Accounting News and Notes

Duluth/Gwinnett CPA: 2013 Tax Planning

The train is leaving the station and it is well past time to get on. Accordingly we advise our clients to at least formally twice annually to prepare a written tax plan so as to ensure there are no undue surprises at the end of the year. If you are a business owner of an LLC, an  S Corporation, a Partnership or a proprietorship it is essential to work closely with your CPA on this most important tax issue. The below is a sample letter we might send to a  client detailing the results of their tax  planning:

Based upon your advice that:

Your anticipated current taxable income will be approximately the same as the prior year we adjusted your monthly federal and state withholding for the rest of the year and doing a larger paycheck  now to get your year to date federal withholding in line.

The federal withholding amount we established for your new monthly payroll can be used for next year  if its estimated taxable income is anticipated to be approximately the same as in prior years whereas the total state withholding amount should be adjusted to $1,000  monthly .

You anticipate your other income, itemizations and exemptions to be approximately the same as the prior year

This is to confirm that your marginal tax rate for the IRS & GA is 28% and 6% respectively.

Please be sure to forward to me a copy of your year to date check stub after you do your next regular monthly paycheck and the larger catch-up paycheck to get your year to date withholding in line and to withhold for the Owner 401K amount.

That after you withhold this from his paycheck and  that you are going to fund this along with a check with $20K of funds from the business as the employer portion for a total of $37.5K to the broker of your owner 401K funds. Please note the overall limit for 2013 from all sources (employer and employee combined) for 2013 is $51,000.

To learn more:

Year End Tax Planning: What Businesses Should Do Now
If you fail to plan, you are preparing to be surprised. Learn how you can get ready now for your year-end liability and survive the year-end tax preparation process. Visit http://www.hiscpa.com/year-end-tax-planning.html

Should You Maximize Profit or Work to Pay Fewer Taxes?
Tax Planning is an art under-girded by the science of the tax code and proper planning. Learn what you need to know to be a wise and judicious steward of your business. See http://www.hiscpa.com/profit-maximization.html

Atlanta CPA: Understanding Tax Dynamics of Entity Selection

Evaluating Partnerships, LLC’s and S Corporations

Below is a sample letter that we might receive off of our web site about a tax question for a new business that has recently incorporated: 

I have a question I hope you can help me with based on your articles on the Web about and partnership law. In the prior year a client organized as an LLC – taxed as a general partnership with US individuals as partners. This year we would like to advise them to convert to an S-Corporation by filing form 2553 to be taxed as an S Corporation. 

One partner is concerned there may be “recapture” of prior depreciation under  or the loss of future depreciation or amortization under  if this entity ceases to be a partnership and elects to be an S Corporation.

My conclusion is : No The entity continues as is Continue to depreciation / Amortize the assets including the 754 basis adjustment. Can you confirm or provide guidance? Thank you

Below is my response:

Thanks for visiting www.HisCPA.com  I recommend you use a CPA firm for all of your business returns. 

If you are looking for a new CPA firm please send along to the below address copies of the impacted returns along with your contact information and a small retainer and I will be happy to help. I have learned many times over again that not using a CPA firm for your business returns is a recipe for overpaying your corporate income taxes. The complexities of IRS tax law, the many deadlines and variances may cause many to fail by the wayside to ensure that they pay only their lowest legal possible tax. Not using a CPA is similar to one performing their own major surgery which is almost guaranteed to cause their patient undue harm. Please be reminded that your initial business consult with our firm is free.

“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 CPA firm) 1940 Woods River Lane, Duluth, GA 30097  Phone 770-814-9304   http://www.hiscpa.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.

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 Virtual CFO… Staying the Course in a Down Market

Business & Financial Planning

There are a few issues which always need to be in the forefront of every business owners mind as they think about and plan for the future. Planning is hard enough as it is without being sensitive to variables which are prone to have a profound impact on your business. Keeping these items in your mind and viewfinder will help you constantly stay update on your whereabouts and how to get back on track to achieve your goals. That is where a Virtual CFO comes in being able to both help you articulate and document your goals as well as their implementation and your accountability. These steps will do much to help you achieve your business goals.

4 Requirements to  Business Success

-Document your goals in writing. You are most apt to achieve your goals if they are clearly delineated and detailed. Absent a firm goal you constantly refocus on you are most apt to miss the mark of what you were shooting to obtain in the first place. Always remember “if you shoot at nothing, you are going to hit it every time”.

-Expect the unexpected as “life is what happens while you are busy making plans”.  Your plans should allow for inflation, anticipate variances, and other unknowns which are bound to impact your decisions and daily operations. For example, it is prudent to always live below your means as life and business issues will frequently void the best laid plans.

-Always keep in mind a reasonable rate of return not expecting great rates of returns on your investments to always be consistent. Maintain an healthy degree of risk while not being too aggressive or passive in your investment style and decisions. Don’t make speculative investments trying to “hit the home run” as it is often the turtle and not the rabbit which wins the race. Maintain a consistent strategy of investing whether it be an up or down market. Be realistic with your investment goals whether they be dollars invested, rates of return, or anticipated age of retirement while always allowing for a bit of wiggle room for those unexpected expenditures.

-Stay current with your financial adviser, CPA, attorney, and banker being sure to know when to have meetings with each to ensure you are on the right track to take advantage of law changes, trends in the marketplace, and may of the other general tools available to an adviser to help manage you and your financial affairs throughout the years. As a general rule, I would suggest meeting with each of these professionals at least once annually and more often if the environment/situations change dramatically.

These tidbits will greatly assist you in staying on your toes as you plan the future success of your business and for your retirement.

JOHN WOODEN:
“FAILURE TO PREPARE IS PREPARING TO FAIL. BE QUICK, BUT DON’T BE IN A HURRY. DON’T MISTAKE ACTIVITY FOR ACHIEVEMENT. THE PURPOSE OF DISCIPLINE ISN’T TO PUNISH BUT TO CORRECT. THINGS TURN OUT BEST FOR THOSE WHO MADE THE BEST OF THE WAY THINGS TURN OUT.”

www.HisCPA.com  A Christian CPA Firm in Duluth GA Proudly Serving Suwanee, Lawrenceville, Snellville, Lilburn, Duluth, Norcross, Peachtree Corners, Atlanta, Gwinnett, Johns Creek, Roswell, Forsyth, Flowery Branch, Buford, Dunwoody, Grayson, Alpharetta, Sandy Springs & Tucker as an Award Winning CPA

Gwinnett/Duluth CPA: Making Sure You Pay Your Lowest Legal Possible Tax

Getting Tough Tax Questions Answered by Award Winning Atlanta CPA Firm

Making Sure You Pay Your Lowest Legal Possible Tax is Job #1 at His CPA PC each and every day. Like the old commercial, we earn your trust one tax return at a time.

Retaining an Award Winning CPA is one of the best things you can do to make sure that your company’s financial statements are correctly compiled, IRS Representation issues are well done, and that your corporate and personal income taxes are done ensuring that only your lowest legal possible income tax is paid.

Gwinnett CPA: Making Sure You Pay Your Lowest Legal Possible Tax

Determining an individual’s adjusted gross income is an integral step in calculating taxable income. AGI/Adjusted Gross Income is essentially all of an individual’s taxable net income from all sources less certain “front page deductions”.

The calculation of taxpayer’s gross income is essentially a total of all of the taxable income received during the tax year–typically the twelve months ending December 31st. For many taxpayers gross income is calculated by adding together the total of:

• W-2′s
  Care should be taken to ensure that this amount is obtained from Box 1 of employees W-2. This amount is frequently different from an employee’s gross salary/compensation as a result of taxable fringe benefits, the deductibility of 401K amounts or Section 125/Cafeteria plans an employee pays, moving expenses, etc.
• Interest Income and Dividends
  Banks, savings and loans and investment houses are required to be reported to each account owner by social security/federal ID # reflecting the taxable portion of such monies received. These amounts are reflected on Schedule B of a taxpayer’s individual return.
• Capital gains/capital losses
  These amounts are most often gains or losses resulting from the purchase and sale of stock or other investment assets. Typically brokerage houses (if you buy and sell with the same brokerage house) will report the specifics required to report all the information, which is reflected on an individual taxpayers schedule D.
• Investment Income
  Investment income is a taxpayer’s net income received from investments in flow through entities/businesses, which are reported by the company to an individual shareholder, typically via a K-1. These amounts are then reported on the taxpayer’s Schedule E that is a part of their personal return. Profits and losses from rental properties owned by an individual taxpayer are also reported here. Wise counsel should be sought out in the preparation of these schedules as often losses are not deductible because there is not sufficient tax basis to do so or if the real estate losses are passive (i.e. the taxpayer is not “actively” as per the narrowly defined by the IRS). Typically however, if an individual qualifies, many of these items can be rolled forward to years when a taxpayer does qualify.
• Alimony Received
  Both the recipient and the payee should ensure that they accurately report the same total and detail of their alimony payments. Generally, in order for monies to qualify as true alimony (which is deductible by the payer and taxable to the payee), payments have to be indefinite in duration. For example, if alimony payments are front-loaded (i.e. the payments are higher in the first few years), the IRS has the ability to invalidate these as alimony payments believing them to be actually part of the property settlement rather than actual periodic living expenses for which true alimony payments are deemed to represent.
• Business Income
  Business income for an unincorporated business/a proprietorship is reported on a Schedule C. The revenues and expenses of a proprietorship are reported resulting in a net income or loss, which is called forward to a taxpayer’s individual return. Net income is then also reported on a Schedule SE where the applicable Self-Employment Taxes are reported and calculated.
• Pensions
  Pensions, after retirement are reported and taxed at a taxpayer’s ordinary income rate. Absent a tax exception, premature distributions are also subject to a ten percent penalty in addition to being taxed at ordinary income rates for both federal and state income tax purposes. Distributions of this type are one of the most problematic areas for taxpayers as they fail to contemplate the total tax liability and penalty which will due, falsely believing that any withholding done on the distribution itself will be sufficient.
• Social Security Income
  Social Security income is reported on a taxpayer’s individual return and is taxable if a taxpayer’s aggregate gross income exceeds certain levels.
• Unemployment Insurance and Other Income
  Unemployment insurance and any other taxable income a taxpayer receives such as sales of real estate, prizes, awards, gambling income, etc are also reported as an integral part of a taxpayers taxable income.

There are deductions that are listed on the front/first page of Form 1040. Predominant examples of these types of deductions include:

• IRA’s (Individual Retirement Accounts)
• Student loan interest and tuition
• Alimony paid (Please note child support payments paid are not deductible by the payer or taxable to the payee)
• One half of any self employment tax paid

The total of these deductions are then subtracted from a taxpayer’s gross income to determine their AGI. Calculating this total is critical to the correct preparation as generally it is solely an employee’s itemized expenses or standard deduction and a taxpayer’s exemptions that are deducted from AGI in determining their taxable income. Correct computation of taxpayers AGI is also critical because many of the thresholds for determining deductible amounts of certain itemized expenses are based upon this total. Certain other deductions, credits and even the deductible amount of one’s itemized deductions are based/dependent upon this total.

At HIS CPA, P.C. we are committed to fast and accurate service. Call today and make us a part of your management team focused on planning for your long-term future.

www.HisCPA.com A Christian CPA Firm in Duluth GA Proudly Serving Suwanee, Lawrenceville, Snellville, Lilburn, Duluth, Norcross, Peachtree Corners, Atlanta, Gwinnett, Johns Creek, Roswell, Forsyth, Flowery Branch, Buford, Dunwoody, Grayson, Alpharetta, Sandy Springs & Tucker as a Faith Based CPA

Duluth GA CPA: Getting Tough Tax Questions Answered

Hiring an Award Winning CPA is one of the best things you can do to make sure that your company’s financial statements are correctly compiled, IRS Representation issues are well done, and that your corporate and personal income taxes are done ensuring that only your lowest legal possible income tax is paid.

One of the first surprises many business owners face when incorporating their business is discovering a listing of the individual due dates associated with the filing of their incorporated entities and the requisite attendant returns. Although the IRS does allow for the proper extension of returns, there is little “wiggle room” for the prompt payment of all taxes. For nearly a century the IRS and states have been a pay as you go system requiring all legally incorporated entities and their respective members/owners/shareholders to pay their appropriate taxes thereon. Depending on your entity type as detailed below you will have listed the appropriate responsibilities thereon.

S Corporations, Partnership Returns, LLC’s, and LLP’s

Tax law treats partnerships/LLC’s/LLP’s and partnerships as disregarded entities. In layman’s terms this means that the entities income flows down through the entities owners and each individual shareholder/partner is then responsible for the payment of respective taxes. Thus, it becomes imperative to not only consider the overall taxable income of the entity to which you belong but also the taxes which will be due on the tax items flowing down to the individual owners.

As each owner’s 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.

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.

Entity Forms Required and Dates

S corporations are required to file a Form 1120S by two and one half months after the close of a business tax year unless they have filed a timely extension. Single member LLC’s can file, as a part of their personal return, a Schedule C and attendant schedules for self-employment tax, depreciation, etc. Multiple member LLC’s, LLP’s, and Partnerships are required to file a Form 1065 to report the entity’s profits and is due by three and one half months after the close of their tax year, unless a timely extension has been filed.

Great care should be given in all of these cases to ensure that all of the attendant taxes due on a business’s earnings have already been paid in accordance with IRS and state guidelines as taxes, per IRS code, are almost all, if not all, due by the end of a tax year or evenly throughout the year. Working closely with your CPA on at least a quarterly basis is a critical component of ensuring that you pay your taxes as you go, thereby avoiding unnecessary headaches, penalties, and interest.

Shareholder/Member Distributions vs. a K-1

Shareholder and member distributions are one of the most frequently confusing issues facing business owners. All too often I have seen this pitfall result in a business owner failing to have paid enough in taxes for their year-end liability. A shareholder, partner, or member of all flow through entities described above are required to report, as part of their taxable income calculations, the respective K-1′s issued to them. Frequently however, owners inadvertently believe that they are to pay taxes solely on their distributions rather than their K-1. Many times owners have discovered much to their dismay that their corresponding tax obligation is much higher than anticipated. Working with close contact and collaboration with your CPA is one of the best ways to mitigate any undue surprises.

C Corporations

C corporations are required to file a Form 1120 which is due two and one half months after the end of a business’s tax year. C Corporations, unlike the flow through entities above, are required to make estimated tax payments. A C corporation is therefore subject to the “double taxation” referred to so often when one hears of a corporation first paying taxes at the entity level and then taxes are paid again at the personal level when salaries and dividends are paid/declared.

HIS CPA PC believes that the best defense is a good understanding of tax law and having a CPA who anticipates your needs and works for your best advantage. Let’s get started today on planning your wise entity choices.

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/ 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 Proudly Serving as a Gwinnett CPA for Decades

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, Back Taxes, Business Acquisitions/Sales, Forensic Accounting, Business Valuations and Bookkeeping.

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

Duluth/Gwinnett CPA: Life is a Journey and not a Destination.

Are you moving closer to Heaven or further away?

Are You Setting Aside Quiet Time for Christ?

Do you want to Grow?

Do you really?

Why do so many of us spend four years in college and more just to get ready to get a job, when our Bibles remain idle and unused?

If your Bible in mint condition or is it tattered with the pages scattered with notes of decades of study with the binder in disrepair?

Why do so many of us say we want the truth in our lives when all we do is wait. Wait for someone else to give us what we want. Wait for others to change. Wait for God to give us (with no effort whatsoever on our part) what we want.

Just as a soldier is not ready for war without training so are we as Believers need to be ready for life being full of God’s design for our lives and His perfect will: The Bible.

So I ask you Do you want to Grow?

Do you really?

If you do not do it already, I highly recommend that you develop a habit of having a period during your day for “quiet time” with the Lord. I have been doing this for a couple of years. I do it very early in the morning between 4 and 5 am. But you can do it whenever you can work it into your schedule, but please make every effort to do so.

I first make me a good cup of coffee, go out onto my front porch, generally sit on my gliding sofa and prepare myself for my very close visit with Him. By preparing myself I mean clearing my mind of everything I possibly can and totally focus on Him. Sometimes I just say “here I am Father, I am listening” and don’t say anything else. Sometimes I may say a short prayer like, “Heavenly Father, I humbly come before you this morning, basking below the beautiful stars you have laid out for me. You are so awesome and your power is unimaginable. I pray Father that whatever You have to say to me this morning, I use it to your praise and glory. Thank you Father for loving me first. I love you. In the Name of my Lord and Savior, Jesus Christ, Amen.

After that I just sit there and listen. Sometimes God’s Counselor, the Holy Spirit, just tells me to stay on the path He has chosen for me and keep spreading the Gospel at every opportunity. Sometimes He may give me an idea to write about. Believe it or not, sometimes He just relax and enjoy all the materials things He has blessed me with over all these years and now. Enjoy the time with my family, friends, and give my time and talents to those who need a friend. Talent and time to those who need a friend is something He kept telling me for a long time and I finally realized He meant the people in nursing homes. I have been doing this for about two months now and I cannot tell you how much I am enjoying being with these men and women. I just pray it is as much a blessing to them as it is to me.

Finally, if there is really something on my mind that I need His guidance on, I get on my knees in front of that glider and pray with the most open heart I can. It may be something for or about me or someone else. This is the greatest time to reach out to Him. As unworthy we are, Jesus Christ has torn down the barrier, and we can come to Him by His grace and mercy, and personally ask for all. In the Book of James he tells us to be sure when you ask, you absolutely believe the He can and will do it. Otherwise your faith is empty. Believe and wait. It will come in His time, not yours. If it is in accordance to His will, it will happen.

Quiet time with Him is the Greatest time of my day. I think it will be for you too.

In the love of Jesus Christ, Gary

www.HisCPA.com A Christian CPA Firm in Duluth GA Proudly Serving Suwanee, Lawrenceville, Snellville, Lilburn, Duluth, Norcross, Peachtree Corners, Atlanta, Gwinnett, Johns Creek, Roswell, Forsyth, Flowery Branch, Buford, Dunwoody, Grayson, Alpharetta, Sandy Springs & Tucker as a Faith Based CPA

Duluth/Gwinnett CPA: Tax Preparation Made Easy…One Detail at a Time

Even though the final due date for the filing of your personal returns has lapsed, do not delay and be sure to file ASAP to avoid unnecessary fines and penalties from being assessed. The below is a sample letter we might use to send to the IRS to ensure that we have ample time to get all of their tax returns and filings current to ensure that a taxpayer pays only their lowest legal possible tax. Please keep in mind to work with a CPA who offers a free initial consultation. Attached is a letter we might send to a client to ensure that all of their open tax issues are correctly addressed:

1-16 initial meeting to address tax issues (please note first half hour was not billed)

1-18 strategic meeting to address open tax issues

Preparing  Personal Return and Amending your 2009 Personal

Initial Set up of files for Corporate Tax Return Preparation and review of files

This will confirm that:

It is essential to get all requested information to me ASAP.

Please let me know ASAP for all tax years from 2008 forward what returns have been filed for your personal returns and your corporate returns.

Please let me know ASAP for all tax years from 2008 forward what returns have been filed for your corporate payroll tax reports and to forward to me copies of all filed returns by year.

For the 2010 tax year please forward me the original tax forms/tuition statements that created the tax credits listed on Form 8863 of your personal return

Please forward me everyone in your families birth-date.

Please get to me the property taxes paid on your cars for all tax years.

This is to confirm that you are handling all payroll and 1099 issues, your county property tax report, your business license, and that you are aware that all workers who are indeed employees should be paid via a W-2.

This is to confirm that you are aware of the need to have annual Board of Directors, Officers, and Shareholder’s Minutes meetings and that each year you should pay the annual fee with the Secretary of State’s Office to renew your corporations annual registration.

This is to confirm that all active employee owners are required by tax law to take a fair and reasonable salary given position and profit.

Please be reminded that you are required to keep a by day log to support business miles. Please be reminded that I suggest we tax plan twice a year as both the IRS & GA are pay as you go systems and they will assess penalties and interest for any late payment.

This will confirm that all of my work will be done at our standard hourly rate of $195 per hour, that invoices are due upon receipt and that you personally guarantee payment of all invoices, and that you acknowledge that both you and your business/corporation are both jointly and severally liable for all billings.

It is an honor to serve you. If you know anyone looking for a Good CPA, please let me know or feel free to refer them to my web site at www.hiscpa.com

Very Sincerely Yours, John C. Dillard, CPA President

www.HisCPA.com A Christian CPA Firm in Duluth GA Proudly Serving Suwanee, Lawrenceville, Snellville, Lilburn, Duluth, Norcross, Peachtree Corners, Atlanta, Gwinnett, Johns Creek, Roswell, Forsyth, Flowery Branch, Buford, Dunwoody, Grayson, Alpharetta, Sandy Springs & Tucker as a Faith Based CPA

Duluth/Gwinnett CPA: Determining Withholding for S Corporation Owners

Atlanta CPA Advises on How to Determine What Your Withholding Should be for S Corporation Owners

To preclude the responsibility for an S Corporation owner to also have to pay estimated tax payments to both the IRS & Georgia, it is prudent to work closely with your CPA to adjust/increase your withholdings accordingly.

A Georgia LLC, LLP, partnership or sole proprietorship, you are subject to the 15.3% Self Employment/FICA/Medicare tax on all of your net earnings. The S corporation, on the other hand, pays you a deductible salary (which is subject to FICA/Medicare), and then the profits flow through your personal return via a Schedule K-1. This K-1 income allows for permanent deferral of the FICA/Medicare tax. The Georgia S corporation allows small business owners to legally save taxes as long as they pay a fair and reasonable salary to themselves. To learn more about how different entities are taxed visit http://www.hiscpa.com/article6.html

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.

Converting Your LLC to an S Corporation for Tax Purposes

An LLC is legally allowed to convert over to an S Corporation for tax purposes which can legally allows the savings of thousands annually. Although being an LLC offers some flexibility (no Board of Directors/ease of formation), being an LLC will typically result in many businesses paying an higher tax bill on its earned income.

If an LLC converts to an S Corporation for tax purposes, it remains an LLC for all other issues thus maintaining the advantages initially desired. When a business converts over to 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. If an LLC converts over to an S Corporation for tax purposes its federal and state income taxes will remain essentially the same. However, an LLC pays FICA & Medicaid taxes on all of its net earnings/earned income whereas an S Corporation will be obligated solely on its salary/W-2 wages.

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 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 Atlanta 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/Gwinnett CPA: Donation Needs for Family Mission Trip to Navajo Indian Reservation

Hi All! Hope you have an awesome last day of school (at least for Gwinnett County) and are ready to step out in a month for a great adventure. As you know, the numbers on the trip have jumped up and down this year and we are at 39 people as of today. To put a dollar figure on that, we are $3960.00 less but our expenses generally stay the same. With a reduced attendance at church, we are also WAY down on our donations for school supplies and we may have to scrap that this year because that is a huge expense with no income to counter balance it along with the book bags. The donation list I sent out prior to this email has a list of all the donations that we need but the major one at this point is financial…the children have grown to depend on these book bags to get them through the school year as well as back and forth home on the weekends. I am working with someone to try and get the lowest possible rate but they will not be free.

So, when you are out and about, stop and tell people what you are doing, and what you need for the trip and you will be amazed at what people will do to help. Write support letters to friends and family to not only receive financial donations, but more importantly, prayer and a part in your mission trip.

KUDOS to Inga Grier (who most of you will not get to meet until we get to the airport since she is in Gray, GA) but last year went for the first time and raised all of her travel money through support letters. When she said she was going this year, she asked for prayer to get enough money to go…she is now over $200.00 over her entire trip cost – NO FEAR! And knowing that the worst someone can say is No.

You can consider this my official fundraising letter and annual fundraising event….help us get the word out.

I have attached some support letter ideas that might help in getting donations, but sounds to me like Inga might be the best one to contact if you need a great letter.

Have a very, very blessed day!

www.HisCPA.com A Christian CPA Firm in Duluth GA Proudly Serving Suwanee, Lawrenceville, Snellville, Lilburn, Duluth, Norcross, Peachtree Corners, Atlanta, Gwinnett, Johns Creek, Roswell, Forsyth, Flowery Branch, Buford, Dunwoody, Grayson, Alpharetta, Sandy Springs & Tucker as a Faith Based CPA

Duluth/Gwinnett CPA: Should You Put Real Estate in a Self-Directed IRA?

The below is a sample inquiry that we might receive off of web site considering putting real estate into a self-directed IRA.

I am a retired and cannot work on a full or part-time basis consistently. I need your help in deciding( options) which is the best way to go with my real estate investments. Should I purchase them through my-self directed (deductible) IRA or should i open an entity such as a LLC. With a lack of knowledge i could open PANDORA’S box if i don’t consult a professional first. With that said. My 2 main Questions to you are How can you help me and what will it cost? 

Below is my response:

Thanks for visiting www.HisCPA.com 

The most important thing you can do in getting started is to call a CPA! You have done the  right thing to get started.

I would not suggest doing a self directed IRA for real estate investing. A self directed IRA is not a simple legal structure and can if managed poorly can lead to Tax Penalties from the IRS. Predominant problematic issues center around any potential appearance of self dealing or that you might personally benefit from the property’s ownership precluding one/one’s family from  living in a property or receiving directly any rental income. For you investing might I suggest you talk to Mr. Mike Allee at Edward Jones at 678 372 6288.

For you real estate investing I suggest you might consider setting up an LLC for your real estate investing with Mr. Rick Campbell, Atty at 770 564 2600.

After you get your LLC incorporated please forward me copies along with the LLC EIN, copies of your last filed personal income tax return and use the attached form to recap your rental property at year end when we do your taxes and use tax checklist on my web site at http://www.hiscpa.com/newclient.html

I look forward to serving as your CPA.

John Dillard, CPA of His CPA, PC, 1940 Woods River Lane, Duluth, GA 30097 Phone 770-814-9304 www.HisCPA.com A Christian CPA Firm

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