Elk Grove, CA Accountant for Start Ups
Cook CPA Group
Starting your own business can offer the freedom to create exactly the kind of company you’ve always dreamed of. With that freedom, however, comes the burden of managing all of the finances involved. Understanding tax implications, managing employee payroll, deciding on accounting methods, and paying self-employment taxes are all important aspects of accounting for a startup, and they can all be managed with the help of an experienced accountant with Cook CPA Group.
Don’t allow a simple mistake in accounting derail the future of your business. Talk with one of the skilled accountants at Cook CPA Group for help keeping account of all the finances associated with your startup business. You can even schedule a free consultation; just call (916) 250-3893 or get in touch with us using our website.
Paying Self-Employment Taxes
According the Self-Employed Contributions Act (also known SECA), anyone who doesn’t work for an employer that withholds taxes from their paychecks must pay their own self-employment taxes (as long as they make at least $400 per year). They must be paid quarterly — in April, June, September, and January.
The rate of taxation for self-employment is 15.3% of net income (12.4% for social security and 2.9% for Medicare). This only applies to people who make an income below $132,900. There are some cases in which an additional 0.9% Medicare surtax is applied is self-employment earnings that are above $250,000 for single filers and above $125,000 for married filers.
Startups without any employees are still required to pay the self-employment tax, since the founder is still considered to be their own employee. And it’s not just startup owners who have to pay the self-employment tax under SECA — freelancers, independent contractors, consultants, members of LLCs, and sole proprietors must pay self-employment taxes as well.
Self-employment taxes go towards Social Security and Medicare. If a startup owner fails to pay their self-employment taxes, then they may be faced with specific consequences. One possible consequence of failing to pay self-employment taxes is penalties and interest, which will accrue until the balance of taxes owed is paid. Another consequence of failing to pay self-employment taxes is being subject to backup withholding, which means that a tax agency will contact anyone you have done business with in the past and request that they withhold portions of their future payments from you, to be paid to the agency.
Another possible consequence of failing to pay self-employment taxes is seizure of assets. This will only happen if the amount you owe is large enough or if you ignore their attempts to collect what’s due for long enough. It’s likely that a tax lien will be placed on your bank account. It should also be noted that those who pay self-employment taxes can deduct half of their self-employment taxes (7.65%).
Other Accounting Services for Start Ups
The success of a startup is largely determined by the success of the foundations it is built upon. The accountants at Cook CPA Group can help you set up all of the financial structures that ensure the long-lasting financial health of your company.
Choosing a Business Structure
Whether it is a limited liability company, sole proprietor, or otherwise, the type of business your start up is classified as can have a big impact on the way that your business will be taxed and the way that you can pursue your business goals. The accountants at Cook CPA Group can help you decide on — and then implement — the most advantageous structure for your startup and its intended future.
Selecting an Accounting Method
The accounting method that your startup uses to keep track of its income and expenses depends on the nature of the dealings that your startup does. There are two main types of accounting methods that businesses may use to keep track of their accounting.
The first is known as cash accounting and consists of recording income when received, rather than when it is incurred. The other type of accounting method is the accrual method. This entails recording income as it is earned. These are the two most popular types of accounting, but there are other less popular types that may be more suited to your business’s needs.
It’s important for the health of your company to keep accurate records. This will enable you to file tax returns accurately and quickly when it’s time. Keeping accurate records will allow you to properly monitor your startup’s gains and losses while anticipating any possible deductions and tax credits.
Startup Accountants in Elk Grove Available for Assistance
The accountants that work with Elk Grove, CA, accounting firm Cook CPA Group are experienced when it comes to managing tax liability issues for startup owners. The accountants that work with Cook CPA Group have decades of experience that allows them to provide accounting services that are efficient and professional. Contact us for more information or to set up a free consultation. Call (916) 250-3893 or pay a visit to our website for more information.