"I'm a new business owner -- how many different types of taxes do I need to pay?"

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Today, our friend, D Zorea of DDZ Accounting Group, submits the following article:


If you're a new business owner and are feeling overwhelmed by the prospects of paying too many taxes, it might be because there are so many different types of taxes for which to account.  Depending on your type of business, an Illinois business owner will be liable for different taxes including (but not limited to):

• Sales: Does your business sell widgets, or food products? You are responsible for collecting the state (and sometimes local municipality's) Sales and Use Tax and remitting these back to the appropriate taxing agencies. Sales tax rates can range around 7.5% to 10%.
• Payroll: Do you have employees?  You will be matching your employee's payroll withholding taxes, as well as contributing to federal and state unemployment insurance premiums based on your employees' earned wages.
• Franchise: The state of Illinois charges a Franchise tax of 1.5% for corporate business owners. This includes LLC, C-corporations and S-corporations, but not sole-proprietors or unincorporated partnerships.
• Income: Similar to sole-propietorships, S-corporations and LLC's are considered "pass-through" entities.  In other words the net profits of those businesses "pass-through" to their owners and are taxed at the business-owners' individual tax rates.  The income tax returns for S-corps and LLC's generate a K-1 form for each shareholder or LLC member; these are the business owner's equivalents to an employee's W-2 form.  However, different from a W-2 which typically already includes income tax withholding, a business owner with net-income from his/her business can either file and pay quarterly estimated taxes throughout the year or pay the lump-sum with the year-end income-tax return.

For the above taxes, the IRS and Illinois state agencies may apply late file or late-pay penalties; so work with your tax-professional to calculate the correct taxes due, maximize your tax return, file on time, pay on time, and save all that time and headache of doing it alone. For other questions, please contact D Zorea at DDZ Accounting -- e: d@ddzgroup.com, p: 630-368-0183, other client-testimonials at www.facebook.com/ddzaccounting.



O'Flaherty Law is based in Downers Grove and Chicago, Illinois. Our attorneys have expertise in Corporate Representation, Commercial Litigation, Divorce, Bankruptcy, Estate Planning, and DUI defense. Please visit our website at www.oflaherty-law.com for more information and resources or e-mail us at info@oflaherty-law.com with any questions or suggestions for future articles.

Tenants' Rights 101

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Most apartment tenants have a horror story or two: busted pipes, leaks, mold, infestation, horrible neighbors, etc.--and many of these apartment tenants probably did nothing about these horror stories, believing that their only remedy was moving out.  Historically this was the case, but today tenants have a variety of rights to ensure that they live in peace and comfort.
Implied in every lease is an implied warranty of habitability, which requires that the apartment be maintained in a livable condition by the landlord.  Working pipes, plumbing, heat, removal of insects and rodents, and keeping the premises within the housing code are the some of the basic requirements of this warranty.  
If a breach of the implied warranty of habitability arises and the landlord fails to remedy the problem within a reasonable time, the tenant has several remedies.  The tenant may (1) move out and terminate the lease, (2) repair the problem and deduct that cost from the rent, (3) reduce the rent by the damage done, or (4) sue for damages.  If the tenant does not wish to take advantage of these remedies, he or she should document all of the damage to ensure that the security deposit is not reduced due to the landlord’s negligence.  
Additionally, If the tenant entered into a nice, clean apartment with relatively high rent, only to see the place fall into disrepair, the tenant can sue to have rent reduced by the lowered property value of the premises.
Tenants may not own their apartment, but they do own the possessory right to that apartment: they are entitled to exclusive possession of their entire apartment for the term of the lease.  Unless the law of the city provides otherwise, even landlords are not allowed to enter a leased apartment without permission. If the landlord does so he or she is committing a trespass. 
Further, Landlords cannot evict tenants without good cause.  Good cause generally requires nonpayment of rent for no reason, illegal activities, or severe damage to the building.  Historically a landlord could personally enter into your apartment and evict tenants, but today only police are allowed to evict tenants, and they need a court order to do so.
Every city has different rules regarding landlord-tenant relations.  Therefore, you should consult with an attorney to determine your rights and remedies before taking action against your landlord. 
                                                                                         --Submitted by Eric Turner

O'Flaherty Law is based in Downers Grove and Chicago, Illinois. Our attorneys have expertise in Corporate Representation, Commercial Litigation, Divorce, Bankruptcy, Estate Planning, and DUI defense. Please visit our website at www.oflaherty-law.com for more information and resources or e-mail us at info@oflaherty-law.com with any questions or suggestions for future articles.
  

What the Heck is Home Title Insurance

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Courtesy of TitleSourceUSA.com

Summary: A home Title Insurance Policy is an insurance policy that you need when you buy land, or buy a house, build a new home, or sell a house. Home Title Insurance can protect you from financial loss due to tax liens, contractor liens or other claims on the property.

Abraham Lincoln lost his home (twice) because he did not have Title Insurance! You could too.

What is Title Insurance and why do you need it when you build or buy a house?

While most of us are familiar with insurance such as auto insurance and the like, most Americans are not familiar with Title Insurance. They have never even heard of Title Insurance.

It is a strange concept, and one not easily grasped at first, and there are very few people, even in the housing and mortgage industry that can explain Title Insurance and all its nuances.

I strongly suggest YOU... continued.

Carl Heldmann

How Much Does Cost To Build a House In Santa Rosa California?

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Hello Carl,

I see that you used Santa Rosa CA as an example for your square foot cost
of around 100.00 per square foot in that area.

Do you think it still can be done for that amount and include permit fees?

My wife and I are considering moving to Santa Rosa and have considered building a house rather than buying one already built.

Thanks for you time,
Joe G.

Hi Joe,

The cost estimating software I use is provided by the Craftsman Book Co. They are one of, if not the most respected names in construction cost estimating. Their books and software are updated as needed.


Using the same construction cost estimating software and the same quality, design, and size as I did before, the approximate cost to build a house in Santa Rosa, CA came out the same.

But you have to remember, that until you actually get bids and/or estimates to build your house, any estimate will remain approximate. Carl Heldmann

Should you Use a Realtor to Buy Land

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Hi Carl,

My husband and I have found a building lot we are interested in purchasing but we are not quite ready to build a home yet.

The lot is in a subdivision that was foreclosed on before it was finished.

It is a swim/tennis community and we have already gotten copies of the covenants to make sure we will be comfortable building there.

All the current houses are right in line with what we would like to build.

My questions come in with the actual process of the purchase.

We are not in a position right now to put a large amount down and everywhere we have looked for financing they want 20% - 25% down payment on the loan.

I have set up a spreadsheet to log every empty lot in the subdivision to keep up with sales, values, etc. We have no idea where to begin with the purchase.

What would be a fair offer?

Do we need to get another appraisal, survey, soil analysis if it is in a platted subdivision?

What about title insurance, property deed, etc?

I would like to cut out the cost of a real estate agent unless it is really recommended that we use one.

I just have not been able to find any information on how to purchase land in today's real estate market since there is so much developed land available.

Everything I have come across involves raw land and talks about traditional financing.

Any answers/advice you can give would be greatly appreciated!!

I just bought your book yesterday and have been fascinated with the information I have found on your website. I look forward to hearing from you.

Thanks so much, Amy

Hi Amy,

There's an old adage; "A lawyer who represents himself has a fool for a client."

I would say the same thought can be applied to home buyers who try to "go it alone" buying real estate.

I recommend that you use a local Realtor (member of the Board of Realtors) as a "Buyer's Agent", if for nothing else, so that you have recourse if something goes wrong.

It shouldn't cost you any extra money to use a Realtor, because most land sellers or home sellers have a real estate commission built into their selling price. Sellers pay commissions!

Even in a good real estate market there are many things that can go wrong often costing the home buyer money that may have been avoided by getting expert advice.

But this is a subdivision that has been foreclosed upon, so I would advise you to be extra careful.

A local Realtor can also access current comparable lot sales to help you determine how much the lot is worth.

I would use a Realtor for the above reasons as well as helping me find and work with the experts below:

An real estate attorney to investigate the foreclosure and bankruptcy if there was one as well as the HOA (Home Owners Association) to see if the HOA dues on all the lots, even the vacant ones, are current and being paid on time, and by whom.

A Title Insurance company to investigate tax liens, mechanics liens, HOA liens, etc. on the property. Since there was a foreclosure involved, a careful investigation of the chain of title and underlying mortgages is critical.

The local building inspection department, health department, and any other departments to see if water and sewer are available and the fees have been paid, if any other local assessments are pending or coming due, including property taxes, and the buildability of the lot.

Your Realtor can present an offer to the seller contingent upon you getting answers to any of your questions. They should also be able to help you locate financing and answer all your other questions.

Good luck, Carl Heldmann

Home Insurance Replacement Value | Cost to Rebuild a House Calculator

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Hi Carl,

I've searched--but could not find my question on your site and I have read several of the chapters that give me partial answers.

Our house is in the small city of Imperial Beach, Calif in South Bay, San Diego. We are about 3 miles from the Mexican border. Our house is a stand alone, slab, 3BR, 2 Bath, insulated home, about 1,600 Sq. Ft., no Chimney, with totally tiled floors except a BR. It was built about 1967. The house is doing fine.

My question is about the cost of insurance. One of the issues is my need to know how much our house would cost to rebuild in case of a total fire.

I can assume that no insurance company would pay out more than they deem the structure to be worth so there is no point in overpaying for insurance.

Working with the insurance agent in Imperial Beach she left to me alone to figure the rebuild cost per sq foot of the house.

Carl, I do not expect you to come up with a dollar and cents figure, but rather impart advice on how to go about getting a sq foot cost to rebuild.

Many thanks for your time [and for creating your site too]
Michel

Hi Michel,

You can use the construction cost estimating software (cost to build calculator) that is used for estimating the cost to build a new house.

Base your answers to the questions found on the cost to build calculator on your actual (current) house.

There will be one cost that won't be available on the calculator, and that is the cost of demolition and trash hauling.


Call a local excavator and get a ball park figure.

I hope you never have to use the information.

Carl Heldmann

New Construction Inspections

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Building Codes are a set of minimum home building standards. New construction inspections are made to insure compliance to these standards.

Hi Carl,

In your steps to building a home, you only mention inspections at two stages, before pouring the foundation and after step 23 or 24.

Are there other inspections that should take place and if so, at which stages of construction?

Rose

Hi Rose,

Actually, the rest of the important ones are mentioned, just hard to find in the minutia of text.

Here is where some of the other inspections are mentioned: “How to Build a House Step by Step”:

STEP 11: Rough-ins (1-2 weeks)
All electrical, plumbing, heating and air-conditioning, phone pre-wires, cable or satellite TV lines, stereo and intercom, Internet, and burglar alarm systems should be roughed-in at this time or anytime after step 8 is completed. This does not mean that these units are installed at this time - only the wiring or plumbing for them. Inspections are needed when this step is complete.
STEP 12: Insulation (3 days)

Consult with your local utility company on the insulation you need to qualify for their lowest rates. Some locales require an inspection of insulation by both the utility and the building inspection department when it is completed, and before it is covered with drywall or paneling (or plaster, if anyone still wants plaster walls).


My list of inspections does not mean it will be your list of inspections.

You may have more inspections or you may have less depending on the locale in which you build your new home. It varies widely.

Having more inspections is good, especially for the 1st time home builder as it takes some of the worry off your shoulders.

When you go through the process of obtaining all your permits you will find out what inspections need to be done for your house. In most locales the cost of permits covers the cost of required inspections.

Here’s a list of most of the possible inspections.

There may be other inspections that may be required that are not listed.

If you are ever in doubt whether or not an inspection is required, call your building inspection department.

Remember: Building Codes are a set of minimum standards.

After plan review, permits issued and permits posted:

INSPECTIONS:

NOTE: All work requiring an inspection must be inspected prior to covering.

• Temporary electric
• Driveway specifications for inspection & permit posted
• Soil erosion control
• Footing inspection
• Mono slab/footing Inspection
• Formed wall Inspection (required for all formed walls prior to placement of concrete)
• Foundation inspection (Note: inspection of steel reinforcement in forms may be required depending on the design of concrete walls or grouted walls)
• Certified foundation survey (for review at the foundation inspection)
• Garage and basement slab areas
• Deck footing inspection
• Slab inspection (non monolithic slab)
• Plumbing under slab Inspection

ROUGH-IN INSPECTIONS FOR:

• Framing
• Plumbing
• Mechanical (HVAC)
• Electrical
• Water and Sewer Inspection
• Insulation Inspection

FINAL inspections for all building components completed including:
• Mechanical,
• Electrical And
• Plumbing Systems;
• Stairs,
• Decks,
• Handrails,
• Guardrails,
• Exterior finish
• Interior finish material (excluding floor finishes/coverings, and interior paint)
• Final grading

OTHER INSPECTIONS

• Waterproofing inspection
• Swimming pools (Require separate permits)
• Retaining walls (Require separate permits)

Well Rose, I am glad you brought the subject up as it’s important. I should have thought to write this a long time ago. Thanks.

You are probably surprised that there are so many inspections…

Builders sure do earn their money don’t they?

Carl Heldmann