New Business...?

Question

I am an 18 year old who is planning to open a Photography Business within the next year. I have a few questions regarding my business activities and my interaction with the IRS, accordingly.

1) My dad stated that as a business, I must file taxes quarterly. How is this done? What form do I use?

2) If my client pays me a personal check for $11,500, must this be reported to the IRS via Form 8300, or is it exempt due to the fact that it is a personal check?

3) I did horribly in my accounting class (well, not horribly, but I hated it.) If I hire a CPA, can he or she file the necessary Forms for me, or is this not an option?

Thank you so much for your time and effort.

Answer 1

1.  Assuming that "you" are not an incorporated business, you make quarterly payments on a form 1040-ES.  (If you have employees or construct a benefit plan, you'll need to get an EIN (Employer Identification Number), but the quarterly estimated tax payments are still filed on form 1040-ES.)

2.  Form 8300 only applies to cash (and cash-equivalents, I suppose).  A check doesn't need to be reported.  (As an aside, if you take a personal check for $11,500 from anyone but your father, you need to consider the adage that a fool and his money are soon parted.)

3.  Almost anyone can prepare tax returns.  (At the moment, in California and Oregon, only CPAs, EAs (enrolled agents), lawyers, and registered tax preparers may prepare returns for pay.  As far as I know, in all other states, ANYONE can prepare tax returns.)  You still have to file the returns.

Answer 2

I agree with Arthur, BUT a personal check is considered a "cash equivalent" and, as such would need to be reported to IRS.

You can have a CPA file the returns for you, but you anyone that is good in accounting and bookkeeping can do it for you.

You only need to estimate your income YTD, subtract any payments and send in the balance with form 1040 ES. Make sure you include self employment tax as well.