Small Business Top Tax Questions

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.

Types of Taxes You Pay When Running a Small Business

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.

Magento - Moving Directory from Test to Live

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.

Magento - Yahoo Analytics Conversion Code

Unlike other tracking codes, we need to put Yahoo Analytics Conversion code between <HEAD> and </HEAD> tags.

Yahoo’s Instructions for the following code are:

Copy the HTML code below and insert it between the <HEAD> and </HEAD> tags on your site’s conversion page(s). To pass a dynamic revenue value in the tag, you must modify your web pages accordingly.

To add the Yahoo conversion tracking code in the Head tags, we need to look at the checkout layout configuration file:
/app/design/frontend/your_interface/your_theme/layout/checkout.xml

Find out which page layout it uses when an order is completed.

i.e.) For one page checkout, look for this code:

<checkout_onepage_success>
<reference name="root">
<action method="setTemplate"><template>page/2columns-right.phtml</template></action>
</reference>

You can edit the Head section of ‘2columns-right.phtml’ to add the Yahoo tracking code. But if this template, 2columns-right.phtml is being used for other pages, I would make a copy of it and name it ‘2columns-right-success.phtml’ and add the tracking code there. This way, it will track it only when there is a successful conversion.

<html xmlns="http://www.w3.org/1999/xhtml" xml:lang="<?php echo $this->getLang() ?>" lang="<?php echo $this->getLang() ?>">
<head>
<?php echo $this->getChildHtml('head') ?>
<SCRIPT language=”JavaScript” type=”text/javascript”>
<!– Yahoo! Inc.
window.ysm_customData = new Object();
window.ysm_customData.conversion = “transId=,currency=,amount=”;
var ysm_accountid = “—–YAHOO_ACCOUNT_ID—–”;
document.write(”<SCR” + “IPT language=’JavaScript’ type=’text/javascript’ ”
+ “SRC=//” + “srv2.wa.marketingsolutions.yahoo.com” + “/script/ScriptServlet” + “?aid=” + ysm_accountid
+ “></SCR” + “IPT>”);
// –>
</SCRIPT>

Magento - AdWords Conversion Tracking

When you use Google AdWords to receive more traffic, don’t forget to track the traffic. AdWords Conversion Tracking is a free tool to help you understand how many users actually buy products or services from you.

Installing AdWords conversion tracking codes is pretty straightforward.

Open the file /app/design/frontend/your_interface/your_theme/template/checkout/success.phtml.

Find the following code in the file.
<?php echo $this->__(’Your order # is: %s’, $this->getViewOrderUrl(), $this->getOrderId()) ?>.
<?php else :?>
<?php echo $this->__(’Your order # is: %s’, $this->getOrderId()) ?>.
<?php endif;?>

Add the following code under the above code. If your success.phtml is customized, add it at the end of the file. In most cases, it should work.

<?php
//-------------------------------------------
// ADWORDS CONVERSION TRACKING
//-------------------------------------------
$order_details = Mage::getModel('sales/order')->loadByIncrementId(Mage::getSingleton('checkout/session')->getLastRealOrderId());
$adwords_saleamt = $order_details->subtotal;
?>
<!-- Google Code for Purchase/Sale Conversion Page -->
<script language="JavaScript" type="text/javascript">
<!--
var google_conversion_id = ---YOUR_GOOGLE_CONVERSION_ID---;
var google_conversion_language = "en";
var google_conversion_format = "1";
var google_conversion_color = "ffffff";
var google_conversion_label = "purchase";
var google_conversion_value = "<?php echo $adwords_saleamt; ?>";
//-->
</script>
<script language="JavaScript" src="http://www.googleadservices.com/pagead/conversion.js">
</script>
<noscript>
<img height="1" width="1" border="0" src="http://www.googleadservices.com/pagead/conversion/---YOUR_GOOGLE_CONVERSION_ID---/?label=purchase&guid=ON&script=0"/>
</noscript>

To look at the conversion data from Google AdWords, generate reports as follows:

Reports -> Create Report -> … ->
Add or Remove Columns from Advanced Settings (Optional) -> Choose conversion related columns.

AdWords Conversion Report

This code is to track conversion rate for regular sales.