Sunday, November 2, 2008

My To-Do list on taxation (monthly and quarterly).

I’ve now started to get into the swing of things in relation to taxation.

This is how it goes:
Receive payment for an invoice. I decided to pay estimated taxes right after the check clears at the bank. This way I don’t have any issues with with forgetting to sent an estimated payment on time.

After receiving a bi-weekly invoice I do this:

1. Login into, EFTPS (Business)

– Make an estimated payment for form 940 (Federal Unemployment).
– Make an estimated payment for form 941, which includes social security tax, medicare tax, and income tax on “payroll money” to myself. In EFTPS, all three payments can be done at once.

2. Login into, EFTPS (Personal)
– Make an estimated payment on distribution money, aka. non-payroll income. This is form 1040ES.

3. Login into, TaxNet (Business, Illinois state level)
– Make an estimated payment on unemployment insurance tax form IL941.
– Make an estimated payment on payroll income tax.

4. Login into, WebPay system (Personal)
– Make an estimated tax payment on distribution income for form IL-1040-ES.

This October I had to start filing statements to the Feds and State. They both required business related forms to be filed. More paper trail.

IRS wants a quarterly form 941. I had planned on doing this online, but I needed to “ask permission” to file online, which takes 1 – 2 weeks (at the time I didn’t know this). I went to to attempt to file the 941 (it costs like $5), but as I said, I needed to opt-in with the government to file electronically. So I had to file my first 941 by paper. I went to the IRS website, downloaded the most current 941, printed it out, and filled it in. Not too difficult. I then had to figure out where to send it (in the 941 instructions which are in a separate document). Have not heard anything bad about this, so I assume the IRS got it.

Then I had to file with the state. I logged into Illinois TaxNet, filed my 941 through their system with no issues. Next I attempted to file the unemployment wage report (UI-3/40). The system would not let me do it.

To make a long story short:
– Sent an email to TaxNet support, they said my account was pending, so I should contact someone on a local level about changing that.
– Found an email for a local IDES person and sent him an email.
– This person in turn sent his email to someone else to higher-level in the state unemployment agency.
– She emailed me and asked that I call her. I did…
– She said that I can’t file online because the account is pending. I could either submit a wage report in paper form, or send a signed letter stating that I am liable to pay unemployment insurance tax.
– She and the local person calculated my percentage (3.4%…I was sending estimated payments of 7.2% before then).
– I send a paper wage report with a printout of my TaxNet payments.
– So hopefully I can do this in TaxNet next quarter…

So if you start a business in Illinois, I suggest that you contact the unemployment agency, so that they understand if you are liable or not. I am being taxed as an s-corporation, so I am liable. I had the misconception that I could never claim on the insurance. I asked the local person about it and he said that was wrong! So if I ever become “unemployed,” Then I might have the ability to collect unemployment until I can find new client(s). That’s good to know… While he also mentioned that it would be more difficult to collect in my case as it would with a general worker.

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