If your business already files as an S-Corporation or Partnership, we are now requiring all the proper source documents, including a full Profit and Loss statement and a complete Balance Sheet statement as well as various supporting detail listings. Samples of these statements can be found below:
Find Sample Profit and Loss Statement here …
Find Sample Balance Sheet Statement here …
We highly recommend using a professional bookkeeping service to meet these requirements, as there is more to proper accounting than just entering the checks you write in a software program such as Quickbooks or Quicken.
Your cooperation in providing the proper documents will make the process of preparing your tax return more streamlined, requiring far less of your valuable time and is very greatly appreciated by Gregory’s Tax and Bookkeeping Service.
Of course, any assistance you may require is available to you at Gregory’s Tax and Bookkeeping Services as well as the option for us to perform all your bookkeeping needs.
We would also like to share this excerpt from a recent IRS notice regarding S Corporations …
When a shareholder-employee of an S corporation provides services to the S corporation, reasonable compensation generally needs to be paid. This compensation is subject to employment taxes.
Tax practitioners and subchapter S shareholders need to be aware that Revenue Ruling 74-44 states that the IRS will re-characterize small business corporation dividends paid to shareholders as salary when such dividends are paid to the shareholders in lieu of reasonable compensation for services.
The IRS may also re-characterize distributions other than dividend distributions as salary. This position has been supported in several recent court decisions.