J. D. Stokes, CPA

Congratulations, small business owners, you get the first deadline of the new year!

The last 2025 estimated tax payment is due on January 15th. Do you know how much you owe? The IRS won't help you figure it out, they'll just charge you penalties and interest if you're short.

If you're not sure how much income you had last year (or even if you are), it's okay - for the majority of taxpayers, you can avoid trouble if each of your estimated payments (April, June, October, and January) was a quarter of your total tax from the year before. But what you don't want to do is ignore it. Penalties and interest mean giving the government even more money than you already have to, and nobody wants that.

"Why is Bitcoin going down? Is the banking cartel attacking it somehow?"

No, it's going down for the same reason it went up: because the value of something is determined by the people buying and selling it. Bitcoin is volatile not because of any inherent characteristic, but because people as a whole don't agree on what it's actually worth. So it drifts along more or less aimlessly, its price fluctuating, sometimes radically, as people react (and over-react) to news or lack of news. Essentially, it's just as artificial as the US dollar, but without the long history of use as a currency that would allow people to reach a consensus on its value.

What is Bitcoin actually worth? Nobody really knows. People holding it obviously believe that it's worth more than its current price, but remember: it doesn't matter what you think it's worth until you offer to buy or sell it. Maybe it will go to a million in the next ten years. Maybe it will go to zero. And while a lot of people have very strong feelings one way or the other, feelings don't determine what it's worth.

For me, the uncertainty means it's off the table as an investment. Other people feel differently, of course.

I recently received my annual Social Security statement. If you're covered by SS, you probably did too. Two important things stand out in the "Retirement Ready Fact Sheet" that accompanies it:

1) Within the next ten years, the program will only be able to pay 81% of the benefit as currently calculated. That means the government will need to reduce benefits, raise the retirement age, or increase taxes. And with life expectancies increasing while birth rates decrease, the problem may be here sooner - and bigger - than that.

2) Even if the above wasn't an issue, Social Security is not going to be enough to live on. You will have to take some responsibility for your own future. If your employer has a 401k program, use it. If they don't (or even if they do), look at putting money into an IRA. If for some reason that's not an option, you can even open a brokerage account and start accumulating dividend stocks. But whatever you do, don't do nothing and just hope it all works out.

For some reason, there are a lot of people out there who will tell you to give up before you start.

The comments were from someone else's post about how investing monthly for retirement from an earlier age is helpful. But there are other topics where the same thing happens. Make a general statement on social media about starting a business, getting in shape, learning a language, or almost anything else that's challenging but potentially rewarding, and dozens of strangers will tell you that it's unrealistic, even impossible. I have some ideas about why this happens, but that's not the point. The important thing is that you DON'T LISTEN TO THEM.

If you can't start at some arbitrary level that someone else suggests...who cares? Start with what you can do, and as your capabilities grow, do more. You don't have to go from where you are right now to where you want to be at lightning speed. Just start moving in the right direction.

Are you up to date on your estimated tax payments?

If you're a typical W-2 employee, the question is pretty easy to answer: if you got a refund for your 2024 tax return, and you make about the same amount this year and haven't changed your withholding, you're probably okay.

If you have a small business, it can get tricky. You have three main options:

1) keep close track of your business expenses, get an income projection before each estimated tax payment due date, and calculate how much you're going to owe,

2) compare your year-to-date business income with the previous year and pay a proportional amount (plus a bit just in case) of your 2024 total tax, or

3) look at line 24 from last year's return, add a bit, and pay a quarter of that every quarter. You might have to pay extra at the end of the year if your business is doing better, but you won't have any penalties to worry about.

Definitely NOT an option is ignoring it and hoping for the best. Don't give the IRS an excuse to take more of your money!

I frequently see questions like "if inflation is down, why is everything still so expensive?" Most Americans don't understand how inflation works. Our education system doesn't explain it well, and our news sources and politicians definitely don't.

Inflation is a measure of what the dollar can buy compared to a previous period, usually a year ago. Something like "inflation for May was 2.4%" means that a certain group of products that cost an average of $100 in May 2024 cost $102.40 in May 2025. The prices of individual products can change for reasons other than inflation, which is caused by the central bank creating more dollars out of thin air. Using multiple products to define inflation helps smooth out some of those individual changes.

Inflation is often compared to the previous month, but the past month's inflation was also based on a year ago, so the month-to-month change isn't as meaningful as it might seem. Even more important, when the inflation rate is down, that doesn't mean the dollar is getting more valuable. Inflation is the rate at which the dollar is LOSING value. The only way prices as a whole go down is if the rate goes to a negative number, which doesn't happen outside of severe recessions.

12-month percentage change, Consumer Price Index, selected categories The .gov means it's official. Federal government websites often end in .gov or .mil. Before sharing sensitive information, make sure you're on a federal government site.

So how does this whole "hiring a CPA" thing work? Good news: it's not actually that complicated.

If you're a business, we start with a conversation about what you need. Just a cleanup and a tax return at the end of the year? Quarterly financial statements and projections so you know how much to send the IRS? Sales tax? 1099 preparation? Fractional CFO services, where I take over your accounting on a continuous basis? Something else? All of those are options. Once we agree on what you need, you give me access to your QuickBooks (or whatever you use for accounting). I analyze it to understand your business well enough to estimate how much time it will take to do what you need the right way, and then give you a quote.

If you're an individual looking for tax help, we start with your previous year's tax return. I review it, and then we talk about anything that's different this year. And as above, I give you a quote for the job.

Either way, if you like the quote, we sign a contract that explains what each of us is responsible for, and we get to work - me on the accounting, and you on what you do.

If you're a small business owner, you've probably seen ads from companies that promise to save you thousands by converting your Schedule C business to an LLC taxed as an S corporation. Is it true?

Like most business tax related questions, the answer is "it depends." If your business is consistently profitable, then yes, possibly. The main savings comes from the fact that when you file on Schedule C (which is where most small businesses start), your entire income is subject to self-employment tax, also known as paying both employer and employee halves of F**A.

As the employee of your S corporation, you still pay both halves of F**A on your salary. But your net income from the business is only subject to normal income tax. And if you need money beyond your salary to cover personal expenses, you can take distributions that in most cases aren't subject to additional tax.

Let's say your Schedule C business is consistently making $80,000 a year. That means you're paying $12,240 (15.3% of $80,000) in F**A in addition to the income taxes on that $80,000. Change to an S corporation and pay yourself a $40,000 salary, and now you're paying $6,120 in F**A. So yes, in the right situation you can in fact save thousands. There are additional expenses, fees, and paperwork requirements to consider, but for the right person and the right business, S corporation taxation can be a good idea.

If you read the previous paragraph and wondered if you can pay yourself $0 salary to avoid F**A completely...sorry, that won't work. The IRS requires your salary to be "reasonable." But it was a good idea.

Did you know that you can get a copy of the information the IRS has on your income and expenses for the previous year (and years before that)? Checking your own numbers against your wage and income transcript can help you spot discrepancies before they become problems.

This can be a big help for Schedule C small business owners who get a large number of 1099s and aren't sure they have all of them. Or anyone who filed for an extension earlier this year and hasn't kept everything organized!

You do have to sign up for an account, but they're the IRS. They already have your personal information anyway.

https://www.irs.gov/individuals/get-transcript

Everyone’s individual situation is different, so there's no one-size-fits-all approach to retirement planning. But doing nothing is almost never the right approach.

I know, I know, it's almost June and nobody wants to think about taxes. But if you're a small business owner, make sure you're getting W-9s throughout the year whenever a contractor or non-corporate vendor reaches the $600 threshold. You'll need those for your 1099-NEC or 1099-MISC filings in January, and the penalty for a late filing starts at $60 per form and just goes up from there.

Waiting until January may not give you enough time to figure out who needs a 1099, get in touch with them and ask them to fill out the form you should have gotten from them months ago, and prepare and mail the forms. In fact, it's not unusual for business owners to still be working on December's close as the deadline creeps up on them.

If you would rather focus on your actual business, you could ask your CPA to help with this. But you need to do that NOW, because even CPAs can't slow down the calendar.