Frequently Asked Questions
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HOW SHOULD I FILE?
If you are married you have the option to file jointly or separately on your federal taxes- but which should you choose? While the IRS recommends that married couples file jointly, there are circumstances that may be a greater benefit to you if you file separate. Couples who file jointly have access to a lot of deductibles, instantly! By filing jointly, you and your spouse
WHAT IS AN ESTATE PLAN?
An estate plan is a written document that outlines the disposal of one’s estate and includes such things as a will, trust, power of attorney, and a living will. An estate plan is critical for the family and the business because without it, you will pay higher estate taxes than necessary, allocating less of the estate to your heirs. The estate plan should be used in conjunction with the succession plan to see that the family business is transferred in a tax effective manner.
WHAT IS A SUCCESSION PLAN?
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HOW LONG SHOULD I KEEP MY TAX RECORDS?
All business records, especially sales and payroll must be kept for seven years. The Social Security Administration requires discrepancy be resolve anytime within this seven year window. The IRS and the states will audit within the seven year window. Keep all federal, state and local returns indefinitely and the all supporting documents for seven (7) years. Real Estate and stock market transactions records should be kept. Tax consequences of a transaction can depend on events that happened years earlier. Taxpayers often keep files in a single, easily accessible location. Consider keeping your files in a safe deposit box or other safe place outside your home.
HOW CAN AN ACCOUNTANT HELP WITH A NEW BUSINESS OWNER?
Can an accountant help a new business owner? Remember, the issue to be address is “What level of professional do I need at any particular point in time?” An accountant has some advantages. Accountants are unlicensed, this translates into lesser fees. This also translates into a lesser level of professional service. Routine accounting work is appropriate for an accountant. The IRS restricts accountants’ ability to represent taxpayers. CPAs and accountants often work in tandem. Accountants will perform the accounting work to the point where a CPA can address the more complex issues. Having accountants do pre-CPA level work saves money.
You need a CPA when: the IRS wants you for any reason, your professional needs are complicated, bankers or whoever needs financial statements and when your accountant does not understand and/or cannot explain the issues. Non-CPA prepared business reports are not considered to be financial statements and have limited third party acceptance. Most importantly you need a CPA BEFORE the circumstances above occur. Establish a relationship with a CPA early in your business formation, or now if you are already a business, so that he can give you guidance and keep you away from the pitfalls.
WHAT ARE PASS THROUGH ENTITIES?
The concept of “pass through entity’s attribution” stems from the fact that this entity’s ownership can be attributed to another entity. The IRS Code prescribes that pass through entities’ income belongs to that other entity. Pass through entity earns the income, but is not responsible to pay the tax related to this income. In effect, the pass through entity’s income and related tax liability passes through to the entity having ownership. Examples are estates, LLCs, partnerships, S Corporations and trusts.
HOW CAN I KNOW WHICH CPA IS BEST FOR ME
Any professional you choose should not only have the technical knowledge required but should also treat you with respect. Does your CPA and advisor take time to listen to you? Does your CPA and advisor return your calls in a timely manner? Do you feel comfortable asking your CPA and advisor a question? When you need a professional in the region who will make you their top priority, Call Reach Financial Today!
WHAT IS A BUSINESS STRATEGIC PLAN?
The family strategic plan establishes policies for the family’s role in the business and is needed to maintain a healthy, viable business. For example, it should include the creed or mission statement that spells out your family’s values and basic policies for the business, and it may include an entry and exit policy that outlines the criteria for working in the business. The plan should consider which family members desire to have a part in management of the business versus those who desire a more passive role.