Frequently Asked Questions
WHAT ARE BUSINESS ENTITIES?
Business entities are organizations formed to conduct business or engage in a trade. There are multiple business entity types, including corporations (C-Corporations and S-Corporations), limited liability companies (LLCs), partnerships (general partnerships, limited liability limited partnerships, and limited partnerships), and sole proprietorships.
ARE MEDICAL BILLS TAX DEDUCTIBLE?
Medical bills are tax-deductible if the taxpayer itemizes and does not elect to take the standard the deduction. In 2019, the IRS allowed all taxpayers to deduct the total qualified unreimbursed medical care expenses for the year that exceeds 7.5% of their adjusted gross income. Beginning in 2020, the threshold amount increases to 10% of Adjusted Gross Income (AGI).
HOW DO YOU CHOOSE A BUSINESS ENTITY?
Unless you’re in a sole proprietorship, where the owner is the same individual that operates the business, you’ll choose a business entity that offers the most for your needs. There are a few things that you’ll consider, such as how many people will join your business, if the business will be incorporated, if there will be liability, if there will be taxes as a pass-through or double taxation, or if there are shareholders.
DO ACCOUNTANTS HANDLE PAYROLL?
Accountants assist clients in the process of setting up the payroll with the respective states. Once completed, there are specific quarterly and yearly forms that need to be filed in order to stay compliant. The accountant will assess the client of any changes and timely file all required forms on a timely basis.
HOW ARE ESTIMATED TAXES CALCULATED?
Estimated taxes are calculated by gathering all up to date sources of income from the taxpayer (W-2, 1099, retirement, business income etc.) and providing an early projection of how much will be due at tax time.
HOW DO I CALCULATE CASH FLOW?
You can calculate cash flow in three ways:
- Free cash flow equals your net income plus amortization/depreciation minus changes in working capital minus your capital expenditure.
- Operating cash flow is equal to your operating income plus depreciation minus taxes plus changes in your working capital.
- Cash flow forecast is equal to your beginning cash plus projected inflows minus your projected outflows minus your ending cash.
Get Your Tax Done in 3 Easy Steps.
