We specialize in accounting, advisory, and compliance for businesses focused on aviation
Albert Einstein famously said, “Strive not to be a success, but rather to be of value.” We have developed our business services around a core belief; provide exceptional value. Regardless if you are newly self-employed or a current business owner, we will spend the time necessary to create value in the service we provide to you whether it be helping you learn to do your own bookkeeping, mitigating your tax burden, or planning for small business retirement.
For existing business owners seeking accounting, payroll, consulting, and/or tax compliance services, please jump to the section(s) relevant to you. “Just Getting Started” provides new or prospective business owners a snapshot of what to expect as you begin working for yourself. If it all seems a bit overwhelming or you have questions beyond what is presented here, please contact us for an initial consultation.
To those who are considering a venture into the self-employed or business owner ranks, please use this getting started section and expanded information that follows as an informational roadmap to help get your new business up and running. If this is overwhelming, or you really want us to do the heavy lifting, skip to the Consultation section and schedule a visit with us.
It is true that 30% of new businesses fail during the first two years of being open, 50% during the first five years and 66% during the first 10. Let us bring our business experience to the table and help you beat the odds.
The first step in becoming your own boss is to decide if you will be self-employed, or set up a business entity separate from yourself. The business entity selection and formation section below discuss more about entity types and which one may be best suited to your situation.
Once you have chosen and established your business entity, there is the all-important matter of “keeping score”. After all, you want to know if you’re winning at what you’re doing. The scorecard takes the form of accounting records, formally known as a general ledger and supporting documents.
The general ledger is also used to create payroll for employees, and you as a “shareholder-employee” if you establish a corporation. Many great tax benefits (books are written on the subject) are available to you as a shareholder employee in a corporation or S-type corporation through payroll. This voluminous discussion leads us to the benefits of consulting. Read on:
As most of your attention will be devoted to running your business, the “back office” tends to get neglected. Periodically we will check in with you and ask to look over your general ledger. We often make recommendations that may either save you money, add to operating profits, and/or reduce your tax exposure. These recommendations may take the form of running payroll, strategic operational or capital spending, or year end tax moves. This is where we add the most value. Candidly, it is what we enjoy doing most. Consulting also takes the form of random correspondence from you asking us “what do you think about…” We encourage these communications because it is how we add value to your organization and it helps you avoid making common mistakes that can have real financial cost to you and/or your business.
As the business gets off the ground, you will find that compliance reporting (a.k.a tax preparation) is a necessary evil and a sunk cost of doing business. That said, non-compliance is not an option. We put considerable effort into preparing accurate tax returns for our clients, whether they be quarterly payroll reports, sales and use tax, excise tax returns, or income tax returns. We will advise you on compliance reporting dates and assure you have adequate records to be able to meet your tax reporting obligations timely and accurately.
Lastly, we are happy to chat via phone or skype if you have questions and are considering our services. As a good faith measure, we charge $125 for thirty minutes. We will credit the $125 towards your first invoice if you elect to use our services.
When starting your business, you must decide what form of business entity to establish and operate as. The form of business entity determines which income tax return form(s) you must file. The most common forms of business structure are the sole proprietorship, LLC, partnership, and corporation. An S-type corporation is not a business entity type, it is simply an election made by an LLC or corporation to be a pass-thru entity for tax purposes. More on this below.
A sole proprietorship is the simplest form of business structure and requires little in terms of startup. You are your own business and there is no legal separation (read: liability protection) for non-tortious acts. A Federal Employer Identification number (FEIN), and state payroll related filings if you plan to have employees, are the only required filings.
A sole proprietor reports their business revenue and expenses on Schedule C of their personal income tax return annually. Because you are paying both the employee and employer portions of social security and Medicare tax in addition to income tax on your net business income, a sole-proprietorship is one of the highest tax structures for small business owners to be in. It is also the reason folks look to an S-type corporate structure. More on this below.
A sole proprietor is someone who owns an unincorporated business by himself or herself. However, if you are the sole member of a domestic limited liability company (LLC), you are not a sole proprietor if you elect to treat the LLC as a corporation.
A limited liability company (LLC) is a business structure allowed by state statute. Most states also permit “single-member” LLCs, those having only one owner. An LLC is formed by filing articles of organization with the Secretary of State. The IRS will treat an LLC as either a corporation, S-type corporation, or partnership, or as part of the LLC owner’s tax return (a “disregarded entity”) based on one-time elections made by the taxpayer when the LLC is established.
A partnership is a relationship existing between two or more persons carrying on a trade or business. A partnership is formed by filing with the Secretary of State. A partnership must file an annual information return to report the income, deductions, gains, losses, etc., from its operations, but it does pay income tax. Instead, it “passes through” any profits or losses to its partners. Each partner includes his or her share of the partnership’s income or loss on his or her individual tax return.
A corporation is formed by filing with the Secretary of State. Prospective shareholders then exchange property for the corporation’s capital stock. For federal income tax purposes, a C corporation is recognized as a separate taxpaying entity. A corporation conducts business, realizes net income or loss, pays taxes and distributes profits to shareholders. The profit of a corporation is taxed to the corporation when earned, and then is taxed to the shareholders when distributed as dividends. This creates a double tax scenario. A C corporation must file an annual tax return to report the income, deductions, gains, losses, etc., from its operations and pays tax on its reported income. Shareholders cannot deduct any loss of the corporation.
An S corporation is an LLC or corporation that elect to pass corporate income, losses, deductions, and credits through to their shareholders for federal tax purposes. A corporation or LLC makes a one time election to be taxed as an S corporation. Shareholders of a corporation, or members of an LLC, electing to be taxed as an S corporation report the flow-through income and losses on their personal tax returns and are assessed tax at their individual income tax rates. This allows S corporations to avoid the double tax structure of corporate entities.
As a quick review, If you choose to form an LLC, corporation, or partnership you will need to file with the Secretary of State to register the business, and file Articles of Organization or Incorporation. Once the state filings are accepted and you have a FEIN in place, you will elect how you want the entity taxed at the Federal and State level.
Your choice of business structure is based in part on minimizing the tax burden created by the business. There are typically two tax structures to consider when choosing your entity type; income tax and payroll (self-employment) tax. The combined payroll tax rate is 7.65% each for employers and employees, for a total rate of 15.3%. Mitigating this combined payroll tax rate is the major driver of S-type corporation structures.
We can’t stress enough the importance of adequate record keeping. It’s not a tremendous amount of fun nor exciting but it will help you determine the health of your business, borrow money, and most importantly, allow us to assure you pay the legally minimum amount of tax possible.
We will help you establish a system for keeping track of your business transactions in an orderly and meaningful way that fits your style. We encourage our clients to use any number of tools such as Google Drive, Expensify, BizXpense, Concur, and mileage log and per diem apps to help with recordkeeping.
We will recommend a general ledger software system, such as Quickbooks and assist with set up, data entry and reporting as needed. We can also work with the general ledger software of your choice. At this level, a shoebox just won’t cut it. The general ledger is what will help you organize your transactions so that you can:
1. File your taxes
2. Determine profitability
3. Borrow money
4. Value your business for sale
Although accounting is not glamorous, it is the one and only absolute every successful business owner will agree on; a complete accounting of your business transactions is a must for success.
To this end, we see too many business owners go at it themselves without a plan of attack or adequate guidance. Let us help set up the books, give a few pointers, and have you do the rest. Or we can do it for you at very reasonable rates. See our fee structure page for rates.
A quick mention on commingling personal and business finances; It’s a no-no. Keep them separate by establishing a separate business bank account and credit card. This also helps with the temptation of classifying what are truly personal expense items as business deductions.
Our greatest value to you is our prior experience helping other business owners get started, operate profitably and in compliance, grow their net worth, and eventually sell their business. Our consulting time provides tremendous value in selecting the right business entity, business setup and operation, as well as ongoing reviews of your operation.
If you choose, we offer a limited review on a quarterly basis in the form of a quarterly tax calculation. We will look at your year-to-date records, project your year-end income and make recommendations for estimated tax payments and/or a tax savings amount to set aside come tax time. We will advise you if we see opportunities for additional profitability, or tax savings. As the year end approaches, our quarterly tax calculation will look closer at tax planning decisions to help reduce or defer income taxes. The year-end planning and quarterly tax projections are part of your tax preparation fee and we encourage you to take advantage if you feel it’s appropriate.
As the business matures, and you are no longer living “hand-to-mouth” the thought of retiring at some point will come into focus. There are several opportunities for retirement planning for self-employed and small business owners including Traditional and Roth IRAs, SEP and SIMPLE IRAs, and a 401(k). Choosing a plan should be done with consideration for the compliance cost, amount you want to contribute annually, and when you plan to retire. We will help you pick a plan that is appropriate for your business structure and goals.
We also make ourselves available for questions you may have as you move through your business day. We are a small practice by number of clients so that we can take adequate time for each of our clients. We are always happy to hear from you, especially before a “big decision” gets made.
Once you have chosen a business structure and begun operations, the various governmental agencies will require periodic filing of tax and informational returns. Depending on your business type, and assuming a calendar year (which most small businesses are), the following will explain what and when must be filed with the taxing authorities.
Sole Proprietorship – Revenue and expenses will be reported on Schedule C and the resulting net income will flow to your Form 1040. Your self-employment tax obligation will be computed on Schedule SE. You are required to pay all tax due no later than April 15th, and if granted an extension of time to file, file your return no later than October 15th.
Single member LLCs – Even though an LLC is an entity legally separate from you, the IRS considers it a disregarded entity for tax purposes (unless you elect otherwise); same tax reporting structure as a sole proprietorship.
Multi-member LLC – this is a bit trickier. If you are a husband and wife multi-member LLC, and you live in a community property state (AZ, CA, TX, WA, ID, NV, NM, WI), you will file two separate Schedule Cs along with your joint form 1040. If, however, you live in a common law state, and you and your spouse are considered to be in a joint venture, then a Form 1065 Partnership tax return must be filed. Each partner share of partnership net income, credits, gains and losses will be passed thru to Schedule E on the personal tax return. You are required to pay all tax due no later than April 15th, and if granted an extension of time to file, file your return no later than September 15th. Non-spouse multi-member LLCs and straight up partnerships also file form 1065.
Corporations – The filing deadline for C corporations may file a timely extension no later than April 15th and file their tax returns no later than October 15th. The last installment of estimated taxes must be remitted by December 15th of the tax year (as opposed to January 15th for individual income tax estimated payments).
S-Type Corporations – This is a Corporation that has made a one-time election to be taxed as a flow through entity. File form 1120-S, US Income Tax Return for an S Corporation. You are required to pay all tax due no later than April 15th. Provided an extension to file has been made timely on or before March 15th, Form 1120-S may be filed no later than September 15th..
Depending on the state your business resides in, there may be sales, use, and/or excise tax returns due quarterly and/or annually. We will lay out the calendar for you and guide your hand on setting up the reporting. You can take it from there, or we are happy to help for a small fee
A brief summary of our process for preparing your business tax return(s) follows.
The Oregon Board of Accountancy, American Institute of Certified Public Accountants (AICPA), and the IRS strongly encourage written Client Engagement Letters.
An Engagement Letter is not a binding contract on you, it simply clarifies your and our expectations associated with service. The engagement letter will also spell out our fee structure. We will email an engagement letter for your review and digital signature after our initial phone consult. It can be digitally signed from any phone, tablet, or PC. A signed copy will be automatically sent to us and a copy sent to you.
With the Engagement Letter completed, we will establish a secure document portal account for you. Using the camera on your phone or tablet, take pictures of your tax documents and upload them automatically to your portal. No scanning, mailing, or faxing required. We will provide you with a short Q&A checklist to assure we have captured all the necessary deductions and credits.
Once all documents are uploaded to your portal we will begin preparing your tax return.
We will establish your preferred communication method (text, phone, fax, email, US Mail, snail mail, pony express, etc.) and touch base with you when we have questions. This is the personal element of our service that we are proud of. Just a little bit of human-to-human contact can save a lot of tax dollars.
We will send an email when preparation is complete. The preliminary tax return draft will be placed in your client portal along with your supporting tax documents for review.
You can review the tax return from your phone, tablet, or PC. Now is the time to catch missing deductions. We strongly encourage you to contact us if any part of your tax return does not make sense or you feel may be in error. Your understanding is our gain; we are happy to take the time.
When you are happy with the preliminary tax return(s) and ready to push the “go” button, shoot us an email or text, or call us.
We will send an email requesting you sign appropriate E-file authorizations and include a payment link to pay for preparation. Payment of preparation fees is your final consent to file tax returns.
Once we have received your signed E-file authorizations and payment, we will file your tax returns and provide you proof of taxing agency acceptance and a final tax return copy in print, digital, or both at your request. On a side note, we will retain a complete digital copy of your tax records for seven years and provide you a copy on request at no-charge during the seven year period.
The secure digital aspect of our service, combined with real human service via your preferred communication channel (phone, text, fax, email, Pony Express, etc.), means you can meet your tax filing obligations wherever you are in the world. Throw your tax docs in your overnight bag and we will make every effort to have your tax return completed and filed by the end of your next trip.
Audits from taxing agencies, although not commonplace, do happen. The IRS 2017 Data Book indicates that 0.6% of personal income tax returns were audited. The IRS only considers “formal” desk or home audits in the 0.6% where they actually examine a tax return or ask for specific documentary support. The office of the Taxpayer Advocate believes this audit percentage to be more like 6% because they include computer automated math checker notices and the Automated Underreporter (AUR) generated notices. This disagreement aside, audits can and do happen.
Our preparation philosophy is simple; we prepare tax returns such that you pay only the minimum tax your are legally obligated to pay, and we prepare tax returns that will survive under audit scrutiny.
We ask our new client’s permission to collect a Wage and Income Transcript and Account Transcript from the IRS for the filing year in question. We do this at no charge to you. This allows us to see what items of income have been reported to the IRS. We do this to make sure we get everything reported on your tax return completely and correctly. This eliminates almost all Automated Underreporter notices, and keeps you “out of the spotlight”.
If you receive audit related documentation from a taxing authority that is associated with a tax return we have prepared we will review the document at no charge. If necessary we will provide to you copies of documents used to create your tax return, as well as a copy of the complete tax return and all supporting schedules if you do not have access to your own copies. If we have made a mistake, we will cover any interest and/or penalties that are a result of our errors.
We can also represent you in front of a taxing authority if you receive an audit notice. Please see our fee schedule for cost of audit representation.
We are happy to chat via phone or skype if you have questions and are considering our services. As a good faith measure, we charge $80 for thirty minutes. We will credit the $80 towards your first invoice if you elect to use our services.
Our fee structure is straightforward and detailed under the Fee section here. Please call if you have questions about your own unique situation.
Individuals (Our individual, Ex-Pats, and business pass-through owners)
Businesses (Our Contract Flight Crews, Sole Proprietors, Partnerships, and Corporations
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