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Lev
Lev, Tax Advisor
Category: Tax
Satisfied Customers: 22649
Experience:  Taxes, Immigration, Labor Relations
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I am starting a business as a window washer in Michigan I need

Customer Question

I am starting a business as a window washer in Michigan I need information on taxes and when to pay them. I will not be having employees, and its just a window washing business..nothing high rise. All residential and store fronts. Which business designation should i use? For taxes, how do i make estimated payments if this is my first year in business? What state tax laws are applicable to me as well? Any explanation on taxes and business designations would be greatly appreciated. If i didn't send this to the right expert, please forward it to the correct one. Thanks!
Submitted: 5 years ago.
Category: Tax
Expert:  servqual replied 5 years ago.
Thank you for contacting justanswer.

Since your questions deal primarily with business taxes, I will forward your request to the tax experts.

From the perspective of a business law expert, likely you may want to consider a limited liability company (LLC) or an S Corporation (if you have employees and there may be some employee tax benefit).

Since Michigan may also require sales tax on services provided (as Ohio now requires), I will ask the tax experts to consider that issue for you as well.

I am sharing for your information so that you know your question has been forwarded. If you have future business law questions you may direct them to me or other business law experts. Best wishes.
Customer: replied 5 years ago.
Ok, Thanks
Expert:  Lev replied 5 years ago.

Hi,

please find here a reference to Michigan business tax forms - http://www.michigan.gov/taxes/0,1607,7-238-44079---,00.html

 

For sales tax issues - please refer to 2009 Instruction Book - http://www.michigan.gov/documents/taxes/78_255401_7.pdf

You must register to pay sales tax if you make retail sales of goods in Michigan even if the items you sell are not taxable.

Who is required to have a sales tax license? - Individuals or businesses that sell tangible personal property to the final consumer need a sales tax license. An application for a sales tax license may be obtained on our web site. In order to register for sales tax, please follow the application process.

See additional information here - http://www.michigan.gov/taxes/0,1607,7-238-43529-154427--,00.html

 

Michigan DOT offers Tax Seminars for New Business - see registration form for

Coming in Spring 2009 here - http://www.michigan.gov/documents/treasury/3838_267928_7.pdf

 

You do not have to register LLC or corporation - unless you want to legally separate the business activities from your personal activities.

In this case you will be considered a self-employed.

Based on your estimated income - you need to pay quarterly estimated taxes to the IRS - http://www.irs.gov/pub/irs-pdf/f1040es.pdf

and to the Michigan DOT - 2009 Estimated Individual Income Tax Voucher - http://www.michigan.gov/documents/taxes/MI-1040ES_260702_7.pdf

 

Let me know if you need any help.

 

Customer: replied 5 years ago.
How do i estimate income when this is going to be my first year in business, (both state and federal) and what state taxes do i need to pay? keep in mind i more then likely be operating as sole proprietorship.
Expert:  Lev replied 5 years ago.

The IRS expects taxes to be paid as income is earned or received.

Assuming - you are expecting gross income for 2009 to be $30,000 and your qualified business expenses $5000 - so you estimated net income would be $25,000

If you are single , standard deductions, no dependents, no other deductions or credits - your will owe self-employment taxes $25,000*15.3%=$3825

your taxable income will be $25,000 - $1913(half of self-employment taxes) - $5600(standard deduction) - $3600(personal exemption) = $13887

and your estimated income tax liability is $1666

Your total estimated tax liability would be $1666+$3825=$5491

 

Generally, you should make estimated tax payments for 2009 if at the tax time you will owe more than $1000 and the total amount of tax withheld and your tax credits will be less than the smaller of:
-- 90% of the tax to be shown on your 2008 tax return; or
-- 100% of the tax shown on your 2007 tax return (110% if your 2007 adjusted gross income exceeded $150,000).

 

Michigan income tax rate is 4.35%

Some cities have additional taxes - see here - http://www.crcmich.org/TaxOutline/Income/ucit.html

Customer: replied 5 years ago.
How did you figure the income tax liability? would my My michigan tax would be (25000*.0435) $1088 right? based on the figures you provided if i made 30k minus 5k in bus exp.
Expert:  Lev replied 5 years ago.

Your Michigan taxable income based on assumptions above would be

$25,000 - $1913(half of self-employment taxes) - $3600(Exemption allowance) = $19487

Your estimated Michigan tax liability is $19487*4.35%=$848

 

You main task would be to keep a good record of your income and business expenses.

 

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