Accounting News and Notes

LLC’s can Legally Convert to an S Corporation Saving Thousands Annually

LLC’s came in vogue approximately fifteen years ago when the the state of Georgia enacted legislation allowing both LLC’s (Limited Liability Company’s) to be established. Although the LLC does allow for some greater flexibility and ease of operation it often results in a higher tax obligation that might have been incurred if the business is an S Corporation.

Tax law treats all the earned income from an LLC as being subject to both FICA & Medicaid taxes whereas an S Corporation has to pay these taxes reflected on W-2’s. Tax law allows an LLC to legally convert over to being an S Corporation, for tax services,  as long as all active employee/owners pay their-selves a fair and reasonable salary. This number is best determined by the facts, position, and profit of a business and the truest test of this calculation is what a business owner would have to pay someone else to perform their position.

We offer a free initial consultation to see if converting your business to an S Corporation for tax purposes makes sense to you. Put our decades of experience to work for you ensuring you pay your lowest legal possible tax.

Recently, several corporations registered with the Corporations Division of the Office of the Secretary of State received a letter from Georgia Corporate Compliance, a private company offering to complete corporation meeting minutes on behalf of registered corporations. Although these forms contained a disclaimer stating that the company was not affiliated or endorsed by any government agency, many customers were understandably confused by the official looking documents.

The forms provided by Georgia Corporate Compliance are not required by the Office of the Secretary of State and will not affect your corporate filing positively or negatively. There is no need for a corporation to use Georgia Corporate Compliance or any other business offering similar services for any reason unless the corporation chooses to do so.  The Office of the Secretary of State does not require the use of any businesses offering services like those apparently offered by Georgia Corporate Compliance.

It is important to remember that any official statement or request from the Office of the Secretary of State will clearly indicate its origin by displaying the State Seal and the name of Secretary of State Karen Handel.  

If corporate customers have any other questions, please call the Georgia Secretary of States Corporations Division Call Center at 404-656-2817.

I believe that in information in the hands of a wise business owner is a wonderful thing. However, that information has to be both timely, informative, and useful. Absent these three factors being fully satisfied then I would suggest changes should be in order.

First: I believe financial should be issue on longer that the fourth workday after the close of a month. Absent their timely relevance, financial’s should not be distributed as much of the cause of their need would have lapsed.

Secondly: I believe that financials should be clear and concise and not uduly culletered with unnecessary accoutns will little or no monies in them or even subaccounts. If an account is not substantive enough to stand on its own merits then it should not exist at all.

Thirdly: And equally as important is that all financials should tell a story but often the subleties and interpetations of their significance can only be adequately expalined or clarified by narratives or substantiating statistics and infromation.

Providing timely and usefuly information is a financial departments primary and most important task and must be achieved in order for the business to both survive and thrive.

You’ve done the hard part…got all your info to the CPA, listened to the barrage of questions that they had about this expense and that, got your return finished, signed off on it and put it in the mail well before the 15th of April…shouldn’t it be time to cash that refund check and take a vacation?  You could if you HAD that refund check, right?  If you are spending your days, waiting patiently/anxiously for that little orange envelope to show up with your tax refund, wait no more.  You can find out the status of your tax refund simply by going to the IRS website by following the link:  https://sa1.www4.irs.gov/irfof/lang/en/irfofgetstatus.jsp or simply www.irs.gov and click on the “Where’s my refund?” section.  Regardless of whether you split your refund into several accounts, opted for direct deposit or asked that your check be mailed directly to you, you can track your refund.  To maintain confidentiality, you will be required to provide them with some information before getting your status.  You will need:  your social security number, filing status (married, head of household, etc.), and exact amount of your refund.

If, after 28 days of the IRS mail date, you haven’t received your refund check, you should start a refund trace.  If your address is incorrect, you can change it online but always be sure and check that before you mail your return into the IRS to avoid any delays in getting your refund. 

 DON’T FALL FOR E-MAIL SCAMS ABOUT YOUR REFUND!!!!  The IRS never initiates e-mails about your refund and never give out your social security number!!!  Have a great “refund” vacation!!

The United States Congress passed and President George W. Bush signed into law the Economic Stimulus Act of 2008.  This Act provides for economic stimulus payments to be made to over 130 million American households, and you may be entitled to a payment of up to $600 ($1,200 if filing a joint return), plus additional amounts for each qualifying child.  The IRS says it will begin sending the one-time payments starting in May. 

There are basically three types of taxpayers who will be affected:

• Those that file their tax return for 2007
• Those that don’t file a return but have a total earned income of $3,000 or more
• Those with adjusted gross income

Affects of Economic Stimulus Act

• For the taxpayer who files annual returns, to receive a payment in 2008, you will not have to do anything more than file a 2007 tax return.  Of course, the IRS will determine your eligibility and amount of payment.

•  For those that don’t have to file a return that have a total of $3,000 or more in earned income, Social Security benefits, and/or Veterans payments, you may receive a payment of around $300 ($600 if filing jointly).  You might also receive an additional amount of $300 for each child that qualifies for the child tax credit. 

• For the taxpayer with adjusted gross income (AGI) of more than $75,000 ($150,000 if filing jointly), the payment will be reduced or phased out completely.

Important things to know about the Economic Stimulus Act of 2008:

• To qualify for payment, an individual, spouse and any qualifying child must have a valid Social Security number.
• Individuals cannot receive a payment if they can be claimed as a dependent of another taxpayer.
• Individuals cannot receive a payment if they filed a 2007 Form 1040NR, 1040NR-EZ, 1040-PR or 1040-SS.
• All individuals receiving payments will receive a notice and additional information before you receive the payment.  If you have questions, you can visit the IRS website at www.irs.gov.

 For any other questions, contact me at hiscpa@yahoo.com

Super Tuesday is finally here. The largest primary ever with over twenty-four states voting with over 2600 plus total delegates combined to be determined. Super Tuesday will be, by far, the largest primary to date and may well ultimately determine who our next President will be. Over 52% of the Democratic delegates and 41% of the Republican delegates will be determined on Tuesday thus dramatically shaping who will be serving as our President for the next many years. Just the past two weeks we had several of the minor candidates dropping out allowing for both our ability to focus on just a few candidates to vote for and for the candidates themselves in determining as to who they might be running against. Though many pundits believe Huckabee to be a potential spoiler, I believe, absent a dramatic turn of events for the good, that he will also soon be dropping out of the race leaving it a “two horse” race on both the Democratic and Republican sides.

When casting your vote remember to consider:

-It is not a popularity contest. Read and understand the issues and where each candidate stands on those which are most important to you.

-Vote your conscience. What would God have you do. Pray over your options and who seems to have the best interest of the country and its people at stake.

-Evaluate each and every candidate as to who will be able to best stand the heat when things get tough. Consider who will be able to do what is right when it is not the popular choice. Remember your next president could perhaps run for re-election in four years and could well be your President for eight years.

-Contemplate whether your candidate will leave the country better off after he is elected than before while carefully evaluating their honesty, level of fiscal responsibility, and commitment to both domestic and international issues. A President of the 21st century is due to impact not only the U.S. at large but the world as a whole.

-Consider your candidate of choice able to weather the tough times and lead from ahead rather than shrinking behind advisers while still being humble enough to seek the wise counsel of others.

Our country, our lives, and the lives of our children depend on our choices today so on this Super Tuesday I believe all should start the day in prayer seeking God’s ultimate advice and counsel.

There is an upcoming bond issue concerning the Gwinnett County Schools on February 5th.  Many of us will be going to the pools to pick our presidential nominee and we need to get out the vote to continue SPLOST. This past November Gwinnett County Board of Education approved a calling for voters to evaluate a General Obligation Bond referendum on the upcoming Georgia Presidential Preference Primary. If it passes, Gwinnett voters will authorize the School Board to sell $750 million in tax-exempt, General Obligation Bonds. The repayment of the bonds will be paid off using the present personal property millage rates.

The Gwinnett County School system is facing a funding crisis and our school board is offering a direction to its voters to meet that crisis head on.  Voting yes on SPLOST will help keep Gwinnett’s school progress on track. Since July 1, 2007 thirty new schools have been built providing over 2000 new classrooms.

In the last decade, funding for the ever-expanding Gwinnett school age population has been met with both property taxes and monies from SPLOST.  But growth in Gwinnett county’s population has far exceeding the schools growth and the school board is suggesting the bond issue continue so that they can meet the demands of the growing population by constructing new schools and adding on to existing ones. To read more about the program visit www.gwinnett.k12.ga.us

Keeping this program in tact depends on you. Please vote to continue school funding with school bonds.  Our children’s education depends on it!

Although there has been a general lessening of the lack of rain in recent months, the drought continues and even worsens. To date no substantive proactive directions have been taken to both lessen the use of water, to plan for management of our present resources, and to set up procedures and policies in place to ensure that we do not ever find ourselves in this situation again. We need a public outcry from all citizens to contact their elected officials now to help them know we are not satisfied with our present situation and are determined to see that it does not happen again. We need policies today which stress the vitality and livelihood of people rather than mollusks. Though we always need to pay attention to special interest/need groups we should ever determine that the needs of a few will not outweigh the needs of many. Though we all have rights and valid expectations we should never expect those to be give up or surrendered to others without our consent or valid and wise discernment.

To stay abreast of Georgia’s lake levels you can visit the National Weather Service Forecast Service web site where at http://www.srh.noaa.gov/ffc/html/rrm.php There you can monitor and review lake levels which are updated every twenty four hours, full pool levels, rainfall in the areas listed. Though we often discuss oil as our biggest need and worry, if we were to be honest, we would soon find out that it is water. Also at the National Weather Service’s web-site you can find satellite and radar images, current forecast, and even articles on weather safety. For the sake of all and the continued economic viability of our region we need action today.

In an unprecedented move the FED just announced a .75% reduction in the prime rate of lending. This was done in an effort to try to kick life into an already sluggish economy and to strive to keep the U.S. economy from sliding deeper into a recession. Recent economic news for the real estate industry and other sources sent the FED into an emergency session looking to help breathe some life into the marketplace. The Prime Rate of lending is the rate that banks charge their best customers as an interest rate. With the rate reduction in tow, interest payments will fall generating excess cash and hopefully enthusiasm in the marketplace for the already sluggish dollar. Stay tuned for more financial news.

The IRS has announced that beginning January 1, 2008 that the standard mileage rate for business use of a personal car/van/pickup/or panel trucks will be 50.5 cents per mile.

The standard mileage rate is affixed annually based upon a study of the variable and fixed costs of the annual cost of operating a vehicle. The 2008 rate for moving or medical expenses will be 19 cents per mile and 14 cents per mile driven when doing work for charitable organizations. The 2008 mileage rate of 50.5 cents per mile is up from the 2007 rate pf 48.5 cents per mile.