FAQ's

A: Business insurance policies such as general liability, professional liability, and errors & omissions insurance may be critical insurance policies to carry, depending on your business industry. If you have employees you will need to have both workers compensation and disability insurance policies. You may also want to offer your employees medical, dental, and/or vision plans or consider life insurance policies for the offices of the company.

A: The Sarbanes-Oxley Act of 2002 rewrote the rules for corporate governance, internal control, and financial reporting. The Act's focal point is to restore public confidence and protect the public interest by improving the integrity of financial reporting. Section 404 of the Act focuses heavily on the critical role of internal control over financial reporting, emphasizing the importance of ethical conduct and reliable information in the preparation of financial information reported to investors.

If you need assistance in understanding the new internal control reporting, please contact our office.

A: Yes, Corporations are granted an automatic 6 month extension to file. Similar to personal returns, an extension of time to file does not give a corporation an extension of time to pay.

A: Corporate tax returns are due by the 15th day of the 3rd month following the Corporations fiscal year end. So for a December 31st year-end the tax return is due by March 15th; one month earlier then personal returns are due.

A: In general, there is a requirement to maintain copies of any tax returns, the supporting documentation, and the proof of receipt for 7 years. Document retention schedules are available under "Tax Resource Guide" in our Resource Center free of charge.

A: Just like personal returns, Partnership & Trust returns are due on or before April 15. You may be granted an automatic extension on the filing due date until August 15.

A: Tax returns should always be mailed by delivery confirmation or certified mail. It is important to have proof that the return was mailed and received by the IRS or the State by the filing due date.

A: Anyone will be granted a first extension, however tax liabilities are still due on April 15. The extended due date is August 15. This is only an extension to file, not pay. A second extension can be requested by August 15th with a reasonable excuse, with a final due date of October 15th.

A: No. An extension is just extra time to submit your return. It still requires you to pay your tax liability at the original due date.

A: There are three different reporting standards that CPAs use that reflect their underlying work performance standards. These performance standards allow us to express a level of assurance about the financial statements being prepared. Those three are:

Performance Standard	Level of Assurance
Compilation	No assurance
Review	Limited assurance
Audit	Positive assurance

Financial statements are most frequently relied on by third parties (funding sources, governmental agencies, creditors, investors, potential buyers, etc.) who want to make a judgment about engaging in some form of business relationship with our clients, whether it be a loan, an acquisition, an endowment, etc., or in determining whether or not the business is in compliance with certain regulatory requirements.

The levels of assurance-none, limited and positive-relate to the fair presentation of financial statements in accordance with generally accepted accounting principles ("GAAP").

A compilation essentially gives no level of assurance. Compilations basically utilize management's records to prepare a set of formal financial statements in accordance with GAAP. Compilations are generally used for management purposes - so that upper-level management has at its disposal a set of compiled financial statements that illustrate the performance and financial position of the business as of a certain year-end date.

In performing a review, we apply our knowledge of our clients and industries served to develop certain expectations about the financial statements being reviewed. Through a careful analysis of ratios, relationships, and certain key figures, along with conversations with management, we ensure that the financial statements are presented in accordance with GAAP, and that all necessary material modifications have been made. Reviews do not provide positive assurance; however, that the financial statements are entirely free of material misstatement. Reviews are generally used for obtaining financing, business valuations, and for non-profit organizations that generate over $100,000 in annual gross receipts.

Audits involve in-depth analysis and thorough testing of the accounts and figures illustrated in the financial statements, as well as the business' internal control environment. The purpose of an audit is to express an opinion on the fairness of the presentation of the financial statements. Audits can provide a business a tremendous level of understanding of its financial structure, operating performance, susceptibility to fraud, internal control environment, and opportunities for improvement. Audits are required for all publicly-traded companies, as well as non-profit organizations that generate over $250,000 in annual gross receipts.

A: While both entities are corporations, thus providing a certain level of limited liability, an S-Corporation (or small business corporation) provides a tax benefit for small corporations (fewer than 100 shareholders). For federal purposes, S-Corporation's earnings are taxed at the shareholder level and not the corporate level. As a result, an S-Corporation can avoid double taxation which often plagues C-Corporations which are taxed both at the corporate level and, when dividends are paid, also at the personal level. Due to their pass through nature, S-Corporations, often result in lower taxes upon the sale of businesses' assets. Careful consideration should be taken when deciding which corporate structure to utilize.