Accounting News and Notes

Duluth/Gwinnett/Atlanta CPA Reminds Atlanta Taxpayers that D-Day is Today 

Today is the last day for individual taxpayers to file and pay their 2009 Personal Income Taxes. There is no “Pass Go” or “Free Pass” as taxpayers are required to “settle up” and pay what they owe and to have it post marked today. 

For taxpayers who will not be filing their return today, they can use IRS Tax Form 4868 to pay any taxes owed and to legally extend the time for the filing of their personal return for six months, until 10-15-10. 

For taxpayers who do not file either their return today or file an extension the IRS/GA can assess regular penalties and interest, and in addition a failure to file penalty. 

For taxpayers who do not pay their taxes in full today the IRS will assess failure to pay penalties and interest, until the amounts are paid in full. 

So run to the post office today before it closes to ensure that your tax obligations do not unduly grow. 

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!

Suwanee/Duluth/Gwinnett/Atlanta CPA on Advises on Back Taxes and Tax Problem Resolution for Atlanta Taxpayers 

For those in the midst of addressing IRS tax issues and trying to evaluate between an Offer of Compromise or an Installment plan, frequently the options look bleak, as often they are. However there is good news for those who are desirous to look “outside the box” in looking to solve your IRS tax problems. Knowing the ins and outs of varying programs will do much to help you know what is in your best interest. My best advice is to encourage personal or business taxpayers who owe more than $10,000 to the IRS or GA/State is to seek out a CPA who is well experienced in such matters. Below is a sample letter that might be sent on behalf of a business client seeking to address unpaid payroll taxes, unfiled reports and Civil Penalty Assessments: 

IRS, Atlanta GA 39901 

I am writing you in a good faith attempt to come to terms over the above taxpayers’ present predicament and to address all the monies they presently have open with the IRS, including both payroll taxes and income taxes.  I am willing/eager to supply you with any information that you might need in order to process their case and to pay any and all outstanding monies.  

I have previously forwarded a copy of their previously filed 2009 corporate income tax return. I also in my prior letter forwarded, a copy of their detailed fixed asset schedule as of 12/31/09,their 2009 financial statements and Form 433B for your review. 

Enclosed please find a check for $3,000 to be applied as follows:

Form 941 for 1-31-09        $ 1000.

Form 941 for 3-31-10           2000.

Total Check Enclosed        $3000. 

I have enclosed copies of the 2009 W-2’s in question for which taxpayer advised me that they had timely filed. Accordingly please abate the previously assessed penalties. I look forward to working with you to satisfactorily address all open client monies and to get all of their returns filed. 

Sincerely, John C. Dillard, CPA, PC, Partner in Charge

Psalm 33:5  The LORD loves righteousness and justice; the earth is full of his unfailing love.

 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.

Duluth/Johns Creek/Gwinnett CPA on Transforming Lives/Growing/Seeking God’s Best for Our Lives 

We are called by Christ to humble ourselves and in so doing seek to lay down our life for the needs of others. Just as Christ came to serve the world, we are called to Imitate his actions, emulate His love and join in the Body of Christ to be the very hands and feet of Jesus Christ. Join us for a weekend as we seek in Hope & Faith to be more like Him, to eliminate Fear in our lives, and to Boldly Stand Strong. 

Jesus calls us, His people, to be a light unto the world, while knowing that our power is made perfect only in His will. As we seek to fulfill God’s destiny for our lives, we find a peace that surpasses all understanding. God calls us to  listen and in order to do that our mind needs to be still and focused on our Creator, for Faith is “not in knowing that God can, but that God will.” 

Romans 12:2 Do not conform any longer to the pattern of this world, but be transformed by the renewing of your mind. Then you will be able to test and approve what God’s will is—his good, pleasing and perfect will. 

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!

Duluth/Gwinnett/Atlanta CPA Reminds Atlanta Taxpayers that Personal Income Tax Returns are Due April 15, 2010

The initial due date for personal returns is April 15. For returns not filed by that date both the IRS and GA allow for a six month extension/IRS Form 4868. Please be reminded that there are no valid extensions after the October 15 final due date lapses. Please be reminded that an extension to file is not an extension to pay and that you are required by tax law to pay applicable taxes as the monies are earned or you will be subject to additional penalties and interest. 

Please be reminded that the mileage rate for 2009 is 55 cents per mile. For 2010, the mileage rate is 50 cents per mile. Please turn in an expense report monthly to get reimbursed for these and any other business expenses you might have paid personally. IRS tax rules require you to have a day by day log to support business miles. Please be reminded that extending the filing of a return does not delay the need to pay as you go as both the IRS & GA will bill you for penalties and interest if you do not pay your taxes during the tax year to which they relate. Below is a checklist that I encourage taxpayers to use to pull their personal income tax information together:

Atlanta CPA Prepares Tax Checklist to Prepare Your Personal Income Tax Returns:  

• Copies of all reported income forms, i.e. Forms W-2, 1099, brokerage statements, interest, dividends, etc.
• Summary of all medical expenses with copies of all individual items over $1,000.
• Summary of property taxes with copies of all individual items over $1,000.
• Summary of Ad valorem Taxes (property tax on cars) with copies of all individual items over $1,000.
• Summary of Mortgage Interest with copies of all individual items over $1,000.
• Summary of cash and property contributions with copies of all individual items over $1,000.
• Be sure to include any changes in address, dependents, filing status, or any other substantive changes from the prior year which would have impact on this year’s return.
• Please forward student loan interest, child care expenses, tuition, and any other miscellaneous deductions/income.
• Please be sure to let me know of any changes to the claiming of dependents, filing status, address, etc.
• If you are a new client to us please bring along for both corporate and personal a copy of your prior year tax returns. If a brand new corporation, please forward along a copy of your incorporation papers, Federal ID #, and your S Corporation acceptance.
• If you have had any independent contractor/proprietorship income you have earned, whether you have received a Form 1099 or not, please use this form (PDF) (Excel) to recap all revenue and expenses.
• Please be sure to let me know how much you received from the Economic Stimulus Plan during the year.
• All K-1s where you and an investment interest including an acknowledgment if you have sufficient basis to take the losses listed.

The initial due date for personal returns is April 15. For returns not filed by that date both the IRS and GA allow for a six month extension. Please be reminded that there are no valid extensions after the October 15 final due date lapses. Please be reminded that an extension to file is not an extension to pay and that you are required by tax law to pay applicable taxes as the monies are earned or you will be subject to additional penalties and interest.

James 1:17 Every good and perfect gift is from above, coming down from the Father of the heavenly lights, who does not change like shifting shadows.

I am looking to grow my business by adding key accounts like you with goals and aspirations just like yours.  So if you know anyone looking for a Good CPA, please let me know and to check me out at www.HISCPA.com  or our book ministry at www.John-Dillard.com Please be sure to allow 10 days for me to complete the returns.

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! 

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

Duluth/Gwinnett/N. Fulton/Atlanta CPA Provides Checklist for New Georgia Business Owners 

The below is a recent sample inquiry we might receive from a new business owner seeking to ensure they understand all of the nuances and reporting issues for Metro Atlanta Business Owners & Entrepreneurs: 

Hi, John – thanks again for spending time with the us the other day.  I was hoping to get on the right track with the financial aspects of our business. We have submitted the sales tax application to the Georgia Dept. of Revenue but have not heard back from them yet.  In the meantime, we are making some sales, but have no clue as to when or how to remit sales tax to the state.  Do you have some guidance for us on that?  Is that a monthly, weekly or quarterly submission? Lastly, my sister-in-law, who is a CPA in FL, mentioned that many CPA’s have a checklist of things clients should be mindful of as they start their businesses and during the course of the operating year.  Do you have something like that to share with us?  I think it would be a good thing for the boys to have as a reference. Thanks again, 

Below is my response: 

For the sales tax it typically takes about six to eight weeks to get the forms. In the interim have them continue to collect sales tax so they can remit when they get the forms. Typically states/GA will assign you initially to a monthly reporting schedule. You can find several good checklist as detailed and listed at http://www.hiscpa.com/articles.html

As your business grows, eventually the need arises to hire and pay employees. Unincorporated sole proprietors may be able get by without employees by filing quarterly estimated taxes and paying the self employment tax at the end of the year with their form 1040. With an incorporated business entity, or when hiring other workers besides the owner, there are specific requirements for tax withholding and information reporting that must be filed.

Employees or Independent Contractors/W-2 vs. Form 1099

You may be tempted to classify the people that work for you as independent contractors. Unlike employees, you are not responsible for withholding taxes, making Social Security contributions, or paying unemployment tax for independent contractors. However, the IRS has a very strict 20-point test that must be satisfied before an individual can be considered an independent contractor rather than an employee. For example, an independent contractor typically owns his or her own tools, and sets his or her own working hours. If you classify a worker as an independent contractor, and the IRS later determines that the person should have been an employee, the officers of the company can be personally liable for the taxes that should have been withheld, along with penalties and interest.

The best advice is to consult with a certified public accountant or financial planner that is familiar with the law, and current standards being used by the IRS to classify workers. He or she will be able to provide the best, informed advice.

Hiring Your First Employee/Handling Payroll Issues

Before you hire your first employee — even if that employee is yourself, which it is likely to be if you own your own corporation — there are several things you may need to do to prepare. Here is a brief checklist:

Obtain a Federal Tax ID Number/EIN

You probably obtained a Federal Tax ID as part of setting up your company. (See our Small Business Getting Started Checklist for more information). You will use this ID number for reporting federal income tax and Social Security Withholding, and for paying the Federal Unemployment Tax.

Obtain a Georgia Unemployment Tax ID Number for SUTA

The Georgia Department of Labor is responsible for administering the state’s unemployment tax system. New employers typically pay 2.8 percent of each employee’s gross wages, up to a limit of $8,500 per employee. The rate collected may vary based on a company’s unemployment claim history. Prior to hiring employees, employers should file DOL form 1-A, which sets up an account with the Department of Labor. The department also publishes an employer handbook that provides useful information on the process. You can get both from the Georgia Department of Labor Forms and Publications page.

Arrange for Worker’s Compensation Insurance/Hiring a Business Lines Agent

If your company will have three or more employees (including officers), you are required to obtain Worker’s Compensation insurance. You may also be required to provide Worker’s Comp for independent contractors. This insurance is provided by traditional insurance companies, and is overseen by the Georgia State Board of Workers Compensation. Consult with your accountant, financial advisor, or insurance agent to determine who must be covered under this program.

Make Sure You Follow the Law when Hiring Employees/Know the Facts

Prior to hiring an employee, there are specific forms that must be completed, and then kept on file. IRS Form W-4 must be completed by the employee, and indicates the number of dependents the employee claims for federal income tax purposes. The employee should also complete the matching Georgia Form G-4 to determine state tax allowances.

The employer is responsible for completing Federal Form I-9 from the Immigration and Naturalization Service. This form confirms that the employer has examined documents provided by the employee to confirm identity and eligibility to work. Georgia also has a New Hire Reporting Program that requires employers to provide information on all new or re-hired employees within ten days of employment.

Georgia New Hire Reporting Program/GA Reports Required

Georgia has a program call the Georgia New Hire Reporting Program.  The Georgia law was passed to aid the state in ensuring two predominant issues:

• To assist in locating fathers who were either late or not paying their required child support
• To preclude and prevent employees from claiming unemployment who should not be

The law is a fairly straightforward one that requires Georgia employers to register with the state.  Employees are then also required to register all new hires so that the state may be consistently updated on all of the new employees in Georgia.  Other departments of the state government may then use this information as needed to assist in the effective enforcement of Georgia law.

Summary

The reporting and withholding requirements for employers can be daunting. Withholdings and taxes must be deposited with the Federal and state governments within specific time limits, and reporting forms must be filed by specific dates. Failure to accurately and completely submit this information can result in substantial penalties. HIS CPA, Inc. has helped many companies in metro Atlanta, Gwinnett County, and Georgia prepare for hiring employees, and with filing returns properly. If you have any questions about what you see on this page, feel free to contact us for more information.

Colossians 1:5 the faith and love that spring from the hope that is stored up for you in heaven and that you have already heard about in the word of truth, the gospel

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!

Alpharetta/Gwinnett/Hall/Atlanta CPA Encourages Atlanta Believers to Let Your Love Light Shine…Taking Christianity Into the World 

Luke 11:33 “No one lights a lamp and puts it in a place where it will be hidden, or under a bowl. Instead he puts it on its stand, so that those who come in may see the light. 

I am a third year accounting student in Malaysia I am from a small nation called Zimbabwe in Africa, of late I had been wondering whether they are honest God fearing people in the accounting and financial profession as very few people are willing to stand up for him and stick it out but because of your testimony you have given me answers to my questions and have inspired me all I can say to you is keep the good fight with your eyes firmly set on his crown thank you have no idea just how much you’ve touched my life may he God continue to enlarge your territory. 

Below is my response:

Thanks for visiting www.HisCPA.com I have been used in some way to encourage and support and uplift, then to God be the glory. In my life, I am in a season of striving for obedience and to assist others in finding opportunities to serve the Lost, the Last and the Least and in so doing so, find God in a new and majestic way.

Having managed my own successful CPA practice in Gwinnett County for over fifteen years, I continued to feel God’s calling on my heart and his desire for me to be more about Him. I had always felt it was my mission to witness to those I came in contact with in both my business and social contacts, but God continued to lay it on my heart that He wanted much more.

Although I was willing to share my Christian faith with people to whom I came in contact with, God was calling and he wanted me to be much more overt, but loving, to share the love of God. Having practiced the Golden Rule in my CPA firm for years, God was calling to be the true center of my life and not just a major player.

With my new bride that I had met only a few years ago, we set out on a journey that has led us on mission trips, publishing books, changing Georgia law, and starting a new accounting firm, HIS CPA, P.C.

Although we wanted to start the company at the beginning of the year God made it necessary to start the firm immediately as He wanted it done then and not later. To this end we have been faithful and continue to spread the Good News of our faith and Christianity to anyone who would like to hear.

Our faith and our lives intersect. Though we still have much to learn to grow to be like Him, we have studied his word and continue to work in Bible studies to share his love with others. My CPA firm is committed to the One who made me and we act on this daily by “Serving HIM by serving You…one tax return at a time”.

To Him Alone be the Glory. In the Matchless Name of Jesus Christ. Here are some of my favorite verses…John 14:6, Jeremiah 29:11, Psalm 27, Psalm 1, Matthew 6:34

1 John 5:14 This is the confidence we have in approaching God: that if we ask anything according to his will, he hears us. 

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!

Gwinnett/North Fulton Atlanta CPA on Helping Atlanta Business Owners on Business Startup Issues. Incorporating and Entity Selection 

As a Believer and a CPA, we are all called  to do as Jesus did and look to serve others. As we lean not on our own understanding but that of God’s we should seek out ways and opportunities to be the very hands and feet of Jesus Christ in a lost and fallen world. Below is sample letter we might receive and our response: 

I am a Christian going through many transitions in life.  I need an accountant to help me learn to take care of my personal finances once that takes place. 

Also, I am daring to believe, as you say, that God can do something mighty in helping me to do something I have never attempted before, that is start my own business.  This is doubly difficult for me as I have been a 20 year stay-at-home mom.  I want to parlay my skills in computer programming and organization into a business that is Christ honoring and serving the average man on the street as well as to some who have little to nothing.  I have a degree in Computer Science from Georgia State University.

I think I need the services of someone like yourself, but don’t know what your fees are.  I need direction all around to get my business up and running.  Do you have a time when I could come in and talk to you? Thank you, P.S. I found you on the Internet under Christian Accountants, and also read the article about your challenge to Dare to Attempt Something so Great for the Kingdom of God that it is doomed to failure, lest Christ be in it! 

Below is my response:

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.

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. These articles will do much to encourage and support you in making wise and prudent decisions for your new Georgia Business.

Tax Effects of Incorporating Your New Georgia Business
We can help you navigate through the myriad of tax law letting you make the best strategic and tax decisions in incorporating your business. See http://www.hiscpa.com/article6.html

New Corporation Forms and Registrations Checklist for your New GA Businesst
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. See http://www.hiscpa.com/incorporating-articles.html

Tracking Marketing Stats for New Atlanta Business Owners
When you are first starting your new business it is a critical time to stay positive emotionally. One of the best ways to validate the success of your efforts is to track your marketing efforts measuring your results and efforts against your business plan model. Learn invaluable information as to how you can increase your likelihood for immediate feedback on your efforts thereby increasing your likelihood of success. Visit http://www.hiscpa.com/marketing-efforts.html

Matthew 7:24  ”Therefore everyone who hears these words of mine and puts them into practice is like a wise man who built his house on the rock. 

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!

Award Winning Duluth/Gwinnett/Atlanta CPA Advises Atlanta Business Owners on Understanding Nuances of Cash vs. Accrual Financial Statements

Using a computerized accounting package which has a balance sheet and profit and loss capability is a great start to being able to track your business transactions accurately and efficiently. Generally speaking for many small businesses QuickBooks is good system and often has much more capability than you will ever need. However this program is not a universal fit for everyone and you should take care to carefully evaluate your needs to ensure that you select a system which will work for you long term. Special consideration, for example, should be given if you need a POS/Point of Sale System, detailed inventory costing/tracking/and valuation, or if your business will require a multiple user system.

Being an expert at running your business does not make you one at the responsibility of accounting for your business. By applying our decades of experience we are well suited to guide you to track the financial and operational affairs of your business. Understanding the differences in the usability of financial statements prepared on a cash versus and accrual basis will do much to help your Atlanta Business have up to date and useful financial information. Below is a sample inquiry we might receive from a client regarding their internal financial statements/tax returns, that were prepared on a cash basis.

Hi John: We are trying to secure a mortgage loan against our  building.  It’s more or less approved, but the loan officer wants to clear up a few things in case he is asked by his supervisor. 

Basically he is looking at our 2008 and 2009 tax returns.  He said we started 2009 with negative retained earnings and ended at negative $45K. His question is “what happened”?  Any help? 

Below is my response: 

Your tax returns are prepared on a cash basis, which means they reflect only the changes in the company’s cash balances and therefore does not reflect any open billings or accounts receivable. 

To give any kind of initial answer I would have to defer to the cash based tax returns themselves. If we want to give a more meaningful answer for those years we would need to compile financial statements for the last two years on an accrual basis. To do this I would need the open Accounts Receivable and Accounts Payable at the end of the last three tax years for the already prepared cash based tax returns. 

Though many business owners will spend substantive time evaluating their cash balance, this alone fails to contemplate other information available that might dramatically impact important operational and strategic issues. Consideration to long-term issues would include evaluation of the business’s current results versus its annual forecast, and a careful review of future sales and profit forecasts. It is also important to evaluate cash balances considering anticipated dates of collection of receivables, payment of ordinary debt, accounts payable, fixed asset purchases, and leases as all of these issues have substantive impact on what your future cash balances will be. The best way to ready yourself for successful evaluation of your financial statements is therefore to prepare your statements on an accrual, rather than on a cash basis. 

In light of this information, you are better able to make wise decisions that take into consideration future issues and your ability to satisfactorily balance the varying ebbs and flows that affect not only your present but future ongoing operations and the very viability of your business. Failure to consider each and all of these issues will result in a perpetual array of poor cash decisions, as they are not grounded in fact. Though running a business is indeed an art, it is based upon one’s ability to perceive and properly process and evaluate the facts available that are tantamount to ones success and an accrual statement is your best bet to have the required information to compile needed useful information for Atlanta Business Owners & Entrepreneurs. 

And this is only some of the information available on our web site. You also have at our blog a host of other varied and timely tax and business management issues you can use. 

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

Duluth/Alpharetta/Atlanta CPA on Top 10 Reasons Your Atlanta Business Should Retain A Christian Atlanta CPA

Every year the IRS selects approximately one to two percent of all tax returns filed. The U.S. tax system is a voluntary compliance system where it is a taxpayer’s responsibility to determine and file their accurate and just tax returns. In this process frequently taxpayers will create environments, which make the IRS more apt to review and audit a return. Your intent in filing a return should never be to stay away from or not deduct a valid deduction, however your end result should always be to file a return that is accurate and complete in all respects and for which you have adequate and clear documentation. By following these steps below you will find insight that will help you avoid unnecessary audits, additional time and stress, and additional assessments for interest and penalties. To take advantage of the Free Analysis of IRS Tax Audit you can contact John Dillard CPA of His CPA PC at www.HisCPA.com or call him today at 770.814.9304.

Colossians 1:5 the faith and love that spring from the hope that is stored up for you in heaven and that you have already heard about in the word of truth, the gospel. 

Top Ten Reasons to Hire a Christian CPA Firm

1. We care much more about you and your business than just your taxes. We believe our clients are much more than just customers.
2. We focus on how short-term issues impact long-term decisions.
3. We answer questions you did not even know you had/knew were important.
4. We are proactive in our tax planning and consistently think ”outside the box.”
5. We practice the “Golden Rule” focusing on serving your needs.
6. You want fast efficient turnaround in your work/returns.
7. You want accurate information.
8. You want your calls and correspondence responded to quickly.
9. You believe traditional business and moral principles are important.
10. You want to pay your lowest legal possible tax.

Serving Metro Atlanta as an Award Winning CPA for Decades

http://www.hiscpa.com/article3.html Gwinnett/Duluth CPA Teaches Personnel Keys to Managing Business Growth
http://www.hiscpa.com/article6.html Alpharetta/Roswell CPA Teaches the Tax Effects of Entity Choice
http://www.hiscpa.com/marketing-efforts.html Norcross/Sandy Springs CPA on Tracking Marketing Statistics for Your Georgia Business 

And this is only some of the information available on our web site. You also have at our blog a host of other varied and timely tax and business management issues you can use. 

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

Duluth/Gwinnett/Atlanta CPA Advises Atlanta S Corporation Owners on Deducting Tax Losses

Although 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. Below is a sample letter we might send a client to ensure that to the extent legally possible, that tax basis is maintained in an S Corporation in order to take S Corporation losses:

Got the information you forwarded for your personal return and have already gotten started. Just wanted to confirm my understanding that the $50,000 Credit Line on the company books was done in the company name, rather in your name personally. Please advise/confirm. In the future if you have to get a loan to fund any business needs, if possible, get the loan in your name personally and then have you loan the monies to the business. That way you will have tax basis in the company that will allow us to deduct the losses as reflected on our 2009 K-1 and will not have to roll them forward to 2010/future year returns.

S Corporation  owner’s 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.

 Bookkeeping for Atlanta Small Business Unleash the power of information by learning the ABC’s of accounting for the business and financial operations of your business. To learn the nuances of Small Business Bookkeeping http://www.hiscpa.com/keeping-books.html

Preparing and Reviewing Financial Statements for Atlanta Business Owners As your financial results of your business are like a doctors chart of their patient, this will help enable you to understand financials and their use. To learn more visit http://www.hiscpa.com/financial-statements.html

http://www.hiscpa.com/article3.html  Gwinnett/Duluth CPA Teaches Personnel Keys to Managing Business Growth

 http://www.hiscpa.com/article6.html  Alpharetta/Roswell CPA Teaches the Tax Effects of Entity Choice

 http://www.hiscpa.com/marketing-efforts.html Norcross/Sandy Springs CPA on Tracking Marketing Statistics for Your Georgia Business And this is only some of the information available on our web site. You also have at our blog a host of other varied and timely tax and business management issues you can use.

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 Christ be in it!

1 John 5:14 This is the confidence we have in approaching God: that if we ask anything according to his will, he hears us.

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.