What is a disregarded entity?
A disregarded entity is a business entity which is considered to be an undivided part of the owner of the entity for federal tax purposes. That is, the entity is disregarded as an entity separate from the owner.

A good example of disregarded entities is a single member LLC that does not choose to be classified as a corporation for federal tax purposes. A single member limited liability company that is not classified as a corporation automatically defaults to a disregarded entity, and file federal income tax return as a sole proprietorship.

How does IRS treat a disregarded entity?
IRS does not require a disregarded entity to file a separate income tax return because the assets of the disregarded entity are considered as the assets of the owner of the entity. The entity is allowed to be taxed as a “pass-through” entity on its owner’s personal tax return. The income, deductions and loss of the disregarded entity are included in its owner’s return.

Why use a disregarded entity?
The owner of a single member LLC who does not want to pay additional federal income taxes for the business entity can choose to be a disregarded entity. That is, the owner of the disregarded entity just needs to file Schedule C with their personal income tax like a sole proprietorship.

This post is not intended to constitute the rendering of legal, accounting, or other professional services or to serve as a substitute for such services.

What Are Estimated Taxes?
The US tax system requires you to pay taxes as you make money. You’re required to pay taxes throughout the year as you earn income rather than waiting until April 15th.

When you’re employed, you don’t really have to worry about this because your employers take care of it for you. They withhold taxes from your paychecks.

It’s more complicated when you are self-employed, when you don’t have enough money withheld, or when you earn additional income in real estate, investments, alimony or other means. You may need to pay quarterly estimated taxes yourself not to pay penalty.

Who Needs to Pay Estimated Taxes?
The general guideline is that you should pay estimated tax if your withholding and credits don’t cover 90% of your current year’s tax liability.

More precisely, you must pay estimated tax if both of the following apply:

1. you expect to owe at least $1,000 in tax after subtracting your withholding and credits
2. you expect your withholding and credits to be less than the smaller of;
90% of the tax to be shown on your current year’s tax return, or 100% of the tax shown on your previous year’s tax return.

Who Does Not Need to Pay Estimated Taxes?
1. You do not have to pay estimated taxes to the IRS if your current year’s tax due will be less than $1,000 after subtracting withholding and credits.
2. You do not have to pay estimated taxes if your employers withholds enough money to cover your current year’s tax due.

How Much Estimated Taxes Do I need to Pay?
1. When you have relatively regular income
If you’re self-employed and you have relatively steady income or it’s easy to estimate your income, you can calculate how much you owe by using the worksheet of the IRS Form 1040-ES or your finance management software.

2. When you have irregular income
If it’s difficult to estimate how much money you will make this year, the easiest way to deal with estimated taxes is to pay the same amount as the last year’s tax bill. This is called “safe harbor rule“. You can avoid underpayment penalty as long as you pay 100% the last year’s tax liability.

When Do I have pay Estimated Taxes?
Estimated taxes are due four times per year:

April 15th
June 15th
September 15th
January 15th

If these days fall on a weekend or holiday, the due date is the following business day. If you do not pay enough tax by the due date of each payment period, you may be charged a penalty even if you are due a refund when you file your income tax return.

How Much Should I Pay Per Installment?
Usually you’re expected to make your estimated tax payments in four equal installments. If it’s tricky because your business is seasonal or your income is uneven every month, you can annualize your income by using the IRS Form 2210. With this form, you can avoid or lower the penalty of underpayment of estimated taxes. Another way to avoid the penalty is to go with safe harbor rule when it’s hard to make equal installments.

How Much Underpayment Penalty Will I Owe If I Don’t Pay Enough Estimated Taxes?
If you don’t pay estimated taxes on time or don’t pay enough estimated taxes, you may have to pay a penalty for underpayment of estimated taxes. For example, your tax due for this year is $15,000 and you’ve only paid $12,000 for this year’s estimated taxes, you are $1,500 short of the 90% of the threshold, $13,500. In this case, the IRS will access a penalty on $1,500.

The amount of the penalty is based on the general underpayment interest rate under IRC Section 6621.

Basic Tax Questions That Small Business Owners Should Ask

How should I keep my records? What kind of records should I keep and how long?

One of the most important things in small business accounting is to keep good records. Good financial records help you calculate income and expenses, monitor financial status, and file tax returns. You may consider using business accounting software such as Intuit QuickBooks, Peachtree Complete Accounting, Microsoft Office Accounting Professional or Simply Accounting Premium. The IRS recommends that you keep your records at least four years.

What expenses can I deduct and how much?
A business expense is an ordinary and necessary expense to carry on a business or trade. Click here to read more about common business expenses.

I work from home. Can I deduct the cost of home office? If I can, how much?
Yes, you can, but remember the IRS is very careful about how much you deduct your home office expenses and the rules change frequently. Read more about deductions of your home office expenses.

Do I need a tax ID number, EIN?
An Employer Identification Number, EIN identifies a business entity as a taxpayer. A sole proprietor without any employees or a LLC with a single member(owner) does not need an EIN. They can use their social security number, SSN as their taxpayer identification number.
Click here for more information about EIN for single member LLC.
Read more about EIN.

What is estimated tax and how often should I pay?
The US tax system requires you to pay taxes as you earn income. Most people who are employed follow this rule by having some of their wages withheld by their employer. But, when you are self-employed, you need to pay estimated taxes yourself every three months. The due dates are April 15th, June 15th, September 15th and January 15th. Read more about estimated taxes.

It’s essential to understand what kinds of taxes you must pay for your small business. These are the types of taxes categorized by agencies that you pay while you run a business.

Federal Taxes (The IRS collects the following taxes)
- Income taxes
- Self-employment taxes for the Social Security and Medicare
- Employment taxes (payroll taxes): when you have employees, you, as an employer, are required to pay and/or withhold employment taxes on behalf of your employees.

State Taxes
- Income taxes
- Employment taxes (payroll taxes)
- Sales taxes on retail goods: you, as a seller, collect the taxes from your customer and pay to the state.
- Excise taxes: some states collect taxes on certain kinds of business operations or activities such as alcohol or cigarette manufacture or distribution
- LLC, corporation or Limited Partnership taxes: Some states collect taxes on LLC, corporation or Limited Partnerships.

County & City Taxes / Fees
- Most cities or counties collect taxes by certain criteria such as gross payroll or receipts.
- Property taxes: counties impose taxes on real estate or personal property owned by business.
- Business license fee or tax registration fee: some cities and/or counties may require you to register your business and pay a registration fee.
- Business permit fee: if your business is engaged in regulated business activities such as selling alcohol, you’re require to acquire a permit for it.

Many Magento users try the application out first on sub-directory or test directory. A lot of times, moving an application from test directory to live directory can be hectic and time-consuming. Luckily, it is relatively easy to move Magento from one directory to another withing the same server.

• Backup everything.
• Update the unsecure / secure URLs via the Admin panel.
  System -> Configuration -> Click Web from the left menu.
  i.e.) Change http://www.mycompany.com/test/ to http://www.mycompany.com.
  When you save the new URLs through the Admin panel, it will show error messages after you’re done. This happens because the Admin can’t be redirected to the old directory any more. Just ignore the message.
  If you’re familiar with SQL queries, you can update the URLs directly from database using phpMyAdmin or other database tool:
  update core_config_data set value='NEW URL' where path like '%base_url%';
• Delete the cache from /var/cache/.
• Move all the files to the new directory.
  You can use a file manager tool that your hosting company provides, do SSH or use FTP. The file manager tool from cPanel is fast and reliable.

This procedure should work in both ways:
when you move Magento from sub-directory to top as ‘http://www.mycompany.com/test/’ to ‘http://www.mycompany.com/’
or from top to sub-directory as ‘http://www.mycompany.com/’ to ‘http://www.mycompany.com/shop/’.

You don’t have to use the word ‘magento’ when you move your store to sub-directory.