How does one start from square one on claiming and paying taxes

[Michael H.]

Hello again BP family,

Ive got a hot one here, My younger brother has operated a construction style business for several years now...under the table. After my repeated nagging, and teaching him what opportunity costs are when he cant take profits into the stock market or real estate, hes now ready to do the right thing.

I gave him books like the tax and legal play book by Mark J Kholer, I can advise him on what to do once hes made money but I cant seem to find a step by step starters guide on the very basics of claiming and paying his taxes.

Any Book recommendations?

Thanks!

[Kevin DeVargas]

@Michael H. ,

Good question. Step by step starting point starter guide for first return.

1. 1. Income – He needs to figure out how much income he made through out the year. Tips on doing this would be to review his bank records and going forward give customers cash receipts for cash payment.
2. 2. Expenses – Second step is calculating expenses for the year. He can review bank statements and credit card statements to get the actual amounts. And would have to recollect items paid with cash. Receipts will also help
3. 3. Filing status – would need to figure out his filling status single, married, head of house hold.
4. 4. Deductions – Calculate deductions such as millage, depreciation on assets and so one. Would also need evaluate dependents and individuals that he will claim.
5. 5. Purchase tax software or hire an Accountant – Tax software is great and I recommend it for low income owners with simple w-2. He may want to speak with an accountant and figure out what’s the best entity structure going forward and create a strategy for his future goals.
6. 6. Last but not least file his tax return. If he owes money the tax software and accountant will give him the payment options. 

I hope this helps let me know if you have any other questions.