I started a new LLC in NJ July 2008, during the creation of my LLC I elected to be taxed as a C-Corp (on the advice of my account). My new business has not generated any income yet. I'm creating new products and they are not ready for market yet but I anticipate completing this task shortly. I anticipate a profit in 2009 (maybe 10K).

My accountant just completed my 2008 business taxes, I do not owe any Federal taxes but I do own NJ the minimum + 2008 estimated taxes penalty.

Here my question: My accountant explained I must pay a $25 penalty for not paying NJ 2008 estimated taxes. He prepared my 2008 taxes so I will pre-pay for 2009. So, it appears if I had pre-paid in 2007 for tax year 2008 estimated taxes I would have avoided this penalty but I create my entity in 2008 not 2007 so how could I pre-pay. Is this a valid penalty for me to pay or should I ask my accountant to remove this?

Thanks,
Steve NJ

Steve, your accountant did not take into consideration that you had a Zero tax liability in 2007! Thus, you would not be subject to the 2008 underpayment penalty for not making the quarterly estimated tax penalties of $520 in 2008.

Sorry, but your accountant either rushed to prepare your 2008 tax return or it was a genuine oversight by him! But, please tell him that he should code your tax program file as having a zero tax liability on the 2007 tax return for NJ State and the penalty will disappear!

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I appreciate your reply.
Thanks,
Steve

Glad we could be of help to you!

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