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Sunday, February 05, 2023

Small Business Accounting

I started my small business (QiSoftware) in September 2004 as a sole proprietorship using a Maryland Trade Name application to setup the business entity.

The type of business I setup is the easiest form- however, only provides the DBA (doing business as) form of business.

In my case, because I offer software consulting and development services- I file taxes at both the Federal and State levels reporting income or salary from these services as an individual taxpayer. In other words, I do not apply taxes to these services nor do I file separate business tax returns for these services.

In February 2021, the Maryland Digital Advertising Tax law was enacted however has run into any number of issues. Since I do offer online digital advertising services, however nowhere near the $1,000,000 in gross receipts the law currently requires for compliance, I only file the income as an individual taxpayer which is allowable under Maryland law.

That said, in September 2021 because I opened my online ecommerce shop (WiredShops), I applied for and was granted a Maryland Sales & Use Tax Number. I file business tax returns every quarter.

I am a software developer, so when I decided to open my shop, I set it up using OpenCart on a domain I registered rather than using a service like Shopify. Popular ecommerce services like Shopify charge monthly fees, however allow shop owners to automatically connect and display inventory from suppliers who have existing relationships with the services.

My supplier, in addition to automated connections for services like Shopify, also offers an API which allows me to connect (not as automated) to my OpenCart shop. Because my shop is not so automated, services like QuickBooks, PayPal, Zettle by PayPal, and my business bank which allow for automation with inventory and payments, can ease some of my reporting concerns.

Once my shop is more established, I plan to use QuickBooks to handle most of my business reporting and tracking needs. Why? It is used by almost every major service- even OpenCart has a plugin.

A big concern for me- recently, Maryland sent a notice requesting delinquent quarterly tax filings for my Maryland Sales & Use number. Since I have not done much with the online shop, this was an easy issue to correct, however if and when the shop becomes more established, I will use QuickBooks to handle proper tax reporting.

Thinking about taxes, as I have explained- I file the same individual tax returns for both business and personal taxes, however mark every transaction as either a business or personal expense. I file my returns with confidence. Are you ready for the tax season?

Interested in learning more about how QuickBooks can help you to run your small business?

This video link explains many of the benefits QuickBooks offers to small business owners.

QiSoftware is very happy to be a QuickBooks Business Affiliate.

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