I have to say I agree with this in general. When I first started out in business I did all this myself - including handling IRS inquiries and disagreements. If you do your homework there is very little that you cannot handle yourself - including all of the items mentioned. Nowadays I pay others to do these things but on the accounting and tax side the hired help still largly follows my templates and mandates and uses the software I developed for such matters...... I have rarely found outside contractors that truly were as diligent as my own internal employees following our detailed internal requirements for accounting and reporting. This applies to the largest accounting organizations by the way which I have to say are usually less of a value than other options....
I guess it comes down to how you want to spend your time. I could probably be more effective and use the specialists....but I find it helps me to get my hands dirty in these matters. The reasoning for this...is many business activities are tax sensitive and an understanding of tax law is necessary. For example...look at the equipment tax credits bush gave us this year! Michael B.
1. Tax due dates... 15th of Apr, Jun, Sep, Jan.... 2. Yes If you don't pay your estimates on time, you will be penalized. I have on 3 occasions been penalized for "not paying soon enough"... The IRS "presumes" your gains are equally spread over the tax year. If you happen to have a big 4th quarter (as I have), you may find youself due a penalty for not "anticipating the gains you were GOING to have later in the year".... Don't laugh, it's NOT funny. I even paid a penalty one year in which I ended up with a REFUND... Cocksucking Gummint!)
Without going into detail on this public forum.....I used a very unknown exemption to free-up IRA funds without penalty. The custodian did not withhold an early withdrawel amount.....so the IRS claimed I owed it. There was no way to avoid the audit....even if the custodian did everything perfectly. Some rules in the IRS are forcing an audit...but mostly can be settled with an appeals officer or a representitive to keep it out of tax court. In my case everything was a trial by affadavit. And, actully we settled a few weeks before the trial. They simply quit and said I did not owe it....they had no case. I had help from the Chapman University....from a graduate student there. I know you won't believe this....but actually I find the IRS very reasonable people to deal with.....They are just humans doing a job....but yes they do have power. Michael B.
Did you use the regular installment method or the annualized income installment method? There are quite a few taxpayers who do not receive income evenly throughout the tax year and use the annualized method to reduce one or more of their estimated tax payments. This method only requires your (annual) estimate to be reasonable (e.g. as in your previous year's AGI). Of course, it's much more complicated than the regular installment method and requires Form 2210 be filed with your return. Personally, I use the safe harbor for the sake of simplicity.
===================================== Best money I ever spent; CPA receipt yearly . NOT just SEVERE penalties & interest for errors ; things change yearly like recent more complex home office deduction form. ==== Might want to study law and medicine & EPA regulations in your spare time also
Here is what your CPA will not tell you about your home office deduction..... WHEN YOU SELL LOOK AT THE RECAPTURE RULES Michael B.
If your CPA doesn't give you cost-benefit analyses of stuff like that, you need a new CPA. That's exactly the kind of thing that I am paying mine for, to tell me what is to my best advantage from a tax perspective. I can't begin to guess how much money and trouble a good accountant has saved me over the years, but that is in addition to freeing my time for things that I would rather do than keep up with every change in the tax code (or filling out pages of forms for that matter). I will continue to bake her cookies and send her thank you cards every chance I get! Jessie
I am happy making (or saving) $50.00 per hr. And it forces me to stay current to help me with decisions on the fly. Michael B.