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How to keep your LLC organized. A Tampa Accountant assists!

Updated: Jul 19, 2023

You’ve opened your LLC, awesome! Now what? Read below for a how-to guide from our Tampa Accountant.

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Now that the hard part of creating your LLC is done, let a Tampa Accountant help you stay organized so tax season is a breeze!

There are a few things to keep in mind throughout the year to keep your LLC compliant and keep your taxes in mind.

  1. Tracking expenses. Every penny counts!

  2. Estimating Quarterly Taxes

  3. Considering an S-Corporation Election

  4. Considering starting formal payroll

This list has been compiled by Accountants in Tampa who have been there, and done that will all things business taxes. We’ve seen it all and we’re here to help you stay educated! Let’s jump into expenses first!

#1 - First things first, utilize accounting software to stay on top of expenses!

Setting up accounting software early on will save you piles of paperwork and endless headaches later on. QuickBooks online is the most user-friendly and cost-effective. It also has good features that you can add on later as your business grows (i.e. payroll). But what you will mostly use it for is tracking your tax write-offs!

So, what exactly is tax deductible?

This really depends on your line of business, as some people will incur more expenses than others based merely on their service line. For example, rideshare drivers incur more mileage than virtual assistants but the virtual assistants will incur more home expenses. A common list of LLC deductions includes:

  1. Auto Expenses (mileage or ‘actual’. Mileage is just that, mileage. You take a % of each mileage incurred for business use. For 2023, the mileage rate is 65.5%, so every 10,000 business miles is a $6,550 tax deduction. Actual expenses are things like gas, insurance, car leases, repairs, etc. You can’t take both mileage and actual expenses, you can just take the higher of the two.)

  2. Home Office Expenses (this is calculated based on square footage. So if you work out of 100 sq. ft. of your 1,000 sq. ft home, you can write off 10% of your rent, utilities, HOA, etc. for home office)

  3. Contract Labor (when you pay for an outside contractor)

  4. Legal and Professional Fees (examples include attorney fees, consultant fees, accounting fees, etc.)

  5. Marketing and Advertising

  6. Costs to create your website (i.e. Domains, Emails, etc.)

  7. Costs to create your LLC (i.e. Sunbiz fees, LegalZoom fees, etc.)

  8. Telephone Expenses (similar to the home office, this is prorated based on business use %. So if you use your phone 50% of the time for business, you can write of 50% of the monthly costs)

  9. Office Supplies (printers, monitors, mouse, keyboard, etc.)

  10. Printing / Postage Fees

  11. Business Meals

  12. Business Travel (hotel, flights)

  13. Cost of Supplies (subjective to each industry)

  14. Office Rent (outside of the home)

  15. Insurance (general liability, professional liability, E&O)

  16. Etc.!

Consult with a Tampa Accountant today to review more possible tax write-offs.

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#2 - Check on your net profits quarterly to prepare estimated tax payments.

You may have heard that the IRS wants self-employed individuals to prepare and pay estimated quarterly taxes, but what does that really mean?

The short answer is: take your income minus expenses and that’s your taxable income. A general rule of thumb is to save at minimum 15-20% of your taxable income for taxes but could be higher depending on your individual tax bracket. Use your last 2 years' tax returns as an average basis for what you save.

Example: if you made $100k last year and owed $20,000, save at least 20% for taxes. Check on your net profits quarterly to create a buffer for tax season.

How to make an estimated tax payment:

  • IRS Website to make a payment:

  • Choose if you want to pay via ACH (Direct Pay) or Credit Card

  • Reason: Estimated Tax

  • Apply to: 1040

  • Tax Period: (current tax year should default)

  • Save the confirmations to PDF for tax season!

Consult with a Tampa Accountant today to review your net profits and to review your estimated payments!

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#3 - Considering converting your LLC to an S-Corporation to save on taxes?

This is arguably one of the most important questions you can ask because the difference between leaving your LLC as a sole proprietorship and converting to an S-Corporation can mean thousands and thousands of dollars in taxes. For simplicity, below are a few figures based on net earnings, and the taxes paid by both types of entities so you can see when it's optimal to convert.

  • Net Earnings of $25,000: LLC pays $4,300, S-Corp pays $900 ($4k difference)

  • Net Earnings of $50,000: LLC pays $10k, S-Corp pays $3k ($7k difference)

  • Net Earnings of $100,000: LLC pays $24k, S-Corp pays $11k ($13k difference)

As you can see, the more you make, the higher the difference in taxes paid vs taxes saved if you remain a sole proprietorship. This is because of 2 things: (1) The IRS incentivizes becoming an S-Corporation so that shareholders get on a reasonable/formal salary (think W2), (2) Second, sole-proprietorships were more designed for hobby income vs trades and businesses.

What exactly is a ‘reasonable salary’?

The general rule is that a reasonable salary is the amount that a similar company would pay for the same or similar service/output that you provide, to another person. Example: if you are a self-employed attorney and make $300,000 gross income and $200,0000 net income, it’d be reasonable to assume that any other legal firm would pay a similar person in your role +/- a $100,000 salary to perform the same or similar services. Use discretion and do research on both your industry and your tax situation holistically before finalizing a salary figure.

What a salary is:

  • Formal Payroll (i.e. biweekly)

  • After Tax (i.e. SS, Medicare, and Fed. Tax are withheld)

  • Subject to payroll tax filings (RT6 and 941 if you’re in FL)

  • Subject to State Unemployment Taxes

What a salary is not:

  • A distribution (likewise, a distribution is NOT a salary because distributions have no taxes withheld)

Contact our Accountants in Tampa today to help you figure out what a reasonable salary means to you and your new LLC! A Tampa Accountant can help look at your business profits in conjunction with the rest of your tax portfolio to get a bird's eye view of the best salary for you to maximize earnings and taxes!

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Why Work With Taxes Tampa?

For over a decade, Taxes Tampa has sought to be a communication-focused Tampa Accounting firm. We don’t operate on a volume-based business model which allows us to check in with our clients more than the average accountant in Tampa and offer our clients a more hands-on and advisory tax experience. We want to ensure you understand the ABCs of LLCs, Taxes, and everything in between. Contact us today for a free tax consultation with one of our Tax Accountants in Tampa!

Foot Notes:

Frequently Asked Questions:

How much does it cost to start an LLC in Florida?

Do you have to pay a yearly fee for an LLC in Florida?

Do I need to have a registered agent?



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