Start by carefully reading the Client Manual found in the Download Forms section. This will guide you from preparing your monthly report, following quarterly advice and planning for your year-end taxes. If you have any questions, just call your Account Representative at 1 (800) 879-6605 and we will guide you every step of the way. Call any time M to F, 9 to 5 EST with any question. We are here to help you.
EIN stands for “Employer Identification Number“, which identifies your corporation exactly like your Social Security Number identifies you. If you are considering incorporation, please call DSA to let us help you get your very own EIN. Every corporation must have an EIN:
to file your corporation taxes
to open bank accounts
to borrow money
to pay yourself a salary
to receive payments of monies due your corporation
A Corporation is an artificial entity created by state law, owned by one or more shareholders and run by a President and other executive officers. “Sub-Chapter S” is a reference to a provision in the Internal Revenue Code that allows a small business with less than 35 shareholders to avoid all corporate taxes. All profits made by the corporation are passed on to the shareholder either as a salary or as shareholder’s earnings.
If you run a small business your corporation can be owned 100% by you. One shareholder, that’s you. One President, one Vice-president, one secretary and one treasurer, all you.
Being an S Corporation is an easy step once you have been incorporated. Call DSA at 1 (800) 879-6605 to inquire about incorporation.
Sole Proprietors vs. Corporations
Operating as a sole proprietor is a little simpler to understand and a little less paperwork. However, when operating as a sole proprietor you are giving up some real tax savings and the liability risk is greater if you are ever sued. As a sole proprietor all of your personal property can be taken away by one lawsuit. Always make sure you have plenty of insurance.
Being incorporated gives you two great advantages over operating as a sole proprietor.
1. Limited Liability. This means that all of your personal property is protected if you ever find yourself in a lawsuit involving your business. This is a real and true benefit and one that alone is worth the change.
2. Tax savings are almost always very significant and can save you much more in tax savings than the extra cost of DSA Tax & Bookkeeping service.
We here at DSA are real advocates of incorporation. Call us at 1 (800) 879-6605 and let us discuss it with you. We can do everything for you and make it simple to understand and simple to do.
If you have a corporation the IRS requires you pay yourself a “reasonable salary” and payroll tax is due on that salary. Each quarter we prepare a Quarterly Wage returns on Form 941 and the state equivalent (if applicable) and mail it to you with instructions to pay the payroll taxes due. These payments represent your liability as an employer and employee for taxes due on your quarterly salary. These taxes are due April 30th, July 31st, October 31st and January 31st. At year-end, we will prepare and mail you your W-2, reporting your wages and associated payroll taxes that have been paid.
If you are incorporated the income remaining, after your “reasonable salary” is taxable but at a lower total rate than your payroll. This is one of the biggest tax advantages to being incorporated. When you submit your Monthly Reports, we apply a portion of your income as “salary” (usually about $20,000), and the remainder will be reported as “profit” (K-1 Shareholder Income). So, after you pay your payroll taxes on the first $20,000 you will owe just income tax (no Social Security tax) on the profit. We will send you recommended estimated tax payment vouchers on Form 1040-ES (Federal) and for state (iff applicable) due each January 15th, April 15th, June 15th and September 15th).
Your Closing Statement provides route purchase figures, as well as important loan information. Assets you own, like a route, vehicle or a handheld computer all create deductions called “depreciation”, or “amortization” depending on the asset. These depreciation expenses greatly reduce your business income. If you have loans on any business assets, the interest paid on those loans is a business expense.
If ever you buy a new vehicle or a new piece of territory (or sell either) or modify a loan, please submit a copy of your Closing Statement or the Major Change Form – Routes & Assets, which you can also Submit Online.
You should always have a signed contract between you and your part time helper. This will help make it clear that they are a part time helper (independent contractor) and not an employee. Please refer to your Client Manual, or download example contracts: Service Contract or Merchandising Contract. Always keep a copy of your signed contract for your records. Pay your contractor by check and obtain their address and social security number. At year-end you will have to issue this contractor a “1099” if paid more than $600/year. When available in season, you can call DSA at 1 (800) 879-6605, to order blank 1099 forms for your use or request them through the Order Supplies.