FAQ

ITIN
process

An Individual Taxpayer Identification Number (ITIN) is a tax processing number issued by the IRS to individuals who are not eligible for a Social Security Number (SSN).

Individuals who are required to have a U.S. taxpayer identification number but do not have and are not eligible to obtain an SSN need an ITIN. This includes non-resident aliens, resident aliens, and dependents or spouses of U.S. citizens or resident aliens.

To apply for an ITIN, submit Form W-7, along with the required documentation, to the IRS. This can be done by mail, through an IRS walk-in office, or with the help of a Certifying Acceptance Agent (CAA).

Required documents include proof of identity and foreign status, such as a passport, national ID card, or birth certificate. Original documents or certified copies from the issuing agency are needed.

It typically takes 8 to 12 weeks for the IRS to process an ITIN application, but processing can take longer during peak periods or if documentation is incomplete

No, an ITIN is not a work authorization and cannot be used for employment purposes.

Yes, ITINs issued before 2013 with middle digits 88 and ITINs not used on a tax return in the past three years will expire. They can be renewed by submitting a new Form W-7.

Yes, an ITIN allows you to file a U.S. tax return and meet tax reporting requirements.

No, the IRS does not charge a fee for processing ITIN applications.

If your ITIN application is rejected, review the rejection notice for the specific reason and resubmit with the necessary corrections or additional documentation.

FAQ

EIN
process

An Employer Identification Number (EIN) is a unique nine-digit number assigned by the IRS to businesses for tax purposes. It’s required for businesses that have employees, operate as a corporation or partnership, file tax returns for employment, excise, or alcohol, tobacco, and firearms, withhold taxes on income, other than wages, paid to a non-resident alien, or have a Keogh plan.

You can apply for an EIN online through the IRS website, by mail, by fax, or by phone (if you’re an international applicant). The online application process is the quickest and most efficient method, usually providing an EIN immediately upon completion.

To apply for an EIN, you will need to provide information about your business, including its legal name, mailing address, responsible party’s name and Social Security Number (SSN), type of business entity, reason for applying, and the date the business was started or acquired.

If you apply online, you will receive your EIN immediately upon completion of the application. If you apply by mail or fax, it can take up to 4 weeks, while international applicants applying by phone will receive their EIN immediately during the phone call.

business days, while international applicants applying by phone will receive their EIN immediately during the call.

Sole proprietors without employees can use their SSN instead of an EIN. However, having an EIN is beneficial as it helps separate personal and business finances, which can simplify accounting and protect personal information.

No, an EIN is permanently assigned to your business and cannot be changed. However, if the structure or ownership of your business changes, you may need to apply for a new EIN. For example, if a sole proprietorship incorporates or a partnership changes to a sole proprietorship, a new EIN would be required.

FAQ

tax
services

Tax services involve preparing, filing, and advising on taxes for individuals and businesses to ensure compliance with tax laws.

Tax services help maximize deductions, minimize liabilities, ensure accurate filings, and stay compliant with changing tax laws.

Services include tax preparation, tax planning, audit representation, bookkeeping, payroll tax, and tax resolution services.

Look for providers with experience, good reputation, professional credentials (like CPAs or EAs), and services that match your needs.

Common documents include W-2s, 1099s, receipts, expense records, prior tax returns, and identification information.

Costs vary based on the complexity of the return and the provider’s fees. They can range from a few hundred to several thousand dollars.

Yes, CPAs, Enrolled Agents (EAs), and attorneys can represent you in dealings with the IRS, including audits.

Tax planning helps reduce your tax liability through strategic financial decisions, such as retirement planning, investment strategies, and timing of income and expenses.

Yes, many tax service providers offer year-round services, not just during tax season, to help with ongoing tax planning and issues.

Tax resolution involves addressing and resolving tax problems with the IRS, such as unpaid taxes, tax liens, and wage garnishments.

FAQ

Bookkeeping
Services

Bookkeeping services involve recording and managing the financial transactions of a business. This includes tasks such as tracking income and expenses, reconciling bank statements, managing invoices, and preparing financial reports.

Proper bookkeeping ensures accurate financial records, which are crucial for making informed business decisions, ensuring tax compliance, and providing insights into your company’s financial health. It helps in identifying trends, managing cash flow, and preparing for audits.

Bookkeeping should be done regularly to keep financial records up-to-date. Depending on the size and complexity of the business, this can range from daily or weekly updates to monthly or quarterly reviews.

Bookkeeping involves the daily recording of financial transactions and maintaining the financial books. Accounting, on the other hand, involves interpreting, analyzing, and summarizing the financial data provided by bookkeeping to generate financial statements and insights for strategic decision-making.

While small business owners can manage their own bookkeeping using software tools, hiring a professional bookkeeper can save time, reduce errors, and ensure compliance with tax laws. Professional bookkeepers bring expertise and can provide valuable financial insights.

Consider factors such as the bookkeeper’s experience, industry knowledge, range of services offered, technology used, pricing structure, and client reviews. It’s also important to ensure that they are certified and have a good understanding of the specific financial needs of your business.

FAQ

Payroll
Services

Payroll services are third-party companies or software that manage payroll processing for businesses. They handle tasks like calculating wages, withholding taxes, and ensuring employees get paid accurately and on time.

Using a payroll service can save time and reduce errors associated with manual payroll processing. They can also help ensure compliance with tax regulations and provide access to tools for managing employee benefits and deductions.

Common features include:

   – Automated payroll calculations

   – Direct deposit and check printing

   – Tax filing and payment services

   – Employee self-service portals

   – Reporting and analytics

   – Compliance assistance with labor laws and regulations

Costs vary depending on the provider and the services included. Some charge a flat monthly fee, while others may charge per employee or per payroll run. Additional costs may apply for extra services like tax filing or HR support.

Reputable payroll services use secure systems to protect sensitive employee information and financial data. They often have robust security measures in place, such as encryption and regular audits, to ensure data safety.

Consider factors such as your budget, the size of your business, the complexity of your payroll needs, and any specific features or integrations you require (e.g., with accounting software or time tracking systems). Reading reviews, getting recommendations, and comparing service offerings can help you make an informed decision.

FAQ

S-Corp
Election

An S-Corp election is a tax status election made by a qualifying corporation to be treated as an S-Corporation for federal tax purposes. This election allows the corporation to pass corporate income, losses, deductions, and credits through to its shareholders for federal tax purposes.

To qualify for S-Corp status, the corporation must:

   – Be a domestic corporation (incorporated in the United States).

   – Have only allowable shareholders, including individuals, certain trusts, and estates (not partnerships, corporations, or non-resident alien shareholders).

   – Have no more than 100 shareholders.

   – Have only one class of stock (common stock).

  • Tax Savings on Self-Employment Taxes: Specifically for LLCs electing S-Corp status, shareholders can significantly reduce their tax burden. By receiving part of their income as distributions—which are not subject to self-employment taxes—rather than full salary, they minimize their total tax liability while adhering to IRS rules for reasonable compensation.
  • Avoidance of Double Taxation: S-Corps allow income to pass directly to shareholders, meaning earnings are taxed only once at the shareholder level. This avoids the double taxation that is typically faced by C-Corporations, where income is taxed at both the corporate and personal levels.
  • Streamlined Tax Reporting: S-Corps simplify the tax reporting process. They file an informational tax return (Form 1120S) and issue K-1 forms to shareholders, detailing each shareholder’s share of income. This allows shareholders to report their portion of the earnings on their personal tax returns, simplifying the process and avoiding separate filings for corporate and individual taxes.

 

To elect S-Corp status, eligible corporations must file Form 2553, Election by a Small Business Corporation, with the IRS. This form must be signed by all shareholders and filed within a specific timeframe (generally within two months and 15 days after the beginning of the tax year the election is to take effect, or at any time during the preceding tax year).

The S-Corp election generally takes effect at the beginning of the corporation’s next tax year if the election is timely filed. However, the election can also be effective on the date specified on Form 2553 if filed during the preceding tax year.

After electing S-Corp status, the corporation must:

   – Maintain eligibility requirements (number and type of shareholders, single class of stock).

   – File Form 1120S annually to report income, deductions, credits, and other information.

   – Issue Schedule K-1 to each shareholder, reporting their share of income, deductions, and credits.

   – Comply with any state or local tax requirements applicable to S-Corporations.

FAQ

Business
formation

Business formation refers to the process of legally establishing a new business entity, such as a corporation, LLC (Limited Liability Company), partnership, or sole proprietorship. It involves registering with government authorities, defining the structure, and setting up operational and financial processes.

The main types include:

  Sole Proprietorship: Owned and operated by one person.

Partnership: Owned by two or more individuals who share profits and liabilities.

  Limited Liability Company (LLC): Provides limited liability protection to owners (members) and flexible tax options.

Corporation: A separate legal entity with shareholders and officers, offering strong liability protection but more complex governance.

Consider factors like liability protection, tax implications, management flexibility, and ease of formation. Consulting with a business advisor or attorney can help determine the best structure based on your specific needs and goals.

Steps typically include:

   – Choosing a business name and checking availability.

   – Registering with the appropriate state or local authorities.

   – Obtaining necessary licenses and permits.

   – Drafting and filing formation documents (e.g., Articles of Incorporation for corporations, Articles of Organization for LLCs).

   – Establishing internal governance documents (e.g., bylaws for corporations, operating agreement for LLCs).

   – Obtaining an EIN (Employer Identification Number) from the IRS if necessary.

Compliance obligations vary by entity type and jurisdiction but may include:

   – Filing annual reports or statements.

   – Paying annual fees and taxes.

   – Maintaining corporate records and meeting minutes.

   – Complying with federal, state, and local regulations regarding employment, taxation, and operations.

While some entrepreneurs may successfully navigate the process independently, consulting with a business lawyer or advisor is advisable, especially for complex entities like corporations or LLCs. They can provide legal guidance, ensure compliance, and help protect personal assets.

FAQ

Business
Cancellation

Business cancellation is the process of officially ending business operations and dissolving the business entity.

Common reasons include retirement, unprofitability, partnership disputes, or shifting to a different business structure.

The process typically involves:

1. Filing dissolution documents with the state.

2. Paying any outstanding taxes and debts.

3. Notifying employees, customers, and creditors.

4. Canceling permits, licenses, and business names.

5. Settling financial accounts and distributing assets.

Forms vary by state and business type but often include Articles of Dissolution or a similar document filed with the state government.

Yes, you need to file the final tax return and indicate that it is the final return. Additional forms may be required, such as Form 966 for corporations.

All debts and taxes must be paid or arrangements made before the business can be officially closed. This includes federal, state, and local taxes.

Employees should be given proper notice, final paychecks, and information on benefits and unemployment. Employment taxes need to be settled with the IRS.

Yes, but you must honor existing contracts or negotiate their termination. Failing to do so can result in legal consequences.

Business assets are usually liquidated and used to pay off debts. Remaining assets can be distributed to owners or shareholders according to ownership interests.

Fees vary by state and business type. Check with your state’s business filing agency for specific costs.

Yes, but you would need to register it as a new entity, obtaining new licenses, permits, and possibly a new business name.

The timeline varies based on state procedures and how quickly you can settle debts and obligations, but it can take several weeks to months.