Accounting News and Notes

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

Atlanta CPA…Just Getting Your Business Started? 

Need Help From a CPA Before Making Important Tax Elections? 

Want to Know What Entity Type is Best for Your Business? 

As a Faith Based CPA Firm We Look to Serve God’s People Rather Than to Hold Them Hostage. 

As such we seek to give free tax guidance to taxpayers 24/7 on our web site at www.HisCPA.com  

The below is a sample letter we might receive from a client who is looking to get a new business started. 

Seek Today to Serve God with All Your Heart, Soul and Might. 

Appreciative of your taking the time to place info on your site for people like myself to read about beginning a business and what might be needed. I’m planning to open a printing business and wanting to know the advantages/disadvantages of incorporating. 

Any help appreciated… Your Sister in Christ 

Below is my response:

Thanks for visiting www.HisCPA.com 

Might I suggest we do a face to face meeting to go over your questions in greater detail.. 

Our initial 30-45 minute consult is free. 

How about next Monday….address is below…Please RSVP 

Be blessed. 

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

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

Atlanta CPA: How Do You Know Who To Hire to Help With Your Company’s Bookkeeping?

Does Your CPA Work To Keep Your Internal Books & Financial Statements Correct?

How Do you Know Who To Hire?

Are they Qualified?

Are they a CPA?

Is this the year your business hires a Part-time Virtual CFO/Chief Financial Officer?

Raw financial data, managed properly can do much to create relevant management financial information that a business owner can use to make corrective decisions, maximize efforts/efficiencies and to gain a competitive advantage in the marketplace. First in line to understand your business is the use of the analysis of your business P & L is to carefully evaluate its gross margin. This calculation is done by subtracting the company’s cost of goods sold from sales and by dividing its result by sales. Cost of goods sold is best measured as a percentage and proper care should be exercised to ensure that the periods P & L has properly allocated all direct sales cost to cost of goods sold. Typically most all of these costs will vary proportionally to the amount of product/services sold and delivered.

A proper and consistently applied cut-off of accounting data is critical to this evaluation as otherwise the data/margins are unduly skewed to start. Care to determine the P/L is first best measured by a careful critique of not only the P/L but also the Balance Sheet. Having well-prepared and presented internal books and records is the best first step to ensure that their internal books and records adequately reflect their financial operating results.

Hiring a CPA to oversee your internal bookkeeping is your best first defense to sound business financial management, while serving as a part-time virtual CFO. There they can help in determining:

-Selection of an Accounting Package

-Determining the Chart of Accounts

-Presentation of Internal Financial Statements/Bookkeeping

-Anticipating Cash Flow Needs

-Tax Elections, Tax Preparation and Tax Mitigation

What your business nets in dollars and as a percent of sales are an essential part of understanding your business. A business pre-tax margin is a worthy manageable calculation determined by subtracting from sales, all cost of goods sold, personnel, sales and operating expenses. Knowledge of this margin is essential as it is a leading indicator of business future assets; liabilities and equity as well as the respective income taxes it/its owners will owe/be required to pay.

Need Help With Your Atlanta Financial Statements or Bookkeeping? http://www.youtube.com/watch?v=PhpMHlJ2Fbw  

Visit us online at www.HisCPA.com  A Christian Atlanta CPA Firm

Christian CPA: Selecting an Accounting Method

Tax Elections Will Impact Your Tax Bill

Providing Atlanta Bookkeeping & Atlanta Financial Statement Insights to Atlanta Business Owners for Decades

Many businesses owners opt to file their tax returns on a cash basis, which results in a client not paying taxes on their accounts receivable or deducting their accounts payable until paid. This is especially advantageous for profitable businesses that qualify, since they will not bear the additional tax burden of paying taxes on billed but yet still uncollected accounts receivable. Often cash needs of a rapidly growing business put an inordinate strain on the availability of funds, and the selection of this method will greatly help as it is very difficult to pay taxes on monies one has not yet collected.  The below is a sample letter we might receive from a client seeking clarification on their tax filing issues:

John, Getting my stuff ready my Corp Return and I just want to confirm something.

Last year I see where you had me not include a check for my company services that was for 2009 work but was not received until 2010. This year they held back paying 4 invoices until 2011, almost the entire month of December.  In fact I have not even received checks on two of these yet though they say they are in the mail.  So these monies will show as 2011 income, is that right?  Thanks for your time,  

Below is my response: 

 Your company is set up as a cash based taxpayer….as such you will only want to list only your recap/company’s internal financial statement of 2010 data the checks you have actually received or checks you have actually written and mailed. When your entity was incorporated its selection of an accounting method is of primary importance as this election will continues in force until either a business is required to change by tax law or formally requests in advance a “determination letter” from the IRS. Both issues will cause additional administrative burdens and fees on a business so it is important that an initial selection is made correctly. Seeking a determination letter from the IRS requires a detailed application, fees, timely filing, compliance, and scrutiny which otherwise might not be required if the correct initial selection is made.

An Atlanta Part-time Virtual CFO can help with:

Atlanta Bookkeeping Issues

Atlanta Financial Statement Insights

Atlanta Business & Financial Management

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

We advise clients on: IRS representation, Offer in Compromise, Tax Problems, Incorporation in Georgia, Corporate and Personal Income Tax Returns, Part-time CFO, Virtual Controller, Business Planning, Back Taxes, Business Acquisitions/Sales, Forensic Accounting, Business Valuations and Bookkeeping. 

We serve clients that are located in Atlanta GA, Gwinnett County, North Fulton County, Cherokee County, DeKalb County, Hall County, Clayton County, Cobb County, Forsyth County, Hart County, Jefferson County, Duluth, Alpharetta, Johns Creek, Lawrenceville, Marietta, Milton, Norcross, Snellville, Roswell, Buford, Smyrna, Marietta, Cumming, Grayson, Hartwell, Suwanee, Sugar Hill, Loganville, Lilburn, East Point, Gainesville, Snellville, Buckhead, Buford, Peachtree City, Dunwoody, Kennesaw, Decatur, Conyers, Stone Mountain, Decatur. Sandy Springs, Peachtree City, Douglasville, Newnan, Griffin, Woodstock, Carrollton, Forest Park, Canton, College Park, Cartersville, McDonough, Riverdale, Fayetteville, Covington, Stockbridge, Conyers, Clarkston, Barrow, Bartow, Butts, Carroll, Cherokee, Clayton, Coweta, Dawson, Douglas, Fayette, Forsyth, Fulton, Gwinnett, Haralson, Heard, Henry, Jasper, Lamar, Meriwether, Newton, Paulding, Pickens, Pike, Rockdale, Spalding, Walton, Canton, Covington, Douglasville, Druid Hills, East Point, Forest Park, Griffin, Lithonia, Mableton, McDonough, Milton, Mountain Park, Newnan, Powder Springs, Stockbridge, Union City, Villa Rica, Winder and Woodstock.

Gwinnett CPA: Helps Atlanta Corporate Taxpayers Utilize S Corporation Profits/Losses

I do not believe in scare tactics in helping clients see the truth it is often the only way to help someone make a wise a prudent decisions. My goal is not to be THE CPA for all of Atlanta but just the share that God allows me to have. Recently I was able to work with a new client to whom the prior accountant had made several tax elections that in hind sight cannot be reversed resulting in the taxpayer substantially overpaying their taxes. I am constantly reminded that failing to plan, is preparing to fail.

When an S Corporation owner 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 response to a taxpayer whose prior accountant did not properly consider and evaluate tax nuances, tax elections and suspended loss issues of an S Corporation.

After studying your 2010 Corporate Income Tax Return, the strategy plan we only is applicable if: 

-You did not do the $60K of salaries to owners.

-You Personally funded the loss. 

Since we are stuck with both of those facts amending the 2010 return will not help us but to the tune of eliminating 10K of income on that return which we in turn would have to add back to 2010. However, if I had been able to be there and plan for 2010 we could have legally avoid both of these issues as well as marking your tax return as cash rather than accrual basis. 

Accordingly, you should go ahead and file the corporate return I forwarded for 2010 and I will complete the personal and get it out your way. ASAP after you get the 2010 financial current, please send them to me along with year to date wages by employee so that we might discuss. 

It is just that I do now want to see any business owner save $1500 now and wind up costing you $10,000 by the time the returns are done, the IRS notices arrive or you later realize the tax options or deductions that are now too late to avail yourself of. To see how a CPA can save you thousands visit http://www.hiscpa.com/testimonials.htm

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!

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.