March, 2008


Corporate Returns due March 15th, and Extensions

Unlike individuals, Corporate returns are due mid-March. Since the 15th is a Saturday this year, the due date is Monday March 17th.

IRS Form 7004 Application for Automatic 6-Month Extension of Time To File is Due Monday , March 17 if you’re not able to file the actual return. Here’s the link: http://www.irs.gov/pub/irs-pdf/f7004.pdf.

California Corp extension Form 3539 is not necessary to file if you don’t owe any money, provided you’ve filed the Federal extension. If you do need it, here’s the link: http://www.ftb.ca.gov/forms/07_forms/07_3539.pdf.

The catch phrase from the IRS is “an extension to file is not an extension to pay.”

If you have an “S” Corporation in California, you owe 1.5% tax on net income, and in your second year, there is a minimum of $800 (the minimum is waived the first year—but NOT the 1.5%!)

If you have a “C” Corporation, you owe the IRS 15%-35% depending on your income, and 8.84% to California, with the same $800 minimum rules.

The rumor is that if you don’t pay a reasonable approximation of what you owe, they can retroactively deny your request for extension. So to file an extension, we basically have to prepare your tax return and figure the tax.

This is different from ESTIMATED tax payments, which are due April 15th for first quarter of ’08 earnings. If you only owe $800 for your S Corporation and you’ve paid the Estimated Payment back in April ’07, you still need to file the extension for ’07 now. And you’ll need to make your next estimated payment of $800 at least in April ’08.

Property Tax Statements (Form 571L)

The County Assessor charges a small amount of tax on Personal Property held for a business purpose in the county. You tell the assessor the purchase price and year on various classes of property on a Form 571L due April 1, and the tax is due by August 31. The Assessor does their own version of depreciation on the reported assets, and they assess a tax of approximately 1.25%, depending on which county you’re in.

This tax is for things like computers, furniture, equipment, improvements, supplies, etc. So this is your opportunity to declare the purchase price of things that you still have on hand. We keep a list of assets with your tax return, since we’re depreciating them for tax purposes. One of the crazy things they want listed is “supplies” – and they mean paper, pens, staples and sandpaper! People often estimate this value for the 571L.

If you have property valued over $100,000 in a county, you’re supposed to declare it (and pay tax on it), even if they don’t send you a form. They don’t really say you HAVE to volunteer for amounts under this (don’t forget to include all that sandpaper!), but I’m not saying you shouldn’t. All this does not include inventory for sale.

The Assessor says they may share the info with the State Board of Equalization – the sales tax people. Presumably if a five year old computer drops off the property listing nothing will happen, but for other ‘current’ assets, they may try to collect sales tax if you sold property.

It seems annoying to me that I bought something for my business, paid sales tax at the time, and I have to pay property tax on that item every year until I sell it.

Appointments Available

We still have appointments available. Feel free to e-mail a request to the earlier the better. If you have “most” of your tax stuff, come on in. If we can get started, it makes it easier to finish off that one or two missing items later. Also, the best way to contact me is by e-mail.

Classes – Basic Payroll and Schedule C for Sole Proprietors

In conjunction with the IRS and EDD, Andy's going to be doing some Basic Payroll seminars coming up in the near future.

Basic Payroll: Seminar runs 9 am – 3 pm with an hour for lunch

The next seminar will be in Oakland
April 23rd http://www.edd.ca.gov/taxsem/txsemrs.asp?SemID=3131
May 21st http://www.edd.ca.gov/taxsem/txsemrs.asp?SemID=3132

Basic Payroll in San Francisco will be at the SBA office at 455 Market Street, 6th floor:
March 5th at http://www.edd.ca.gov/taxsem/txsemrs.asp?SemID=3152
May 7th at http://www.edd.ca.gov/taxsem/txsemrs.asp?SemID=3228

Basic Payroll in San Rafael is presented at 120 North Redwood Drive, 2nd floor, Redwood Room on March 26th. http://www.edd.ca.gov/taxsem/txsemrs.asp?SemID=3145.

These seminars have proven to be very popular, plus they’re free.

How to Prepare your Own Schedule C
 Prepare your business taxes for ’07 and get ready for ‘08. Review what the IRS wants to know from you and how to report it on the Schedule C for your business. This is a class for business owners who need a basic understanding of their 1040 Schedule C tax forms. We’ll also talk about what to do with the numbers once you have them. We can’t guarantee you won’t get audited, but this class will make it less likely.

Andy will be at the US Small Business Administration offices in San Francisco at 455 Market Street, 6th Floor in April, 6-8:30 pm. We’re still working on the date. This class will be free.

Andy will also present this class in San Francisco at the WISE offices Friday May 16th and June 9th at the WISE offices in Oakland. WISE charges a nominal fee.

With the IRS, Andy will be presenting at the SF Chamber of Commerce April 1 (really!) as part of their “Business Success Series” 8:30am – 10:30 in their office about general business expenses, record keeping etc. I currently believe this will be at 235 Montgomery St, 12th Floor in San Francisco between Bush and Pine—nearest BART stop is Montgomery Street. Their phone is 415 392-4520 to confirm.

Relaxation and Clear Thinking will Carry You Through

To carry you through the season, we recommend meditation and that you check out On The Spot Massage at http://www.onthespotmassage.com/corporate.html to help you relax. A relaxed mind is a clear thinking mind.

The Next Product(s)

“The 8-Fold Path to Paying Less Tax and Avoid an Audit” includes chapters on Auto Expenses, Home Office Deduction, Business vs. Personal expenses, Meal and Travel receipts, Incorporation, Miscellaneous Deductions, Retirement Plan contributions, and When to Hire Professional Help. Release date is pending, and will probably be after the tax season is completed for ’08. We’re also working on an update to the web site so you can see the products and classes.

Your Questions in Future Newsletters

Feel free to e-mail questions you’d like answered. If we think it is a topic of general interest, we’ll include the answer in upcoming newsletters!