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How should I track private lesson income?
Private lessons come in every shape: weekly students, prepaid packages, makeup lessons, no-shows, a parent who Venmos you for three kids at once. Here is how…
BookkeepingHow do I separate my business and personal money?
Mixing business and personal money is the most common reason books take forever and returns cost more. Untangling it is easier than it sounds. 1. Open a…
BookkeepingHow do working musicians keep track of receipts?
Strings, reeds, gas, parking, sheet music, a new cable at 10 p.m. before a gig. Musicians spend money in small pieces, and small pieces are easy to lose. Ten…
IRS lettersI got a letter from the IRS. What do I do?
Find the notice number in the corner and the response date, then check the letter against your return before you pay, call or set it aside. Most IRS letters…
IRS lettersI got a CP14 from the IRS. What does it mean?
A CP14 is the IRS's first notice that you owe a balance, and it asks you to pay within 21 days of the date on the notice. It usually arrives a few weeks after…
IRS lettersI got a CP501 from the IRS. What does it mean?
A CP501 is a reminder that a balance from an earlier IRS notice is still unpaid, and it asks you to pay by the date printed on it. It usually follows a CP14…
IRS lettersI got a CP502 from the IRS. What does it mean?
A CP502 is a follow-up reminder that you still owe a balance the IRS has already written to you about, and it asks you to pay by the date on the notice. It…
IRS lettersI got a CP503 from the IRS. What does it mean?
A CP503 is the IRS's second reminder that you owe a balance, and it means the IRS has not heard from you after its earlier notices. The tone gets firmer here…
IRS lettersI got a CP504 from the IRS. What does it mean?
A CP504 is a notice of intent to levy, which means the IRS is warning that it can start taking money or property to pay a balance you still owe. The first…
IRS lettersI got an LT11 or Letter 1058 from the IRS. What does it mean?
An LT11 or Letter 1058 is the IRS's final notice before it levies your wages, bank accounts or other property, and you generally have 30 days from the date on…
IRS lettersI got a CP90 from the IRS. What does it mean?
A CP90 is a final notice that the IRS intends to levy certain assets for unpaid taxes, and it tells you about your right to a Collection Due Process hearing.…
IRS lettersI got a CP523 from the IRS. What does it mean?
A CP523 means you have defaulted on your IRS payment plan, and the IRS intends to end the agreement and start collection unless you act before the termination…
IRS lettersI got a CP71 from the IRS. What does it mean?
A CP71 is a yearly reminder that you still owe tax, penalties and interest on an account the IRS has already billed you for. It does not mean anything new…
IRS lettersI got a CP161 from the IRS. What does it mean?
A CP161 is a notice to a business that it has an unpaid balance on a business tax account, such as a payroll or business income tax return. It shows how the…
IRS lettersI got a CP11 from the IRS. What does it mean?
A CP11 means the IRS corrected what it sees as a mistake on your return, and the change left you owing money. The notice has a section called "What we changed…
IRS lettersI got a CP12 from the IRS. What does it mean?
A CP12 means the IRS corrected something on your return and, because of it, your refund changed or you are now due a refund you were not expecting. Sometimes…
IRS lettersI got a CP22A from the IRS. What does it mean?
A CP22A means the IRS made changes to your return, often ones you asked for, such as an amended return, and you now owe a balance. It is common after a…
IRS lettersI got a CP49 from the IRS. What does it mean?
A CP49 means the IRS used all or part of your refund to pay a tax debt you already owed. It is not a penalty. The IRS applies refunds to open balances on…
IRS lettersI got a CP05 from the IRS. What does it mean?
A CP05 means the IRS is holding your refund while it reviews your return to verify things like your income, withholding, credits or business income. It does…
IRS lettersI got Letter 5071C from the IRS. What does it mean?
Letter 5071C means a tax return was filed under your Social Security number or ITIN, and the IRS needs you to confirm your identity and whether you filed it…
IRS lettersI got Letter 4883C from the IRS. What does it mean?
Letter 4883C means the IRS received a return under your Social Security number or ITIN and needs you to verify your identity by phone before it will process…
IRS lettersI got a CP2501 from the IRS. What does it mean?
A CP2501 means income reported to the IRS by employers, banks or payment apps does not match your return, and the IRS wants you to explain the difference. It…
IRS lettersI got a CP3219A from the IRS. What does it mean?
A CP3219A is a statutory notice of deficiency, and it gives you a deadline, printed on the notice, to file a petition with the U.S. Tax Court if you disagree…
IRS lettersI got a CP59 from the IRS. What does it mean?
A CP59 means the IRS has no record that you filed your personal tax return for the year on the notice. What to do depends on where things stand: - If you…
IRS lettersI got an audit letter from the IRS. What happens now?
An audit letter means the IRS wants to see support for specific items on your return, and it tells you whether the review will happen by mail or in person and…
GeneralDo I need to charge sales tax?
In Florida, generally yes on goods and on a handful of specific services, and generally no on most professional services. The details are state by state and…
BookkeepingWhen should I hire a bookkeeper?
When the books stop being a two-hour job and start being the reason you avoid looking at your numbers. For most owners that is somewhere between 50 and 100…
EntitiesAre my startup costs deductible?
Partly in the first year, and the rest over time. You can generally deduct up to $5,000 of startup costs and $5,000 of organizational costs in the year the…
Your returnWhat happens if I file my return late?
Two separate penalties, and the one for filing late is far worse than the one for paying late. Filing late generally costs 5 percent of the unpaid tax per…
BookkeepingWhat is the difference between a bookkeeper and a tax preparer?
A bookkeeper records what happened. A tax preparer reports it to the government. Most small businesses need both, and the handoff between them is where things…
Your returnMy business lost money this year. Do I still have to file?
Yes, and you want to. A loss year is often worth filing carefully rather than quickly. A loss on a sole proprietorship or a single-member LLC generally…
BookkeepingDo I really need a separate business bank account?
Yes, and it is the single cheapest fix in small business bookkeeping. The practical reasons: it turns a month of sorting into an afternoon, it makes the books…
PayrollCan I put my kids on the payroll?
Yes, if they actually do real work for the business at a reasonable rate for that work. Done properly it shifts income from your bracket to theirs, and in a…
Your returnI got paid through Venmo and PayPal. Is that taxable?
Yes. Income is taxable because it is income, not because a form shows up. Money for work you did is reportable whether it arrived by check, cash, Zelle, Venmo…
PayrollWhat is a reasonable salary for an S corporation owner?
What you would have to pay someone else to do your job. That is the whole standard, and it is the one the IRS applies. In practice it comes from a few things:…
DeductionsCan I write off meals?
Generally half the cost, when the meal has a business purpose and you or an employee is present. A client lunch, a meal while traveling for work, a meal with…
Your returnI have not filed in three years. What happens now?
You file them, oldest first, and in most cases the result is far less frightening than the silence has been. What is true: the failure-to-file penalty is…
BookkeepingHow long do I need to keep tax records?
Three years for most things, longer for a few, and forever for the returns themselves. - Receipts, bank and card statements, invoices: three years after you…
DeductionsMileage or actual expenses — which should I use for my car?
Whichever produces the bigger deduction, but the choice you make in the first year the car is used for business limits your options later. The standard…
Estimated taxesDo I have to pay quarterly estimated taxes?
If nobody withholds tax from your income and you expect to owe $1,000 or more when you file, yes. That covers most self-employed people, freelancers and…
Estimated taxesHow much should I set aside for taxes?
Put 5 to 8 percent of every payment you receive into a separate tax savings account, the day it lands. Every payment, before you spend any of it. We go by…
EntitiesShould I elect to be an S corporation?
Usually only once your business profit is steady and meaningfully above what you would pay yourself as a salary. Below that, the cost of running it eats the…
DeductionsCan I deduct my home office?
Yes, if you are self-employed and a specific area of your home is used regularly and only for business. A desk in the corner of a guest room that guests still…
IRS lettersI got a CP2000 from the IRS. What does it mean?
A CP2000 means the income reported on your return does not match what someone else reported about you. It is not an audit, and it is not a bill yet. It is a…
DeductionsDo I have to send 1099s this year?
Only if you paid an unincorporated contractor $2,000 or more for business services during 2026. The old $600 threshold went away for payments made after…
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