Here are the answers to some of the most Frequently Asked Questions our firm receives.
Remember: The information found on this website is general in nature and may not apply to the reader's situation. Therefore, the reader should not rely on the information on this website alone. For specific advise, please call us at Joseph A. Richmond, CPA. Thank you.
Q. Do you work with Start-up Companies?
A. Yes. Many of our clients are just starting in business. We will lead you through the necessary governmental forms. Through our networking, we can also assist in finding you other necessary professionals to deal with (lawyers, insurance agents, mortgage brokers, etc.) throughout the state.
Q. What do I need to do to start a new business?
A. Typically, most people will go to their lawyer first, get the business set up and then contact an accountant. We would rather that you contact us at the beginning. There are many different kinds of companies and we can help you select the best one for the kind of company that you will be setting up. Then we will continue to help you with payroll, tax returns, monthly accounting, and financial statements to whatever degree you need.
Q. I want to start a new business. Can you tell me which type of business I should form?
A. Yes. When setting up a new business, it is crucial to set up the right type of business, such as corporation, S corporation, limited liability company, limited liability partnership, partnership, sole proprietorship, etc. We can help you form the right type of business based on your unique situation with consideration given to liability issues and tax advantages.
Q. How are Limited Liability Companies (LLC) taxed?
A. A single-owner LLC defaults to being taxed as Sole Proprietorship. Income/loss from the LLC is reported on the owner's personal income tax return. A multi-member LLC defaults to being taxed as a Partnership. A Partnership tax return must be filed. The profit or loss is then reported on the owner's personal tax return. Any LLC can elect to be taxed as a corporation. To do so, one must file an election within 75 days of creating the LLC.
Q. Should I use a lawyer or an accountant to incorporate my business?
A. Although lawyers can get the paperwork together to make your incorporation happen, they might not know all the different tax laws that can apply to the different kinds of incorporations. Therefore, we suggest you see an accountant first to find out exactly which kind of incorporation you should pursue. After that meeting, have either your accountant or the lawyer finish the paperwork.
Q. Do you perform business valuations?
A. Yes. We are often engaged to conduct a business valuation. Business valuations are required or recommended in the following situations: divorce, estate and gift tax valuations, buy/sell agreements, shareholder disputes, mergers and acquisitions, incentive stock options, employee stock ownership plans, initial public offerings, and legal claims for damages.
Q. I am concerned that my business is not as profitable as I would like it to be. What can you do to help me?
A. We offer an operational auditing program where a team of our professionals comes into your business to assess your company's operational strengths and weaknesses. We breakdown your business into the areas that are mission critical and offer recommendations (that we can help you to implement) to get your business on track. Organizational efficiencies and profitability structuring are the keys to your business working for you rather than vice versa.
Q. I prepare my own tax return, why should I use your services?
A. Many times you are correct and you can prepare and file a return. Did you take all the deductions? Did you take the available tax credit? Did you go to a tax course in the past 12 months? We find that many returns can be self-prepared but many are lacking in all the deductions that can be taken.
Q. How can I contact the IRS about my tax return?
A. You can call the IRS at its toll-free line at 800-829-1040. To be ready to respond, you should have your Social Security number, your filing status and your refund or payment due amounts. Allow between 4 to 6 weeks before you contact the IRS.
Q. Where can I get additional information about IRS e-file?
A. You can visit the IRS website at www.irs.gov. Feel free to call our offices to ask us questions as well.
Q. Can I save taxes by filing a separate return?
A. It depends. For example, if both parties' income is approximately the same, but one has extraordinarily large itemized deductions subject to income limitations (medical expenses, casualty losses, miscellaneous deductions, etc.) it is possible to save taxes by filing separately. We always compute the tax result both ways, as jointly and married filing separately, to ascertain which filing status is more beneficial to our client.
Q. How long should I keep my tax records?
A. We recommend keeping your tax records for ten years. This is longer than recommended by the IRS, but we feel this is the safest length of time. However, documents in support of the purchase of a depreciable asset should be kept until the asset is disposed of and documents in support of loans and mortgages should be kept until the loan or mortgage is liquidated.
Q. Is there any non-tax record that I should keep?
A. There are other records you should keep, even though they don't appear to have any use for your tax returns. Family documents, certain medical records, insurance policies, records of major purchases, are just a few examples. These documents will be needed in the case of any emergency that may arise.
Q. What happens if my return is filed electronically, I am receiving a refund, and I owe taxes from previous years?
A. The amount owed on back taxes is automatically deducted from your refund just as if you filed a paper return.
Q. If I e-file my return how do I know that the IRS really has my return?
A. The IRS notifies your Authorized IRS e-file Provider within 48 hours of transmission that your return information was received. If the IRS detects any errors, it sends a message back to our firm indicating the error. Our firm will correct the error and notify you to let you know what the error was. We will then retransmit your returns to the IRS.
Q. If my return is electronic, how do I sign it?
A. The most convenient way for you to sign your electronic return is to use a Personal Identification Number (PIN). It's completely paperless. Our firm has you sign a document that shows that you agree with the numbers in the return and is allowing us to e-file your return for you. The signed forms stay at our firm for four years.
Q. Do I really get my refund faster?
A. With IRS e-file you get it back in half the usual time. It's even faster and safer if you have your refund deposited directly to your bank account in as few as 10 days. Ask you Authorized IRS e-file Provider for the estimated date of deposit.
Q. What do I gain by using IRS e-file?
A. Accuracy, security, electronic signatures, proof of Acceptance, fast refunds with direct deposit, electronic payment options - only IRS e-file offers these advantages.
Q. How can I obtain a copy of my tax return?
A. Of course, we supply you with a copy and if you lose it, we will furnish you with another copy. If we did not prepare the return, and for some reason you do not have a copy in your possession, you need to file form 4506, Request for Copy or Transcript of Tax Forms, with the IRS service center where you filed your missing return.
Q. What is the most tax efficient way to save for my children's education?
A. The educational savings area is very complicated. We recommend that taxpayers seek professional assistance. Although a Section 529 plan, under the 2001 Tax Act, is an extremely flexible and tax effective plan, there are other plans to be considered. Also when considering any educational savings plan, consideration should be given to the impact on financial aid qualification requirements.
Q. What services do you provide?
A. We prepare all tax returns including individual, corporation, LLC and LLP, non-profit, estate and trust, partnership, payroll, sales tax, property tax, and other taxes. We also sell computers and software as well as offering training. We offer bookkeeping, financial statements, accounts payable, and accounts receivable processing--in fact, any office function, including setting up an office, as part of our services.
Q. What size clients do you accept?
A. We accept any clients within our service range. If the engagement is very large, we will accept it if we feel we have the staff to handle it. If we don't have the appropriate staff, we may form an alliance with another CPA firm and perform a joint engagement. There is no account too small to be considered important in our office.