Small Business Tax & Accounting

Chicago is a major economic hub in the United States, with a diverse range of industries contributing to its economic growth. Here are some of the strongest business industries in Chicago:

1. Finance: Chicago is home to several major financial institutions, including the Chicago Board Options Exchange, the Chicago Mercantile Exchange, and the Federal Reserve Bank of Chicago. The city is also home to many private equity and venture capital firms.
2. Technology: Chicago has a thriving technology industry, with a growing number of startups and established tech companies. The city is particularly strong in areas such as fintech, healthcare IT, and logistics technology.
3. Healthcare: Chicago is home to several major hospitals and healthcare systems, including Northwestern Medicine, Rush University Medical Center, and the University of Chicago Medicine. The city is also home to many healthcare-related businesses, such as pharmaceutical companies and medical device manufacturers.
4. Manufacturing: Chicago has a long history of manufacturing, and the city continues to be a major center for manufacturing industries such as food processing, printing, and metal fabrication.
5. Transportation and logistics: Chicago is a major transportation hub, with several major airports, interstates, and rail lines passing through the city. The city is also home to several major logistics and transportation companies, such as UPS and FedEx.
6. Professional services: Chicago is home to many professional service firms, including law firms, accounting firms, and consulting firms.

Overall, Chicago has a diverse economy with many strong industries, providing business owners with opportunities in a variety of sectors.

A top-tier bookkeeping business would exhibit several characteristics that set it apart from other bookkeeping businesses. Here are some key characteristics of a top-tier bookkeeping business:

1. Accuracy: A top-tier bookkeeping business would have a reputation for accuracy and attention to detail. They would maintain up-to-date financial records and ensure that all transactions are recorded correctly and in a timely manner.
2. Timeliness: A top-tier bookkeeping business would prioritize timeliness, ensuring that financial records are up-to-date and available to clients when needed. They would also be responsive to client inquiries and requests.
3. Organization: A top-tier bookkeeping business would be well-organized and efficient in managing financial records. They would use modern accounting software and tools to streamline their processes and ensure that clients' financial records are accurate and complete.
4. Communication: A top-tier bookkeeping business would have excellent communication skills and keep clients informed of their financial status. They would be able to explain financial reports and statements in a way that clients can understand and make informed decisions.
5. Knowledge and expertise: A top-tier bookkeeping business would have a deep understanding of accounting principles and practices. They would keep up-to-date with changes in tax laws and regulations and be able to provide expert advice and guidance to clients.
6. Professionalism: A top-tier bookkeeping business would exhibit professionalism in all interactions with clients and stakeholders. They would be ethical, trustworthy, and reliable, and would maintain the confidentiality of clients' financial information.
7. Scalability: A top-tier bookkeeping business would have the ability to scale up or down based on the needs of clients. They would be able to handle the financial needs of small businesses as well as larger organizations, and would have the flexibility to adapt to changing circumstances.

Overall, a top-tier bookkeeping business would prioritize accuracy, timeliness, organization, communication, knowledge and expertise, professionalism, and scalability. These characteristics are critical for providing clients with high-quality financial services and building a strong reputation in the bookkeeping industry.

An accountant is a professional who is responsible for the preparation and analysis of financial records for individuals, businesses, and organizations. A Certified Public Accountant (CPA) is a licensed accounting professional who has met specific educational and experience requirements and has passed a rigorous professional exam.

Here are some of the key differences between an accountant and a CPA:

1. Education and certification: Accountants may have a degree in accounting or a related field, but they are not required to be licensed or certified. CPAs, on the other hand, must have a degree in accounting or a related field, meet specific educational requirements, pass the Uniform CPA Exam, and meet ongoing continuing education requirements to maintain their license.
2. Professional standards: CPAs are held to higher ethical and professional standards than accountants. They must adhere to a strict code of professional conduct and are subject to disciplinary action if they violate ethical or professional standards.
3. Services provided: Accountants may offer a range of services, including bookkeeping, tax preparation, and financial analysis. CPAs may also provide these services, but they can also perform audits, review financial statements, and provide attestation services.
4. Legal requirements: In some states, certain types of accounting services can only be provided by a licensed CPA. For example, in Illinois, only a licensed CPA can perform audits or attestation services.
5. Compensation: CPAs may command higher salaries than accountants, due to their higher level of education, certification, and specialized skills.

In summary, while both accountants and CPAs can provide accounting services, CPAs have completed additional education, passed a rigorous professional exam, and are subject to higher ethical and professional standards. As a result, they may be better equipped to provide specialized services such as auditing, review of financial statements, and attestation services.

Chicago has the authority to impose additional taxes known as "home rule taxes," which are designed to fund specific city services and projects. Here are some of the most common home rule taxes that are typically incurred upon a Chicago-based small business:

1. Chicago Amusement Tax: The Chicago Amusement Tax is a tax on charges for amusement, such as admission fees to concerts, movies, or sporting events. The tax rate is currently 9% of the admission charge, and it is applied to both businesses and individuals.
2. Chicago Personal Property Lease Transaction Tax: The Chicago Personal Property Lease Transaction Tax is a tax on the lease or rental of personal property, such as equipment, machinery, or vehicles. The tax rate is currently 6.25% of the lease or rental charge, and it is typically charged to the lessee.
3. Chicago Non-Titled Personal Property Use Tax: The Chicago Non-Titled Personal Property Use Tax is a tax on the use of non-titled personal property, such as computer software or certain types of equipment. The tax rate is currently 9% of the purchase price of the property, and it is typically charged to the purchaser.
4. Chicago Employer's Expense Tax: The Chicago Employer's Expense Tax is a tax on the privilege of employing individuals within the city of Chicago. The tax rate is currently $1.25 per employee per month, and it is typically paid by the employer.
5. Chicago Hotel Accommodations Tax: The Chicago Hotel Accommodations Tax is a tax on the rental of hotel rooms or other accommodations in the city of Chicago. The tax rate is currently 17.4% of the rental charge, and it is typically charged to the customer.

It's important for small business owners in Chicago to be aware of these home rule taxes and ensure that they are complying with all applicable requirements. They should consult with a qualified tax professional or business advisor to ensure that they are taking advantage of all available tax incentives and benefits.

Business owners in the city of Chicago should be aware of the Tax Increment Financing (TIF) Districts and consider their potential benefits and drawbacks. Here are some things that business owners should take into consideration about Chicago's TIF Districts:

1. Potential benefits: TIF Districts are designed to promote economic development and encourage investment in specific areas of the city. Business owners located in TIF Districts may be eligible for tax incentives, grants, or other financial assistance to help with business development or expansion.
2. Eligibility requirements: In order to be eligible for TIF District benefits, business owners must meet certain criteria, such as being located within the boundaries of the TIF District, creating jobs, or making significant investments in the business.
3. Application process: Business owners who are interested in applying for TIF District benefits must go through an application process and meet certain requirements, such as submitting a business plan, demonstrating financial need, and providing information about the impact of the business on the local community.
4. Transparency and accountability: TIF Districts have been criticized for lacking transparency and accountability, and for diverting tax revenue away from other public services, such as education and public safety. Business owners should be aware of these issues and ensure that they are making informed decisions about whether to participate in TIF District programs.
5. Local community impact: Business owners who participate in TIF District programs should also consider the impact of their business on the local community, including issues such as job creation, economic development, and community engagement.

Overall, business owners in Chicago should carefully consider the potential benefits and drawbacks of TIF Districts and ensure that they are making informed decisions about whether to participate in TIF District programs. They should also consult with a qualified tax professional or business advisor to ensure that they are taking advantage of all available tax incentives and benefits.

Small business owners in the city of Chicago may face different tax considerations than businesses located in other cities in Illinois. Here are some special tax considerations that small business owners in Chicago may need to make:

1. City of Chicago Taxes: The city of Chicago imposes a number of taxes on businesses, including a Personal Property Lease Transaction Tax, a Non-Titled Personal Property Use Tax, an Amusement Tax, and a Parking Tax. Small business owners in Chicago should be aware of these taxes and ensure that they are complying with all applicable requirements.
2. Sales Tax: Chicago has a higher sales tax rate than many other cities in Illinois. Small business owners in Chicago should be aware of the current sales tax rates and ensure that they are collecting and remitting the correct amount of sales tax.
3. Home Rule Taxes: Many cities in Illinois, including Chicago, have the authority to impose additional local taxes, known as home rule taxes. These taxes can include a variety of different taxes, such as a food and beverage tax, a hotel tax, or a telecommunications tax. Small business owners in Chicago should be aware of these taxes and ensure that they are complying with all applicable requirements.
4. Tax Increment Financing (TIF) Districts: Chicago has a number of Tax Increment Financing (TIF) districts, which are designed to promote economic development in certain areas of the city. Small business owners located in these districts may be eligible for tax incentives or other benefits.
5. Employer Taxes: Illinois and the city of Chicago impose a number of employer taxes, such as the Illinois Unemployment Insurance Tax and the Chicago Employee Head Tax. Small business owners in Chicago should be aware of these taxes and ensure that they are complying with all applicable requirements.

Small business owners in the city of Chicago should consult with a qualified tax professional to ensure that they are aware of all applicable tax requirements and are taking advantage of any available tax incentives or benefits.

Small businesses located in the state of Illinois, including in the city of Chicago, are required to file various tax forms at the federal, state, and local levels. Here are some of the most common tax forms that small businesses and their owners may need to file in Illinois:

1. Federal tax forms: Small businesses that are structured as sole proprietorships, partnerships, or S corporations are required to file an annual income tax return on Form 1040, along with any necessary schedules and attachments. Corporations are required to file Form 1120. Business owners who receive income from their business may also need to file a personal income tax return on Form 1040.
2. State tax forms: Small businesses in Illinois are required to file an annual state income tax return on Form IL-1120, along with any necessary schedules and attachments. Sole proprietors and single-member LLCs may be able to file their state income tax return on Form IL-1040.
3. Sales tax forms: Small businesses that sell goods or services in Illinois are required to register for a sales tax permit with the Illinois Department of Revenue and collect and remit sales tax on a regular basis. Businesses may need to file a variety of sales tax forms, including Form ST-1 (Sales and Use Tax Registration), Form ST-2 (Resale Certificate), and Form ST-3 (Monthly or Quarterly Sales and Use Tax Return).
4. City of Chicago tax forms: Small businesses located in the city of Chicago may also be required to file a variety of local tax forms, including the Chicago Business License Application, the Chicago Amusement Tax Return, the Chicago Personal Property Lease Transaction Tax Return, and the Chicago Restaurant Tax Return.

It's important for small business owners to consult with a qualified tax professional to ensure that they are complying with all federal, state, and local tax requirements and filing the appropriate tax forms on time.

Filing taxes can be a complex and time-consuming task, especially for business owners. Here are some common mistakes that business owners make when trying to file their own taxes in the state of Illinois:

1. Misreporting income: Business owners may make the mistake of misreporting their income, such as failing to include all sources of income or misclassifying income.
2. Failing to keep accurate records: Business owners may not keep accurate and organized financial records, which can lead to errors in reporting income, expenses, and deductions.
3. Not taking advantage of deductions and credits: Business owners may not be aware of all the tax deductions and credits available to them, such as the Illinois Small Business Job Creation Tax Credit or the Illinois Property Tax Credit.
4. Filing the wrong tax form: Business owners may not be familiar with the different types of tax forms and may file the wrong form, which can lead to errors and delays in processing.
5. Missing tax deadlines: Business owners may miss tax deadlines, which can result in penalties and interest charges.
6. Failing to remit payroll taxes: Business owners who have employees may fail to remit payroll taxes, such as Social Security and Medicare taxes, on time, which can result in penalties and interest charges.
7. Not understanding Illinois tax laws: Illinois has its own tax laws and regulations, which can be complex and confusing. Business owners may not be familiar with these laws and may make mistakes when filing their taxes.

To avoid these and other common tax filing mistakes, business owners in Illinois should consider working with a qualified tax professional who can help them navigate the state's tax laws and regulations and ensure that their taxes are filed accurately and on time.

Reconciling accounts in bookkeeping refers to the process of comparing and verifying the accuracy of the balances in an organization's accounting records with the corresponding balances in its bank or credit card statements. The goal of account reconciliation is to ensure that the organization's financial records are accurate and complete, and to identify any discrepancies or errors.

The process of reconciling accounts typically involves the following steps:

1. Gather all relevant financial documents, including bank statements, credit card statements, and accounting records such as a general ledger or balance sheet.
2. Compare the balances in the organization's accounting records with the corresponding balances in the bank or credit card statements. This can be done manually or using accounting software.
3. Identify any differences or discrepancies between the two sets of balances. This could include errors in recording transactions, timing differences, or bank fees that were not accounted for.
4. Investigate and resolve any discrepancies or errors. This could involve contacting the bank or credit card company to clarify or correct transactions, making adjustments to accounting records, or recording new transactions.
5. Reconcile the accounts and make any necessary adjustments to the organization's accounting records. This will ensure that the accounting records accurately reflect the organization's financial position.

Reconciling accounts is a critical part of the bookkeeping process, as it helps ensure the accuracy and completeness of an organization's financial records. It can also help identify potential fraud or other financial irregularities. Organizations should reconcile their accounts on a regular basis, such as monthly or quarterly, to ensure that their financial records are up-to-date and accurate.

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Illinois Business Owners should consider whether or not converting to an S-Corporation is a good idea.  One of the most potent tax savings strategies for self employed individuals in Illinois, and small business owners in Chicago, is to utilize an S-Corporation instead of being a Schedule C Sole Prop.

1. Limited liability: One of the biggest benefits of converting to an S-Corporation is that it provides limited liability protection to the business owner. This means that the owner's personal assets are protected from any business-related debts or legal claims.
2. Pass-through taxation: S-Corporations are pass-through entities, which means that the profits and losses of the business are passed through to the owner's personal tax return. This can result in a lower tax rate than if the business were taxed as a sole proprietorship.
3. Reduced self-employment tax: Self-employment tax can be a significant burden for sole proprietors, as they are responsible for paying both the employer and employee portion of Social Security and Medicare taxes. By converting to an S-Corporation, the owner can pay themselves a reasonable salary and take the rest of their income as distributions, which are not subject to self-employment tax.
4. Increased credibility: Converting to an S-Corporation can make the business appear more credible and professional to customers, vendors, and investors.
5. Improved access to funding: S-Corporations can issue stock, which can make it easier for the business to raise capital from investors.
6. Transferability of ownership: S-Corporation shares can be easily transferred, which can make it easier to sell or transfer ownership of the business.

We will help you identify whether or not an S-Corporation is a good idea for you and your business, and we'll guide you to do everything possible to reduce taxes and build tax efficient wealth.

Getting your accounting professionally done and doing your own accounting both have their own benefits and drawbacks. Here are some of the key differences between the two:

Benefits of getting your accounting professionally done:

1. Expertise: Professional accountants have the training and experience to handle complex financial issues that may be difficult for a non-expert to navigate. They are also up to date with the latest changes in tax laws, regulations, and accounting standards.
2. Fewer Mistakes: You will almost certainly make the mistakes our team made years ago.
3. Opportunity Costs: Your time should be focused on production and sales, not on the bureaucracy of your business.
4. Time-saving: If you hire a professional accountant, you can focus on running your business, rather than spending time on bookkeeping and accounting tasks. This can be especially beneficial for small business owners who may not have the time or resources to dedicate to accounting tasks.
5. Accuracy: Professional accountants are trained to be accurate and precise in their work, which can help you avoid costly errors and mistakes in your financial reporting.
6. Business advice: Professional accountants can provide you with valuable financial and business advice that can help you make informed decisions and achieve your financial goals.

Benefits of doing your own accounting:

1. Cost savings: Doing your own accounting can be cheaper than hiring a professional accountant, especially if you are just starting out and have a relatively small business.
2. Control: By doing your own accounting, you can maintain more control over your finances and have a better understanding of your business's financial situation.
3. Flexibility: Doing your own accounting can be more flexible than working with a professional accountant. You can set your own schedule and work on your accounting tasks at your own pace.
4. Understanding: By doing your own accounting, you can gain a better understanding of your business's financial health, which can be valuable in making strategic decisions.

Summary:

We've found that business owners have significantly higher value activities to work on, such as leading their team, developing strategy, selling and production. Doin

Choosing the right tax accountant and bookkeeper can be critical to the success of a business. Here are some factors that a business owner should consider when choosing a tax accountant and bookkeeper:

1. Integrated Services: You should work with a tax accountant that's focused on small businesses, and takes a holistic approach to tax and accounting.  We know there's tremendous value in providing an integrated bookkeeping, tax preparation and tax reduction planning service.
2. Focus on Pro-Active Planning. Your business deserves to have pro-active, engaged advice throughout the year. If you're not getting pro-active advice throughout the year, you're going to miss opportunities to save taxes and grow your business.
3. Communication: It's important to have good communication with your tax accountant and bookkeeper. Make sure that the accountant or bookkeeper you choose is accessible and responsive. You should be able to call or email your accountant, and they should provide pro-active communication as well.
4. Industry knowledge: It's always best to work with an accountant that specializes in businesses rather than individuals, but then it's also good to choose a tax accountant that also specializes in your specific industry or niche.
5. Technology: Choose a bookkeeper or tax accountant that invests into technology to make your life easier.  Technology is transforming the way accounting and service is done, we would not recommend working with an accountant that's lagging in technology.
6. Value Focused: It's easy to focus on trying to pay as low of a price as possible, but if you choose an accountant focused on delivering high value to business clients, you'll probably gain significantly more value than the original cost.