Frequently Asked Questions
What do I do if the IRS contacts me?
A) Never respond to an IRS letter or notice without proper representation from a CPA. Most IRS letters are generated based on computer data which usually overstates the amount of tax you may owe, and in some cases the computer-generated letter can be completely erroneous. Don’t panic, but don’t ignore it either. Call us immediately and we will walk through the challenge with you.
IRS Phone Call
B) Never speak to anyone over the phone who claims to be with the IRS. There is an increasing number of phone scams every year from people claiming to be from the IRS. The IRS never initiates a conversation with a phone call. You will always receive a letter first.
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Should I Incorporate?
The differences | Sole Proprietor vs LLC vs S-Corporation
Forming/operating as a separate entity has many implications. Most importantly- if you have legal questions about these- you should consult an attorney.
Sole Proprietorship – Most simple way to operate. Activity is tracked using an individual’s SSN, but using a separate business bank account is still advised to create separation (and some protection) in case of an audit. Compared to other entity types there are no direct or indirect tax benefits to this type.
LLC – Entity created within a state (TX). Activity is tracked using a separate EIN (from the IRS) and will have a separate bank account under this EIN (instead of your SSN). This type of entity can provide legal protection along with minimal indirect tax benefits, but no direct tax benefits. Single-member LLCs will still be taxed the same as sole proprietors and multi-member LLCs may also be required to file partnership tax returns with the IRS
C-Corporations – Entity created within a state (TX) that is required to file corporate tax returns with the IRS. These may be used in rare instances for tax planning purposes and may also provide more room for growth. From a tax standpoint, these alone are generally not a preferential entity type.
S-Corporations – This is an election you may be able to make in order to convert an already formed LLC or C-Corporation into an S-Corporation. While the S requires a separate federal tax return (like C-Corps), S-Corps have been able to provide more preferential tax treatment. Most S-Corporations face payroll requirements, but we can take care of the tax returns and payroll for you- while you can receive liability protection along with direct and indirect tax benefits. Most of our clients that have this formation save thousands of dollars each year.
Sometimes you just need some guidance and peace of mind.
Objectivity can be hard to find, but you can rest assured we do not accept commissions, do not receive financial compensation for business referrals, and stay away from anything that may impair objectivity.
We value the integrity of our services and advice and are committed to giving honest feedback to our clients.
Does filing an extension increase/decrease my risk of an audit?
There is no known proof to link filing an extension to an increase/decrease in audit risk. An extension is helpful if more time is needed to gather information to file a tax return, but most tax is still due by the original due date. Late payment penalties and interest will still be assessed regardless of extensions. In other words- unless there is more info needed- tax returns should be filed as soon as possible to avoid risk of increased penalties and interest.
What Do You Charge for CPA Services?
CPA services are dependent upon the complexity and time to complete and are paid for by the type of service or by the hour. The National Society of Accountants publishes survey results annually on the average costs of CPA services. These are not our prices but the list gives you an idea of the average service costs. The following averages were published in the 2016-2017 NSA Income and Fees of Accountants and Tax Preparer.
We strive to keep costs lower than those listed below but are flexible depending upon the complexity and time involved.
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2016-2017 NSA Income and Fees of Accountants and Tax Preparer
Average hourly fees for various client services include:
- Estate/Financial Planning – $163
- Audit of Financial Statements – $157
- Financial Services – $144
- Tax Services – $145
- Management Advisory Services – $146
- Elder Care Financial Services – $131
- Financial Statement Presentation – $134
- QuickBooks or Bookkeeping Advisory Services – $97
- Write-up Work – $93
- Payroll Services – $83
Average fees to prepare forms include:
- $273 for a Form 1040 with a Schedule A and state return
- $176 for a Form 1040 (non-itemized) and a state return
- $184 for a Form 1040 Schedule C (business)
- $124 for Schedule D (gains and losses)
- $135 for Schedule E (rental)
- $656 for a Form 1065 (partnership)
- $826 for a Form 1120 (corporation)
- $809 for a Form 1120S (s corporation)
- $733 for a Form 990 (tax exempt)
- $1,563 for a Form 706 (estates)
- $532 for a Form 5500 (pension/profit-sharing plans)
- $53 for a Form 8965 (health coverage exemptions)
- $58 for a Form 1095‐A (health insurance marketplace statement)
Do I have to pay sales tax?
State sales tax may be required for your trade or business, but certain business planning and/or research may help you avoid charging customers (and/or paying vendors) too much sales tax. An 8% reduction in cost could be a priceless competitive advantage for your business.
When and how do I pay the IRS?
Extensions may be filed, but penalties and interest can begin accruing at the original the due date. Some individuals may be required to submit estimated tax payments quarterly. Payment options include mailing checks with IRS vouchers, www.EFTPS.gov electronic deposits (requires 2-3 week registration process), and IRS Direct Pay (link to your bank account from the IRS website).
Tyler, TX 75703
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