AnglingEntrepreneur Posted January 26, 2014 Report Share Posted January 26, 2014 I am a 18 year old high school entrepreneur. I currently attend Our Lady Of Good Counsel High school in Olney, MD and am in my Senior year. I started PPMB Fishing Skirts in the middle of March 2013 with 3 friends- Patrick, Mikey, and Ben- but I am the last one left in the company. in the 10 months of 2013 we were running, we sold $2,010 in skirts, and so far in January 2014 we have done $817 sales. We currently do all of our sales on Facebook, but we plan on moving into retail/wholesale tackle shops in 2014 across the country. We are currently using Go Daddy's book Keeping app service, formally Outright.com. I Did the following on 1/14/14 - Registered and received an EIN Number - Registered with the state of MD I haven't registered for a trade name yet I do have some concerns/confusion On the form that tells me my EIN Number, it says the following "Based on the information received from you or your representative, you must file the following forms by the date shown, 1/14/14." That was the date of the day I got the number. The form is Form 720 Then, it says "After our review of your information, we have determined that you have not filed tax returns for the above-mentioned tax periods dating as far back as 2013. Please file your returns by 1/29/14. If there is a balance due on the returns, penalties and interest will continue to accumulate from the due date of the returns until it is filed and paid. If you were not in business or did not hire any employees for the tax periods in question, please file the returns showing you have no liabilities." Any advice? At the top of the form it says the following: Date of this notice: 1-14-2014 Form: SS-4 What do I need to do, pay, and fill out- and how? I cannot afford a CPA. Should I be scared? Concerned? I've tried to call the IRS four or five times now- mostly in the afternoon, I'll be on the phone for 4- 5 minutes going through all the options on the type of questions I have and every time I get a automated recording saying something like this "We no longer Answer this question over the phone- please check our website" and then click it hangs up by itself. What should I do? Quote Link to comment Share on other sites More sharing options...
smallmouthaholic Posted January 26, 2014 Report Share Posted January 26, 2014 (edited) Did you ever obtain form #637 signed by an I.R.S. agent? That is an excise exeption form to be used when you buy materials @ wholesale prices.If so,the agents name and contact phone # are on the form You can download form #720 from the I.R.S. website https://www.google.com/search?q=IRS+form+%23720&ie=utf-8&oe=utf-8&aq=t&rls=org.mozilla:en-US:official&client=firefox-a Go to sport fishing equipment area on the back of the form and fill out you 10% tax due on gross sales.Make sure you put your E.I.N. # on the front w/ your name & address and sign/date the back of the form The form gets mailed to: Department of the Treasury Internal Revenue Service Cincinnati,Ohio 45999-0009 Personally,I would get a check and any interest / penalty they have assessed to you mailed out ASAP. Make your check out to:Department of the Treasury.They want their excise tax money and are not an organization to fool around with.You can include a letter(for what it's worth) that you've tried to contact them and wish to file form #720 every quarter Edited for additional links Edited January 26, 2014 by smallmouthaholic 1 Quote Link to comment Share on other sites More sharing options...
AnglingEntrepreneur Posted January 26, 2014 Author Report Share Posted January 26, 2014 Smallmouthaholic, Should I pay what I owe in a lump some? I've calculated what I owe and its $285 from when I started in March. Should I pay it all at once? On the Form 720 they have a box to check off which quarter you're paying for- should I just check them all off? Quote Link to comment Share on other sites More sharing options...
smallmouthaholic Posted January 27, 2014 Report Share Posted January 27, 2014 I'd pay them all ,check the appropriate boxes and get up to date immediately.The I.R.S. will contact you if they are not happy w/ the return. Enclose the letter i suggested w/ the return Quote Link to comment Share on other sites More sharing options...
m.t.pockets Posted January 27, 2014 Report Share Posted January 27, 2014 Just did the same thing. I filed all 4 quarters separately with a check for each quarter. I did mail all of them in one envelope. So far I have not heard back from them. It's only been 3 weeks since I filed. KEEPING MY FINGERS CROSSED NO INTEREST OR PENALTIES ARE DUE Quote Link to comment Share on other sites More sharing options...
Travis Posted January 27, 2014 Report Share Posted January 27, 2014 (edited) I find your comment funny about not being able to afford a CPA. In my opinion it is just the opposite..you can't afford not to have one. Too many guys do this stuff on their own and leave money on the table or are in for a surprise later at some point. This is one area a lot like to "save" money on because they believe they have the tax code all figured out (add a man card to your deck sort of thing). Definitely ask questions and guidance from guys that are doing it so you can have some points and questions to ask the CPA. You should have been pulling money out all along for the expense of a CPA. Edited January 27, 2014 by Travis 1 Quote Link to comment Share on other sites More sharing options...
mark poulson Posted January 27, 2014 Report Share Posted January 27, 2014 I find your comment funny about not being able to afford a CPA. In my opinion it is just the opposite..you can't afford not to have one. Too many guys do this stuff on their own and leave money on the table or are in for a surprise later at some point. This is one area a lot like to "save" money on because they believe they have the tax code all figured out (add a man card to your deck sort of thing). Definitely ask questions and guidance from guys that are doing it so you can have some points and questions to ask the CPA. You should have been pulling money out all along for the expense of a CPA. Amen. If you can't afford a CPA, you aren't a viable business. You should rethink what it takes to be in business. It's serious, and the IRS doesn't play around. Quote Link to comment Share on other sites More sharing options...
smallmouthaholic Posted January 27, 2014 Report Share Posted January 27, 2014 The business world can be cruel and the tax man wants his $ on time. The tackle business is not the cheap and in-expensive venture some here on TU seem to think it is. I've been told the I.R.S. agents get a bonus when they catch a manufacturer(no matter how small) who sells baits but does not pay the excise tax. Quote Link to comment Share on other sites More sharing options...
JSC Posted January 27, 2014 Report Share Posted January 27, 2014 Just a side note ... Look to pay a penaltiy on the back taxes .. They can figure and spend dollara to collect on a .02 cent penalty. Quote Link to comment Share on other sites More sharing options...
carolinamike Posted January 28, 2014 Report Share Posted January 28, 2014 Entrepeneur, the best thing to do, instead of asking advice here, is to contact your local IRS. Explain to them that you did not have knowledge of the Federal Excise Tax and that you would like to get things straight. I had to do something very similar to this, they are not as ruthless as some people make them sound, especially if you are trying to be honest. It is those people that are trying to be dishonest that they have no mercy on. Explain your age and your situation in detail and ask for their help. Our IRS agent actually drove 50 miles, spent a couple of hours with us, helped us build the excise tax into our pricing and explained in detail the things that we needed to do to stay out of trouble. It was as simple as that. If you keep your books up and file your taxes regularly, and pay them on time, then really your only need for a CPA is when it comes time to do your taxes for income tax purposes at the end of the year. Most charge from $300-$500. The IRS services are free, just be honest and upfront and request help. You will be surprised at how nice these folks are. If you don't keep your books up, and you don't pay on time, don't be surprised how nasty these folks can be. Bottom line, is stay current with your bookkeeping. 2 Quote Link to comment Share on other sites More sharing options...
JSC Posted January 28, 2014 Report Share Posted January 28, 2014 XX2 to what Mike said ... a few years back they would go out of the way to help You (have not seen one in a while) .. but when it comes to collection they can be tough even when a mistake is made (lost in the mail payments and when it gets to them a day or 2 late) for years what little bit I have done I had figured my 10% one way and one of the "Checkers" showed me another and gave me credit for a few years back. Good Luck Quote Link to comment Share on other sites More sharing options...
TroutSupport.com Posted January 30, 2014 Report Share Posted January 30, 2014 X3 on Mikes post. Quote Link to comment Share on other sites More sharing options...
Nathan Posted January 30, 2014 Report Share Posted January 30, 2014 X4 on what Mike said.They had one of their people drive over 100 miles out to my place when I got started.It was a really nice lady and she really helped me out..Just be honest and on time and you will be just fine...Nathan Quote Link to comment Share on other sites More sharing options...
tsic Posted January 31, 2014 Report Share Posted January 31, 2014 If you wholesale baits to stores do you still pay the excise tax or is it just for retail sales? Quote Link to comment Share on other sites More sharing options...
Jensen Posted January 31, 2014 Report Share Posted January 31, 2014 If you wholesale baits to stores do you still pay the excise tax or is it just for retail sales? Don't confuse Federal excise tax with State or local sales tax. Quote Link to comment Share on other sites More sharing options...
carolinamike Posted January 31, 2014 Report Share Posted January 31, 2014 If you manufacture any fishing product and sell it, be it retail or wholesale, because you are a manufacturer you are required to pay the 10% Federal Excise Tax. You will have to contact your own state's Department of Revenue to find out about state taxes. Keep in mind, each state is different. Quote Link to comment Share on other sites More sharing options...
tsic Posted January 31, 2014 Report Share Posted January 31, 2014 So the way I understand this, If I manufacture baits I pay a 10% excise tax. Then the store pays an excise tax on sales of the same baits? And this tax to the manufacture is on total sales,not on profit? I thought making a few baits might be a good retirement sideline glad I found out all this stuff before I got in too deep, I can't see how there is anything left over after the cost of making a bait than paying a tax on gross sales. Is this why so many baits are manufactured in China? Quote Link to comment Share on other sites More sharing options...
dlaery Posted January 31, 2014 Report Share Posted January 31, 2014 So the way I understand this, If I manufacture baits I pay a 10% excise tax. Then the store pays an excise tax on sales of the same baits? And this tax to the manufacture is on total sales,not on profit? I thought making a few baits might be a good retirement sideline glad I found out all this stuff before I got in too deep, I can't see how there is anything left over after the cost of making a bait than paying a tax on gross sales. Is this why so many baits are manufactured in China? No, the store does not pay excise tax. they paid it to the manufacturer. It is a manufacturers tax to be paid at the last line of manufacturer. Quote Link to comment Share on other sites More sharing options...
DaBehr Posted January 31, 2014 Report Share Posted January 31, 2014 http://www.irs.gov/publications/p510/ch05.html Quote Link to comment Share on other sites More sharing options...
tsic Posted January 31, 2014 Report Share Posted January 31, 2014 Thanks for the info everyone TU comes through again Quote Link to comment Share on other sites More sharing options...
