Atlanta CPA on How You Can Convert your Georgia C Corporation to an S Corporation Thereby Avoiding Double Taxation 

More Georgia based businesses are incorporating as an Limited Liability Company (LLC) because of the ease of the initial set up of the business entity. However, frequently this may not be the best “tax choice” for the business as an C Corporation is subject first to taxes at the corporate level initially and then the profits are taxed again at the personal level when these profits are paid out to the company’s respective shareholders/stockholders. C Corporations were once much more popular as an entity choice but as consumers and entrepreneurs became more aware and informed, C Corporations are much less pursued as a viable option as business owners sought to legally avoid the “double taxation” exposure of C Corporations as they are taxed first at the corporate level and then again at the personal level when monies are paid out of the corporation to the companies’ respective owners.  

Though being an S Corporation is note ideal for all business it is often a good fit for the following types of business. This list is not intended to be comprehensive and it is prudent to work closely with your CPA in making this election. 

-Computer technicians such as contractors, retailers, repairs, programmers, etc.

-Sales Representatives  including residential and commercial real estate agents, brokers, including those of most all types and territories.

-Distribution companies, resellers, wholesalers, and those in the distribution chain of a product of service.

-Service companies including consultants of all  types, single owner physicians, dentists, doctors, chiropractors, etc. 

-Trade Contractors such as builders, painters, landscapers, electricians, plumbers, etc.

-Retail shops such as boutiques, restaurants, clothing stores, furniture, appliances, video equipment, etc. 

Taxation of S Corporations 

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 profit, 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.

The rules of being an S Corporation are only four and many businesses will qualify. To be an S Corporation you must have:

• Have a December 31st year-end.
• Have less than 100 shareholders.
• Shareholders have to be U.S. citizens or resident aliens.
• Only one class of stock

 For LLC’s that change from an LLC for legal purposes to an S Corporation for tax purposes, the LLC remains an LLC with the Georgia Secretary of State along with all other legal purposes. Thus, your LLC makes solely a tax election which affects none of the other contracts, licenses, trademarks, legal filings, and legal obligations of the LLC. 

Contact HIS CPA PC (A Christian CPA Firm) today. 

To learn more about tax entities and the taxation thereof visit http://www.hiscpa.com/article2.html  There you will also discover a wide host of resources for American Entrepreneurs.

 John Dillard is an Christian Speaker/Author and Certified Public Accountant in Duluth, GA. To See how he takes Christ along with him to work visit http://www.hiscpa.com/ and for his latest book Overcoming Life’s 9/11’s: Job’s Journey and a Voice of One: Nehemiah’s Prayer visit http://www.john-dillard.com/ or call John Dillard CPA today at 770.814.9304 (All Rights Reserved) Dare to Attempt Something so Great for the Kingdom of God that it is doomed to failure, lest Christ be in it!     

We advise clients on: IRS representation, Offer in Compromise, Tax Problems, Incorporation in Georgia, Corporate and Personal Income Tax Returns, Part-time CFO, Virtual Controller, Business Planning, Offer in Compromise, Back Taxes, Bookkeeping. 

Serving Atlanta, Duluth, Gwinnett, Barrow, Bartow, Carroll, Cherokee, Clayton, Coweta,  Douglas, Fayette, Forsyth, Fulton, Gwinnett, Henry, Newton, Paulding, Pickens, Rockdale, Walton, Barrow, Bartow, Carroll, Henry, Newton, Bartow, Walton, Rockdale, Barrow, Spalding, Coweta, Dawson, Douglas, Fayette, Newton, Paulding, Spalding, Walton, Henry, Paulding, Douglas, Coweta, Canton, Covington, Douglasville, Druid Hills, East Point, Forest Park, Griffin, Lithonia, Mableton, McDonough, Milton, Mountain Park, Newnan, Powder Springs, Stockbridge, Union City, Villa Rica, Winder, Woodstock,  Smyrna, Sandy Springs, Marietta, East Point, Gainesville, Snellville, Buckhead, Buford, Peachtree City, Dunwoody, Kennesaw, Decatur, Conyers, Stone Mountain, North Fulton County, DeKalb County, Hall County, Clayton County, Cobb County, Forsyth County, Hart County, Jefferson County, Duluth, Atlanta, Alpharetta, Johns Creek, Lawrenceville, Milton, Norcross, Snellville, Roswell, Buford, Cumming, Grayson, Lake Hartwell, Suwanee, Sugar Hill, Loganville, Lilburn, Dunwoody, Gainesville, Decatur, Atlanta GA, Gwinnett County, North Fulton County, Cherokee County, DeKalb County, Hall County, Clayton County, Cobb County, Forsyth County, Hart County, Jefferson County, Duluth, Atlanta, Alpharetta, Johns Creek, Lawrenceville, Marietta, Milton, Norcross, Snellville, Roswell, Buford, Smyrna, Marietta, Cumming, Grayson, Hartwell, Suwanee, Sugar Hill, Loganville, Lilburn, East Point, Gainesville, Snellville, Buckhead, Buford, Peachtree City, Dunwoody, Kennesaw, Decatur, Conyers, Stone Mountain, Decatur. Sandy Springs, Peachtree City, Douglasville, Newnan, Griffin, Woodstock, Carrollton, Forest Park, Canton, College Park, Cartersville, McDonough, Riverdale, Fayetteville, Covington, Stockbridge, Conyers, Clarkston, Barrow, Bartow, Butts, Carroll, Cherokee, Clayton, Coweta, Dawson, and Douglas

Recently I received an inquiry from my website which is listed below: 

I found your website…love the Christian approach. I’m in need of a Profit and Loss statement from a CPA quickly for a loan modification I’ve applied for. I am a Realtor…and have some minor expenses from my commission checks. I can drum up receipts for the desk fee and website fee, but the rest is minor for gas (lunches with prospects) and one rebate I have not gotten a cashed check back for. They don’t add up to much, and would almost be willing to take them out if you would have to have receipts to prepare?

I need this very quickly or we might lose our loan mod. Any help you can give me would be greatly appreciated. 

Incorporating your business and knowing what is best from Day 1 is what your CPA may be best utilized for to protect you personally, legally mitigate your income taxes and planning for your retirement. Below is my response to the client’s inquiry: 

Thanks for visiting www.HisCPA.com I can certainly help you quickly with your need but would need to talk to you further and to get a copy of your prior personal return in order to gain a good understanding of your business and to advise/quote accordingly. Feel free to give me a call and I will be happy to discuss. 

If you have not yet incorporated might I suggest you review the article on our web-site at http://www.hiscpa.com/article2.html as being an S Corporation might both legally save you taxes as well as limit you personally from corporate liability. 

Also if you have already incorporated your business as an LLC, we can look to convert your business to an S Corporation for tax purposes and potentially also legally limiting your annual tax oblations. 

I look forward to hearing from you soon.

John Dillard is an Christian Speaker/Author and Certified Public Accountant in Duluth, GA. To See how he takes Christ along with him to work visit http://www.hiscpa.com/ and for his latest book Overcoming Life’s 9/11’s: Job’s Journey and a Voice of One: Nehemiah’s Prayer visit http://www.john-dillard.com/ or call John Dillard CPA today at 770.814.9304 (All Rights Reserved) Dare to Attempt Something so Great for the Kingdom of God that it is doomed to failure, lest Christ be in it!  

Contact HIS CPA PC (A Christian CPA Firm) today.

We advise clients on: IRS representation, Offer in Compromise, Tax Problems, Incorporation in Georgia, Corporate and Personal Income Tax Returns, Part-time CFO, Virtual Controller, Business Planning, Offer in Compromise, Back Taxes, Bookkeeping.

Gwinnett CPA on Converting Your Georgia C Corporation or Georgia LLC to an S Corporation

Incorporating in Georgia 

With changes over the last ten plus years in state law, more and more Georgia based businesses are incorporating as an LLC because of the ease of the initial set up of the business entity. However, frequently this may not be the best “tax choice” for the business as an LLC pays FICA and Medicaid taxes on all of its net earnings out of the business, whereas an active S Corporation owner will pay FICA and Medicaid taxes on its W-2. Tax law does require, however, that all S Corporation owners are to take a fair and reasonable salary given position and profit. Though the election is not in the best interest for all business’s as many LLC’s should stay an LLC for both legal and tax purposes, becoming an S Corporation is often a prudent decision for the following types of business: 

-Trade Contractors such as builders, painters, landscapers, electricians, plumbers, etc.

-Retail shops such as boutiques, restaurants, clothing stores, furniture, appliances, video equipment, etc.

-Computer technicians such as contractors, retailers, repairs, programmers, etc.

-Sales Representatives  including residential and commercial real estate agents, brokers, including those of most all types and territories.

-Distribution companies, resellers, wholesalers, and those in the distribution chain of a product of service.

-Service companies including consultants of all  types, single owner physicians, dentists, doctors, chiropractors, etc. 

C Corporations were once much more popular as an entity choice but as consumers and entrepreneurs became more aware and informed, C Corporations are much less pursued as a viable option as business owners sought to legally avoid the “double taxation” exposure of C Corporations as they are taxed first at the corporate level and then again at the personal level when monies are paid out of the corporation to the companies’ respective owners. 

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 profit, 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.

The rules of being an S Corporation are only four and many businesses will qualify. To be an S Corporation you must have:

• Have a December 31st year-end.
• Have less than 100 shareholders.
• Shareholders have to be U.S. citizens or resident aliens.
• Only one class of stock

 For LLC’s that change from an LLC for legal purposes to an S Corporation for tax purposes, the LLC remains an LLC with the Georgia Secretary of State along with all other legal purposes. Thus, your LLC makes solely a tax election which affects none of the other contracts, licenses, trademarks, legal filings, and legal obligations of the LLC.

Contact HIS CPA PC (A Christian CPA Firm) today.

To learn more about tax entities and the taxation thereof visit http://www.hiscpa.com/article2.html  There you will also discover a wide host of resources for American Entrepreneurs.

John Dillard is an Christian Speaker/Author and Certified Public Accountant in Duluth, GA. To See how he takes Christ along with him to work visit http://www.hiscpa.com/ and for his latest book Overcoming Life’s 9/11’s: Job’s Journey and a Voice of One: Nehemiah’s Prayer visit http://www.john-dillard.com/ or call John Dillard CPA today at 770.814.9304 (All Rights Reserved) Dare to Attempt Something so Great for the Kingdom of God that it is doomed to failure, lest Christ be in it!    

We advise clients on: IRS representation, Offer in Compromise, Tax Problems, Incorporation in Georgia, Corporate and Personal Income Tax Returns, Part-time CFO, Virtual Controller, Business Planning, Offer in Compromise, Back Taxes, Bookkeeping.

Serving Atlanta, Duluth, Gwinnett, Barrow, Bartow, Carroll, Cherokee, Clayton, Coweta,  Douglas, Fayette, Forsyth, Fulton, Gwinnett, Henry, Newton, Paulding, Pickens, Rockdale, Walton, Barrow, Bartow, Carroll, Henry, Newton, Bartow, Walton, Rockdale, Barrow, Spalding, Coweta, Dawson, Douglas, Fayette, Newton, Paulding, Spalding, Walton, Henry, Paulding, Douglas, Coweta, Canton, Covington, Douglasville, Druid Hills, East Point, Forest Park, Griffin, Lithonia, Mableton, McDonough, Milton, Mountain Park, Newnan, Powder Springs, Stockbridge, Union City, Villa Rica, Winder, Woodstock,  Smyrna, Sandy Springs, Marietta, East Point, Gainesville, Snellville, Buckhead, Buford, Peachtree City, Dunwoody, Kennesaw, Decatur, Conyers, Stone Mountain, North Fulton County, DeKalb County, Hall County, Clayton County, Cobb County, Forsyth County, Hart County, Jefferson County, Duluth, Atlanta, Alpharetta, Johns Creek, Lawrenceville, Milton, Norcross, Snellville, Roswell, Buford, Cumming, Grayson, Lake Hartwell, Suwanee, Sugar Hill, Loganville, Lilburn, Dunwoody, Gainesville, Decatur, Atlanta GA, Gwinnett County, North Fulton County, Cherokee County, DeKalb County, Hall County, Clayton County, Cobb County, Forsyth County, Hart County, Jefferson County, Duluth, Atlanta, Alpharetta, Johns Creek, Lawrenceville, Marietta, Milton, Norcross, Snellville, Roswell, Buford, Smyrna, Marietta, Cumming, Grayson, Hartwell, Suwanee, Sugar Hill, Loganville, Lilburn, East Point, Gainesville, Snellville, Buckhead, Buford, Peachtree City, Dunwoody, Kennesaw, Decatur, Conyers, Stone Mountain, Decatur. Sandy Springs, Peachtree City, Douglasville, Newnan, Griffin, Woodstock, Carrollton, Forest Park, Canton, College Park, Cartersville, McDonough, Riverdale, Fayetteville, Covington, Stockbridge, Conyers, Clarkston, Barrow, Bartow, Butts, Carroll, Cherokee, Clayton, Coweta, Dawson, and Douglas.

Gwinnett CPA Teaches Understanging How Incorporating Your Georgia Business Can Affect Your Taxes and Liabilities

There are many reasons a taxpayer may look to incorporate their business ranging from legitimacy, liability limitation and tax mitigation. Understanding these many nuances is your best first step in ensuring that you chose an entity type is best achieving success given your business model and operations. Entity selection is determinant on many issues ranging from citizenship, number of shareholders, ease of operation, tax obligations and year-end filings and even who your shareholders will be. Though many of these issues will conflict, working with a professional who is well versed in these issues will help you make the best election available for your new Georgia Business. 

Choosing an Entity Type

Your initial choice of entity is perhaps the most important tax, financial and legal decision you might ever reach. Being well versed in these areas is essential to a wise and prudent decision.  To learn more visit http://www.hiscpa.com/article2.html

Tax Effects of Entity Choice

Carefully considering the tax effects of your entity choice is essential to getting your business off on the right foot. Being careful to avoid, if at all possible, the double taxation of C Corporations and then selecting the right entity for your business from both a tax and legal perspective is critical. To discover how entity choice and affect you see http://www.hiscpa.com/article6.html

Getting Started

Understanding many of the basics of the start of the incorporation process will do much to ensure that you are well-versed and able to make wise and informed decisions. As these issues will affect your business operations and finances during the lifetime of your business they are essential to getting started well. 

Contact HIS CPA PC (A Christian CPA Firm) today.

To learn more about addressing IRS Tax Issues and Back Tax Returns visit http://www.hiscpa.com/working-with-the-irs.html 

John Dillard is an Christian Speaker/Author and Certified Public Accountant in Duluth, GA. To See how he takes Christ along with him to work visit http://www.hiscpa.com/ and for his latest book Overcoming Life’s 9/11’s: Job’s Journey and a Voice of One: Nehemiah’s Prayer visit http://www.john-dillard.com/ or call John Dillard CPA today at 770.814.9304 (All Rights Reserved) Dare to Attempt Something so Great for the Kingdom of God that it is doomed to failure, lest Christ be in it!    

We advise clients on: IRS representation, Offer in Compromise, Tax Problems, Incorporation in Georgia, Corporate and Personal Income Tax Returns, Part-time CFO, Virtual Controller, Business Planning, Offer in Compromise, Back Taxes, Bookkeeping.

Serving Atlanta, Duluth, Gwinnett, Barrow, Bartow, Carroll, Cherokee, Clayton, Coweta,  Douglas, Fayette, Forsyth, Fulton, Gwinnett, Henry, Newton, Paulding, Pickens, Rockdale, Walton, Barrow, Bartow, Carroll, Henry, Newton, Bartow, Walton, Rockdale, Barrow, Spalding, Coweta, Dawson, Douglas, Fayette, Newton, Paulding, Spalding, Walton, Henry, Paulding, Douglas, Coweta, Canton, Covington, Douglasville, Druid Hills, East Point, Forest Park, Griffin, Lithonia, Mableton, McDonough, Milton, Mountain Park, Newnan, Powder Springs, Stockbridge, Union City, Villa Rica, Winder, Woodstock,  Smyrna, Sandy Springs, Marietta, East Point, Gainesville, Snellville, Buckhead, Buford, Peachtree City, Dunwoody, Kennesaw, Decatur, Conyers, Stone Mountain, North Fulton County, DeKalb County, Hall County, Clayton County, Cobb County, Forsyth County, Hart County, Jefferson County, Duluth, Atlanta, Alpharetta, Johns Creek, Lawrenceville, Milton, Norcross, Snellville, Roswell, Buford, Cumming, Grayson, Lake Hartwell, Suwanee, Sugar Hill, Loganville, Lilburn, Dunwoody, Gainesville, Decatur, Atlanta GA, Gwinnett County, North Fulton County, Cherokee County, DeKalb County, Hall County, Clayton County, Cobb County, Forsyth County, Hart County, Jefferson County, Duluth, Atlanta, Alpharetta, Johns Creek, Lawrenceville, Marietta, Milton, Norcross, Snellville, Roswell, Buford, Smyrna, Marietta, Cumming, Grayson, Hartwell, Suwanee, Sugar Hill, Loganville, Lilburn, East Point, Gainesville, Snellville, Buckhead, Buford, Peachtree City, Dunwoody, Kennesaw, Decatur, Conyers, Stone Mountain, Decatur. Sandy Springs, Peachtree City, Douglasville, Newnan, Griffin, Woodstock, Carrollton, Forest Park, Canton, College Park, Cartersville, McDonough, Riverdale, Fayetteville, Covington, Stockbridge, Conyers, Clarkston, Barrow, Bartow, Butts, Carroll, Cherokee, Clayton, Coweta, Dawson, and Douglas.

Atlanta CPA on How a Georgia LLC and Legally Convert to a Georgia S Corporation for Tax Purposes 

Converting your LLC to an S Corporation Might Save You Money 

Though S Corps came into vogue in the 1950’s when Congress passed legislation allowing business owners to pay their taxes on their business profits on their personal return, an Limited Liability Company (LLC) is a relative newcomer on the tax scene. Like an S Corporation the earnings from an LLC and their corresponding taxes are paid on the respective shareholders personal return. Though S Corporations earnings, as well as their shareholder distributions, have to be reported/paid based upon the S Corporations stock ownership, an LLC and its owners are legally able to allocate monies to its owners in any method or percentage that its members agree. 

Disregarded Entities. Like an S Corporation, the earnings from an LLC are communicated to its owners via a K-1, which is a part of the Partnership Return/Form 1065. However it you are the sole-owner of an LLC, then you should file as part of your personal return a schedule C, which is the form that proprietorships as well use to report their operating results. Both an S Corporation and an LLC are considered “disregarded entities” for income tax purposes, which means that the entity does not pay income tax on the company’s earnings but that the owners pay/report their share of their personal income taxes. 

Tax Differences. An LLC like an S Corporation has the tax advantage of not being subject to the double taxation affect of a C Corporation. An LLC pays FICA/Medicaid taxes on all of its net earnings, as long as all active employee/owners have paid themselves a fair and reasonable salary given position and profit. When an LLC converts over to an S Corporation, it does for predominantly for income tax purposes, qualified retirement plans and the need to pay a salary to its owners. For all other legal purposes the LLC that converts to an S Corporation for tax purposes remains an LLC for all of its other needs and issues. Thus, from a legal perspective the LLC remains an LLC in the eyes of the courts and the Secretary of State’s Office. In general terms the predominant legal differences are that an S Corporation will have directors, shareholders and officers whereas an LLC while have members; the owners.

 Converting to an S Corporation. Whether your business had hundreds of clients, just a handful for only yourself. converting to S Corporation status, if you qualify is a prudent and sound financial decision. To be an S Corporation you have to meet four criteria. They include having less than one hundred owners/shareholders, all of your owners have to be citizens/resident aliens of the United States, that you are required to have a calendar year end and to have only one class of stock; as an LLC you will not have any. To convert your LLC to an S Corporation for income tax purposes you should complete Form 2553: Election to be a Small Business Incorporation. Generally this form should be filed within seventy-five days of the incorporation date or the first date of the tax year to which you desire the election to be effective. If you fail to meet these deadlines, the IRS has issued Revenue Procedures that, if you qualify, will allow an entity to receive the requested S Corporation effective date.  

John Dillard is a Christian Speaker/Author and Certified Public Accountant (All Rights Reserved). To See how he takes Christ along with him to work visit http://www.hiscpa.com/ (An Atlanta  CPA firm) and for his latest book Overcoming Life’s 9/11’s: Job’s Journey and to learn about his ministry visit http://www.john-dillard.com/ To contact John Dillard CPA (Atlanta Christian Author/Speaker) today call 770. 814.9304 proudly serving Duluth, GA, Gwinnett County and Beyond. 

“Dare to Attempt Something so Great for the Kingdom of God that it is doomed to failure, lest Christ be in it!” What, then, shall we say in response to this? If God is for us, who can be against us? Romans 8:31

Why are these verses here? Learn how HIS CPA became a Christian Accounting firm visit http://www.hiscpa.com/christian-CPA.html  

We advise clients on: IRS representation, Offer in Compromise, Tax Problems, Incorporation in Georgia, Corporate and Personal Income Tax Returns, Part-time CFO, Virtual Controller, Business Planning, Offer in Compromise, Back Taxes, Business Acquisitions/Sales,  Forensic Accounting, Business Valuations and Bookkeeping. 

Serving Atlanta, Duluth, Gwinnett, Barrow, Bartow, Carroll, Cherokee, Clayton, Coweta,  Douglas, Fayette, Forsyth, Fulton, Gwinnett, Henry, Newton, Paulding, Pickens, Rockdale, Walton, Barrow, Bartow, Carroll, Henry, Newton, Bartow, Walton, Rockdale, Barrow, Spalding, Coweta, Dawson, Douglas, Fayette, Newton, Paulding, Spalding, Walton, Henry, Paulding, Douglas, Coweta, Canton, Covington, Douglasville, Druid Hills, East Point, Forest Park, Griffin, Lithonia, Mableton, McDonough, Milton, Mountain Park, Newnan, Powder Springs, Stockbridge, Union City, Villa Rica, Winder, Woodstock,  Smyrna, Sandy Springs, Marietta, East Point, Gainesville, Snellville, Buckhead, Buford, Peachtree City, Dunwoody, Kennesaw, Decatur, Conyers, Stone Mountain, North Fulton County, DeKalb County, Hall County, Clayton County, Cobb County, Forsyth County, Hart County, Jefferson County, Duluth, Atlanta, Alpharetta, Johns Creek, Lawrenceville, Milton, Norcross, Snellville, Roswell, Buford, Cumming, Grayson, Lake Hartwell, Suwanee, Sugar Hill, Loganville, Lilburn, Dunwoody, Gainesville, Decatur, Atlanta GA, Gwinnett County, North Fulton County, Cherokee County, DeKalb County, Hall County, Clayton County, Cobb County, Forsyth County, Hart County, Jefferson County, Duluth, Atlanta, Alpharetta, Johns Creek, Lawrenceville, Marietta, Milton, Norcross, Snellville, Roswell, Buford, Smyrna, Marietta, Cumming, Grayson, Hartwell, Suwanee, Sugar Hill, Loganville, Lilburn, East Point, Gainesville, Snellville, Buckhead, Buford, Peachtree City, Dunwoody, Kennesaw, Decatur, Conyers, Stone Mountain, Decatur. Sandy Springs, Peachtree City, Douglasville, Newnan, Griffin, Woodstock, Carrollton, Forest Park, Canton, College Park, Cartersville, McDonough, Riverdale, Fayetteville, Covington, Stockbridge, Conyers, Clarkston, Barrow, Bartow, Butts, Carroll, Cherokee, Clayton, Coweta, Dawson, and Douglas.

Atlanta CPA Advises on Helping Understand Tax Benefit of C Corporations vs. the Tax Savings Afforded by S Corporations 

For the past several decades as an Atlanta CPA I have been bombarded by new business owners seeking to understand the tax benefits of a C Corporation versus the permanent income tax savings afforded an S Corporation. To this cause, I recently received this inquiry off of my website:

Hello. I am researching C vs. S Corps. Is double taxation the primary downside of using a C Corp. for a home based business. What if you avoid taking dollars out of the company as distributions by taking salary and other tax deductible benefits instead? 

Many taxpayers come prepared with their own predetermined answer for me to supply them. In those circumstances, it is essential for the CPA to be a quick study and to address their individual needs both accurately and succinctly. To this end I prepared the below response: 

Over the years there have been many very popular books written about this idea and though in adsentitia, they might make sense, in the bigger picture they will lead tax payers to overpay their taxes. Inherent in many erroneous tax arguments is that a taxpayer does not plan to take the monies out of their business. However, I have met to meet the client who is in business to accumulate wealth in the business and not for their selves or their family. Thus, many arguments fail at their basic level in that their initial premise is invalid. Also, it many times scenarios fail to point out the broader picture rather than the tax nuances as a whole and not just a small portion of tax law. Furthermore, I suggest all of my business clients only listen to tax advice from a CPA who has at least ten years of experience with preferably at least five years as serving as a Chief Financial Officer. By gaining the insight of both public and private accounting, a CPA will be better served/ready to address most all of your operational and tax issues.

On His CPA’s website at   http://www.hiscpa.com/article2.html you will find a explanation that will teach you as to the many variables affecting entity selection for your Georgia based business. There you will find many of the rules and regulations regarding entity selection in a straight-forward style which is easy to both digest and understand. Also at  http://www.hiscpa.com/article6.html you can find an actual example of how entities are taxes and the nuances thereof. I have learned that by having a sample or illustration does much to remove the mystery of entity taxation issues.

If you are already a C Corporation and desire to be taxed as an S Corporation you may make a timely election by filing Form 2553. The IRS also allows, if you qualify for certain exceptions, to make the election even if you might have missed the original deadline. To learn more visit http://www.hiscpa.com/blog/2009/05/29/atlanta-cpa-gets-back-81000-refund-from-irs-for-atlanta-client/

I am committed to living out the “Golden Rule” of treating our clients as our friends and giving the best service possible. Our goal of Serving Him as We Serve You, will help you receive the very best advice we can provide. I would welcome meeting to get started and I have time openings later this week and please note: our initial thirty minute consultation is free.

John Dillard is an Christian Speaker/Author and Certified Public Accountant in Duluth, GA. To See how he takes Christ along with him to work visit http://www.hiscpa.com/ and for his latest book Overcoming Life’s 9/11’s: Job’s Journey and a Voice of One: Nehemiah’s Prayer visit http://www.john-dillard.com/ or call John Dillard CPA today at 770.814.9304 (All Rights Reserved) Dare to Attempt Something so Great for the Kingdom of God that it is doomed to failure, lest Christ be in it!    

We advise clients on: IRS representation, Offer in Compromise, Tax Problems, Incorporation in Georgia, Corporate and Personal Income Tax Returns, Part-time CFO, Virtual Controller, Business Planning, Offer in Compromise, Back Taxes, Bookkeeping.

Serving Atlanta, Duluth, Gwinnett, Barrow, Bartow, Carroll, Cherokee, Clayton, Coweta,  Douglas, Fayette, Forsyth, Fulton, Gwinnett, Henry, Newton, Paulding, Pickens, Rockdale, Walton, Barrow, Bartow, Carroll, Henry, Newton, Bartow, Walton, Rockdale, Barrow, Spalding, Coweta, Dawson, Douglas, Fayette, Newton, Paulding, Spalding, Walton, Henry, Paulding, Douglas, Coweta, Canton, Covington, Douglasville, Druid Hills, East Point, Forest Park, Griffin, Lithonia, Mableton, McDonough, Milton, Mountain Park, Newnan, Powder Springs, Stockbridge, Union City, Villa Rica, Winder, Woodstock,  Smyrna, Sandy Springs, Marietta, East Point, Gainesville, Snellville, Buckhead, Buford, Peachtree City, Dunwoody, Kennesaw, Decatur, Conyers, Stone Mountain, North Fulton County, DeKalb County, Hall County, Clayton County, Cobb County, Forsyth County, Hart County, Jefferson County, Duluth, Atlanta, Alpharetta, Johns Creek, Lawrenceville, Milton, Norcross, Snellville, Roswell, Buford, Cumming, Grayson, Lake Hartwell, Suwanee, Sugar Hill, Loganville, Lilburn, Dunwoody, Gainesville, Decatur, Atlanta GA, Gwinnett County, North Fulton County, Cherokee County, DeKalb County, Hall County, Clayton County, Cobb County, Forsyth County, Hart County, Jefferson County, Duluth, Atlanta, Alpharetta, Johns Creek, Lawrenceville, Marietta, Milton, Norcross, Snellville, Roswell, Buford, Smyrna, Marietta, Cumming, Grayson, Hartwell, Suwanee, Sugar Hill, Loganville, Lilburn, East Point, Gainesville, Snellville, Buckhead, Buford, Peachtree City, Dunwoody, Kennesaw, Decatur, Conyers, Stone Mountain, Decatur. Sandy Springs, Peachtree City, Douglasville, Newnan, Griffin, Woodstock, Carrollton, Forest Park, Canton, College Park, Cartersville, McDonough, Riverdale, Fayetteville, Covington, Stockbridge, Conyers, Clarkston, Barrow, Bartow, Butts, Carroll, Cherokee, Clayton, Coweta, Dawson, and Douglas.

Duluth GA CPA on the Successful Business Owner: Addressing Entity Selection

Evaluating what type of entity your business should be, I strive to balance the legal protection issues vs. the tax savings. I have developed the mindset that there is no perfect election but there are ones that are better than others. The below assumptions are based upon the fact that my clients tell me that they want to pay as few tax dollars as legally possible. There are some very specific rules, as well as some generalities. As such, I suggest that you sit down with a tax professional to see how these guidelines relate to you. Having Served as a CPA in Duluth, GA for over ten years, entity selection is perhaps the biggest mistake business owners and entrepreneurs make when getting started. 

                                                RULES OF BEING AN S CORPORATION 

There can be no more than one hundred shareholders and they all need to be U.S. citizens or resident aliens. You almost always have to have a calendar year as your fiscal year. The S Corporation rules have been around since before 1960 and were set up to simplify the rules and regulations of being a business owner. When the corporate return/Form 1120S is filed you do not pay any income taxes as the profits of the business are reported on your personal tax return.  As long as you pay yourself a reasonable salary, you may also take shareholder distributions out of the business that are devoid of FICA/Medicaid taxes. S Corporations like a C Corporation affords the business owner personal liability protection from business risks. Keys to maximizing that protection is to treat the corporation like one by doing all your business in the corporate name, signing all of your documents listing your corporate title,  not co-mingling any personal issues/bills in the corporation, and by having your annual Board of Directors and Annual Shareholder Minutes Meeting.

 Other advantages of being an S Corporation include the ability that if you have corporate losses, and you fund (you put the money in the business) those losses personally, then you can deduct those losses on your personal return.  Losses that are funded by the bank (a direct loan from the bank to the corporation) or by trade creditors are not deductible. Often you can set up a loan so that the bank lends to you personally and then you could do a personal loan to the company which will result in you having contributed basis/the dollars to the business, thus making any losses that you fund deductible. 

                                                      BEING AN C CORPORATION 

C Corporations are ideal for those to whom do not qualify to be an S Corporation such as a public held company that has thousands of shareholders, lots of classes to stocks, and sells its stock to anyone (corporations, individuals, retirement plans, etc).  A C Corporation pays taxes on all its profits first at the corporate level and then when the dollars are paid out to the owners in subsequent years, the owners pay tax again at the individual level. C Corporations, therefore, are exposed to a “double taxation” that none of the other entity types are exposed to. If you think taxes are bad enough paying them once, try paying them twice.

C Corporations can make a timely tax election to become an S Corporation and start taking advantage of tax advantages of being an S Corporation. Care should be taken to ensure that all shareholders understand and agree to become an S Corporation and that there are no or relatively insignificant net operating losses that might still be utilizable if you were to stay a C Corporation. Then after these are utilized/considered, I would affect the change.

 LLC’s, LLP’s & PARTNERSHIPS

All of these entity types would be poor selections for a print shop as they will all result in higher taxes with no additional advantages for the printer. I have personally developed a mindset that if you do not need to be another entity type then you need to be an S Corporation. For example, generally speaking a printer that was an LLC, LLP, or Partnership will pay higher taxes with no additional advantages as opposed to being an S Corporation. 

Below are some of the reasons you might want to be an LLC or LLP are:

-If you were a lawyer or physicians practice then all of the partners personal assets are at risk if one partner does something wrong, while if an LLC or an LLP, only the offending partners personal assets would be at risk. This is because of the professional service statues for these type of professionals, but these rules do not relate to our printer.

-If you were an real estate developer and you had a piece of land that had dramatically increased in value, you can transfer that property to an LLC, LLP, or Partnership without having to pay any capital gains tax. Also with these entity types, you can take shareholder distributions that are not based upon ownership, whereas in an S or a C Corporation they have to be. Again, this does not relate to our printer client.

-These entities can be used also for estate planning purposes as well. 

If you have set up as one of these entity types, it might be advantageous to consider a tax-free merger into an S Corporation which will allow you to retain all the legal contracts, etc. of your present entity while switching to the tax advantages of being an S Corporation.

 I would welcome meeting with you to discuss these and your personal tax situation in detail at your convenience.

 To help find other helpful articles to help you manage your business operationally, strategically and financially visit our articles at http://www.hiscpa.com/articles.html

Award Winning CPA John Dillard is an Christian Speaker/Author and Certified Public Accountant in Duluth, GA. To See how he takes Christ along with him to work visit http://www.hiscpa.com/ and for his latest book Overcoming Life’s 9/11’s: Job’s Journey and a Voice of One: Nehemiah’s Prayer visit http://www.john-dillard.com/ or call John Dillard CPA today at 770.814.9304 (All Rights Reserved) Dare to Attempt Something so Great for the Kingdom of God that it is doomed to failure, lest Christ be in it!    

We advise clients on: IRS representation, Offer in Compromise, Tax Problems, Incorporation in Georgia, Corporate and Personal Income Tax Returns, Part-time CFO, Virtual Controller, Business Planning, Offer in Compromise, Back Taxes, Bookkeeping.

Serving Atlanta, Duluth, Gwinnett, Barrow, Bartow, Carroll, Cherokee, Clayton, Coweta,  Douglas, Fayette, Forsyth, Fulton, Gwinnett, Henry, Newton, Paulding, Pickens, Rockdale, Walton, Barrow, Bartow, Carroll, Henry, Newton, Bartow, Walton, Rockdale, Barrow, Spalding, Coweta, Dawson, Douglas, Fayette, Newton, Paulding, Spalding, Walton, Henry, Paulding, Douglas, Coweta, Canton, Covington, Douglasville, Druid Hills, East Point, Forest Park, Griffin, Lithonia, Mableton, McDonough, Milton, Mountain Park, Newnan, Powder Springs, Stockbridge, Union City, Villa Rica, Winder, Woodstock,  Smyrna, Sandy Springs, Marietta, East Point, Gainesville, Snellville, Buckhead, Buford, Peachtree City, Dunwoody, Kennesaw, Decatur, Conyers, Stone Mountain, North Fulton County, DeKalb County, Hall County, Clayton County, Cobb County, Forsyth County, Hart County, Jefferson County, Duluth, Atlanta, Alpharetta, Johns Creek, Lawrenceville, Milton, Norcross, Snellville, Roswell, Buford, Cumming, Grayson, Lake Hartwell, Suwanee, Sugar Hill, Loganville, Lilburn, Dunwoody, Gainesville, Decatur, Atlanta GA, Gwinnett County, North Fulton County, Cherokee County, DeKalb County, Hall County, Clayton County, Cobb County, Forsyth County, Hart County, Jefferson County, Duluth, Atlanta, Alpharetta, Johns Creek, Lawrenceville, Marietta, Milton, Norcross, Snellville, Roswell, Buford, Smyrna, Marietta, Cumming, Grayson, Hartwell, Suwanee, Sugar Hill, Loganville, Lilburn, East Point, Gainesville, Snellville, Buckhead, Buford, Peachtree City, Dunwoody, Kennesaw, Decatur, Conyers, Stone Mountain, Decatur. Sandy Springs, Peachtree City, Douglasville, Newnan, Griffin, Woodstock, Carrollton, Forest Park, Canton, College Park, Cartersville, McDonough, Riverdale, Fayetteville, Covington, Stockbridge, Conyers, Clarkston, Barrow, Bartow, Butts, Carroll, Cherokee, Clayton, Coweta, Dawson, and Douglas.

Gwinnett County/Duluth, GA CPA Advises on Procedures for Incorporating in Georgia

Incorporating in Georgia is not necessarily difficult but those who do it alone without the services of a good attorney are a sitting recipe for disaster. Frequently I will see clients, who have incorporated themselves soon to learn that although they have filed the Georgia Articles of Incorporation they have failed to: 

-Name Reservation. If so desired the name of the business may be reserved prior to the initial filing of the Articles of the Incorporation. A reservation fee of $25 must accompany the request. To reserve a name visit the Corporations Division web site, http://www.georgiacorporations.org

-Articles of Incorporation. The Secretary of State is required to receive an  original and one copy of the articles of incorporation, a completed Transmittal Form 227, and a $100. filing fee. 

-Select and Legally Name Officers/Managing embers/Partners of the Corporation/Partnership. Officers of a Corporation are people who are duly authorized and able to legally run the business and have contractual ability. 

-Have the Legal Posting Done in the Official County Paper. All incorporated business’s must publish a Notice of Intent to Incorporate in the official legal organ/newspaper of the business initial incorporating address.  A list of legal organs is published at http://sos.georgia.gov/corporations/legal_organs.pdf 

-Establish Company Bylaws. Bylaws essentially law out the intent and purpose of the corporation and establish the rights and duties of duly elected Officers of the business. 

-Issue Stock Certificates. Though in today’s electronic age, the stock certificates of many public companies are tracked and recorded electronically, it is widely recommended that all owners of corporations purchase pre-printed stock certificates for their recording and issuance to their shareholders. 

-Made any Necessary Tax Elections. All newly incorporated business’s will need a new Federal Identification Number/EIN, which can be applied for on-line at www.irs.gov/ Also companies that desire to become an S Corporation/flow through entity for tax purposes must file IRS Form 2553: Election by a Small Business Corporation within 75 days of the beginning of the tax year to which you would like to become effective.  When incorporating with the Secretary of State a company is initially a C Corporation and has to file the S Corporation paperwork to become an S Corporation. LLC’s who wish to become an S Corporation for tax purposes should also file this form within the time allotment referred to above.

On an ongoing basis also many business owners fail to: 

-Have an Annual/ Periodic Board of Directors Meeting. All C Corporations and S Corporations are required by law to have an Annual/Periodic Board of Directors Meeting. Failure to do this may indicate a lack of the owners respect of the “corporate veil” thereby potentially impugning their rights of personal legal protection. 

-Have an Annual/Periodic Shareholders Meeting. All C Corporations and S Corporations are required by law to have an Annual/Periodic Shareholders Meeting. Failure to do this may indicate a lack of the owners respect of the “corporate veil” thereby potentially impugning their rights of personal legal protection. 

-Paid the Company’s Annual Registration Fee to the Secretary of State.  Failure to pay this fee can result in your business being listed as a Non-Compliant Entity or worse yet Administratively Dissolved by the Secretary of State’s office. The registration form should be filed online at www.georgiacorporations.org/ 

-Maintain a Valid Business License. Business licenses are to be obtained from the county the business transacts business in/has a physical presence. If the business is located with a town’s city limits, then the license is procured from the city. 

For all business’s before you incorporate, it is prudent to first talk with a Certified Public Accountant to ensure that you select the right entity type for your business. To gain a basic understanding of these nuances visit http://www.hiscpa.com/article2.html To read more about the incorporation process visit the Georgia Secretary of State at http://sos.georgia.gov/corporations/filing_procedures_corp_2001.pdf  

John Dillard is a Christian Speaker/Author and Certified Public Accountant (All Rights Reserved). To See how he takes Christ along with him to work visit http://www.hiscpa.com/  (An Atlanta CPA firm) and for his latest book Overcoming Life’s 9/11’s: Job’s Journey and to learn about his ministry visit http://www.john-dillard.com/  To contact John Dillard CPA (Atlanta Christian Author/Speaker) today call 770. 814.9304 proudly serving Duluth, GA, Gwinnett County and Beyond.

“Dare to Attempt Something so Great for the Kingdom of God that it is doomed to failure, lest Christ be in it!” What, then, shall we say in response to this? If God is for us, who can be against us? Romans 8:31 Why are these verses here? Learn how HIS CPA became a Christian Accounting firm visit http://www.hiscpa.com/christian-CPA.html 

Atlanta CPA on Helping Georgia Taxpayes Understand & Utilize Net Operating Loss Carry-backs and Net Operating Loss Carry-Forwards

Tax law has long allowed individual taxpayers to carry back and to carry forward tax losses to offset reportable income in other years. Thus if a taxpayer has a business loss that is reflected on a return they can carry these losses either back for forwards thereby legally sheltering income and creating refunds that would otherwise not exist. Net Operating Losses (NOL) are opportunities for taxpayers who have paid taxes in one year to legally offset these monies against NOL’s. Generally speaking a NOL is defined as the extent that allowable expense exceed deferred income and are carried back, by the taxpayer, two years or carried forward twenty years.

Claiming & Deducting a NOL Carryback

If you are individual taxpayer you can carry back your NOL, by using either Form 1045 or Form 1040X to claim your refund. You will get your refund faster by using Form 1045, but you have a shorter time to file it. You can use Form 1045 to apply an NOL to all carryback years. If you use Form 1040X, you must use a separate Form 1040X for each carryback year to which you apply the NOL.

Generally, you must file Form 1045 on or after the date you file your tax return for the NOL year, but not later than one year after the end of the NOL year. For example, if you are a calendar year taxpayer with a carryback from 2008 to 2006, you must file Form 1045 on or after the date you file your tax return for 2008, but no later than December 31, 2009

Claiming & Deducting a NOL Carryforward

If you carry forward your NOL to a tax year after the NOL year, list your NOL deduction as a negative figure on the Other income line of Form 1040.

Corporate Taxpayers

Corporate Taxpayers (C Corporations) are also eligible to utilize the IRS’s Carryback and Carryforward rules and can use Form 1139 which is a Corporate Application for Tentative Refund.

How To Claim an NOL Deduction

If you have not already carried the NOL to an earlier year, your NOL deduction is the total NOL. If you carried the NOL to an earlier year, your NOL deduction is the NOL minus the amount you used in the earlier year or years. NOL’s when carried back to prior years should be applied to the oldest return first and then carried forward. Below you will find an example of a client letter when we applied IRS tax rules and regulations and carried a loss back to prior years receiving thousands in refunds the client did not know they could claim.

What Clients of John Dillard CPA Have to Say…

Mr. John Dillard, CPA

Dear John:

Here’s the information we discussed.  Will appreciate your taking a look at it and letting me know your recommendation.

John, I really appreciate the work you’ve done on my behalf.  You literally saved me thousands of dollars by going back to the prior years and “carrying back” my current year taxes.  You can be sure I won’t forget that or hesitate to recommend you to others.  I had been hoping to find a good accountant that I could trust and rely on to help me with my business and the Lord filled my need when he brought us together through the [Gwinnett] Chamber of Commerce.

Please let me know if I can be of any help to you or anyone you know with any Real Estate matters.  As you know, I have been serving Gwinnett and surrounding counties with their Real Estate needs since 1972.

Thanks again!

Very truly yours,

Beverly

President

We are much more than a CPA firm. For a CPA who We strive to do much more than just prepare your taxes. We look to understand your business from the bottom up, by looking at all facets of your business. We come alongside you in your endeavors to succeed as an entrepreneur. Though we do not expect it, some of our clients have invited us to treasured and special family events. However our long-term goal is that you life, your business and your retirement are all better off as a result of our business relationship.

At His CPA we work to retain the best CPA’s on our staff and whose desire is to serve the Lord, by serving You, our client. Our motto of “Serving Him…by Serving You, One Tax Return at a Time” is not just a watchword but a legacy. Serving clients by the “Golden Rule” is where the “rubber meets the road.” This is just part of a series of letters where we highlight just a few of the recommendations and client letters we have received. Call us today and put our staff to work for you making sure you pay your lowest legal tax, avoid unnecessary penalties and long range planning. We look to provide CPA and Tax Return Advice you can trust. Put an award winning CPA to work for you today as past winner of the Georgia Accounting Advocate of the Year Award.

John Dillard is a Christian Speaker/Author and Certified Public Accountant (All Rights Reserved). To See how he takes Christ along with him to work visit http://www.hiscpa.com/ (An Atlanta  CPA firm) and for his latest book Overcoming Life’s 9/11’s: Job’s Journey and to learn about his ministry visit http://www.john-dillard.com/ To contact John Dillard CPA (Atlanta Christian Author/Speaker) today call 770. 814.9304 proudly serving Duluth, GA, Gwinnett County and Beyond.

“Dare to Attempt Something so Great for the Kingdom of God that it is doomed to failure, lest Christ be in it!”

What, then, shall we say in response to this? If God is for us, who can be against us? Romans 8:31

Why are these verses here? Learn how HIS CPA became a Christian Accounting firm visit http://www.hiscpa.com/christian-CPA.html

We advise clients on: IRS representation, Offer in Compromise, Tax Problems, Incorporation in Georgia, Corporate and Personal Income Tax Returns, Part-time CFO, Virtual Controller, Business Planning, Offer in Compromise, Back Taxes, Business Acquisitions/Sales,  Forensic Accounting, Business Valuations and Bookkeeping.

Atlanta CPA on Substantive Monetary Advantages of Converting Your Georgia C Corporation to a Georgia S Corporation

Recently I converted one of our  C Corporations to an S Corporation. Filing a Form 2553, which is the IRS election that a company makes to be treated as an S Corporation, does this. The company was a profitable one and had income in the hundreds of thousands.  By doing so, the company was able to avoid the double taxation that a C Corporation pays and only pay taxes once at the corporate level. In doing so we were able to save the taxpayer tens of thousands of dollars. S Corporations came into vogue in the 1950’s when Congress passed legislation allowing business owners to pay their taxes on their business profits on their personal return. Although a corporate income tax return is still required to be file for an S Corporation the earnings from the business and their corresponding taxes are paid on the respective shareholders personal return. S Corporations earnings, as well as their shareholder distributions, have to be reported/paid based upon the S Corporations stock ownership.

To illustrate how this might work, let’s assume an effective tax rate of thirty percent for both business owners and individuals. For the most recent client we converted to an S Corporation it was netting before taxes approximately $300,000. Thus, if it had stayed an S Corporation it would have paid approximately $100.000 in corporate income taxes ($300,000 times 33%) as well as then the owner of the business would have paid another $60,000 in taxes (the remaining $2000,000 of cash available after the above corporate income taxes were paid) time their attendant 30% personal income tax rate.

In the most recent actual client scenario we saved the client approximately $60,000. Our fees for doing the conversion were approximately $1000, resulting in a 60 to 1 monetary return for the client. Talk about a great return for your investment! In this particular situation the client, before they met me, were making estimated tax payments based upon their being a C Corporation and that the Internal Revenue Service requires taxpayers to make their estimated tax payments as they go. To help in the cash flowing of this particular situation we advised the client to set up a line of credit so that the cash need of their business would not be unduly negatively affected during the time requirements necessitated making the tax conversion.

As with all tax planning and in dealing with the taxing authorities things do not necessarily proceed as planned. In this particular situation the state of Georgia quickly refunded the estimated tax payments that had been paid. However in dealing with the IRS, they decided that the previously paid estimated tax payments would not be refunded until the S Corporation return was filed. Thus, the advantage referred to above, in having a line of credit available to the business to assist in any normal fluctations in cash flow needs and requirements. 

Though in the above example the tax savings were very high based upon the profit, the savings to a much smaller business are equally important and advantageous as small business owners desire to save tax dollars as well. Whether your business had hundreds of clients, just a handful for only yourself. converting to S Corporation status, if you qualify is a prudent and sound financial decision. To be an S Corporation you have to meet four criteria. They include having less that one hundred owners/shareholders, all of your owners have to be citizens of the United States, you are required to have a calendar year end and to have only one class of stock.

In the particular tax/client situation referred to above, it took a bit more time than anticipated and to get the IRS Tax Problem Resolution involved, the tax savings have been tremendous. Even if your net income is in the tens of thousands rather than the hundreds of thousands, as in the above example, converting to an S Corporation may well be the most profitable transaction you ever contemplate or consummate given the tax saving as well as effort involved.

John Dillard is a Christian Speaker/Author and Certified Public Accountant (All Rights Reserved). To See how he takes Christ along with him to work visit http://www.hiscpa.com/ (An Atlanta  CPA firm) and for his latest book Overcoming Life’s 9/11’s: Job’s Journey and to learn about his ministry visit http://www.john-dillard.com/ To contact John Dillard CPA (Atlanta Christian Author/Speaker) today call 770. 814.9304 proudly serving Duluth, GA, Gwinnett County and Beyond.

“Dare to Attempt Something so Great for the Kingdom of God that it is doomed to failure, lest Christ be in it!”

What, then, shall we say in response to this? If God is for us, who can be against us? Romans 8:31

Why are these verses here? Learn how HIS CPA became a Christian Accounting firm visit http://www.hiscpa.com/christian-CPA.html

We advise clients on: IRS representation, Offer in Compromise, Tax Problems, Incorporation in Georgia, Corporate and Personal Income Tax Returns, Part-time CFO, Virtual Controller, Business Planning, Offer in Compromise, Back Taxes, Business Acquisition/Sales, Forensic Accounting, Business Valuations and Bookkeeping.