Quick and Easy Resource for California Business

  
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TABLE of CONTENTS

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Introduction

SELECTING A BUSINESS ENTITY

  1. Sole Proprietorship
  2. Partnership
  3. C Corporation
  4. S Corporation
  5. Limited Liabilty Company (LLC)
  6. Fiscal Year-End
REGISTERING WITH THE TAX AUTHORITIES
  1. Internal Revenue Service
  2. Employment Development Department
  3. Franchise Tax Board
  4. State Board of Equalization
  5. Business License
  6. Tax Calendar
FEDERAL AND STATE PAYROLL TAXES
  1. Federal Payroll Taxes
  2. Federal Payroll Tax Deposit Requirements
  3. Federal Unemployment Taxes
  4. Supplemental Wages
  5. Fringe Benefits
  6. Other Tax Requirements
  7. Available Publications
  8. California Payroll Taxes
  9. California Payroll Tax Deposit Requirements
  10. Employee vs. Independent Contractor
  11. California Independent Contractor
  12. Form 1099 Filing Requirements for Independent Contractors
INCOME TAXES
  1. Income Tax Reporting
  2. Estimated Tax Payments
  3. Due Dates
  4. Extensions
  5. First Tax Return
  6. State Taxes
ACCOUNTING AND BOOKKEEPING
  1. The Accounting Process
  2. Financial Statements
  3. Responsibility for Bookkeeping and Accounting
  4. Cash or Accrual Accounting
  5. Internal Control
  6. Computer Systems
CASH MANAGEMENT
  1. Starting the Analysis
  2. Cash Collections
  3. Cash Outflows
FINANCING YOUR BUSINESS
  1. Financing Alternatives
  2. Debt Financing Sources
  3. Equity Financing Sources
  4. How Do I Get the Money?
INSURANCE POLICIES

SELECTING PROFESSIONAL ADVISORS

FEDERAL FORMS

CALIFORNIA FORMS

SAMPLE TAX RETURNS

FEDERAL AND STATE PAYROLL TAXES

If you have employees, you will be responsible for collecting payroll taxes and filing payroll tax reports.

Failure to deposit payroll taxes in a timely manner results in substantial penalties and interest. New businesses frequently get into trouble because they do not follow the strict payroll tax rules. Be sure to consult your tax advisor before hiring employees. Decide who will be responsible for the payroll process, preparing the checks, depositing payroll taxes and preparing payroll reports. Because of the complexities involved, most businesses use a payroll service.


1. FEDERAL PAYROLL TAXES

The following chart contains tax rates and the taxable wage basis for employers and employees. The limits and maximum contributions for 2010 are per employee.

2010 - Social Security Tax (FICA) and Federal Unemployment Tax (FUTA)
Medicare
Soc. Sec.
Total
       
FICA Tax rate for employee
1.45%
6.2%
7.65%
FICA Tax rate for employee
1.45%
6.2%
7.65%
On wages not to exceed
No Limit
$ 106,800
____
Maximum employer contribution
No Limit
$ 8,170
____
Federal Unemployment Tax (employer only): Gross Federal tax rate
____
____
6.2%
Less credit for California Unemployment Insurance
____
____
5.4%
Net FUTA rate
____
____
0.8%
On Wages not to exceed
____
____
$ 7,000
Maximum employer contribution
(per employee)
____
____
$ 56

In addition to the above Federal payroll taxes, you are required as an employer to withhold Federal income taxes from each employee according to the number of exemptions claimed.


2. FEDERAL PAYROLL TAX DEPOSIT REQUIREMENTS

The deposit requirements for employer and employee portions of Social Security Taxes (FICA) and Federal Income Tax Withheld (FITW) are as follows:

Lookback period. Your deposit schedule for a calendar year is determined from the total taxes reported on your Forms 941, in a four-quarter lookback period. The lookback period begins July 1 and ends June 30 of the prior year. If you reported $50,000 or less of taxes for the lookback period, you are a monthly schedule depositor; if you reported more than $50,000, you are a semiweekly schedule depositor.

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1201 W. Huntington Drive, #108, Arcadia, CA 91007, Tel. 626 440-9511, Fax: 626 793-0876, info@bliedencpa.com
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