Tax Preparation and Filing
Jeanine previously prepared and submitted comprehensive and accurate tax filings, amendments, and other required documentation on behalf of her year-round clients as part of their full-service contracts. Going forward Jeanine will be assisting full-service clients with tax planning and referring out the tax preparations to firms specialized in business tax preparation services. This can include your business’s entity (C corporation, S corporation, partnership or multi-member LLC, proprietorship or single owner LLC, not-for-profit, trust or estate, or other) income taxes, owners’ and employees’ income taxes, payroll taxes, property (personal or real), sales & use taxes, or other required taxes. This will better enable company clients to utilize my expertise gained from annual continued education in the US Tax Code, my Master’s Degree focused on accounting and tax law, and my 38 plus years of working with businesses and owners.
Comprehensive tax preparation requires taxpayers to complete a tax organizer (interview annually) to answer questions about their tax year’s activities and updated status. The tax accountant or tax attorney (preferably an Enrolled Agent or EA, Certified Public Accountant or CPA specialized in tax compliance, or a licensed attorney or Esq. specialized in tax compliance) should review the taxpayer answers and seek clarification from taxpayers where needed, confirm that the financial accounting is up to date AND reconciled, and then mindfully enter the taxpayer financial data into their tax calculations to produce relevant tax returns for taxpayer client review. Once BOTH the taxpayer(s) and the tax professional receive relevant clarifications from the review, the tax professional can finalize the tax returns at hand, obtain required taxpayer signatures and dates, and e-file (or prepare clients for paper-file if taxpayers not eligible for e-file or conscientiously object to e-filing) the tax returns.
Taxpayers should be aware that corporations, self-employed individuals, partners or LLC members working in their businesses, investors incurring capital gains, retirees receiving non-principal distributions, prize winners, sellers with capital gains, and some other taxpayers, are subject to estimated tax payments on a quarterly (with specific due dates!) basis. This is a requirement under the US Tax Code because income taxes are due as income is earned during a tax year, NOT when you complete your income tax returns. Should you fail to pay the required estimated taxes for income tax compliance or payroll tax compliance by the specified due dates, then you will incur financing fees and interest charges on top of the estimated taxes due. This is NOT the fault of your tax accountant or other tax professionals IF you chose NOT to get tax planning advice, and IF you chose not to make your REQUIRED estimated tax payments when due. You, the taxpayer, are always liable for your own taxes due, and for paying them in a timely manner on or before the due dates.
Jeanine recommends that you work with her to get your corporate general ledger tax liability accounts set up in your liabilities section, and your tax expense accounts set up in your expense section, of your general ledger. As the amounts are calculated for income taxes, payroll taxes, sales & use taxes, and/or other taxes, you can record the respective expense and liability amount. Upon payment of the liability, the appropriate cash account will be utilized.
Non-corporate businesses can similarly set up the employment tax, sales & use tax, and other tax transactions in their general ledger. Since the owners and not the non-corporate entities are subject to self-employment taxes, the individual owners’ liabilities and expenses can be tracked withing their individual capital accounts and payments made out of their guaranteed payments or as draws from their capital accounts where you set aside fund amounts to cover their personal estimated ta payments. This way the owners will get checks or direct deposits made directly to the taxing authorities and not spend the entire amounts of their distributions or guaranteed payments without remembering to pay their required self-employment taxes. It is a suggested system for individual owners that prevents them from incurring additional financing fees and interest on top of the self-employment taxes that are due quarterly on specific quarterly due dates.
Tax planning not only involves looking at your entity and individual owner tax situations, for quarterly or other modes of tax due dates. It can involve reviewing your prior year tax returns and your current year financial accounting, and projecting out your expected earnings, expenses, and tax consequences. Once a projection is established, then a budget can be utilized to maintain the status quo, or reduce taxes with more conscious use of resources, increases in profitable activities, and/or decreases in expenditures where possible. Tax planning can reveal if referrals are needed for certified financial planners (CFP), licensed tax attorneys (esquire), and/or certified public accountant (CPA) auditors. It is not unusual for a company to require a team of professionals to create a plan for making their operations profitable and for utilizing their resources efficiently. Financing and budgeting should include the costs of obtaining help from specialists where needed.
Please plan on integrating tax planning into your year-round general ledger set-up and accounting services. Please text Jeanine at (616) 430-5231, email to Buben.Jeanine@comcast.net or complete the Contact Us form at https://accounting4business.org/contact to arrange a service contract and your subsequent tax planning appointments for key times throughout the tax year.