S Corps
S Corporations (S Corps) are pass-through entities (like partnerships), but their owners are employees who are required to receive reasonable salaries for their positions and must run payroll. S Corps file Form 1120-S, and shareholders are required to report their income and expenses from the S Corp on their individual tax returns. Form 1120-S includes Schedule K-1s, which are prepared and distributed to each shareholder so they can properly report this income. There are opportunities for tax-free distributions if shareholders have enough basis and equity is measured in shares.
Each Massachusetts S Corp is required to file an annual report and pay an annual fee with the Secretary of State.
Limited Liability Corporations
Limited Liability Companies, often referred to as LLCs, are disregarded entities in the eyes of the IRS. The business structure varies by each state’s laws and regulations. For the IRS’ purposes, single member LLCs are taxed like sole proprietors (with a 1040 Sch C) and multiple member LLCs are taxed like partnerships (with a Form 1065).
Each Massachusetts LLC is required to file an annual report and pay an annual fee with the Secretary of State.
Corporations
In a corporation, taxes are paid by the entity itself, rather than passing it (and any income or losses) through to shareholders. Corporations file Form 1120 and are also responsible for employee taxes like payroll and Social Security. They take similar deductions to a sole proprietorship, as well as additional tax breaks.
Bookkeeping
It can be difficult for small business owners to keep up to date with their books and records as it takes a lot of time away from running core functions of their business. It may not be many people’s favorite thing to do, but is an important part of running a business. It helps the owners understand their financial position, as well make it possible to file accurate tax returns.
We provide a full suite of bookkeeping services that includes monthly reconciliations; 1099-MISC preparation; W-2 preparation; tax preparation handoffs; financial statement preparation; cash flows; and projections.
Some clients need one or two of these services and some need all. We let our client decide what works best for them and their business needs. We are happy to assist in any way we can because we understand the value that accurate financial information can bring to a growing business.
Small Business Consulting
Many of our clients own and operate all types of companies including sole proprietorships, LLC’s, Partnerships, S Corps, and C Corps. Many of our business clients want to incorporate but they don’t know what options are available and what entity type will best suit their needs. We start by asking them questions about their business and future goals. Once we understand their needs, we can help them evaluate their options and advise them on the advantages of each.
We help business owners pick the right entity type, understand record keeping, implement new software like QuickBooks, understand their financial statements, set up retirement plans, run payroll, and understand the tax and legal implications of their decisions. We know that not every business owner understands the intricacies of bookkeeping or QuickBooks. However, almost all business owners, regardless of their industry, need to establish some form of record keeping. We help in a variety of ways depending on our client’s needs. Some of our clients are very hands off and we handle all bookkeeping for them. Others want a better understanding of their business and want help learning how to do it themselves. We are happy to assist in any circumstance.