Q: What is an S-Corp?
S corporations are corporations that elect to pass corporate income, losses, deductions, and credits through to their shareholders for federal tax purposes. Shareholders of S corporations report the flow-through of income and losses on their personal tax returns and are assessed tax at their individual income tax rates. This allows S corporations to avoid double taxation on the corporate income.
To qualify for S corporation status, the corporation must meet the following requirements:
- Be a domestic corporation
- Have only allowable shareholders
- May be individuals, certain trusts, and estates and
- May not be partnerships, corporations or non-resident alien shareholders
- Have no more than 100 shareholders
- Have only one class of stock
- Not be an ineligible corporation (i.e. certain financial institutions, insurance companies, and domestic international sales corporations).
S-Corporations one of the most common tax planning strategies! S-Corporations, when structured correctly, can assist business owners in reducing or mitigating burdensome employment taxes.
Q: What is ecommerce accounting?
- Traditional accounting tasks focused on a business that has e-commerce sales channels. Three factors make e-commerce accounting more complex than usual
- Cash or bank related activity do not always correspond with revenue related activity. For example, bank deposits from payment processors are ordinarily not revenues, but instead include a combination of merchant fees, refunds, chargebacks, and revenues.
- Accounting for inventory. For accounting purposes, the cost of inventory can only be expensed on the income statement when the individual units are sold. For example, if there are 10 units of inventory purchased, and 2 are sold to customers, then 2 units of inventory are eligible to be expensed on the income statement while the other 8 units are not yet deductible and must be included on the business’s balance sheet.
- For a successful online seller, there is often a very high volume of transactions that need to be accounted for.
Q: How do tax returns work?
A tax return is a filing (often an electronic filing) for which an individual or legal entity reports their income or other taxable transactions to a tax authority. In the United States, individuals and business entities can have Federal, State, and/or local tax filing obligations. All of these filing obligations oftentimes have different filing deadines which can create complexity for compliance.
Q: How do I prepare for tax season?
If you have received a form 1099-K from a credit card payment processor, we strongly recommend that you consider hiring a professional. If you do not reach the threshold for receiving a form 1099-K, we usually perceive this as “low risk” and suggest that you consider an automated solution, such as turbo tax.
Q: Why do I need an accountant?
If you are a seller that has substantial levels of profits, we highly recommend hiring an accountant for several reasons:
- Tax can be a substantial expenditure of yours, especially for successful business owners in the higher tax brackets. If the work is done incorrectly, there is the risk of overpaying or underpaying your taxes. If you underpay your taxes, you are at risk with the tax authorities. If you overpay your taxes, you can put financial strain on the business
- Tax professionals can assist you in structuring your business in a more strategic way to optimize your tax structure.
- Having a handle on your accounting and bookkeeping is essential. Your profits are the starting point for calculating your income taxes, so if youre accounting/bookkeeping is incorrect, the taxes that your business incurs will also be incorrect. Additionally, we believe that knowledge is power. Having a good handle of your financial performance on a regular basis is essential to any successful entrepreneur.
Q: What is CFO and what is an outsourced CFO?
- CFO is an acronym for “Chief Financial Officer”. The chief financial officer (CFO) oversees a company’s finances. A CFO analyzes financial data, reports financial performance, prepares budgets, and monitors costs. This is often handled by an individual that is an employee of the company. This individual is often one of the most highly compensated employees of the company.
- An outsourced CFO is a finance leader outside of your organization that provides top-tier finance, business, accounting, and operational guidance for your business. An outsourced CFO is usually not an employee of your company and accordingly will come at a much lower cost in comparison to a full time CFO.
Q: What information is needed to file taxes?
- Personal information including your name, social security number, and mailing address as well as the information for direct family members.
- Financial information about your income as well as documentation for taxes that you’ve already paid.
- Information about foreign bank accounts
Q: What are the benefits of hiring a CPA?
CPAs can prepare tax documents, file tax returns and provide tax planning advice to help you strategize how you can minimize your tax liability for next year. Also, as mentioned above, CPAs can represent you if the IRS has questions about your return or you’re audited, which is an important consideration.
Q: Do I need a CPA for my business?
If you have received a form 1099-K from a credit card payment processor, we strongly recommend that you consider hiring a CPA professional. If you do not reach the threshold for receiving a form 1099-K, we usually perceive this as “low risk” and suggest that you consider an automated solution, such as turbo tax.
Q: What is a CPA?
A Certified Public Accountant (CPA) is an accounting professional who has met state licensing requirements to earn the CPA designation through educational training, experience and passing the CPA Exam.