To incorporate — or not to incorporate?
As a business owner, you may be wondering whether to continue running your business as a sole proprietor or to incorporate. Should you form a C-Corp, an S-Corp or an LLC? What are the differences between them? Are you looking for tax savings, a way to protect your personal assets or both?
Before you make this decision, call our office and set up a time to meet with us to discuss the tax implications. We can explain to you the differences between the different entity structures from a tax perspective. Also, when you form a corporation or partnership you need to handle your accounting differently than a sole proprietor does. Let us assist you in correctly converting or establishing the proper entity.
In addition to talking to us, we strongly recommend you also talk to an attorney. An attorney can explain to you the legal ramifications of each entity and provide guidance to you. Being informed of your options will enable you to make the best decision for you and your business. If you do not have an attorney to work with, we can refer you to one who has helped many of our clients.
Meet our newest tax preparer:
Many of you know Sally Madrid. She has worked for Accountability since 2001 in the accounting department. Over the past seven years she has become an important part of the accounting department. Her attention to detail, ability to solve problems, desire to learn more and cheerful personality make her a valued employee. This summer, Sally decided to take a class to learn taxes. We are proud to announce Sally has passed her test to become a licensed tax preparer and she will expand her skills this tax season to include tax preparation. If you get a minute, give Sally a call and congratulate her on her accomplishment.
Housing Assistance Act of 2008
On July 30, 2008, President Bush signed into law the Housing Assistance Act of 2008. This act allows first-time home buyers to receive a refundable credit. If you have not owned a home for the past three years, you may qualify for this credit.
The credit is 10% of the purchase price up to $7,500. Unlike most credits, this one does have to be repaid to the government. Starting in year two, when you file your taxes you will be required to repay $500 each year until the credit is repaid in full.
Another credit included in this act is for homeowners who pay property taxes but don't have enough deductions to file a Schedule A. When they file their 2008 tax return, they will be allowed to deduct property taxes paid. For single taxpayers, the deduction is up to $500; married–filing–joint returns will be allowed to deduct up to $1,000.
Time's up!
We are currently working on corporate tax returns that were extended in March. If you have information you need to get to our office so we can finish your return, please get it to us as soon as possible. These returns are due on September 15, 2008.
Important Dates:
September 15
Corporate Tax Returns due
Third Quarter Estimated Taxes due
October 15
Individual Tax Returns due
Foreclosures, short sales and bankrupcies
All over the newspapers, television, radio and internet we hear about the thousands of homes that are going into foreclosure or shortsales. A recent study showed that San Bernardino and Riverside Counties rank number four in the nation for having the most foreclosures or short sales. In January 2009, lenders will be sending taxpayers whose homes were foreclosed or sold in a short sale a 1099-C (Cancellation of Debt). The amount of debt cancelled is normally considered income that needs to be added to their 2008 tax returns. The Mortgage Forgiveness Debt Relief Act of 2007 can help thousands to be relieved of additional taxes.
We are in the process of arranging a seminar with a lender and real estate agent in October to discuss options available to those facing foreclosure, a short sale or bankruptcy. If you or someone you know would be interested in attending this seminar please call our office or e-mail us.
Food for thought
"Choose a good reputation over great riches, for being held in high esteem is better than having silver or gold. The rich and the poor have this in common; The Lord made them both. A prudent person foresees the danger ahead and takes precautions; the simpleton goes blindly on and suffers the consequences
(Proverbs 22:1-3)."
— Karen Spencer
President