Common Questions
Answers to questions about bookkeeping, taxes, payroll, and how we work. Can't find what you need? Contact us.
What does Smart Outsourced Solutions do, and who is it for?
Smart Outsourced Solutions provides bookkeeping, payroll, sales tax, 1099s, personal tax returns, tax planning, and IRS representation for owner-operated service businesses. The firm is run by Simona Leppala, a CPA and Enrolled Agent, so tax expertise is built into the bookkeeping from day one.
Read answerWhat makes a CPA and Enrolled Agent different from a regular bookkeeper?
A CPA is a state-licensed accountant, and an Enrolled Agent is a federally licensed tax specialist with IRS representation rights. Here, the same person who keeps your books also handles tax planning and personal returns, so nothing gets lost between providers.
Read answerYou are based in Massachusetts. Can you work with my business if I am in another state?
Yes. The firm works remotely with clients across New England and nationwide, all in QuickBooks Online. Massachusetts is home base, but bookkeeping, payroll, and federal tax work travel anywhere.
Read answerHow much does bookkeeping cost?
Monthly bookkeeping starts at $199 a month, with add-ons like bill pay and invoicing starting at $99 each. Pricing depends on your transaction volume, number of accounts, and whether you need payroll or tax work. Catch-up bookkeeping for past months is scoped separately.
Read answerWhat accounting software do you use?
We use QuickBooks Online for all of our bookkeeping clients. It's cloud-based with automatic bank feeds and integrates with payroll and other apps. If you're on a different tool or spreadsheets, we handle the migration.
Read answerHow do we get started, and what do you need from me?
Getting started is simple. We schedule a short call to understand your business, then you grant us access to your books or bank feeds. If your books are behind, we start with catch-up work to bring them current before moving to ongoing monthly bookkeeping.
Read answerDo you handle my taxes too, or just the bookkeeping?
Yes. Because the firm is run by a CPA and Enrolled Agent, tax planning and personal tax return preparation are built into the relationship. The firm handles your personal return, including Schedule C for sole proprietors, and does not prepare separate business entity returns.
Read answerWill you work with my current CPA or tax preparer?
Yes. We keep clean, tax-ready books throughout the year and coordinate directly with your outside tax preparer at year-end. Many clients also choose to consolidate bookkeeping and personal tax returns with us, but either arrangement works well.
Read answerWhat is the difference between bookkeeping, a controller, and a fractional CFO?
Bookkeeping records and reconciles what happened in your business. A controller adds oversight, a tighter monthly close, and accuracy at scale. A fractional CFO looks forward with forecasting, cash flow planning, and strategy.
Read answerHow do you keep my financial information secure?
We use QuickBooks Online with bank-level encryption, share documents through a secure portal rather than email attachments, and limit access to your data. Working with a small firm means fewer people touch your information.
Read answerHow often will I get my financials, and will you explain them?
You get financial statements monthly after the books are closed, typically within the first two weeks of the following month. We walk through what the numbers mean in plain language so you can actually use them for decisions.
Read answerHow do I write off my truck and equipment as a landscaper or contractor?
Section 179 expensing and 100 percent bonus depreciation let you deduct the full cost of qualifying equipment and vehicles in the year you buy them. For trucks, you also choose between actual expenses and the standard mileage rate, which is 72.5 cents per mile for 2026. Clean records of purchases and mileage make the deductions hold up.
Read answerMy business is seasonal. How should I manage cash flow and taxes in the slow months?
Set aside 25 to 30 percent of busy-season profit for taxes, plus enough to cover several months of operating expenses during slow periods. Pay quarterly estimated taxes so you don't face a large bill all at once, and track your cash runway monthly so you see problems before they arrive.
Read answerI pay subcontractors. What do I need to track to file 1099s?
You need a W-9 from each subcontractor before you pay them, and you need to track total payments per subcontractor through the year. When the totals cross the filing threshold, you file a 1099-NEC.
Read answerCan I pay my cleaners as 1099 contractors in Massachusetts?
In most cases, no. Massachusetts uses the ABC test for worker classification, and cleaners performing a cleaning company's core work almost always fail Prong B, which requires the work to be outside the company's usual business.
Read answerHow do I handle payroll for a cleaning crew?
In Massachusetts, cleaning crew members are almost always employees, which means you need proper payroll with tax withholding, overtime tracking, and quarterly filings. Getting this right involves federal and state withholding, FICA taxes, unemployment contributions, and accurate hour tracking.
Read answerHow do I price and track profit across recurring cleaning contracts?
Track revenue, direct labor, and supplies by client to calculate the profit margin on each contract. A full schedule can hide unprofitable jobs, so setting up this tracking shows you which accounts actually make money.
Read answerHow do I keep clean books for a contract-based facility business?
Clean books for a contract-based facility business start with tracking each contract as a separate customer in your accounting system. This lets you see revenue by contract, run payroll accurately for your staff, and close the books cleanly each month with statements that show you how the business is really doing.
Read answerCan a property management company keep its books with you, even though it handles owner funds?
We handle the management company's own operating books, including management fee revenue, payroll, and expenses. Trust accounting for owner and tenant funds is a separate specialized service that we don't provide. If you need bookkeeping for your company's operations, we're a fit.
Read answerWhat retirement plan shelters the most tax for a high-earning practice owner?
For the highest shelter, a defined benefit or cash balance plan can exceed $265,000 annually. But a Solo 401(k) or SEP-IRA may fit better depending on your income, age, and whether you have employees.
Read answerCan I still get the QBI deduction as a dentist or doctor?
It depends on your taxable income. Medical and dental practices are classified as specified service businesses, so the 20 percent deduction phases out as income rises and disappears above certain thresholds. High-earning practice owners often lose QBI entirely, making retirement contributions and compensation planning more valuable.
Read answerHow do I write off expensive dental or medical equipment?
Big equipment purchases like dental chairs, imaging systems, and lasers can usually be written off in the year you buy them using Section 179 expensing or bonus depreciation. This can sharply reduce your taxable income and should be timed with the rest of your tax plan.
Read answerHow do I handle insurance reimbursements and patient receivables in my books?
The key is tracking what you bill, what insurance pays, the contractual adjustment between them, and the patient portion still owed. Set up your books to show all three pieces separately so you know what the practice actually earns and collects.
Read answerI am an architect or engineer. Do the service-business limits on the QBI deduction apply to me?
No. The IRS specifically excludes architecture and engineering from the service-business rules that phase out the QBI deduction at higher income levels. You can claim the full 20 percent deduction subject only to wage and property limits.
Read answerI run a wealth management practice. Why is my QBI treated differently from an engineer's?
Wealth management falls into the specified service trade or business category under the tax code, which means the QBI deduction phases out above certain income thresholds. Engineers and architects are explicitly excluded from this limitation and keep the full deduction regardless of income.
Read answerHow do I handle project-based billing and see profit by project?
Tag every invoice and expense to its project so you can see real profitability by engagement. The key is tracking labor time accurately since that's most of your cost. Monthly reviews show you which work is worth pursuing and which clients actually make you money.
Read answerI am a freelance designer. Do I lose the QBI deduction because I am a service business?
Good news: freelance designers generally do qualify for the full 20 percent QBI deduction. The IRS narrowed the catch-all provision that once seemed to cover any skill-based business.
Read answerHow do I handle 1099s for the freelancers I subcontract?
Collect a W-9 from each freelancer before the first payment, track payments per person throughout the year, and file 1099-NEC forms by January 31 for those over the threshold.
Read answerCan I deduct my camera gear, software, and home studio?
Yes, if you use them for business. Equipment like cameras and computers can often be written off in full the year you buy them. Software subscriptions are deductible as operating expenses, and a home studio qualifies for the home office deduction if it meets the exclusive use test.
Read answerShould I elect S-corp status as a solo consultant, and at what income does it pay off?
It typically pays off around $60,000 to $80,000 of net profit. At that level, splitting income between a reasonable salary and distributions can save you several thousand dollars a year in self-employment tax, with savings growing as income increases.
Read answerAs a consultant, do I qualify for the QBI deduction?
Consultants can qualify for the 20 percent QBI deduction, but income limits apply. Below roughly $200,000 single or $400,000 married filing jointly, you get the full deduction. Above that range, it phases out and eventually disappears.
Read answerCan I deduct my home office as a consultant?
Yes, if the space is used regularly and exclusively for your business. You can choose the simplified method at $5 per square foot up to $1,500, or the actual expense method that deducts a share of your housing costs. Which one saves more depends on your rent, utilities, and office size.
Read answerI run a staffing agency. How do I handle high-volume payroll and the related taxes?
Staffing agency payroll requires accurate time tracking across many placed workers, on-time tax deposits that often happen multiple times per week, and clean records by job classification for workers comp audits. The volume means small errors compound fast, so systems and oversight matter more than in most businesses.
Read answerHow do I keep cash flow healthy when I pay workers before clients pay me?
The timing gap in staffing and IT services means payroll goes out weekly while client payments come in 30 to 60 days later. Surviving this requires tight receivables tracking, a cash buffer covering four to six weeks of payroll, and often a line of credit or factoring relationship.
Read answerHow do I handle server tips in my books and payroll?
Track cash tips through employee declarations and credit card tips through your POS, record credit card tips as a liability rather than revenue, and include all reported tips in taxable wages for payroll. New W-2 reporting rules for tips take effect in 2026.
Read answerDo my servers really get a tax break on their tips now?
Yes. Starting in 2025, eligible tipped workers can deduct up to $25,000 of qualified tips on their personal tax returns. It's an income tax deduction only, meaning tips are still subject to Social Security and Medicare taxes, and the law puts a premium on accurate tip tracking for employers.
Read answerHow much sales tax do I charge on meals in Massachusetts?
Massachusetts charges 6.25 percent sales tax on restaurant meals. Cities like Boston, Worcester, and Cambridge add a local meals excise of 0.75 percent, bringing the total to 7 percent in those areas.
Read answerHow do I keep accurate books with high daily volume and thin margins?
Reconcile your POS sales daily, track food and labor costs as percentages of revenue weekly, and close your books within two weeks of month end. Small errors compound fast when margins are tight, so accuracy depends on catching problems while you still remember what happened.
Read answerDo my booth renters get a 1099 or a W-2?
It depends on how the relationship actually works. True booth renters who run their own independent business typically get a 1099, but Massachusetts applies a strict ABC test that presumes employee status.
Read answerDo I charge sales tax on the products I sell at my salon?
In Massachusetts, salon and spa services are exempt from sales tax, but retail products like shampoo, styling products, and skincare are taxable at 6.25 percent. You need to track product sales separately from service revenue and collect and remit sales tax on the product portion.
Read answerDo my stylists get the new tax break on their tips?
Yes, stylists qualify for the new No Tax on Tips deduction available 2025 through 2028. Eligible workers can deduct up to $25,000 of tips on their personal returns, though tips remain subject to Social Security and Medicare. For salon owners, clean tip tracking in payroll becomes essential with new W-2 reporting starting in 2026.
Read answerMy med spa does both services and retail and injectables. How do I handle the added complexity?
Med spas need their chart of accounts, sales tax setup, and payroll configured to handle each revenue type separately. Massachusetts taxes retail product sales but not most services, and getting this wrong creates compliance problems. Clean separation from the start gives you visibility into which parts of the business actually make money.
Read answerDo you file my business's tax return?
It depends on your business structure. For sole proprietors and single-member LLCs, we prepare your personal return including the Schedule C that reports business income. For S-corps, partnerships, and C-corps, we keep tax-ready books and handle your personal return, but the entity return itself needs a separate preparer.
Read answerI am a sole proprietor or single-member LLC. How does my business income get taxed?
Your business profit flows directly to your personal tax return on Schedule C. That profit gets hit with both regular income tax and 15.3 percent self-employment tax. There is no separate business return to file.
Read answerHow much should I set aside for taxes as a self-employed owner?
Self-employment tax alone is 15.3 percent of net profit, and income tax stacks on top. Most self-employed owners set aside 25 to 35 percent, but the real answer comes from a tax projection based on your situation.
Read answerWhen are my quarterly estimated taxes due, and how do I avoid penalties?
Quarterly estimated taxes are due in mid-April, mid-June, mid-September, and mid-January of the following year. You can avoid penalties by meeting safe harbor thresholds based on last year's tax or this year's expected liability.
Read answerI got an IRS notice. Can you deal with the IRS for me?
Yes. As an Enrolled Agent, Simona has unlimited rights to represent taxpayers before the IRS. She can respond to the notice, speak with the IRS on your behalf, and handle the entire process from start to finish.
Read answerI am being audited. Can you represent me?
Yes. An Enrolled Agent has federal authority to represent you before the IRS during an audit. Simona can communicate with the examiner, organize your records, and argue your position on your behalf.
Read answerI owe back taxes I cannot pay all at once. What are my options?
The IRS offers installment agreements that let you pay over time, and in qualifying hardship cases, an offer in compromise that settles for less. An Enrolled Agent can request and negotiate these options on your behalf, though eligibility depends on your specific financial situation.
Read answer1099 or W-2: how do I know if my worker is a contractor or an employee?
Two tests apply: the federal IRS test weighing control factors, and in Massachusetts, the much stricter ABC test. In Massachusetts, a worker is presumed an employee unless you can prove all three prongs of the ABC test.
Read answerWhat happens if I misclassify a worker in Massachusetts?
Massachusetts takes worker misclassification seriously. A misclassified worker can recover triple damages for lost wages and benefits, plus attorney fees. You also owe back payroll taxes, and the Attorney General can enforce this independently.
Read answerI heard the 1099 rules changed for 2026. What is the new threshold?
For payments made in 2026, the federal 1099-NEC and 1099-MISC reporting threshold increased from $600 to $2,000. The 1099-K threshold for payment apps and cards reverted to more than $20,000 and more than 200 transactions. Payments made in 2025 still follow the old $600 rule.
Read answerDo I still send 1099s if I pay contractors through PayPal or a card?
Payments made through PayPal, Venmo, or credit card are reported by the processor on a 1099-K, so you generally do not issue a 1099-NEC for those same payments. You issue 1099-NEC only for direct payments like cash, check, or ACH transfers.
Read answerDo I still have to file a beneficial ownership (BOI) report for my LLC?
If your LLC was formed in the United States, you are currently exempt from BOI reporting. After rule changes in 2025, only foreign companies registered to do business in the US must file. The underlying law is still on the books and could change, but most domestic small businesses have no filing obligation right now.
Read answerDoes my service business need to collect Massachusetts sales tax?
Most service businesses in Massachusetts do not collect sales tax on their core work. Services like cleaning, consulting, creative work, and professional services are exempt. Sales tax applies to tangible products you sell, restaurant meals, and a few specific taxable services.
Read answerI sell both services and products. How do I handle sales tax?
In Massachusetts, most services aren't taxable but physical products are. If you sell both, you need to charge 6.25 percent sales tax on the products while leaving the services untaxed, and track them separately in your books.
Read answerWhat do you handle when you run my payroll?
Full-service payroll means we calculate pay, withhold and deposit federal and state taxes, pay your employees, file the quarterly and annual returns, and produce W-2s at year end. You approve hours and we handle everything else.
Read answerI have one employee. Do I really need payroll, or can I just pay them?
Yes, even one employee triggers real payroll obligations. You have to withhold taxes, pay the employer share, file quarterly returns, and issue a W-2. Skipping this or misclassifying someone as a contractor creates serious tax exposure.
Read answerMy books are a mess. Can you fix them, and what does that look like?
Yes, messy books can be fixed and it's more common than you think. The process involves reviewing your current state, gathering statements, reconciling accounts, and correcting miscategorized transactions to deliver accurate, current books.
Read answerI am switching from another bookkeeper. How does the transition work?
We get access to your QuickBooks Online file, review the last few months for accuracy, fix anything that's off, and pick up the ongoing work. Your involvement is minimal and the transition typically takes two to three weeks.
Read answerWhat does a fractional CFO actually do for a small business?
A fractional CFO provides part-time financial leadership that goes beyond bookkeeping. They forecast cash flow, build budgets, analyze pricing and margins, and help translate your numbers into actual business decisions.
Read answerMy business is growing. How do I plan cash flow so I do not run out of money?
Profit does not equal cash, and growth often eats cash faster than you expect. You pay workers and suppliers before clients pay you, which creates a gap that can sink a busy business. A simple cash flow forecast shows you what is coming so you can plan around it.
Read answerWhat is the difference between filing my taxes and tax planning?
Tax filing reports what already happened after the year ends, while tax planning happens during the year to legally lower what you owe. The value of a CPA who also keeps your books is that the planning stays grounded in real numbers.
Read answerWhat tax deductions do small service businesses miss most often?
Service businesses often miss deductions for home office space, vehicle mileage, equipment, retirement contributions, health insurance, and software. These get missed because owners don't track them throughout the year. Clean bookkeeping captures these deductions as they happen.
Read answerWhat records do I need to keep, and for how long?
Keep receipts, bank statements, invoices, payroll records, and tax returns for at least three to seven years depending on the document type. Good records protect your deductions if you're audited and make tax preparation much easier.
Read answerCan you help me figure out if I should be an LLC, S-corp, or stay a sole proprietor?
Yes. The firm can walk you through the trade-offs based on your profit level and tolerance for complexity. A sole proprietor or single-member LLC is simplest, an S-corp election can save self-employment tax once profit is high enough, and the right choice depends on your specific numbers.
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