Duluth CPA on Incorporating Your New Georgia Business

Now that you  have started a new business and now need tax advice to take your business to the next level and to ensure that you set up as the correct/best legal entity type for your new Georgia business. Choosing to incorporate your business as a corporation will do much to protect your personal assets from legal liability issues while potentially shrinking your overall year-end tax obligation while also providing benefits for yourself, as well as your employees. We are here to serve you as you make this important decision. Over the decades we have helped thousands pursue the dream of owning their own business and helping them understand and utilize the entity choice that is best-suited for their business.

Accordingly, Incorporating in Georgia requires that you file for the company Articles of Incorporation with the Georgia Secretary of State’s Office. Corporations should also be sure to prepare a legal posting/announcement for the legally authorized newspaper in the county’s paper, establishing bylaws, election a Board of Directors, Officers and the issuance of stock.

Though there is never  a good substitute for a good attorney to help you address legal issues, we look to help business owners with many of the varied nuances of the incorporation process to ensure that your new business is duly incorporated and following applicable state law to stay in compliance. The below is a sample letter that might be sent to work with your attorney to address and correct open issues. As always you will want to be reminded to have a valid business license, pay to the Secretary of State your firms annual registration fee, and to have your Annual Board of Directors, Officers and Shareholders Minutes meeting. If you opt to become an S Election you will file IRS Tax Form 1120S when filing your company’s corporate income tax return.

In critiquing the paperwork for your incorporation that you forwarded: 

 I did not see the Required Notice/Legal Posting of Your New Business’s Incorporation, which is required when you incorporate to make a legal posting in the officially recognized newspaper in the county that your business was incorporated.

Stock was authorized as 5000  shares and it appears as if 5500 shares were issued. Please review/advise as you cannot issue more shares than authorized in the initial Incorporating Papers absent a stock split or change the existing authorized shares.

I would have marked S Election request to be in accordance with IRS Rev. Proc. to qualify for being filed more than 75 days after your incorporation date.  If you do not receive any acceptance by 10-25-10, let me know that I will re-file the election marking it accordingly, being sure to properly compete IRS Form 2553:  Election by a Small Business Corporation 

Please be sure to draw up a lease between the two companies to document the rental agreement between the two companies. I would suggest you consider a triple net lease. 

“Dare to Attempt Something so Great for the Kingdom of God, that it is Doomed to Failure Lest God be in it!”

John Dillard, CPA of His CPA, PC (A Duluth GA CPA firm) 1940 Woods River Lane, Duluth, GA 30097  Phone 770-814-9304   http://www.hiscpa.com/    http://www.john-dillard.com/ (All Rights Reserved) To retain John Dillard CPA (An Atlanta Christian Speaker/Author) for your business group or church congregation, you can contact him today at 770.814.9304. To discover John Dillard’s Published Books and their vision visit  http://www.john-dillard.com/

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.

Should a Residential Real Estate Agent/Computer Programmer/Independent Sales Rep be an S Corporation For Tax Purposes? 

Making the Incorporation Process Simple

If you are a Residential Real Estate Agent, Computer Programmer, or an Independent Sales Representative and have not yet incorporated, NOW is the best time to do so. These are just a few of the many business types who should look to or consider being an S Corporation if they qualify. Working with a CPA who is well versed in such matters will do much to limit your overall tax bill and to limit your financial exposure for many years to come. Selecting the entity that is not the best fit for you, can do much to unduly limit your business financial success and ease of operations. Please be advised that there is a move afoot in Congress to address and change tax law in this area. However, even if such a law is passed limiting the advantage of being an S Corporation it will continue to be a prudent choice for business owners. 

Though there are no perfect entity selections, choosing the one that is best for you will do much to assist you in your efforts for business excellence. There are three primary reasons that we see as the most widely recognized incentives to set up your business as a legally recognized entity.

Business Legitimacy: When you incorporate your business it tells the business and social community in which you thrive that you are serious about your operations and that you have taken initial requisite steps to get your business started. All of us want to know that the products and services we buy from others will be supported, so it is with those who buy from us. Frequently governmental agencies/cities/municipalities will not even buy or lend to those who are not incorporated and an informed consumer is always looking esoterically for indicators showing a seller’s commitment to their product/services.

Personal Liability Protection: The U.S. has become a litigious society full of people who are looking to make a fast dollar and there are those about who are quick to find any get rich method they can find.  Nowhere has this become more prevalent than in our court system, which was originally intended and set up to right a wrong. Our courts are full of frivolous cases where greed rather than fairness are the watchword. There is no such thing as perfect protection you can help limit your exposure by acting in good faith, using good judgment and wise discernment, and incorporating to help limit your personal assets from being exposed to corporate liability.

Tax Savings: S Corporations are well suited for business owners such as a Residential Real Estate Agent, Computer Programmer, or an Independent Sales Representative where, after a reasonable salary is paid to all of the active owners, shareholder distributions are legally devoid of FICA/Medicaid taxes. To be an S Corporation you have to meet all four of the below qualifying criteria:

• 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.

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.

Incorporating is the most important tax decision you will ever reach in your business and making it along with a trusted adviser is your best choice. We have helped guide hundreds in this endeavor over the years and are ready to help you.

John Dillard, CPA of His CPA, PC (An Atlanta Christian CPA firm) 1940 Woods River Lane, Duluth, GA 30097  Phone 770-814-9304   http://www.hiscpa.com/    http://www.john-dillard.com/ To retain John Dillard CPA (An Atlanta Christian Speaker/Author) for your business group or church congregation, you can contact him today at 770.814.9304. “Dare to Attempt Something so Great for the Kingdom of God, that it is Doomed to Failure Lest God 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, 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.

Present Tax Law Surrounding S Corporations 

Taxation of an S Corporation 

When a business is an S Corporation all active employee/owners are required to take a fair and reasonable salary. The best test of a reasonable salary is what an owner would have to pay someone else to perform their position and it is a function of their position, responsibilities, and the business’s profit. At present I do not believe your return would pass any type of review and that if you do not go back and declare a salary on your 2009 earnings that you should expect an audit. I would suggest that you ASAP: 

-For 2010 add all active employee owners so that they are receiving a regular paycheck that is reasonable given position and profit.

-That you show a reasonable salary for 2009 while reflecting on the your internal books the payment as a fourth quarter payroll, which will require amending the IRS and State Payroll reports filed and the W-2’s/W-3. If you decide not to do this I believe you should expect and audit. 

Tax law does not allow S Corporation owners to deduct the medical insurance premiums paid on their behalf, unless they receive a salary at least equal to the amount of premiums paid.  Please be advised that there is a move afoot in Congress to address and change tax law in this area. However, even if such a law is passed limiting the advantage of being an S Corporation it will continue to be a prudent choice for business owners.

Health Insurance Issues 

One of the most maligned and misunderstood sections of tax law centers around proper classification of a worker as an employee or an independent contractor. The fact that you choose to pay someone as an independent contractor, when you treat them as an employee, will not preclude you from payroll tax or general liability issues. A careful review of the tax law, established guidelines, as well as a fair and just review of your own facts and circumstances will more aptly enable you to follow the rules to the letter of the law and also its spirit. Independent contractors if they are paid over a prescribed limit are required to receive a Form 1099 from their client which details the independent contractor’s business name, identifying number, address, and amount earned. This form serves, like a W-2 for employees, to notify the IRS of monies earned and taxable. A payroll service will be your most efficient and prudent resource to handle all of your employee’s W-2 filings and payments and Form 1099 issues. As independent contractors are separate and distinct from the firm, it is widely recommended that you do not cover them under your company’s medical insurance plan.

John Dillard, CPA of His CPA, PC (An Atlanta Christian CPA firm) 1940 Woods River Lane, Duluth, GA 30097  Phone 770-814-9304   http://www.hiscpa.com/    http://www.john-dillard.com/ To retain John Dillard CPA (An Atlanta Christian Speaker/Author) for your business group or church congregation, you can contact him today at 770.814.9304. “Dare to Attempt Something so Great for the Kingdom of God, that it is Doomed to Failure Lest God 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, 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.

Duluth/Lawrenceville/Gwinnett/Atlanta CPA on Utilizing Your Bookkeeping, Financial and Tax Return to Gain Key Management Information 

Keep Your Tax Bill As Low as Legally Possible: Only You Can Prevent Undue Tax Burdens

As each business owner/entrepreneurs situation varies dramatically, great care should be afforded in closely held business to ensure that taxes have been appropriately considered for all. When there is more than one partner, it may be wise to consider assisting in making shareholder/member distributions at the highest partners marginal tax rate to ensure that everyone gets at least enough to cover their respective tax obligation. Each of these entities will issue a K-1 to each individual shareholder to reflect their corresponding share of entity profits.

Understanding the Tax Advantages of Being an S Corporation

Although S Corporations have to issue K-1’s and make distributions based upon stock ownership percentages, partnerships, LLC’s, and LLP’s are allowed by law to issue K-1’s and member distributions based on any method that all owners agree upon. This is a distinct advantage partnerships, LLC’s and LLP’s have as agreeing members have the ability to do what they will with the profits whereas S corporations are required to issue distributions and K-1’s based upon each shareholder’s ownership percentage. Your CPA should be your primary financial adviser offering you insight and guidance, even when not initially sought for it is your CPA who is best able to offer information and suggestions to ensure that your business not only survives but thrives. The below is a sample letter we might use to guide a taxpayer with financial insight, while serving as their CPA and Virtual Chief Financial Officer:

Regarding Your 2009 Corporate Returns 

Your 2009 cost of goods sold (cost of doing business) is 90% leaving only 10% to cover salaries and other expenses creating a book loss of $25,000. I suggest ASAP that we review our pricing guidelines and adjust so that margins are at least 20%. This would allow for your operating expenses to approximately remain the same and break-even. To ensure profitability, given present expense levels, I would suggest increasing your gross margin to 25% ASAP. 

Tax law does not allow S Corporation owners to deduct tax losses except to the extent of your tax basis (which is calculated predominantly by a review of retained earnings and current loans made to the company). Therefore this year’s tax loss of $25,000 will be rolled forward to future years when you might have tax basis. 

Tax law requires all S Corporation owners to take a fair and reasonable salary given position and profit. The paying of  excessive salaries, when you have a business/tax loss, has resulted in you paying approximately $14,000 of FICA/Medicaid taxes that would otherwise not be due and payable and $10,000 of 2009 Income Taxes on your 2009 Personal Return that otherwise would not have been due, as your W-2 was taxable, while your losses are suspended as your did not have any tax basis in order to deduct them. 

John 15:13 Greater love has no one than this, that he lay down his life for his friends. 

John Dillard, CPA of His CPA, PC (An Atlanta Christian CPA firm) 1940 Woods River Lane, Duluth, GA 30097  Phone 770-814-9304   http://www.hiscpa.com/    http://www.john-dillard.com/ To retain John Dillard CPA (An Atlanta Christian Speaker/Author) for your business group or church congregation, you can contact him today at 770.814.9304 

His CPA PC…A Christian Atlanta CPA Firm: Never Underestimate the Long-Term Benefits. Dare to Attempt Something so Great for the Kingdom of God that it is doomed to failure, lest Christ be in it! 

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. 

Alpharetta/Gwinnett/North Fulton CPA Advises on Incorporating Your New Georgia Business 

Incorporation: Choosing a Entity Type for Your New Georgia Business

Evaluating what type of entity your business should be, we strive to balance the legal protection issues vs. the tax savings. Over the years, we have developed the mindset that there is no perfect election but there are ones that are better than others.

My clients tell me that they want to pay as few tax dollars as legally possible. Below are some very specific rules, as well as some generalities. If you are considering incorporating in Georgia, we suggest that you sit down with a tax professional to see how these guidelines relate to you.

Understanding S Corporations

S Corporations can have no more than one hundred shareholders and they all need to be U.S. citizens or resident aliens. This corporation type almost always has to have a calendar year as the fiscal year. S Corporation rules have been around since the 1950s and were set up to simplify the rules and regulations of being a business owner.

Liability Protection and Subchapter S Corporations

An S Corporation, like a C Corporation, affords the business owner personal liability protection from business risks. Some of the keys to maximizing that protection are 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.

Choosing an Entity Type for Your New Georgia Business
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. See http://www.hiscpa.com/article2.html

 Determining How Your New Georgia Business Will Be Taxed: 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. Visit http://www.hiscpa.com/article2.html

Getting Your New Georgia Business 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. Go to http://www.hiscpa.com/incorporating-guide.html

Determining Where to Incorporate Your New Geogia Business
The decision of where to incorporate your business is a critical component of getting your business started. Learn what you need to know to make a well-informed decision. See http://www.hiscpa.com/incorporating.html

 Gerogia Corporation Forms and Registrations Checklist
Whether you are just incorporating or have been in business for years. This summary will enable you to quickly locate the forms and guidance you need to ensure your business maintains tax compliance. Visit http://www.hiscpa.com/checklist.html  

Incorporating Your Issues for Your New Georgia Business Leadership

Knowing who will lead your business, their morals, beliefs and work ethic are essential to success in your new business venture. Determining who should be at the helm and who should follow will do much to avoid needless delays and time lost in aimless decision making. http://www.hiscpa.com/business-leadership.html

Incorporating the Details for Georgia Business Owners
Learning the basics of incorporation will do much to ensure that you do not make a costly mistake. Discovering the details of what all is involved in your new Georgia business will much to ensure you avoid costly mistakes and blunders. http://www.hiscpa.com/incorporating-details.html

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.

A Christian CPA Firm: Never Underestimate the Long Term Benefits 

John Dillard is an Christian Speaker/Author and an Atlanta CPA. 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

Duluth/Alpharetta/Atlanta CPA Advises Atlanta Taxpayers on Converting their Business from an LLC to an S Corporation

One of the most frequent questions we get each and every week is from Georgia business owners seeking to discover what entity type they should be. Below is a sample letter that we might receive researching entity selection issues:  

Love your site as it has given me tons of information to consider. I am starting my graphic design business and I’m in the process now of getting my company rolling. I wanted to know what your consult fee is, how much do you charge for CPA services and if you have dealt with single-member LLCs which are disregarded entities (non-corp.)? I have learned about what taxes I would need to pay and which ones I don’t, but having someone help me to get my information solidified is always needed. I am a Christian brother, so I know any help would be sincere and helpful. Thank you in advance. Romans 1:16 

Below is my response: 

LLC’s came in vogue approximately twenty years ago when the state of Georgia enacted legislation allowing an LLC (Limited Liability Company) 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 not have been incurred if the business was 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 those taxes reflected on W-2’s. For tax purposes, the law allows an S Corporation to legally convert to being an S Corporation as long as all active employee/owners pay themselves 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.  

There are four rules to qualify for being an S Corporation.  You must Have a December 31st year-end, Have less than 100 shareholders, Have shareholders who are U.S. citizens or resident aliens and Have only one class of stock.  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. 

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.

A Christian CPA Firm: Never Underestimate the Long Term Benefits 

John Dillard is an Christian Speaker/Author and a Duluth GA CPA. 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.

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.

Determining to Set Up Your New Ministry as a Non-Profit or an S Corporation 

Frequently I get called to help those setting up a new entity striving to learn whether their ministry should be a 501(c) or S Corporation. A recent statistic indicated there were approximately 640,000 of active domestic entities in Georgia and 58,000 which are foreign (incorporated in other states). Of those, 303,000 of the domestic corporations are for profit, 65,000 are non-profits, and 246,000 are Limited Liability Companies. LLC’s continue to be very popular since their becoming possible in Georgia approximately fifteen years ago and continue to be used more than ever before. Due to their ease of formation, the lack of a need for a formal Board of Directors, and that there is no requirement for owner/active members to take a salary, the administrative burden of operating an LLC makes it an attractive choice when considering corporate structure. 

If you believe you will be raising a substantial portion of funds from those seeking to make charitable contributions to a qualifying organization or a 501(c) would generally be a prudent choice. However, if your new venture or ministry will be predominantly self-funding from business operations, then an S Corporation might be a wiser choice. It is prudent to keep in mind predominantly and measure the amount of additional tax and administrative responsibilities of having a non-profit against the potential funds/monies raised through contributions versus operations. 

An S Corporation has the added advantage (as opposed to an LLC) of not requiring FICA/Medicaid taxes to be paid on shareholder distributions as long as a fair and reasonable salary is paid. As your results and how you plan to utilize your corporate entity can vary substantially from that of others, be sure to consult with your CPA for all of the possible tax/operational consequences which you will be facing as your proceed with your business. An LLC or LLP might be a much better choice for those who are doctors, lawyers, engineers, renting or developing commercial or residential real estate, have more than 100 shareholders or have investor/owners who are not U.S. citizens or resident aliens.

To read more and see which entity type is best for you visit http://www.hiscpa.com/article2.html

John Dillard is an Christian Speaker/Author and Certified Public Accountant. 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 visit http://www.john-dillard.com/ or call John Dillard CPA today at 770.814.9304

 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 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, Gwinnett County, 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, Douglas, Fayette, Forsyth, Fulton, Gwinnett, Haralson, Heard, Henry, Jasper, Lamar, Meriwether, Newton, Paulding, Pickens, Pike, Rockdale, Spalding, Walton, 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 and Woodstock

Atlanta CPA Gets Back $81,000 refund from IRS for Atlanta Client

John Dillard CPA of His CPA PC just received notice today that the IRS has issued a check to refund one of his Atlanta based clients over $81,000. “Though it took a bit longer than expected,” the client was able to deposit the monies back into their accounts and to gain a refund from the IRS which ultimately resulted in a tax savings to a client of approximately $62,000 in tax savings dollars.

The IRS has long had a process where a company who was an LLC or a C Corporation and who desires to be an S Corporation to make an election to do so. This process is documented and performed by the filing of IRS Form 2553, which is the Election to be a Small Business Corporation. To file for S Corporation status the easy way, this election should be filed within 75 days of incorporation date (if an new company) or within seventy-five days of the tax year to which it relates. S Corporations status allows for the legal avoidance of “double taxation” as C Corporations have to pay taxes first at the corporate level on any retained profits and then again at the shareholder level when monies are paid out to owners in either the form of dividends or salaries. LLC’s continue to be responsible to pay FICA/Medicaid taxes on all of their net earnings out of the business, whereas an S Corporation are only required to pay these FICA/Medicaid taxes on salaries paid out to all employees, including active employee owners. Care should be exercised as tax law requires that all active employee owners take a fair and reasonable salary given position and profit.

If you fail to make the seventy-five day time requirement the IRS has long had a process where one you can formally appeal requesting the S Corporation date you prefer. Care should be taken when performing this procedure and working with a CPA is your best bet to ensure that your S Election request is granted. Talking with the IRS about any substantive tax issue that it is widely recommended that you sign a Power of Attorney, which if Form 2848, to have your CPA talk to the IRS on your behalf, which will dramatically and exponentially ensure a higher success rate than going it alone.

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