From a client:

Subject: LLC Partnership question

 

Hi Kerry,

 

I’ve been a partner of a start-up business which now is going to be formally incorporated as LLC taxed as a partnership. My question is whether I should become partner of this company myself or rather make my existing C corporation a partner? How can you compare advantages/disadvantages of the two approaches?

 

thanks

My Reply:

Having your corp as the LLC member has all of the advantages as running your other income through the corp.

You can manipulate tax year timing with the corp’s fiscal year.  LLCs and individuals must use tax year ending 12/31/0X.

You can avoid 15.3% SE tax.

You also have more liability protection with the extra layer between the LLC and you.

Kerry

 

Q-1:

Subject: Question

 

Earlier this year I decided to revoke my subchapter S and am now wondering if that was an appropriate decision.  Is it possible to request re-instatement before I file this year’s taxes?  To whom do I petition?  Does the IRS have a small business advocate?  I am a micro-business (myself and a PT assistant).  My business is financial brokerage – revenue is from commissions.  Thanks for any input you can provide.

A-1:

Before you continue flipping back and forth between C and S, you need to engage the services of a tax professional who can give you guidance as to what is best for your unique circumstances.  Making a decision such as this on your own is no different than taking potentially toxic medicine based on what your friends may have told you or you saw in a TV ad.

If you and your professional advisor do decide that remaining as an S is the best for you, s/he should be able to help you rescind the erroneous revocation via the special hotline IRS has for us practitioners.

Good luck.

Kerry Kerstetter

Q-2:

I paid $750 to a CPA (formerly with Deloitte an Touche) to request a rescision of the revocation request.  He sent it to the wrong IRS dept and  made one phone call that  did not resolve anything.  Please forward the hotline number you refer to and I will ask my accountant to call on my behalf.  Appreciate your time!

A-2:

IRS has a web page with the special contact info for tax pros.

You still need to properly analyze which structure is best for you.

Good luck.

Kerry Kerstetter

Follow-Up:

Thanks much!!

 

 

From a client:

Subject: quick books

 Hi Kerry…

 Are you still recommending we upgrade to quick books 06?  Apparently that comes out this week and my bookkeeper will be using it.

A:

It’s not essential that you always have the most current version of QuickBooks.  However, it’s a good idea not to fall too far behind so that you can take advantage of the new features that make it easier to work with, as well as not fall victim to Intuit’s sunset policy that orphans any version more than three years old.

For anyone currently thinking of upgrading to a newer version, I would hate to see them waste their money on the 2005 model, when the 2006 programs are so close to release.  In fact, I should be receiving my copies of the 2006 programs any day now and the public should be able to order it now as well. 

Kerry

Follow-Up:

 Thanks, yes, they are releasing 2006 on the 11th…so since my bookkeeper is upgrading hers and you are too, then I need to get mine or not be supported, it sounds like.

Costco on line has it for $149. which is the cheapest, but maybe with Intuit’s $80 rebate….that’s not too bad in fact if they both hold.

A:

I’m not sure what your bookkeeper is doing, but I will continue to support whichever Windows versions of QB the clients are using.  I don’t really like using the older versions because they aren’t as automated as the newer ones; but I do have all the QB versions from 1999 up to the most current installed on my computers and use whichever one is compatible with the data files the clients send me.

Over the past several years, I have found that the warehouse clubs have had the best prices for new releases off both Quicken and QuickBooks.

Kerry

 

David Letterman’s Top Ten Signs You’ve Run A Bad Campaign includes this one that the DemonRats love to repeat over and over.  It’s actually a cornerstone of Queen Hillary’s campaign for a third term in the White House, as she and her co-president continue their attacks on Bush’s tax cuts.

5. You’ve pledged to “Tax America back to the Stone Age”