YOUR ESTIMATED TAXES MAY HAVE TO BE ADJUSTED
Restaurant owners and other business owners have to pay attention to their tax situation more than other taxpayers. Your income can vary from year to year and profits and losses from your business can cause your taxes to fluctuate.
In addition, as a business owner, you have some control and latitude as to how to treat certain forms of income and how to expense certain items such as depreciation.
Most owners who have to pay taxes on their profits need to do so through quarterly estimated taxes. Quarterly estimated taxes are a requirement for all taxpayers whose payroll withholding are insufficient to cover their tax liabilities.
If you do not set up proper estimated taxes, you may have an unpleasant surprise tax bill at year end along with penalties for not paying enough.
To resolve this situation, the IRS allows a taxpayer to set up “safe” estimates which is basically 110% of your prior year tax.
Kallas prepares a “safe” estimate for you every year that it is needed. But if your income has increased or decreased this year, or you had some other transactions we are not aware of, you may need to adjust your estimates.
The best defense against an unexpected tax bill is for you – the business owner – who knows best whether you are having an unexpectedly good year to call our office and have us take a look to see if we need to increase your estimates or create estimates for you.
- Items that could cause a too low estimated tax;
- High profits or downturn in business the current year.
- Open or close a business in the current year.
- Sale of a business or sale of stocks in the stock market.
- Loss carryovers end.
- Skipping or not paying the full amount of prior estimates.
- Other unanticipated items.
Even if none of the above apply to you, Kallas welcomes you to sit with us and discuss any issues or tax planning opportunities. We will assess your current situation and can make recommendations.
