All Forum Posts by: Richard Sherman

AWESOME clarification Josh!  Thanks for taking the time to send that, I sort of half knew that and no I really know...and you know they say that's half the battle..haha  Seriously though, thanks!

Awesome!  Glad someone who knows what they are talking about jumped in!  :)  Thumbs up!

I am not sure if it would matter if you used her as a 1099 as on the one hand, the business gets a write-off, but on the other hand, you have to jointly pick up that income...so probably a wash or real close to it.  BUT you can 100% write off all the materials, cleaners, tools etc.

I would absolutely consider a CPA, even if just for one year if it ends up being too much compared to your income as you would probably learn a lot..or just do what your doing now, track everything in quickbooks (you can get the desktop version and just pay the one time fee as opposed to the monthly which is probably overkill if its just you working on the books) you can export the quickbooks backup for your CPA or anyone else that needs it.

I am not sure on if you are not going to have a penalty, I hope not but you might, but it wont be huge, and learning about the taxes is a WISE thing to do!

Congrats on your properties and AirBNB business!  Make sure you sign up for VRBO/Homeaway as well.  We have a Airbnb and we get at least 1/3 of our bookings from VRBO/Homeaway!

@Ray Johnson  That's a very astute observation.  I am not sure if there is a correct answer.  For me, it is because I am after an income producing asset, not really the income (at least not in the traditional sense), so I think in terms of number of doors (but do the math in my head for my market to take into account my experience with rent increases and appreciation plus the decreased management costs per door since I run my own crew (doubling doors doesn't mean I need to double costs, for example, I don't need an additional dump trailer etc.)

My guess is that people who are not relying on the income (or at least not all of it) to pay their household bills might think in something like doors or return percentages and people who are replacing an income etc might take that percentage into an income number the way @Asad Shaikh did.

Its a quick and dirty rule of thumb for me, but I know if I can buy decent shape at under $85 a sf, I am going to do well 9I do formally value deals as well, but that's one of my guides.  

 Yep, that's exactly right.  In W2 income they withhold for you, so you always have some already paid to the Feds/State.  The reason they make you do QE when not on W2 is essentially the same thing...they want your money early and want to spread it out as it is easier to collect than a big bill 9 months later.

Yeah  it can be tough to figure that out, BUT, it is good you are thinking on this as going forward in RI, you will almost certainly need to do your quarterly estimates.  Worst case, if you miss them then you would have a penalty on the amounts owed.  I usually have a penalty even though I do QE because of how erratic my income is, hard to estimate where I end up.

You should be able to take what you think your income will be and use an online calculator to ball-park your tax liability.  My guess, if you have not been doing withholding then you will for sure have some tax owed and probably more than 1k.  If that is the case, it could be worth making a payment at least for Q4 (due mid January but there can be tax benefits for paying in 2017 depending on your state etc on the local side.)

You mention your wife is an employee of your business, do you mean she gets a paycheck or a 1099?  

Summary- Sounds like you might have needed to do QEs, BUT you are learning, and worst case is a penalty for not paying which isn't too bad.  This was a honest mistake, no one is going to kick down your door, your just gonna pay Uncle Sam a little bonus.  BUT, make sure you have it on point for next year!  :)

Remember this is a business, try to remove the emotion from it.  To the degree that you can, just act like you are a hired worker in a  property manager business.  Emotional decisions are the most costly ones.   I would probably spend $200 with an attorney to see what your options are under your lease.  I know its not a great answer, but it took me a LOT of money to learn to not get emotional.

The best advice is to start networking to learn what a good deal is, if you are able to do the legwork and find good deals and let people know about it, the money will follow.  Meet-UP groups etc in your area...95% listen, 4% ask questions 1% talk until you really understand how people are doing it.  It WILL be hard, but you can do it!

LOVE that you are breaking your goals down!  So much of achievement is the mindset and having something to aim for. Now go DOUBLE those goals!

:)

My goal:  Go from 30 doors to 60 doors in 2018 paying under $85 SF in Greater Portland Market (will be tough!).  

DISCLAIMER:  I am not an accountant or Attorney :)

That being said, I think I can steer you in the right direction.  You PROBABLY should be making QE payments (depending on the state you might have to do state QEs as well.  BUT, you might not have to depend on some rules.  This is from a similar question on an Intuit post.  

"To determine whether you need to make quarterly estimates, answer these questions:

1. Do you expect to owe less than $1,000 in taxes for the tax year after subtracting your federal income tax withholding from the total amount of tax you expect to owe this year? If so, you're safe—you don't need to make estimated tax payments.
2. Do you expect your federal income tax withholding (plus any estimated taxes paid on time) to amount to at least 90 percent of the tax that you will owe for this tax year? If so, then you're in the clear, and you don't need to make estimated tax payments.
3. Do you expect that your income tax withholding will be at least 100 percent of the tax on your previous year's return? Or, if your adjusted gross income (Form 1040, line 37) on your tax return was over $150,000 ($75,000 if you're married and file separately), do you expect that your income tax withholding will be at least 110 percent of the tax you owed in tax for the previous year? If so, then you're not required to make estimated tax payments.

If you answered "no" to all of these questions, you must make estimated tax payments using Form 1040-ES. To avoid a penalty, your total tax payments (estimated taxes plus withholding) during the year must satisfy one of the requirements we just covered."

https://turbotax.intuit.com/tax-tips/small-business-taxes/estimated-taxes-how-to-determine-what-to-pay-and-when/L3OPIbJNw