties and interest, but you’ll minimize fines by filing before more time passes.&nbsp;</p><h2 class="wp-block-heading">How to File a Federal Tax Extension</h2><h3 class="wp-block-heading">Step 1: Find the Correct Form and Check the Due Date</h3><p>Your business entity type determines the business tax extension form you should use and its due date.&nbsp;&nbsp;</p><h4 class="wp-block-heading">Sole Proprietorship Tax Extension</h4><ul><li><strong>Federal extension</strong>: <a class="link" href="https://www.irs.gov/pub/irs-pdf/f4868.pdf">IRS Form 4868</a></li><li><strong>Original due date</strong>: April 15th</li><li><strong>Extended due date</strong>: October 15th</li></ul><h4 class="wp-block-heading">Partnership Tax Extension</h4><ul><li><strong>Federal extension</strong>: <a class="link" href="https://www.irs.gov/pub/irs-pdf/f7004.pdf">IRS Form 7004</a></li><li><strong>Original due date</strong>: March 15th</li><li><strong>Extended due date</strong>: September 15th</li></ul><h4 class="wp-block-heading">Limited Liability Company (LLC) Tax Extension</h4><ul><li><strong>Federal extension</strong>:<ul><li><a class="link" href="https://www.irs.gov/pub/irs-pdf/f7004.pdf">IRS Form 7004</a> for LLCs taxed as partnerships or C corporations</li><li><a class="link" href="https://www.irs.gov/pub/irs-pdf/f4868.pdf">IRS Form 4868</a> for single-member LLCs<br /></li></ul></li><li><strong>Original due date</strong>:<ul><li>March 15th for LLCs taxed as partnerships</li><li>April 15th for single-member LLCs and LLCs taxed as C corporations<br /></li></ul></li><li><strong>Extended due date</strong>:<ul><li>September 15th for LLCs taxed as partnerships</li><li>October 15th for single-member LLCs and LLCs taxed as C corporation</li></ul></li></ul><h4 class="wp-block-heading">S Corporation Tax Extension</h4><ul><li><strong>Federal extension</strong>: <a class="link" href="https://www.irs.gov/pub/irs-pdf/f7004.pdf">IRS Form 7004</a></li><li><strong>Original due date</strong>: March 15th</li><li><strong>Extended due date</strong>: September 15th</li></ul><h4 class="wp-block-heading">C Corporation Tax Extension</h4><ul><li><strong>Federal extension</strong>: <a class="link" href="https://www.irs.gov/pub/irs-pdf/f7004.pdf">IRS Form 7004</a></li><li><strong>Original due date</strong>: April 15th</li><li><strong>Extended due date</strong>: October 15th</li></ul><h3 class="wp-block-heading">Step 2: Estimate Your Federal Taxes</h3><p>The tax you owe the IRS represents your estimated <a class="link" href="https://1800accountant.com/blog/prepare-file-small-business-tax-return">taxable income</a> multiplied by the applicable income tax rate. Calculate your business’s taxable income by adding the year’s receipts and subtracting allowable deductions.</p><p>If you’ve worked with <a class="link" href="https://1800accountant.com/services/small-business-taxes">tax professionals</a> and made quarterly estimated payments throughout the year, you can simply update your calculations with full-year figures.&nbsp;</p><p>Since this is an estimate, you won’t know the exact dollar amount you’ll owe. Avoid underpayment penalties and interest by rounding up your estimated tax due.&nbsp;</p><h3 class="wp-block-heading">Step 3: Gather Your Estimated Payment Records</h3><p>Total the estimated tax payments you made to the IRS throughout the year. Don’t forget to include prior-year overpayments you applied to the current tax year. (If you’re not sure whether this applies to you, check last year’s federal tax return.)&nbsp;</p><p>Subtract the total prior payments from the estimated tax liability you calculated in Step 2. The result is what you should pay with your business tax extension.</p><h3 class="wp-block-heading">Step 4: Submit Your Federal Tax Extension&nbsp;</h3><p>The IRS allows multiple extension filing methods. Choose one of the following options:</p><ul><li>File electronically using tax preparation software</li><li>Mail a paper extension to the IRS</li><li><a class="link" href="https://1800accountant.com/services/small-business-taxes">Hire a tax professional</a> to assist you with filing</li></ul><p>If you file Form 4868 and plan to make a payment, you’ll receive an automatic extension by <a class="link" href="https://www.irs.gov/payments">making an electronic payment</a> through the IRS website. You shouldn’t submit a separate extension form.&nbsp;</p><p>Taxpayers submitting electronic or paper extensions should carefully enter business information on the form. Include the business identification number and the estimated tax liability for the year.&nbsp;</p><h2 class="wp-block-heading">How to File State Tax Extensions</h2><p>The state extension process is similar to the federal extension process. These steps apply to city and county extensions, too.&nbsp;</p><p>Before digging in, review your state’s rules. Many states provide automatic extensions, which means you might not need to file a separate form. Some jurisdictions require a form sent with any payment, so check if this applies to you.</p><h3 class="wp-block-heading">Step 1: Find the Correct State Form and Check the Due Date&nbsp;</h3><p>Use your state’s website to find the correct extension form for your entity type. Review the deadline instructions.</p><h3 class="wp-block-heading">Step 2: Estimate Your State Taxes</h3><p>Remember the estimated taxable income you calculated for your federal tax extension? Adjust the figure for state calculation differences such as depreciation or US treasury interest.</p><p>Multiply the result by your state tax rate to estimate what you owe. Round up in case of uncertainty to make sure you pay enough.&nbsp;</p><p>If your business operates in multiple states, your calculations will have an extra step: Consider the percentage of your operations within each jurisdiction. State taxes can get complicated quickly. We recommend <a class="link" href="https://1800accountant.com/services/small-business-taxes">consulting with a tax professional</a>.&nbsp;</p><h3 class="wp-block-heading">Step 3: Gather Your Estimated Payment Records</h3><p>Have you been making quarterly tax payments? Review your payment records and total the state payments you’ve made.&nbsp;</p><p>Subtract prior state payments from your estimated tax liability. The result is what you should pay with your state tax extension.</p><h3 class="wp-block-heading">Step 4: Submit Your State Tax Extension</h3><p>Review your state’s filing instructions. State rules vary, but you’ll have one or more of the following options:&nbsp;</p><ul><li>File electronically using tax preparation software</li><li>Submit an extension through the state’s online portal</li><li>Mail a paper extension to the state</li><li>Submit a payment only (no form required)</li><li><a class="link" href="https://1800accountant.com/services/small-business-taxes">Hire a tax professional</a> to assist you with filing</li></ul><h2 class="wp-block-heading">How to Make a Payment with Your Business Tax Extension</h2><p>If you’re using tax preparation software, you can likely pay your federal and state taxes through the software. You’ll be prompted to enter your bank account information before you submit your extension.&nbsp;</p><p>Other payment methods include the following:&nbsp;</p><ul><li><strong>Sign up for the </strong><a class="link" href="https://www.eftps.gov/eftps/"><strong>Electronic Federal Tax Payment System</strong></a><strong> (EFTPS)</strong> to make federal payments.</li><li><strong>Mail a check</strong> to the address listed on the form instructions.</li><li><strong>Submit a payment online</strong>. You may need to create an account to access your state’s electronic payment system.&nbsp;</li><li><strong>Pay over the phone</strong>. Certain jurisdictions allow taxpayers to call their automated payment line.&nbsp;</li></ul><h2 class="wp-block-heading">Tips for a Successful Tax Extension Process</h2><p>You’re now prepared for stress-free business tax extensions. Here are our final suggestions for a successful tax extension process:&nbsp;</p><ul><li><strong>Plan ahead</strong>. Gather your information early to avoid a last-minute frenzy.</li><li><strong>Stay organized</strong>. Document invoices and receipts throughout the year.</li><li><strong>Schedule time to prepare your tax returns</strong> and ensure a timely filing when they’re due.</li><li><strong>Seek professional assistance</strong> if you need help. <a class="link" href="https://1800accountant.com/">1-800Accountant</a> has a multitude of resources.</li></ul><h3 class="wp-block-heading">Work with Accounting Experts Who Specialize in Tax Extensions</h3><p>Don’t let business tax deadlines interrupt your smoothly-running business. The tax professionals at 1-800Accountant can relieve your tax season stress. We’ll support your business tax extensions today and help you prepare for accurate and timely tax return filings in the future.&nbsp;</p>

Tax season can be a stressful time of year, especially for business owners with competing priorities and low bandwidth. You’re expected to dig through last year’s financials, complete extra paperwork, make tax payments, and remember due dates.&nbsp; Fortunately, a business tax extension can grant you some relief.&nbsp; If you file a tax extension, you’ll have [&hellip;]

A woman reviews documents in a bright living room with text overlay reading "how to file business tax extensions.

how-to-file-business-tax-extensions

Business Tax Extensions: How to File in 4 Steps

<p>Within the intricate realm of taxation, this article aims to shed light on the process of attaining tax-exempt status for nonprofit organizations and charitable entities. In this informative guide, we will navigate the complexities of tax exemption, offering valuable insights and step-by-step instructions to assist you in pursuing tax relief.</p>



<h2>Section 501(a) and Tax Exemption: An Overview</h2>



<p>Let's start by understanding Section 501(a) and the concept of tax exemption. Under Section 501(a), certain entities can be recognized as exempt from federal income tax.&nbsp;</p>



<p>The Internal Revenue Service (IRS) distinguishes several types of tax-exempt entities. These can include private foundations, public charities, social welfare organizations, and more. Each qualifying organization serves diverse purposes, from advancing education and relieving poverty to promoting social welfare and supporting charitable causes.</p>



<h2>How to File a 501 Tax Exempt Form</h2>



<p>Now that you grasp the essence of tax exemption, it's time to delve into filing for a 501 tax exempt form. This crucial document, officially known as <a class="link" href="https://1800accountant.com/blog/form-1023">Form 1023</a> or Form 1023-EZ, sets the wheels in motion for your nonprofit organization or charitable entity to secure that coveted tax-exempt status. To be exempt from tax under Section 501 a, here are the steps you should take:&nbsp;</p>



<h3>1. Determine Eligibility</h3>



<p>Before beginning the process, ensure that you have a qualifying organization that meets the criteria for tax exemption. Generally, organizations falling under Section 501(c) of the Internal Revenue Code are eligible. This includes nonprofit organizations, religious entities, educational institutions, and more. However, remember that certain political organizations and private foundations may face additional requirements.</p>



<h3>2. Choose the Right Form</h3>



<p>Once eligibility is confirmed, you must select the appropriate form for your application. The two primary options are Form 1023 and Form 1023-EZ. Form 1023 is more detailed and comprehensive, suited for larger tax-exempt entities. Form 1023-EZ is a streamlined version designed for smaller, less complex entities.&nbsp;</p>



<h3>3. Prepare the Necessary Documents</h3>



<p>Gather the documents required to support your application. These include your organization's articles of incorporation, bylaws, financial statements, a narrative description of your activities, and more. Ensure that your paperwork is complete and compelling, as it lays the foundation for a successful application.</p>



<h3>4. Fill Out the Form with Finesse</h3>



<p>Pay careful attention to every question, responding truthfully and accurately. Provide clear, concise explanations for your organization's mission, activities, and financial details. Remember, precision and clarity are your allies in this quest.</p>



<h3>5. Submit and Await the Verdict</h3>



<p>With your form completed, it's time to submit your application. Along with the form, enclose any required fees, as specified in the instructions. Now comes the waiting game. The IRS will carefully review your application, conducting due diligence to ensure your organization complies with the requirements for tax exemption.</p>



<h2>Important Things to Keep in Mind</h2>



<p>As you embark on the tax exemption process, keep a few essential points in mind:</p>



<ul>
<li><strong>Compliance is Key – </strong>Maintaining tax-exempt status requires ongoing compliance with IRS regulations. Stay informed about your obligations, such as filing annual information returns (Form 990) and adhering to specific restrictions on political activities and unrelated business income.</li>



<li><strong>Stay Up-to-Date with Changes – </strong>Tax laws are ever-evolving beasts. Keep a vigilant eye on updates and amendments to the tax code, ensuring that your tax-exempt organization remains in harmony with the latest requirements. The IRS website and publications, such as IRS Publication 557, will guide you on this ever-changing path.</li>



<li><strong>Utilize the Power of Contributions –</strong> Remember that tax exemption not only benefits your organization but also encourages others to contribute to your cause. Individuals and businesses are more likely to donate to a tax-exempt organization, as their contributions may be tax-deductible. Embrace the power of charitable contributions to fuel your mission.</li>
</ul>



<h2>Work with the Experts</h2>



<p>1-800Accountant is a virtual accounting firm merging the convenience of technology with live support from real professionals, making taxes easy and personable for individuals and small businesses. Focus on growing your bottom line while our team of accountants, certified public accountants, and enrolled agents perform the heavy lifting – tax advisory and preparation, payroll, bookkeeping, and audit defense. For professional, year-round services at an affordable price,&nbsp;get in touch&nbsp;with our <a class="link" href="https://1800accountant.com/services/industry/nonprofit">nonprofit tax experts</a> and schedule your consultation with America’s leading small business accounting firm.</p>

Within the intricate realm of taxation, this article aims to shed light on the process of attaining tax-exempt status for nonprofit organizations and charitable entities. In this informative guide, we will navigate the complexities of tax exemption, offering valuable insights and step-by-step instructions to assist you in pursuing tax relief. Section 501(a) and Tax Exemption: [&hellip;]

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Tax-Exemption-Under-Section-501a

How To File for Tax Exemption Under Section 501(a)

<p>Employees can essentially trust their employers to handle much of the regular work of bookkeeping for them. Their employer keeps track of their income, withholds wages to pay taxes, and then sends regular reports on all of that.</p>



<p>Freelancers, on the other hand, are on their own. That’s why bookkeeping for freelancers is critical, even if it doesn’t seem like it. It’s the paperwork that lets the work happen and makes sure you get paid. No one else is going to make sure the numbers add up, and your account gets its deposit at the end of the day.</p>



<p>Freelance bookkeeping can be a challenge if it isn’t handled early and properly. Thankfully there are some supporting strategies freelancers can use to have a smooth bookkeeping experience. Finding an effective system and process for managing your accounting can help save time and money, not only for calculating expenses, compiling invoices, and paying quarterly taxes but throughout the year.</p>



<p>While there are many ways to go about bookkeeping for your independent business, freelancers should consider some things first. For example, keeping track of every financial transaction is crucial, and saving may be very helpful when it’s time to pay taxes. Here’s a quick guide to all of these basic things each freelancer should know about bookkeeping.</p>



<h2>Why is Bookkeeping Important for Freelancers?</h2>



<p>Bookkeeping allows freelancers to stay organized with their finances. If you <a class="link" href="https://1800accountant.com/blog/bookkeeping-101-keep-good-financial-records">keep good financial records </a>and <a class="link" href="https://1800accountant.com/blog/cash-flow-management">monitor your cash flow</a>, you’ll be able to deal with problems that come up and easily prove your eligibility for any lines of credit you might need. </p>



<p>Keeping track of expenses, income, and invoices will save time when tax season approaches. For freelancers, like for all small businesses, you have regular obligations to pay income taxes quarterly and then file tax returns at the end of the year. Having all of that information accurately recorded and easy to find will make the process easy and efficient.</p>



<p>Bookkeeping is essential for a lot of different reasons. If you don’t get paid properly for your time, there’s no one else who will notice the issue and address it, and you need the records to give you that information and prove it to your customer. Bookkeeping can also help freelancers avoid penalties and have an easier experience finding documentation if audited.</p>



<h2>Essential Bookkeeping Tips for Freelancers</h2>



<p>These guidelines are the fundamental basis of any freelancer or small company’s bookkeeping. If you aren’t already using these guiding tips, you should implement them as soon as possible to decrease the chance of mistakes and to give your business a solid footing.&nbsp;</p>



<p>While what is best for you will vary depending on the size and type of your freelance business, every business owner should consider what these look like for their own work.&nbsp;&nbsp;&nbsp;</p>



<h3>Keep Financial Documents</h3>



<p>Don’t get rid of any financial documents. Your company’s records are built on the financial documents you keep, whether you keep them in physical or digital form.&nbsp;</p>



<p>Keeping critical financial statements and records can allow you to examine your finances in several ways, watching for trends and planning more efficiently for the future. Two of the most important documents for freelancers are <a class="link" href="https://1800accountant.com/blog/bookkeeping-101-what-is-a-balance-sheet">balance sheets</a> and <a class="link" href="https://1800accountant.com/blog/how-to-read-profit-and-loss-statement">profit and loss statements</a>. Each <a class="link" href="https://1800accountant.com/blog/cash-flow-statement">cash flow statement</a> and invoice is also useful to keep.&nbsp;</p>



<h3>Separate Personal and Professional Assets</h3>



<p>It may be tempting for freelancers to simply use their personal bank accounts for business purposes. Still, it can be very useful to separate your business assets from your personal ones, and this is absolutely crucial if your business involves a lot of business expenses.&nbsp;</p>



<p>Opening a business bank account solely for professional assets lets you track professional expenses and income without constantly having to sort through both piled together. This will also help immensely during tax season. If all of your company costs are on your business credit card, it becomes simple and easy to <a class="link" href="https://www.keepertax.com/freelancer-tax-deductions">claim deductions for those expenses</a>.&nbsp;&nbsp;</p>



<h3>Track Your Income</h3>



<p>Freelancers should track everything, including their expenses and taxes, but you should track your income most of all. Track how much you are owed and how much you are paid so that you can ensure those numbers match up.&nbsp;</p>



<p>Then your income numbers will help you assess how to proceed with your business in the future, and you’ll have it ready for <a class="link" href="https://www.irs.gov/businesses/small-businesses-self-employed/estimated-taxes" target="_blank" rel="noreferrer noopener">paying quarterly estimated taxes to the IRS</a> and completing your tax return. You can use bank deposits, software, or spreadsheets to further track your income.</p>



<h2>Long-Term Bookkeeping Tips for Freelancers</h2>



<p>Now that you have the foundations for your bookkeeping system, you can move on to more detailed pieces of the process. These tips will help you improve your system and process to get the most out of your bookkeeping.&nbsp;</p>



<h3>Create an Organized System</h3>



<p>Freelance workers should create an organized system to track expenses and income, whether it’s a filing system or a set of spreadsheets on your computer. There needs to be a straightforward process you follow so that nothing falls through the cracks. In case of an audit, you’ll want to save pictures of receipts if at all possible as well.&nbsp;</p>



<p>If you get paid for your time, you need to find an organized and easy way to do time tracking to avoid wasting time or missing out on income.&nbsp;</p>



<h3>Improve Your Invoices&nbsp;</h3>



<p>You don’t get paid without invoices, so it’s essential to make sure your invoices and invoicing system are efficient and effective.</p>



<p>Each <a class="link" href="https://1800accountant.com/blog/invoice">small business invoice</a> should include your contact information, an invoice number, the issue date, and the due date. Other important things to include are the goods and services provided and the total due for those goods and services.</p>



<p>You should also provide information about how you'll accept payments (e.g., by check, through your bank, or via PayPal). You want your invoice to contain all the information necessary for the payment to happen. If getting payments on time is an issue, you should also include a clearly stated policy about incentives or penalties for payments before or after the deadline.&nbsp;</p>



<p>An easy way to make this process smoother is to set up invoicing software to put all this information together and send invoices for you. This will help keep you on schedule as well, because if you send out invoices late or at unpredictable times, then that’s the same way they’ll get paid.&nbsp;&nbsp;</p>



<h3>Record All Expenses</h3>



<p>It’s important to keep both income and expense reports as a part of your bookkeeping, as both will be essential for your tax returns. Keeping track of all your legitimate business expenses will let you <a class="link" href="https://1800accountant.com/blog/10-ways-to-deduct-business-expenses-as-a-freelancer">deduct business expenses as a freelancer</a> and reduce your tax liabilities.&nbsp;&nbsp;</p>



<p>You can claim tax deductions for supply costs, as well as rent, travel, and vehicle expenses related to your business. Any professional dues, employee wages, and healthcare premiums may be deductible. If you work from home, you may also be able to deduct many expenses related to your dedicated home office.&nbsp;</p>



<p>Freelancers can also benefit from setting a budget to monitor their spending. A carefully crafted budget gives you a clear framework for planning and assessing your income and expenses over time.&nbsp;&nbsp;</p>



<h3>Build Up Savings</h3>



<p>Saving money as a freelancer is important in case there is an unforeseen business expense or penalty. This is another way budgeting and monitoring your cash flow will help. By planning ahead, you can ensure you have money to spare when you need it.&nbsp;</p>



<p>It’s a healthy standard to save about 30% of your income if your tax bill is higher than expected. Freelancers may want to save money for tax payments early, if possible, to avoid saving more significant amounts later.</p>



<h3>Find Accounting Software</h3>



<p>For everything from sending invoices and payment processing to recording expenses and receipts, accounting software can help if you want to know <a class="link" href="https://1800accountant.com/blog/are-you-wasting-time-on-small-business-bookkeeping">how to streamline accounting processes</a> and reduce human error.&nbsp;</p>



<p>These software programs will help you collect payments, estimate and file quarterly taxes, track expenses, and more. Software for freelancers like this can also help you plan financial reports, invoicing, and payroll.</p>



<p>There are all sorts of accounting software programs available for self-employed business owners.&nbsp; Accounting software like Quickbooks Self-Employed usually requires a monthly or yearly subscription, so you should discuss with an accountant to see what kind of program fits your needs best before you commit.&nbsp;</p>



<h3>Set Up Tax Payments</h3>



<p>Having complete records will make filling out and filing tax returns a breeze, but that still leaves you with estimated quarterly income tax payments throughout the year. You should be planning ahead to make these payments on time and registering with the IRS to make the process smoother.&nbsp;</p>



<p>Estimated taxes are due quarterly, and there may be penalties if you underpay or pay after the deadline. If you owe a small enough amount at the end of the year, or you’ve paid enough income taxes elsewhere, you might be able to avoid these quarterly payments and pay an annual tax.&nbsp;</p>



<p><a class="link" href="https://1800accountant.com/blog/calculate-small-business-taxes">Calculate your small business taxes</a> ahead of time, so you know what you need to do to keep up with your obligations throughout the year.&nbsp;</p>



<h2>Work With a Professional Bookkeeper</h2>



<p>You don’t have to be a big business to hire an accountant. Even a freelancer can afford and benefit from working with a professional for your <a class="link" href="https://1800accountant.com/services/industry/freelancer-self-employed">freelance accounting needs</a>. The expert doesn’t have to be your full-time employee to help you improve your system and get your bookkeeping process up and running.&nbsp;</p>



<p>You don’t have to figure it out on your own. <a class="link" href="https://1800accountant.com/services/bookkeeping">Bookkeeping for small businesses</a> can address all of your needs, along with the<a class="link" href="https://1800accountant.com/services/bookkeeping"> </a>professional bookkeepers at 1-800Accountant.</p>

Employees can essentially trust their employers to handle much of the regular work of bookkeeping for them. Their employer keeps track of their income, withholds wages to pay taxes, and then sends regular reports on all of that. Freelancers, on the other hand, are on their own. That’s why bookkeeping for freelancers is critical, even [&hellip;]

A person using a calculator with financial documents, a notepad, and a laptop, under the text "freelance bookkeeping: everything you need to know.

Freelance-Bookkeeping

Freelance Bookkeeping: Everything You Need to Know

<p>Payroll is most likely one of the largest expenses you’re responsible for as a business owner. It’s also one of the most important, as you’re the person responsible for ensuring that an employee and their family receive their salary or wages on time so they can pay <em>their</em> expenses.</p>



<p>Because payroll is so important to the employee, the IRS acts with the utmost urgency to ensure that payroll taxes<strong> </strong>are properly collected and timely remitted by businesses.</p>



<p>For both of these reasons - to be responsible to both your employees and the IRS and other taxing authorities - it’s a good idea for you and other small business owners to understand the importance of payroll taxes and <a class="link" href="https://1800accountant.com/blog/small-business-payroll">how the payroll tax system works</a>.</p>



<p>Here’s what you’ll learn in this article:</p>



<ul>
<li>What payroll taxes are and the different types of payroll taxes</li>



<li>Your payroll tax responsibilities as a business owner</li>



<li>How payroll taxes are calculated</li>



<li>Deadlines to file payroll tax returns and to remit payment</li>



<li>Different options to pay your payroll tax liability</li>



<li>How to make sure your business stays in compliance</li>
</ul>



<h2>Types of Payroll Taxes</h2>



<p>Payroll taxes are the federal, state, and local taxes associated with an employee’s taxable compensation that an employer is responsible for remitting to the proper taxing authority. Here’s a look at the different types of payroll taxes you’ll encounter as a business owner.</p>



<h3>Income taxes</h3>



<p>Employees owe income tax based on their wage or salary at the federal level and, if necessary, at the state and local levels. This income tax is withheld from the employee’s paycheck by the employer and paid to the respective taxing authority by the employer.</p>



<h3>Social Security taxes - employee portion*</h3>



<p>Employees pay Social Security taxes on 6.2% of their taxable income up to $162,200 in 2023. (This dollar amount is increased each year based on inflation.) The Social Security tax is officially called Old Age, Survivors, and Disability Insurance (OASDI). Social Security taxes are withheld from the employee’s paycheck by the employer and paid to the U.S. Treasury by the employer.</p>



<h3>Social Security taxes - employer portion*</h3>



<p>When an employer remits Social Security taxes withheld from an employee’s paycheck to the U.S. Treasury, the employer also makes a matching payment equal to the employee’s portion of Social Security taxes. For example, if an employee owes $1,500 in Social Security taxes, the employer must make a matching payment of $1,500 for a total of $3,000.</p>



<h3>Medicare taxes - employee portion*</h3>



<p>An employee pays Medicare taxes on 1.45% of their entire taxable income. Medicare taxes are withheld from the employee’s paycheck by the employer and paid to the U.S. Treasury by the employer.</p>



<h3>Medicare taxes - employer portion*</h3>



<p>Similar to Social Security taxes, an employer makes a matching payment equal to the employee’s portion of Medicare taxes.</p>



<h3>Additional Medicare Tax</h3>



<p>Employees pay an additional Medicare tax on 0.9% of their taxable income above an applicable threshold. An employer must withhold this Additional Medicare Tax from wages or salaries paid to an employee in excess of $200,000 during a calendar year without regard to that employee’s filing status or wages paid by another employer.</p>



<h3>Federal Unemployment Taxes (FUTA)</h3>



<p>The FUTA tax rate is 6.0% and applies to the first $7,000 paid to each employee as wages during the year.</p>



<h3>State Unemployment Taxes (SUTA)</h3>



<p>The SUTA tax is administered similarly to the FUTA tax but with differing tax rates and wage levels.</p>



<p><a class="link" href="https://www.sba.gov/business-guide/manage-your-business/pay-taxes">Read this article from the U.S. Small Business Administration’s website</a> to learn more about the different types of payroll taxes your business might have to pay.</p>



<p><strong><em>*NOTE:</em></strong> Social Security taxes and Medicare taxes are levied by the <a class="link" href="https://www.ssa.gov/thirdparty/materials/pdfs/educators/What-is-FICA-Infographic-EN-05-10297.pdf">Federal Insurance Contribution Act (FICA) of 1935</a>. Hence you may hear <strong>payroll taxes</strong> also referred to as FICA taxes.</p>



<h2>Employer responsibilities with payroll taxes</h2>



<p>There are several payroll tax-related tasks for which employers are responsible:</p>



<h3>Calculating and withholding</h3>



<p>Employers must calculate the amount each employee owes for all types of taxes. The IRS, state, local, and other taxing authorities publish booklets that walk you through this process.</p>



<p><strong>Timely remittance</strong></p>



<p>As a general rule for all types of federal taxes, you must deposit all withheld taxes either monthly or semi-weekly. Check with your jurisdiction about due dates for state and local taxes. Here are the different ways you can make a federal tax payment:</p>



<ul>
<li>Submit your payment electronically via the <a class="link" href="https://www.eftps.gov/eftps/direct/EftpsHome.page">Electronic Federal Tax Payment System</a> (EFTPS).</li>



<li>Submit your payment electronically via ACH through your financial institution.</li>



<li>Submit your payment electronically or by check if your tax liability is less than $2,500 for a particular quarter.</li>
</ul>



<p><strong>Timely filing of reports</strong></p>



<p>Employers must file a variety of tax returns to report payroll taxes to the respective taxing authorities.</p>



<h2>Payroll tax returns and filing deadlines</h2>



<p>Here’s a look at the <a class="link" href="https://1800accountant.com/blog/payroll-tax-return">payroll tax returns</a> that must be filed to report the different types of payroll taxes:</p>



<h3>Common federal forms and deadlines</h3>



<ul>
<li><a class="link" href="https://www.irs.gov/forms-pubs/about-form-940">Form 940</a>: Annual FUTA tax return. The due date is the last day of January following the end of the tax year.</li>



<li><a class="link" href="https://www.irs.gov/forms-pubs/about-form-941">Form 941</a>: A quarterly tax return that reports all federal withholdings, including the employer’s share of Social Security and Medicare taxes. The due date is by the last day of the month following the end of the quarter.</li>
</ul>



<h3>Less common federal forms and deadlines</h3>



<ul>
<li><a class="link" href="https://www.irs.gov/forms-pubs/about-form-943">Form 943</a>: Similar to Form 941, except Form 943 reports all federal withholdings for agricultural employees. The due date is the last day of January following the end of the tax year.</li>



<li><a class="link" href="https://www.irs.gov/forms-pubs/about-form-944">Form 944</a>: You can file Form 944 annually instead of Form 941 each quarter if your business has an annual payroll tax liability of $1,000 or less. The due date is the last day of January following the end of the tax year.</li>



<li><a class="link" href="https://www.irs.gov/forms-pubs/about-form-945">Form 945</a>: Use this form to report income taxes withheld from non-payroll payments, such as pensions, gambling winnings, or other mandatory backup withholdings. The due date is the last day of January following the end of the tax year.</li>
</ul>



<h3>State forms and deadlines</h3>



<p>State and local payroll tax return deadlines often, but not always, follow federal reporting due dates. Check with your jurisdiction about the types of tax returns and due dates for state and local taxes.</p>



<p><strong>*NOTE: </strong>If a due date for filing a return or making a payment falls on a Saturday, Sunday, or legal holiday, you generally have until the end of the next business day to timely file or pay.</p>



<h2>Ensure compliance with payroll taxes</h2>



<p>Here are some suggestions to help you stay in compliance with payroll tax rules.</p>



<ul>
<li><strong>Use software.</strong> Increase the accuracy of your payroll tax reports by using a reputable software program.</li>



<li><strong>Hire a payroll service provider.</strong> Even better, hire an expert in payroll taxes to do it for you.</li>



<li><strong>Keep current with tax law changes</strong>. Tax laws are constantly changing. You need to stay current with the latest changes to ensure you’re staying in compliance.</li>



<li><strong>Review employee information at regular intervals.</strong> Review your employee’s information at least once each year to check for significant life events that can affect their payroll taxes, such as getting divorced or married, having a child, or someone passing away.</li>
</ul>



<h2>Don’t tackle payroll taxes alone</h2>



<p>Properly calculating wages, salaries, and payroll taxes is your responsibility as a business owner. In this article, you learned the importance of understanding how payroll taxes work so you can keep your employees happy and avoid making <a class="link" href="https://1800accountant.com/blog/common-payroll-mistakes">common payroll mistakes</a> that can result in severe fines and penalties from the IRS.</p>



<p>While payroll may seem complicated and intimidating, remember you’ve got help whenever needed.</p>



<p>Working with a 1-800Accountant <a class="link" href="https://1800accountant.com/services/payroll">small business payroll expert</a>, you can rest easy knowing that you’ll have a helping hand to properly navigate every payroll tax hurdle that you’ll encounter.</p>

Payroll is most likely one of the largest expenses you’re responsible for as a business owner. It’s also one of the most important, as you’re the person responsible for ensuring that an employee and their family receive their salary or wages on time so they can pay their expenses. Because payroll is so important to [&hellip;]

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Everything You Need To Know About Payroll Taxes

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