Posts Tagged ‘financial reporting’

Do you hate paperwork? Almost everyone does, but when it come to dealing with the Internal Revenue Service, you need to have all the proper paperwork and have all the i’s dotted and the t’s crossed.

When you operate as a corporation, the corporation is a separate legal entity from you, so you should have a corporate paper trail that clearly reflects intent and action. One area that can really be a minefield is accounting for monies paid to corporate officers, other than payroll.

Is it a Loan or a Dividend?

In one scenario, William H. Bruecher III paid more than $27,000 in taxes on money his corporation supposedly loaned to him. Instead of receiving a salary, the corporation paid his personal expenses, classifying the payments as advances.

In an audit, the IRS will check to see if such advances are loans or dividends. If repayment by the owner and collection by the corporation seem assured, the advance is a loan.

To decide whether there is intent to repay, the following are factors:

• Is there a promissory notes or other written promises to repay the advance?
• Is the interest charged on the advance?
• Is there collateral to ensure repayment?
• Is there a history of repayment?

Neither Mr. Bruecher nor his corporation could produce documentation of any of these factors; therefore, the advances were taxable dividends.

Social Security Tax Exemption

There are new tax benefits for employers in 2010 from the Hiring Incentives to Restore Employment (HIRE) Act. Qualifying employers have an exemption on their matching share of the 6.2% social security tax paid to qualifying employees effective on wages paid from March 19, 2010 through December 31, 2010. This exemption is claimed on form 941 beginning with the quarter ending June 30, 2010.

Linda Silva, Certified Quickbooks ProAdvisor

Based in Georgetown, Texas, Vista Professional Services Inc. provides payroll and bookkeeping services, financial services software and internal analysis and examinations for start-ups, sole proprietorships and corporations in a host of industries throughout the Central Texas area.

Our goal is to free you, the business owner, from the daily grind of the repetitive tasks that can prevent you from accomplishing your primary goal-building your business.

Vista Professional Services Inc. conducts a preliminary assessment with each new client to determine the scope and nature of their needs. This allows us to
tailor our services to best meet your goals with least impact to your bottom line.

Whether you need to start from scratch, have your books balanced periodically, enhance your current bookkeeping system/skills, train your onsite bookkeeper, convert from your current system, begin a checks-and-balances process within your business, or want someone to do it all for you, we can help.

By streamlining your bookkeeping system, creating maximum efficiency in maintaining your financial records and providing “at-a-glance” optimal tax and financial reporting, we can help you put your focus where it should be-growing your business.

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