Atlanta CPA on Converting Your Business to an S Corporation

Atlanta CPA on Converting Your Business to an S Corporation  

About S Corporations/What Entity is Best for Your New Business
Subchapter S Corporations can have no more than one hundred shareholders and they all need to be U.S. citizens or resident aliens. This corporation type almost always has to have a calendar year as the fiscal year. S Corporation rules have been around since the 1950s and were set up to simplify the rules and regulations of being a business owner.

Liability Protection and Subchapter S Corporations
A subchapter S Corporation, like a C Corporation, affords the business owner personal liability protection from business risks. Some of the keys to maximizing that protection are to treat the corporation like one by doing all your business in the corporate name, signing all of your documents listing your corporate title, not co-mingling any personal issues/bills in the corporation, and by having your annual Board of Directors and Annual Shareholder Minutes Meeting.

Tax Advantages of S Corporations/Incorporating in Georgia
No income taxes are paid with the corporate return. The profits of the business are reported on the personal tax return of the S corporation's shareholders. As long as you pay yourself a reasonable salary, you may also take shareholder distributions out of the business that are devoid of FICA/Medicaid taxes.

Another advantage of S Corporations is that if you have corporate losses, and you fund (you put the money in the business) those losses personally, then you can deduct those losses on your personal return. Any losses that are funded by the bank (a direct loan from the bank to the corporation) or by trade creditors are not deductible. Below is a sample letter one might send to the IRS to ensure that the S election has been properly received and timely processed by the IRS.

Taxpayer Advocate Office, Atlanta GA  

Dear Sir/Madam,  

I am writing to follow up on your IRS Letter dated 1-16-10 (copy enclosed). Please note I have enclosed a copy of the S Corporation election and the signed S Corporation return as requested. Please fix your records accordingly to show that the client was an S Corporation for the tax year in question.  

Accordingly please refund any monies previously paid.  

I appreciate your attention to this matter and please do not hesitate to contact me should you have any questions.  

Very Sincerely Yours, John C. Dillard, CPA, President  

John Dillard is an Christian Speaker/Author and Certified Public Accountant of His CPA PC (An Atlanta CPA Firm). To See how he takes Christ along with him to work visit http://www.hiscpa.com/  and for his latest book Overcoming Life's 9/11's: Job's Journey visit http://www.john-dillard.com/  or call John Dillard CPA today at 770.814.9304

Dare to Attempt Something so Great for the Kingdom of God that it is doomed to failure, lest Christ be in it!