Doing all of this paperwork is always so scary, so I always push it off. Last year, I was fined $1564 by the IRS for submitting the S Corporation election form(2253) late. This is pretty sad since there weren't actually any monies paid directly to the company, although I did advertise it and interview with potential clients, which got me some good side work.
Well, like most people, I struggle with debt and credit cards and picked up this great book by Suze Orman (Dave Ramsey is also a good read). She throws out a great concept, that people are often afraid of money and push off dealing with it. We have this belief that money is the root of all evil and we just hate dealing with the hassles and paperwork. One of her laws is respect for money attracts money and disrespect for money repels money. This is so true. Despite my ability to do paperwork for the IRS, I just put it off because I didn't want to deal with it. Months passed and well, what do you know, I was late and hit with an enormous fee.
After reading her book, I took the opposite route. I found out what I needed to close down shop of our New Mexico businesses, since we have moved to California. Did you know interest piles up on owed tax with no limitation on time?
In case some of you have to do the same, here's what I did. I got up to date on the CRS-1 forms, which have to be filled out if you sell goods at say, a Farmer's market. I calculated the penalties and interest as well for being late.
I filed the business tax registration update with the Taxation and Revenue Department, making each business closed. I filed the Tax Clearance Request as well. I sent the Articles of Dissolution for the LLC elected as an S Corp along with $25 to the Public Regulation commission. Finally, I don't know if I need other things like a "Certificate of No Tax Due", "Certificate of Compliance" or "Letter of Clearance" so I sent out extra letters to the Taxation and Revenue Department, Department of Labor and Public Regulation Commission just to make sure I'm squared away with them.
Come tax time, I will fill out the 1120S along with the K1s to square that away as well. This took me a good 5 hours to do, which isn't all that bad. On the other hand, I feel really good that I got focused and committed to getting these things taken care of.
So here's a summary of the what the digging got me:
- I found out my escrow account conveniently holds my money, acruing until it is time to pay taxes and insurance. I'd rather have the money to earn interest on it, so I closed my escrow account: $610.
- I found out my insurance policy changes caused an overpaying, which of course they were just letting sit in my account: $315.
- I also found out I had paid my flood insurance in addition to the escrow account paying it: $1015.
- The call to the IRS above: $1560.
- Finally, when I setup my automatic deduction for my mortgage, I double paid that month and the mortgage company would only apply it to principal if I specifically requested it. In other words, I was 1 month ahead every payment for a year. An easier way to explain it is that if you take a mortgage for $100,000 and then pay the company $100,000 the next day, they won't say anything. They will just keep that money, apply the payments and in 10 years or so, say, okay, we've used up all the money to make your payments and you still owe us $50,000. Anyways, found: $830 (called and applied it to the principal).
This post was reposted from http://sizuservices.blogspot.com/2012/01/closing-down-shop-in-new-mexico.html, originally written on January 8th, 2011.
No comments:
Post a Comment