Accounting News and Notes

Duluth/Gwinnett CPA: Incorporating Your New Georgia Business

Incorporating 101: Ensure the Incorporation Process Works for You

Incorporating in Georgia
Starting your business off with the best tax elections for your business are amongst the most important business decisions you will ever reach. Discover how you can best set yourself up for business success as you consider this critical part of your business start-up. See http://www.hiscpa.com/incorporating-articles.html

Nevada and Delaware Incorporation
The incorporation of your business may cost you thousands in unnecessary registration and filing fees. Discover the ins and outs of this important decision and how to avoid unnecessary pitfalls and headaches. Visit http://www.hiscpa.com/incorporating-nv.html

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

John Dillard, CPA of His CPA, PC (An Atlanta Christian CPA firm) 1940 Woods River Lane, Duluth, GA 30097 Phone 770-814-9304 www.HisCPA.com Incorporating in Georgia, Setting up an LLC in Georgia, Setting up an S Corporation in Georgia, Georgia Entity Selection, Converting Your GA LLC to an S Corporation, Converting Your GA C Corporation to an S Corporation, GA LLC, GA S Corporation and Converting Your Georgia Business to an S Corporation

Duluth/Johns Creek/Lawrenceville CPA: Get Simple Answers to Complex Tax Questions

At His CPA PC, we are committed to upholding the law of the land and God’s law. As such we look to provide plain talk that clients can understand that looks to use tax law to the full extent possible to ensure that you pay only your lowest legal possible tax. The below is an example of an inquiry we might receive off of our web site:

I was “googling” a Christian CPA to answer some questions and I found a link to your website.. I see that you provide services to clients in my area so maybe you can help me.

In July, I lost my job as part of a ” staff reduction”. I’ve been a volunteer youth minister for 13 years and it is my true passion. That is how I have been spending my time for the last 6 months, living off my severance, savings and investments. I am wondering about becoming a non-profit doing the same thing I am doing now, but hoping to pursue monthly financial support. Also, I am wanting to sell items online (although I don’t expect to sell many) as another means of income.

Although I have always filed my own taxes. I really do not understand taxes or tax laws and am not sure if what I am considering is even feasible. However, if it is, I would like some direction on how to get 501c3 status and I would like to know what I will need to save and such to make the upcoming months on myself or a CPA. Any advise you provide is appreciated!! God bless!

Below is my response:

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

The Advantages and Disadvantages of Incorporating as a Subchapter S Corporation, C Corporation, Limited Liability Company or Partnership

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:

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

Liability Protection and Subchapter S Corporations

A subchapter S Corporation, like a C Corporation, affords the business owner personal liability protection from business risks. Some of the keys to maximizing that protection are to treat the corporation like one by doing all your business in the corporate name, signing all of your documents listing your corporate title, not co-mingling any personal issues/bills in the corporation, and by having your annual Board of Directors and Annual Shareholder Minutes Meeting.

If you are looking to raise most of your revenue from sales then I would suggest you being an S Corporation. I will send you some information under a separate e-mail. When you have reviewed it please give me a call and I will be happy to discuss.

Please be reminded we offer a free initial consultation and a free look at your prior tax returns. Be sure you pay only your lowest legal possible tax.

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, Roswell, Sandy Springs & Tucker as a Faith Based CPA

Duluth/Suwanee CPA: When is the Right Time to Incorporate Your Business?

How to Determine if You Have a Valid and Legal Business

Recently I received an inquiry from a taxpayer who acknowledged that on prior tax returns they had traded stocks for their own account and claimed business expenses on their Schedule C as part of their Form 1040. Claiming business expenses for a personal activity are not allowed as tax law defines items such as hobbies or similar like activities as personal in nature. To qualify as a legitimate business the purpose of the enterprise must be for the production of income, to serve other clients with the ultimate goal of making a reasonable profit and likelihood.

Incorporating 101: Georgia Incorporations

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

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

Georgia Entity Requirements: Georgia law requires that you essentially disclose that entity type your business is as part of the name of the business such as adding to the end of your business name one of the below entity types. These names acknowledge to the public what entity type you have selected and for identification purposes with the Georgia Secretary of State. Types including Incorporated, Company, Inc., LLC, LLP.

Selecting a Name for your Georgia Business: Georgia law requires you to select a corporate/business name that is easily distinguishable from other names so that the public will be able to readily identify and recognize businesses from other companies.

Establishment of an Incorporator: Georgia law requires that as a business legally registering to transact business in the state have a named incorporator who is responsible for all of the initial incorporating paperwork. A company’s Articles of Incorporation should be included in the initial paperwork filed with the Secretary of State’s Office with the initial filing fees.

Corporate Directives/Setting up Your Corporate Bylaws: Over the years of serving Georgia business owners have often struggled with “what’s next” in the establishment and setting up of their new business. To help clarify and assist owners in addressing these issues, we work with taxpayers by providing the below Incorporating Checklist:

As a business owner it is prudent to have an annual Board of Directors, Officers, and Shareholder’s Minutes meetings and that each year you should pay the annual fee with the Georgia Secretary of State’s Office to renew your corporations annual registration. Please be aware that you need to get a business license and always list your corporate title when signing any agreement and conduct all corporate business in the corporate name.

Employee forms – W-4, G-4, and I-9 and independent contractor forms W-9. After they complete these forms, you should keep these in their permanent files. Employers should also be aware of the Georgia New Hire Reporting Act and forms relative to that information. Tax law requires all active employee owners to pay a fair and reasonable salary and it is prudent to retain a payroll service for your entire payroll and 1099 needs. Please be reminded that as long as you pay yourself a reasonable salary, you may also pay yourself shareholder distributions, which are devoid of FICA and Medicaid taxes. Per your advice you will not be required to file sales tax reports.

The following are recommendations to better manage your business including turning in a monthly expense report to the business and keep a daily log to track and support business miles. I suggest all business owners tax plan twice every year. Your U.S./IRS and Georgia corporate returns if you are a C or an S Corporation are due March 15th of each year. I suggest that all business owners consider a trademark to ensure that the name will always be yours.

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

Choosing an Entity Type for Your New Business
Your initial choice of entity is perhaps the most important tax, financial and legal decision you might ever reach. Being well versed in these areas is essential to a wise and prudent decision. Visit http://www.hiscpa.com/article2.html

A Christian CPA Firm: Never Underestimate the Long Term Benefits www.HisCPA.com Incorporating in Georgia, Setting up an LLC in Georgia, Setting up an S Corporation in Georgia, Georgia Entity Selection, Converting Your GA LLC to an S Corporation, Converting Your GA C Corporation to an S Corporation, GA LLC, GA S Corporation and Converting Your Georgia Business to an S Corporation

Atlanta CPA: Incorporating in Georgia…What to Be Sure to Do

The Incorporating in Georgia Series

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

At His CPA We Cover a Wide Host of Full Service CPA Firm Services Including:

Atlanta Tax Problems, IRS representation, Offer in Compromise

Incorporation in Georgia, Corporate and Personal Income Tax Returns

Atlanta Part-time CFO, Virtual Controller, Business Planning

Atlanta Bookkeeping & Financial Statements

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

On an ongoing basis also many business owners fail to:

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

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

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

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

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

Duluth/Lawrenceville/Johns Creek CPA on Converting Your Georgia C Corporation or Georgia LLC to an S Corporation

Incorporating in Georgia

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

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

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

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

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

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

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

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

How S Corporations are Taxed

There is no income tax paid by as S Corporation when the annual tax return is filed to the IRS. However, as a part of the corporate return which is prepared, a Form 1120S, there is an attached schedule which shows each owners respective ownership percentage and via a Form K-1 for which each shareholder should reflect on their personal return. K-1 profits, losses, and shareholder distributions are all required by tax law to be issued based upon the each shareholders ownership percentage. In order for losses to be deductible a shareholder has to have a positive tax basis, which is a component of past profits, losses, and loans to and from the business. If a shareholder has no basis to cover losses reported on a K-1, they are by tax law considered to be “suspended losses” and can be rolled forward to future years when the shareholder has positive basis, which can be created by future years profits or the shareholder loaning money to the business.

An owner should report the K-1 profit, which is based upon their share of the business and not the amount of their shareholder distributions. This is a common misnomer about S Corporations and often leads to confusion for the new business owner. To that end it is best to remember that you pay taxes on the profits when you make them and not when you take them. For example generally speaking if your business nets $100,000 and you are the sole owner, you will pay taxes on $100,0000 whether you take zero dollar of shareholder distributions, a $100,000 or any number in between. Thus if you were to have a $100,000 profit in any given year and take no distributions then you would be able, absent any other issues, to take shareholder distributions in subsequent years with no additional tax responsibility as these monies would have already been taxed.

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

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

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

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

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

www.HisCPA.com Incorporating in Georgia, Setting up an LLC in Georgia, Setting up an S Corporation in Georgia, Georgia Entity Selection, Converting Your GA LLC to an S Corporation, Converting Your GA C Corporation to an S Corporation, GA LLC, GA S Corporation and Converting Your Georgia Business to an S Corporation

Duluth/Suwanee CPA Helps New Georgia Business Get Started on the Right Financial Footing: Incorporating in Georgia

Recently I had the below inquiry from our website. Desiring first to serve we focus on Serving the Atlanta Business Community even before they become clients:

We are a new business just outside Atlanta and are seeking a solid Business CPA to help us with our business, tax, and licensing issues. We are just getting our business started and want to ensure that we get it off on the right foot. We would appreciate your guidance in this area and look forward to hearing from you soon and all about of your payroll tax and withholding issues.

Below is our response designed to assist and serve others in our community and beyond:

Thanks for visiting www.HisCPA.com I would welcome as you begin your new business and to ensure that you are aware of and correctly apply all business tax, and licensing issues. As payroll is perhaps the largest most difficult of administrative issues for business owners to address, I suggest all business owners utilize the services of a payroll company to assist and to write a monthly paycheck.

For the other issues please feel free to give me a call and I will be happy to assist. John Dillard CPA, 770 814 9304.

Getting your Newly Formed Business Incorporated in Georgia started off on the right foot is essential to prudence and good business planning when starting a new business venture.

Getting Your New Georgia Business Started
Understanding many of the basics of the start of the incorporation process will do much to ensure that you are well-versed and able to make wise and informed decisions. As these issues will affect your business operations and finances during the lifetime of your business they are essential to getting started well. Go to http://www.hiscpa.com/incorporating-guide.html

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

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

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

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

www.HisCPA.com Incorporating in Georgia, Setting up an LLC in Georgia, Setting up an S Corporation in Georgia, Georgia Entity Selection, Converting Your GA LLC to an S Corporation, Converting Your GA C Corporation to an S Corporation, GA LLC, GA S Corporation and Converting Your Georgia Business to an S Corporation

Duluth/Suwanee CPA Advises Gwinnett Business Owners: Understanging How Incorporating Your Georgia Business Can Affect Your Taxes and Liabilities

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

Choosing an Entity Type

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

Tax Effects of Entity Choice

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

Getting Started

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

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

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

John Dillard is an Christian Speaker/Author and Certified Public Accountant in Duluth, GA. To See how he takes Christ along with him to work visit http://www.hiscpa.com/ and for his latest book Overcoming Life’s 9/11′s: Job’s Journey and a Voice of One: Nehemiah’s Prayer  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.

Johns Creek/Suwanee/Duluth CPA Advises Atlanta Business What Entity Type Is Best for Your New Business

When Incorporating in Georgia it is critical to your tax bill to be sure you select the entity that is the best for your business. Be sure that you work with a CPA BEFORE you get your business incorporated to ensure you start off on sound financial footing.

Below is a sample of a recent inquiry we received off of our web site covering the many and varied details of incorporating:

I’m setting up my own new business in Georgia with me as the sole employee, doing business out of my home, very minimal start-up costs and I believe I should get E&O insurance. Do you have any recommendations on whether I should setup as a LLC or an S Corporation (I really don’t know the difference)? I’m assuming a Georgia S-Corporation is just more expensive & complicated to set up…and a PS (is that sole proprietors). Somehow I stumbled across your site and I love seeing the faith spread along with your business. God has worked wonders in my life. I’m really not sure why a LLC is so frequently recommended if I have E&O insurance. Hopefully, you might have some leads on this information. Thanks and best of luck to business in Georgia. God Bless

Choosing the correct entity for your new Georgia business will have tax implications for the whole period that you own your business. Being sure that you make a well informed and judicious decision will do much to ensure that you make a prudent decision. Reviewing these articles and meeting with a business CPA who is well versed in these matters will do much to ensure you make an informed and wise decision.

Incorporating 101: Keeping the Process of Incorporating Your Georgia Business Simple

Incorporating in Georgia
Starting your business off with the best tax elections for your business are amongst the most important business decisions you will ever reach. Discover how you can best set yourself up for business success as you consider this critical part of your business start-up. See http://www.hiscpa.com/incorporating-articles.html

Nevada and Delaware Incorporation
The incorporation of your business may cost you thousands in unnecessary registration and filing fees. Discover the ins and outs of this important decision and how to avoid unnecessary pitfalls and headaches. Visit http://www.hiscpa.com/incorporating-nv.html

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

www.HisCPA.com Incorporating in Georgia, Setting up an LLC in Georgia, Setting up an S Corporation in Georgia, Georgia Entity Selection, Converting Your GA LLC to an S Corporation, Converting Your GA C Corporation to an S Corporation, GA LLC, GA S Corporation and Converting Your Georgia Business to an S Corporation

Duluth/Gwinnett CPA Teaches Incorporating Your New Georgia Business

Determining Who Will Lead Your Georgia Business/Incorporating in Georgia

Leadership 101: Knowing who is in charge and how they are lead are essential to the running of a country, a war, a battle, a family, a church and your business. Failing to prepare for essential business planning issues will do much to impair your way to success. Great authors over the years from John Maxwell, Zig Ziglar, and Lou Holz have written dynamic books and articles on how to lead with both your heart and your mind. Choosing who will lead your corporation at all levels is essential to goal congruence and obtaining your overall business mission, profits and goals.

Electing Your Board of Directors

Though Georgia law only requires one director, it might be prudent to seek additional outsiders to oversee and guide your business operations. Directors, though not required to be, are frequently outsiders who are willing to provide wise and insightful guidance. Directors are required to be of legal age but are not needed to be Georgia residents.

Having the Right Officers

The Officers of a company are those who can legally sign a contract the company. It is not unusual for many business’s to have the owner serve as the sole Officer, sole Director and Shareholder. As one could imagine, this dramatically streamlines the decision making process. Officers as well, are the duly authorize representatives to sign the corporate income/partnership return.

Determining Who Will Own the Company

In many minds the most important portion of business leadership for your business is who has the ultimate control. Though both good Directors and Officers are essential to goal obtainment, it is the shareholders/owners who have the ultimate control of who runs the business and thus ultimately their final determinations. Shareholders and owners, not only elect the Officers and Directors of a company, but they have ultimately the final work in all business decisions. Great care should be exercised when potentially adding a partner, as the right one versus the wrong one can well result in the difference between business harmony and profits to needless anxiety to losses. Your owners and shareholders as well should be of full legal age and are not required to be Georgia residents.

At His CPA, PC we strive to be much more than just tax preparers, put our partner to work for you today to see how much enlightened business leadership can mean to your business success.

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

www.HisCPA.com  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.

www.HisCPA.com  A Christian CPA Firm in Duluth GA Proudly Serving Suwanee, Lawrenceville, Snellville, Lilburn, Duluth, Norcross, Peachtree Corners, Atlanta, Gwinnett, Fulton, Johns Creek, Forsyth, Flowery Branch, Buford, Cumming, Hamilton Mill, Cheatu Elan, Winder, Gainesville, Hart County, Dunwoody, Grayson, Alpharetta, Roswell,  Sandy Springs and Tucker as an Award Winning CPA.

Atlanta CPA: Incorporating in Georgia: Convert your Georgia C Corporation/LLC to an S Corporation

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

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

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

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

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

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

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

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

Taxation of S Corporations

There is no income tax paid by as S Corporation when the annual tax return is filed to the IRS. However, as a part of the corporate return which is prepared, a Form 1120S, there is an attached schedule which shows each owners respective ownership percentage and via a Form K-1 for which each shareholder should reflect on their personal return. K-1 profits, losses, and shareholder distributions are all required by tax law to be issued based upon the each shareholders ownership percentage. In order for losses to be deductible a shareholder has to have a positive tax basis, which is a component of past profits, losses, and loans to and from the business. If a shareholder has no basis to cover losses reported on a K-1, they are by tax law considered to be “suspended losses” and can be rolled forward to future years when the shareholder has positive basis, which can be created by future years profits or the shareholder loaning money to the business.

An owner should report the K-1 profit, which is based upon their share of the business and not the amount of their shareholder distributions. This is a common misnomer about S Corporations and often leads to confusion for the new business owner. To that end it is best to remember that you pay taxes on the profits when you make them and not when you take them. For example generally speaking if your business nets $100,000 and you are the sole owner, you will pay taxes on $100,0000 whether you take zero dollar of shareholder distributions, a $100,000 or any number in between. Thus if you were to have a $100,000 profit in any given year and take no distributions then you would be able, absent any other issues, to take shareholder distributions in subsequent years with no additional tax responsibility as these monies would have already been taxed.

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

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

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

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

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

John Dillard is an Christian Speaker/Author and Certified Public Accountant in Duluth, GA. To See how he takes Christ along with him to work visit http://www.hiscpa.com/ and for his latest book Overcoming Life’s 9/11’s: Job’s Journey and a Voice of One: Nehemiah’s Prayer 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!

www.HisCPA.com  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.