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Tax Tips for Small Business Owners

Posted on October 8th, 2018

Every year, investigative tax notices are mailed to small business owners. While these are not always official audits, they raise a red flag, and proprietors should know how to prevent and address these inquiries in turn. This list addresses the best tax practices for small businesses to keep them abreast of tax changes and trends, and away from IRS scrutiny.

List of top 15 Best Tax Practice Tips for Entrepreneurs 1. Maintain thorough and separate records of employees and contractors.

2. If you set up any location based business, even temporarily, keep records of all expenditures and educate yourself on the local tax laws.

3. Use a tax software accounting system – this can help you develop appropriate reports at tax time and can alert you of changing tax rules.

4. If you hire a tax accountant make sure they have experience with taxes as they relate to your specific business.

5. Keep records—including serial numbers and detailed receipts—for all business equipment, office machines, and vehicles.

6. Don’t use funds that are earmarked for taxes as a means to tide your business over in hard times. This will result in a worse financial crunch come tax time and if you can’t pay, you risk the loss of your tax ID.

7. Educate yourself on the correct way to estimate your taxes – This may be overwhelming and a tax professional is highly recommended for small business owners.

8. Determine an appropriate fiscal year so that you can plan better for tax time: A fiscal year refers to an accounting year that does not end on December 31.

9. Tax records should be kept for a minimum of three years – unless related to property and depreciation. In that case, tax records should be kept for three years past the time ownership ends.

10. Keep detailed records on business vehicles’ usage – both on the job and off.

11. When operating on foreign soil and dealing with other currencies and tax laws, be sure your tax professional is vigilant in obeying the new rules on foreign bank accounts enacted in the Foreign Account Tax Compliance Act, or FATCA.

12. Work with your tax professional to determine whether you should operate as a partnership, an S corporation, an LLC, or a sole proprietorship.

13. Become familiar with your requirements in regards to the Affordable Care Act.

14. If you are not able to pay taxes owed to the IRS, or another tax agency, contact your tax professional right away. There are appropriate steps that can be taken and ignoring it only makes it worse.

15. If you are paid in cash – that payment is taxable. The IRS has sophisticated technology to track spending habits and bank accounts to build their case. Let the experts handle your taxes for you. It is usually a mistake for a business owner to complete their own taxes, and doing so can distract you from making your company a success.

Reducing Tax Liabilities for High Income Earners

Posted on July 2nd, 2018

Preparing for end-of-the-year taxes can be daunting, but understanding good tax-planning practices can help to increase your chances of receiving higher returns on your investments. Income from investments can be one of the best places to look when searching for places to cut costs and increase your revenue. Creating a proactive tax-plan can prevent you from paying thousands of dollars in unnecessary taxes.

Tax-saving Solutions

While high-income taxpayers are required to pay the most income tax, there are a few practices these individuals can engage in to lower the amount they pay at the end of the year. Purchasing stock for at least one year prevents you from paying additional costs from unnecessary taxes. Allowing your stock to become eligible for long-term treatment helps to reduce the amount you pay in taxes. Failing to hold stock for at least a year causes you to pay short-term capital gains on investments rather than just the 15 to 20 percent of normal capital gains tax, in short paying more.

Regular reviews of your taxable assets make sure you’re aware of all the areas that may be costing you extra money. Routine checks develop good practices and habits that help to reduce what you pay. Reduce the amount of taxable interest, which means reducing the amount of money stored in low-profit areas. Banks give their clients close to nothing, while clients are still required to pay at least half of that interest in taxes.

Utilizing high-profitable places to store your money will not only increase your dividends but also reduce the amount of taxes you pay. Give away assets, that is, giving or donating assets to charities and family members using appreciated stock, may reduce the amount of taxable income you own. Neither party associated in the exchange is required to pay capital-gains taxes when the stock is transferred. Additionally, family members may qualify for a different tax bracket that are lower than your costs, in turn reducing the overall amount of gains lost through the process. Since the New Year is just around the corner, it’s best to engage in proper tax-planning practices to best increase your chances for reducing the amount of money you pay and increase the amount of profit you actually keep.

Enrolled Agent vs. a CPA – Which Can Help Me at Tax Time?

Posted on March 11th, 2015

Financial professionals with Enrolled Agent licensure or Certified Public Accountant status are able to use their knowledge and specialized skills to help businesses and individual clients at tax time. However, EAs and CPAs are two different types of professionals who supply different tax services. If you need professional help in preparing your taxes, consider the following:

Enrolled AgentsAn EA’s main area of specialty is tax preparation and problem resolution. They can practice without limits in front of the IRS, meaning out-of-state tax returns and other complex tax problems are no issue for them. EAs can also represent you in matters of tax problems, like un-paid taxes, tax audits, and back taxes owed. However, it’s important to consider the Enrolled Agent you’ve chosen to help you — an EA without much accounting experience will only be able to guide you in tax matters, and may not have a larger understanding of good accounting principles, should you need further assistance.

Certified Public Accountants – A CPA license allows an accountant to practice before the IRS and confirm that the tax information they submit on behalf of their clients is accurate – a guarantee you can’t get by doing taxes yourself. CPAs also have a wider understanding of solid accounting procedures and can guide your business toward financial stability after your taxes are taken care of. But CPAs are locked into their state, as these are the entities that issue their licenses. It’s also not necessary for a CPA to have a graduate degree, in some states, or a post-graduate degree to obtain their license.

Picking which financial professional is best for you depends on your needs. If you’ve found yourself in trouble with the IRS, or have a multi-state tax return that’s proven to be a headache – an EA is your best choice. If you have messy books, no real accounting strategy, and are unsure of how to tackle your business taxes, a CPA can be of assistance.

The easiest way to get the best of both worlds at tax time, however, is to hire an EA with intimate knowledge of accounting practices, and proven experience in helping business accounting clients. Our firm is run and operated by a financial professional, Sina Kazemi, who has a Masters in Accounting — the knowledge he obtained being equal to, and broader than, that of anything a CPA would be tested on. Sina has guided more than 300 businesses with his accounting expertise, and also has an EA certification, so he can represent you in matters of tax problem resolution. As an EA, Sina is designated as one of “America’s Tax Experts” by the National Association of Enrolled Agents.

If you have questions about what an EA can do for your business tax accounting needs, contact our office for more information.

What to Do If you get an IRS Audit Notice

Posted on February 27th, 2015

If you find you are one of the chosen few tax filers who’s been singled out for an IRS audit, here is what you need to do:

Respond Right Away

Ignoring it won’t make it go away. Typically, you have 30 days to make your response, so it’s best to handle the situation immediately. Be sure to check what year the audit is referring to, as it isn’t always the most recent return.

Follow Instructions Carefully

Depending on the nature of your audit, you may be asked to submit extra information or clarify data in-question. Follow all included instructions carefully and gather the information that is requested of you. In most cases, correspondence can be handled by simply mailing in a piece of missing information or documentation.

In more extreme cases, you may need to gather extensive paperwork or information, or even hire a tax professional to help. Though this is rare, you will need to evaluate the severity of your audit and determine how to protect yourself. If you feel anxious about your tax problems, and need the help of a licensed professional, our office is owned and operated by an EA, who is certified to represent you in front of the IRS.

Take Care of Corrections

If you have made a simple mistake on your return, you may receive a correction notice, rather than a full IRS audit. Look carefully over the adjustments the IRS has made. If you agree with the changes, simply reply with your payment for any additional taxes due.

On the other hand, if you disagree with the correction, you will need to respond immediately with a written statement. Keep copies of all correspondence to and from the IRS and allow about a month for a response.

Receiving an IRS audit notice can be scary, but it doesn’t have to be. If you’ve received notice for an audit and are unsure about how to proceed, please contact our office immediately for assistance. As enrolled agents in Falls Church, VA we are specially licensed to deal with the IRS on your behalf, and can help you avoid making further errors.

How Hiring a Tax Preparer Helps Small Business Owners

Posted on February 18th, 2015

When your business taxes are handled the right way, you can rest easy knowing that you’ve done everything the IRS has required of you, and have taken advantage of all deductions possible. This level of confidence isn’t always attainable by doing taxes on your own, which is why hiring an outside accounting professional does wonders at tax time.

Here’s how we can help small business owners make tax season work for them:

Decrease Chances of an Audit – There are many things you can do to avoid getting your business tax return audited by the IRS; refrain from claiming personal deductions or use an online tax form. However, the truth is that visiting a skilled accountant is the best way to avoid scrutiny from the IRS. We’re able to efficiently review your returns for errors and use our intimate knowledge of the tax code to ensure compliance.

All Relevant Tax Documents Can Be Ready in Advance – Professional tax preparers can help your business get accurate tax filing help, and can also help your business develop an effective tax plan. Whether that plan includes supplementing tax preparation with bookkeeping or other accounting services, getting help from an experienced accountant allows you to have all of your information organized up-front to be better prepared for tax time.

Review of Last Year’s Tax Return – It’s possible to have your previous tax year information reviewed and amended, to take advantage of any missed deductions. If you bring us your prior year tax information, we can help you fill in anything you may have overlooked.

Tax Audit Assistance – If the IRS has selected you for an audit, we’re in your corner with expert advice and assistance. We take point on tax problem resolution and communicate directly with the IRS, so you don’t have to.

When it comes to tax time, our office is here to help small business owners. For more information on what we can do for you, contact us for your business tax consultation.

Welcome to our blog!

Posted on December 3rd, 2014

We’re excited to announce the official launch of our Sina Kazemi Accounting & Tax Service LLC blog.

We’ll be posting helpful news from the financial industry, updates from our practice, and more about the latest in keeping your personal and business finances in the best shape possible.

We built our practice on the notion that we’re there for our clients when they need us and we want our online presence to be a reflection of that principle. We hope this blog provides an extra level of service to our current and future guests.

If you would like to stay up to date on the latest from Sina Kazemi Accounting & Tax Service LLC, simply click the RSS “Subscribe to feed” link located on our website and subscribe. Our subscribers will be updated when we make a new blog post.

Here’s to your best financial future ever!