Coffee Time with Marie Torossian CPA - Episode 37

Tax Planning as a Stimulus for Businesses 

Marie Torossian and Pedro Gonzales emphasize the importance of tax planning as a stimulus for businesses. By developing strategic tax planning strategies, businesses can generate additional funding, which can significantly benefit them financially. 

Recap of Previous Topics 

The hosts briefly recap some of the previous episodes, covering topics like self-employment tax strategies, partnerships, financial analysis, cost-cutting, using cars for business, and IRS audits versus financial audits. They also mention a special guest, Douglas Cowgill, an immigration attorney, who discussed how US accountants and attorneys collaborate on immigration and business plans for investors. 

When to Apply for S Corporation Tax Status 

One of the recurring questions is about the timing to apply for S Corporation tax status, whether for an existing corporation or an LLC. Pedro explains that being an S Corp is a tax election, not automatic with incorporation. The timely election deadline is no later than the 15th day of the third month of the tax year, often meaning March 15 for most small businesses. 

Filing Late S Corporation Election 

If someone missed the deadline but hasn't filed their taxes, they can still attach Form 2553 to their first-year return to make a late election. 

Payroll Considerations 

For S Corporations, establishing payroll is essential. If you're an LLC intending to be taxed as an S Corp, managing payroll can be tricky since LLC members don't typically pay themselves a salary. This distinction is crucial to avoid potential hiccups. 

Checking IRS Payment Plans 

Taxpayers should regularly check their IRS payment plans to ensure proper posting of payments. The IRS website allows individuals to monitor their payment status and verify that payments are correctly recorded. 

Filing Business Tax Returns with No Activity 

Even if a business has no activity, it's advisable to file a tax return. Whether it's a startup or a business that ceased operations, filing a zero return or a final return ensures compliance and avoids future issues with the IRS. 

IRS Notices and Scams 

Pedro warns about increasing IRS correspondence and advises recipients of IRS notices to act promptly. Responding to IRS inquiries is crucial, and if tax issues are known, hiring representation is recommended. He also cautions against IRS phone scams and emphasizes that the IRS typically communicates through correspondence first. 

Closing Remarks 

Marie encourages listeners to submit their questions for future episodes and emphasizes the importance of seeking professional help for tax-related matters. Pedro underscores the value of good advice, especially in the first year of business, to avoid common pitfalls and ensure compliance. 

In summary, the episode covers critical aspects of tax planning, S Corporation elections, payroll considerations, and IRS interactions, providing valuable insights for business owners and individuals alike.