PA Electrical Contractors...

[jayrad1122]

I need some assistance with taxes for a sole proprietorship in PA. Actually a lot. :roll: I started my EC business in May so I could do legal work on weekends and summers while I'm going to college. My questions are:

Do I file quarterly or annually? Where do I find out which one?

Am I suppose to have a EIN number? I don't have employees. I just use my SSN #.

Sales Tax? Do I need to charge sales tax for my total bill? For labor? If I do when do I send it in and how? I am just charging for material, the same i paid for it.

I'm not currently paying myself hourly for my work, actually I just now paying back tools and material I bought. I've written most of the hours I worked on a job done. Do I have to pay me and deduct all the taxes that are on a pay stub (Income, Medicare, unemployment,...). Where do these deductions go?

Also, I have general liability insurance, do I also need W.C. insurance if I don't have employees.

Whenever I get time I'm going to get an accountant to help me but in the mean time I have you guys. :grin: A week ago I got Quickbooks Premier to help with the business side. I like it so far, and it's definitely helping. Sorry for all the questions, thanks for helping.


-Jared

 

[bradleyelectric]

you need to make time for an accountant.

 

[JES2727]

As a sole proprietor you can use your SS#.
You also don't need to pay yourself a wage, all the money your "company" makes is yours anyway. You'll be taxed on it all.
Sales tax laws differ from state to state. I'm sure PA makes the information available on the internet. In NJ you'd be required to collect sales and send it in quarterly. Capitol improvements and new work are sales tax exempt.
Insurance laws vary also. In NJ a sole proprietor is not required to carry WC coverage on himself, but of course employees must be covered.
Only an accountant can advise you about when to file.

Good luck

 

[PaTerminator]

Some jobs require Workman's Comp( even if you have no employees) but if you're just starting out, I would avoid them until you have the funds to do it. There's plenty of other work that doesn't need it. You don't charge sales tax unless you bought materials tax exempt. I would definitely agree to hire an accountant. You can assist him in the meanwhile by keeping all bills and invoices organized, Quickbooks will help you sort all of your deductions in the correct catagories. What area of NE PA are you in?

 

[mdshunk]

Quickbooks will help you sort all of your deductions in the correct catagories.

Yeah, but let me give you one important thought on that. Pay your accountant the 85 bucks or whatever to set up your chart of accounts. The chart of accounts that comes in Quickbooks IS NOT adequate for the electrical contractor's needs. If you don't have an accountant, it is imperitave that you hire one for an hour or so to set up your chart of accounts, otherwise you could be entering stuff in the wrong places for a whole year, and it'll be a royal mess to sort out later on.

 

[satcom]

Yeah, but let me give you one important thought on that. Pay your accountant the 85 bucks or whatever to set up your chart of accounts. The chart of accounts that comes in Quickbooks IS NOT adequate for the electrical contractor's needs. If you don't have an accountant, it is imperitave that you hire one for an hour or so to set up your chart of accounts, otherwise you could be entering stuff in the wrong places for a whole year, and it'll be a royal mess to sort out later on.

Good advice!

 

[PaTerminator]

The chart of accounts that comes in Quickbooks IS NOT adequate for the electrical contractor's needs.

True, My thought was that, if he was just starting out, Quickbooks would be a starting point until he used an accountant. Also filing and organizing your paperwork and not keeping all of your receipts and invoices in a big box. CPA's don't like to see shoeboxes when you visit them.:roll: They tend to charge a lot more if you have to sit there and dig through a pile of stuff.:grin:

 

[mdshunk]

True, My thought was that, if he was just starting out, Quickbooks would be a starting point until he used an accountant.

I'd say that's a common mistake. You need to use QuickBooks and use an accountant. My accountant doesn't do my day to day bookkeeping. I do, in Quickbooks. He gets my info quarterly by dropping off a thumb drive at his office. I think that many small businesses are that way. Pretty much every accountant can directly use your QuickBooks file data. It is still quite important to have your accountant set up the chart of accounts. Doing things this way can keep your accountant bills to 500 bucks a year if you play your cards right. Get things set up the way your accountant likes them now will save big bucks and much headache later.

 

[aline]

I am just charging for material, the same i paid for it.
-Jared

I know this has nothing to do with the questions you're asking but you may want to consider charging more for material than what you pay for it.

In my state they offer free classes on all the stuff you're asking questions about. You just log onto the states website to see the class schedules and sign up for them. I've been to several of them and they cover the very questions you're asking here in great detail and it's free. They even have free classes on how to properly file liens.

 

[jayrad1122]

Some jobs require Workman's Comp( even if you have no employees) but if you're just starting out, I would avoid them until you have the funds to do it. There's plenty of other work that doesn't need it. You don't charge sales tax unless you bought materials tax exempt. I would definitely agree to hire an accountant. You can assist him in the meanwhile by keeping all bills and invoices organized, Quickbooks will help you sort all of your deductions in the correct catagories. What area of NE PA are you in?

On the border of Monroe and Northampton counties

 

[jayrad1122]

I know this has nothing to do with the questions you're asking but you may want to consider charging more for material than what you pay for it.

In my state they offer free classes on all the stuff you're asking questions about. You just log onto the states website to see the class schedules and sign up for them. I've been to several of them and they cover the very questions you're asking here in great detail and it's free. They even have free classes on how to properly file liens.

I do also include my markup, i was just trying to give an example. I will look into those free classes as soon as I'm done typing this. Although more classes isn't what I'm looking for now, Its something I would like to sit through.

 

[satcom]

I know this has nothing to do with the questions you're asking but you may want to consider charging more for material than what you pay for it.

A good accountant, will help him understand why he needs to mark up the material, and also help him get set up with all the required paperwork.

When i started i was marking up 10%, the accountant explained why i needed to mark-up 50% to 100% min, and also helped me understand the real cost of doing business.

 

[jayrad1122]

A good accountant, will help him understand why he needs to mark up the material, and also help him get set up with all the required paperwork.

When i started i was marking up 10%, the accountant explained why i needed to mark-up 50% to 100% min, and also helped me understand the real cost of doing business.

And here I was thinking that they only did book keeping and taxes. Who or what kind of accountant should I look for? The yellow pages had 102 different CPAs, do I just go down the list and pick? Do they all help you out that much? There is one about 5 minutes away so Monday I think I'll give him a call. Thanks Everyone. :grin:

-Jared

 

[mdshunk]

Who or what kind of accountant should I look for? The yellow pages had 102 different CPAs, do I just go down the list and pick?

Interview an accountant the same way you'd interview a new employee. Better yet, select an accountant the same way you might pick a wife. You're likely to be "married" to your accountant for longer than you're married to your wife, if you believe in statistics. Ideally, you'll find an accountant who has a good many contractors as clients so they already know the peculiarities of accounting for contractors.

Do they all help you out that much? There is one about 5 minutes away so Monday I think I'll give him a call.

Yes, they can and should help you out that much. Your success is their success. Think of them more as a "money coach" who also happen to handle quarterly financial paperwork. They also try to get you to stick extra money in an IRA instead of buying a second 52" plasma for the rec room. They're on your side.

 

[aline]

You can also put the blame on your accountant when a customer asks why you charge so much.

You simply tell the customer your prices are based on what your accountant says you need to charge in order to make a profit and stay in business and that he's always looking for ways for me to reduce my expenses so I can keep my prices as low as possible.

You're basically telling the customer that you can't do much about the price because the accountant is telling you what you need to charge so that's what you charge.

"We work with an accountant on regular basis to keep expenses down as much as possible and determine what we need to charge so we can remain competative, make a small profit, stay in business and continue to provide quality service to our customers. Our prices are not based on how much we think you can afford to pay but rather how much we need to charge to cover our expenses and make a small profit."