Small Business Guidance
The benefits of hiring a CPA to do your small business taxes
For years, I have filed my own taxes. As a child I watched my mom with stacks of receipts spread across the kitchen table, typing in numbers to file taxes for the interior painting business that she and my dad owned.
When I began filing my own taxes, it made sense to follow her lead and do them myself, rather than hiring a professional. I signed up for TurboTax, the same e-filing program that my mom used, and filed without any trouble for years.
That is, until I was hit with a nearly $5,000 tax bill that was wholly unexpected, and, it turns out, wrong. Here’s what happened, and why I’ll be hiring a tax professional in 2020 and beyond.
An unexpected bill
I used to roll my eyes a bit when people stressed about filing taxes. Doing my own taxes was straightforward, I thought, even though I am self-employed with a sole-proprietorship business.
I put in my income and expenses, and TurboTax would generate a Schedule C with my self-employment income. I filed online and digitally paid whatever I owed. Eventually, I started paying federal tax quarterly, as my business grew. Simple.
Then, last year, I got a surprise. I live in New Hampshire, a state with no personal income tax. And yet, TurboTax calculated that I owed $4,700 in state business tax from my work as a writer. I was frantic.
I had paid federal taxes quarterly and did not have money saved for this added expense. And yet, when I googled and read up on tax law, it all sounded legit: Unbeknownst to me, New Hampshire has an 8.2% business profits tax that kicks in when the gross business income exceeds $50,000, a threshold I crossed last year.
Contact a Dugan & Lopatka tax professional to guide you through your small business tax return at (630) 665-4440 or info@duganlopatka.com.