Accounting News and Notes

Duluth CPA Illustrates  Preparing the S Corporation Election 

Should Your New Georgia Business be a LLC Convert to S Corporation

Let’s assume you have just gotten incorporated and you have begun your business and are well into the fiscal year. It is at that time your first meet with a CPA only to find that you failed to make a timely election to be a Georgia S Corporation by filing Form 2553: Election by a Small Business Corporation. S Elections have been for decades required to be filed within either seventy-five days of the beginning of a tax year or within 75 days of the incorporation date, if a new corporation. For example, if you are a new business and incorporate on 3-1-09 then you would have 75 days from 3-1-09 to file the S Corporation for it to be timely. Similarly, if you are a C Corporation or an LLC and wish to become an S Corporation for the 2009 tax year then you would have 75 days or until March 15, 2009 to file for a timely election. 

Just this past year the IRS has eased the rules and is now allowing Corporations who qualify under Rev. Proc 20003-43 to file the S Corporation election form along with their properly filed S Corporation return and the IRS will process the election as requested. It is this author’s opinion that the S Corporation and the attending tax issues are so important that it would be prudent to obtain the election acceptance letter from the IRS well in advance of the filing of the return. An example of a letter you might want to send along with the Election form is presented below, being sure to ensure that all of the fats are relevant and that you indeed do qualify: 

Internal Revenue Service

Ogden, UT 84201 

Filed pursuant to Rev. Proc. 2003-43

FAX 801-620-7116

Phone 800-829-4933 

Dear Sir or Madam: 

Enclosed find a Form 2553 (S Corporation election) and a power of attorney for the above referenced client. The client understands the rules of being an S Corporation should have elected to be one all along. Their original incorporator/accountant failed to file the appropriate forms correctly for them to be so and I am filing these within 18 months since the original due date of the S Corporation election and the return has not yet been filed. 

I feel the company is an ideal candidate to be an S Corporation and that they desire to become same. I feel the above is reasonable cause for failing to timely make the election and I am seeking relief for a late S Election. Accordingly, I am requesting that the company be given an S election date requested.  Accordingly, the shareholders of the company have been planning on filing their personal income tax returns reflecting the operating results/income/loss on their personal return. 

Under penalties of perjury, to the best of my knowledge and belief, the facts presented in support of this election are true, correct, and complete. 

I appreciate your attention to this matter. 

Very Sincerely Yours, John C. Dillard, CPA,  President 

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.

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

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 Firm on Incorporating in Georgia

Determining How to Best Determine if You Should be an S Corporation or LLC

When looking at 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.

The information below and the assumptions we make are based upon the fact that 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.

About S Corporations

Sub chapter 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

A sub-chapter S Corporation, like a C Corporation, affords the business owner personal liability protection from business risks. Some of the 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.

Taxing an S Corporation

No income taxes are paid with the corporate return. The profits of the business are reported on the personal tax return of the S corporation’s shareholders. 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.

Another advantage of S Corporations is 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. Any 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.

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

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 Georgia C Corporations can Legally Convert to S Corporations Avoiding the “Double Taxation” Effect of C Corporations

Atlanta CPA Reduces Tax Obligations by $28,000 by Converting C Corporation to S Corporation saving $16,000 while also gaining a refund of $12,000 for prior taxes.

CPA – “Never Underestimate the Value”

Though all of our client situations are different and unique. Though our charge and responsibility at each and every client is varied, our goal for each client is the same, to save you much more and to contribute more than our fees.  While serving as a Part-Time/Virtual CFO for Atlanta Business Owners for Twenty Years, we actively assist in the process of Helping C Corporations Owners save thousands annually by avoiding the double taxation associated with C Corporations and Converting them to S Corporations. Also frequently with new clients an evaluation and critique of prior filed returns can frequently result in amending those prior returns to gain substantive refunds.

What Clients of John Dillard CPA Have to Say…

Dear John:

Lately we had felt that our company had grown to a stage where we needed to dramatically upgrade our accounting services.  You promised to be as aggressive as legally possible and have helped us get:

                                                                                                                        SAVINGS

-S Election back dated by the IRS to 01/01/96                                           $16,000

-A refund for 1995 taxes paid as a result of a poor cutoff by

   prior accountant                                                                                         $12,000

                                                                                                                       $28,000

We really appreciate your attention and deeply value your services.

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.

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. To read more about S Corporations and other entity types visit http://www.hiscpa.com/article2.html

C Corporations are taxed first at the corporate level and then again at the shareholder level as these monies are paid out to the owners. For Atlanta’s Business Owners this is a “double whammy” they can avoid by filing Form 2553, Election to be a Small Business Corporation.

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.

A Part-Time/Virtual CFO is one who becomes an integral trusted adviser and who has the ability to see both the “forest and the trees” at the same time. Thinking strategically while acting practically is a watchword that bodes well with long-term success. Adding value by strengthening internal control, accounting methods and procedures and business practices should all be the focus of good outside financial adviser/Part-Time Controller. Seeking first to understand, plain talk and judicious discernment are all hallmarks of prudent business management and profit maximization.

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.