At HIS CPA P.C. we strive to serve all of our clients each and every day utilizing all of our talents, resources, and wisdom to your best advantage. Striving to price our services in the big fat happy middle with many being below and many being above our fees we strive to make an honest day’s wage and in return serve our clients to the highest standards possible. Our motto…”Serving HIM…By Serving You, One Tax Return at a Time”

Business Management and the whole of its many varied issues are a daunting issue for both the new and experienced business owner. HIS CPA P.C. has combined at their web site a litany of many varied issues which has never before been available in such a succinct and well written format. John Dillard, CPA the firms founder desired to develop a firm which lived out the “Golden Rule” in serving others and community. By offering this information gratis, Mr. Dillard’s desire is to heighten the understanding of his fellow business owners and to contribute back to the community in which he lives and works.

By turning onto their web site you will find a plethora of information which will always be available at your fingertips. Covering issues for selecting a new entity type, how to look for a CPA, new corporation forms, and even a registration checklist is a must read for the new business owner striving to get off on the right foot of their financial future. For those who need financing you will be able to learn the various types of financing options available ranging from both traditional sources to alternative financing methods. By discovering which plan type works best for you and your business you will be better suited to successfully fulfill your business’s financing needs. There’s even a section on how to work with and “court” your banker to gain access to needed financing.

For the savvy business owner their is much to be gained as there are recaps of payroll forms and how they are utilized, clarification of how to properly classify workers as either independent contractors vs. employees, and a checklist on how to come a new employer in Georgia. For those who have run afoul of the IRS and are dealing with tax issues, there are words of wisdom to successfully resolve your tax problems, how to pay your taxes on a timely basis by properly utilizing withholding, estimate payments, and extensions. You will also be able to discover the general guidelines and rules of how to qualify for and process and Offer in Compromise, which is where the IRS & GA both will reduce your bill to what you and afford to pay based upon detailed tax regulations.

Proper preparation of financial statements and their utilization of financial statements are essential to a business owner being able to understand and adequately interpret their own financial results. Explaining the difference between current and long term assets, cash flow statements, forecasting, and gross margin analysis will give the savvy business owner the information they need to account for their business accurately. By utilization and understanding of this information you will be able to accurately decipher trends and variances well before they become problematic or worse. The web site details how to use your own business’s financial information to discover how to manage the pulse and heart beat of your business.

Knowing how to properly track business deductions, protecting your business’s intellectual property, how to buy insurance, handling automobile expenses, mergers and acquisitions, business purchases and sales, and just some of the other issues you will discover as you will want to go back again and again gaining needed wisdom and insight as you plan your business’s future.

By planning ahead you can avoid having unnecessary tax fines and penalties from being assessed. Being sure to pay your taxes as you go will enable you to properly budget your living expenses while also being sure to legally maintain the tax and legal responsibilities of your business. If you show up at year end hoping for your tax professional to work a miracle you are expecting the impossible. However, if you show up at your CPA’s door well before the year is over and before the tax clock has wound down, you CPA can help you not only plan but help ensure that you have legally claimed all of your tax deductions. During these meetings you can also set up and fund, if you do it early enough, retirement plans for you and your employees so as to maximize your retirement benefits in the future and your tax deductions today. Planning and not compliance are one of the best investments you will make in your financial future.

If you have either already just started a business or in the process of beginning one, the decision on whether or not to incorporate and its related variables will be one of the most important financial decisions you ever reach. Although many financial pundits will encourage a one size fits all approach encouraging one entity type over another, it is wise to carefully consider and evaluate this decision as both your mode of operation, the availability of certain financial transactions, retirement plans, etc. will be greatly impacted. As not all transaction types are will suited for every entity type knowing what your business short term and long term plans are is the first step in a careful determination of your entity/incorporation type. For example many real estate developers, for a myriad of reasons, are well suited to be an LLC, LLP or partnership due to the flexibility of profit allocations and the movement/transfer of real estate from and to the business. However, as many of these variables/options will not be even a blip on the radar screen for a service, manufacturing, distribution, or wholesale business they may want to consider if an S Corporation might be the best course to pursue due to its profits only being taxed once as opposed to the double taxation of a C Corporation.

The 2007 mileage rate is 48.5 cents per mile for those who utilize their personal vehicle for business use. Whether you own the business yourself or work for someone else tax law requires you to keep a by day log to support your business miles. Just as when you would work for someone else and be required to turn in an expense  report to get reimbursed for any business expenses you might have paid personally, so it is when you are the owner as well as the employee. As it is difficult to recall all the business expenses you might have incurred after the fact, it is usually most advantageous to track items as you go being sure to properly list and document business expenditures you personally pay as they are incurred.

An expense report does not need to be elaborate but it should include the nature and purpose of the business expense and all receipts, in accordance with tax law, over $75 would be maintained. Usually it is easiest to keep copies of all credit card receipts and when needed adding copies of the actual receipts to clarify the actual nature of an expense.

Periodic and consistent tracking such as turning in an expense report at least monthly and perhaps even weekly if you travel often is the best way to stay abreast of expenditures as they are incurred and to seek and obtain current reimbursement for them. If you are able it is always best to obtain reimbursement for expenses rather than deducting these monies on  your personal return as these monies would be a tax free reimbursement of monies to your personal assets rather than a tax deduction which is limited, by tax law, to only the excess of the un-reimbursed business expenses which exceed seven and one-half percent of your adjusted gross income.

If you have not yet file, it is not too late to get your return accurately filed, processed, and paid. Although it is too late to avoid the IRS’s potentially assessing the late filing penalty in addition to any late payment penalties which might be due. As our tax system is a voluntary system the IRS has incentives such as these to encourage taxpayers to pay file and pay their taxes as they become due.

The IRS as well as individual states are a pay as you go system requiring taxpayers to pay their taxes as they earn the monies to which they relate. Many fall prey to believing that an extension to file is an extension to pay and it is anything but that and is well spelled out in tax law that taxpayers are required to submit monies for their taxes as their salaries, profits, and taxable income are earned.

If you have filed and paid late the IRS has several programs geared toward working with taxpayers who have failed to meet required dates and guidelines. Contact us today; you will be glad you did.

Showing up at your CPA’ s office after the year is over to prepare your year end taxes will result in surprises which only you can avoid. Although a professional adviser can greatly assist in year end tax planning issues, a CPA is greatly limited in what they can do after the year is over. By reviewing your tax elections, status, looking for missed deductions, and year end financial and tax planning issues a CPA can assist you in not only planning for your year end liability but in its reductions as well.Being sure that you have properly funded your retirement plan, turned in expense reports for business items you paid personally, and carefully evaluating your business operations are all critical components of ensuring that your year end payments are in order. As the IRS as well as states will penalize you for late payment it is judicious to spend time planning on what your year end liability will be as well as taking appropriate steps prior to year end.

Looking ahead to the future while taking care of the past and present are a constant everchanging challenge for the business owner. Although there is no magic bullet, obtain the services of a quailifed professional CPA is your best option to ensure that you satisfy the myriad of steps, actions, forms, and procedures required of a business owner to stay compliant with all federal, state, and local laws.

Taking Christianity Into the World

 As a Body of Believers we are called to take the good news of Jesus Christ along with us each and every day. In an effort to fulfill the Great Commission, Jesus’s last words before he ascended into heaven are with us today calling us to share the love of Christ in action and by our hearts. Striving to live under the principles of the Bible we are therefore called to study His word so we might better understand the way we should live. Join us as we:

“Serving HIM by serving You…one tax return at a time”.

How S Corporations are Taxed

There is no income tax paid by as S Corporation when the annual tax return is filed to the IRS. However, as a part of the corporate return which is prepared, a Form 1120S, there is an attached schedule which shows each owners respective ownership percentage and via a Form K-1 for which each shareholder should reflect on their personal return. K-1 profits, losses, and shareholder distributions are all required by tax law to be issued based upon the each shareholders ownership percentage. In order for losses to be deductible a shareholder has to have a positive tax basis which is a component of past profits, losses, and loans to and from the business. If a shareholder has no basis to cover losses reported on a K-1, they are by tax law considered to be “suspended losses” and can be rolled forward to future years when the shareholder has positive basis, which can be created by future years profits or the shareholder loaning money to the business.

An owner should report the K-1 profits which is based upon their share of the business and not the amount of their shareholder distributions. This is a common misnomer about S Corporations and often leads to confusion for the new business owner. To that end it is best to remember that you pay taxes on the profits when you make them and not when you take them. For example generally speaking if your business nets $100,000 and you are the sole owner, you will pay taxes on $100,0000 whether you take zero dollar of shareholder distributions, a $100,000 or any number in between. Thus if you were to have a $100,000 profit in any given year and take no distributions then you would be able, absent any other issues, to take shareholder distributions in subsequent years with no additional tax responsibility as these monies would have already been taxed.

Although most states recognize and reflect the same tax treatment for S Corporations as the IRS and charge a relatively insignificant net worth tax such as Georgia, there are many states which charge a franchise tax as well.