# KDM Accounting Services Inc — Full Site Content

> S-Corp specialists for small to medium businesses since 1989. 1120-S, K-1s, reasonable comp, bookkeeping, payroll. Florida HQ, serving clients nationwide.

Site: https://flaccountingservice.com
Tagline: Tax experts for small to medium businesses.

## About

KDM Accounting Services Inc is a tax and accounting firm focused on small to medium businesses, with deep S-Corporation specialty. Headquartered in South Florida (Boca Raton + Fort Lauderdale), serving clients nationwide. The firm offers tax preparation and planning, monthly small-business accounting, payroll, QuickBooks services, new business formation, and IRS notice response on tax returns we prepared (CP2000, CP14, CP504, math-error notices, automated underreporter letters, and similar routine correspondence). We are not a CPA firm — financial-statement assurance work is outside our practice scope. We are not an IRS-representation firm — audit defense, collections, Offers in Compromise, installment agreements, levy/lien/wage-garnishment release, and Tax Court representation are all referred to licensed Enrolled Agents or tax attorneys.

### What we stand for

- **Professionalism** — Engagements are specialist-led from day one. Senior judgment on the strategy, the work product, and the relationship — not handed down to a junior after the sale.
- **Responsiveness** — A scoped engagement defines who answers you and how fast. Same-business-day reply is the standard, not the headline. Material questions reach a specialist.
- **Quality** — Defensible positions. Documentation that holds up to lender, IRS, and counsel scrutiny. Work that does not need re-work next quarter or next year.

## Contact

### Boca Raton Office (primary)

Address: 4400 North Federal Highway Suite 405, Boca Raton, FL 33431
Phone: (561) 334-4066
Fax: (561) 278-5006
Email: kdmfinancialsolutions@gmail.com

### Fort Lauderdale Office

Address: 1819 Southeast 17th Street, Fort Lauderdale, FL 33316
Phone: (561) 334-4066
Fax: (561) 278-5006
Email: kdmfinancialsolutions@gmail.com

## Services (overview)

- **[Bookkeeping](https://flaccountingservice.com/services/bookkeeping/)** — Monthly or quarterly close, financial statements, and clean books for your tax return.
- **[Payroll Services](https://flaccountingservice.com/services/payroll/)** — Owner-W-2-integrated payroll for S-Corps — reasonable comp built in.
- **[QuickBooks Services](https://flaccountingservice.com/services/quickbooks/)** — Setup, training, cleanup, and ongoing support — including S-Corp chart of accounts.
- **[S-Corporation Tax](https://flaccountingservice.com/services/s-corp-tax/)** — Our flagship: 1120-S, K-1s, reasonable compensation, basis tracking.
- **[Late S-Election Relief](https://flaccountingservice.com/services/late-s-election/)** — Missed the deadline? Rev. Proc. 2013-30 lets you retroactively elect — up to 3 years back.
- **[Tax Preparation](https://flaccountingservice.com/services/tax-preparation/)** — Accurate federal and state returns — 1040, Schedule C, 1065, individuals.
- **[Tax Planning](https://flaccountingservice.com/services/tax-planning/)** — Year-round strategy: entity selection, reasonable comp, quarterly estimates.
- **[New Business Formation](https://flaccountingservice.com/services/new-business-formation/)** — LLC + S-Corp election from day one — structured right.

### IRS Notice Response — scope

We respond to routine IRS notices (CP2000, CP14, CP504, math-error notices, refund-hold notices, automated underreporter letters) on tax returns we prepared. Flat fee per notice. For audit defense, Offers in Compromise, installment agreement negotiation, levy/lien/wage-garnishment release, Tax Court representation, or any other IRS-representation engagement, we refer you to a licensed Enrolled Agent or tax attorney.

---

# Services (detailed)

## Tax Preparation

Tax preparation at KDM Accounting includes complete federal (Form 1040) and state returns for individuals, and full business returns (1065, 1120, 1120-S) for pass-through entities and corporations. We e-file with the IRS, review every return with you before filing, and keep records for seven years.

### What a tax return should actually include

Most tax problems we see — missed deductions, missing forms, underpayment penalties — happen because the preparer rushed. A proper return takes time to do once and stays done.

- Complete federal Form 1040 with all applicable schedules
- State return(s) — multi-state if you worked or earned income elsewhere
- Estimated tax calculations for the year ahead
- Review of prior three years for potential amended returns
- E-file with IRS (acceptance confirmation emailed to you)
- Year-end letter summarizing positions taken, income sources, and planning notes

### For individuals

Whether your return is a basic W-2 with standard deduction or involves rental properties, investment portfolios, K-1s, and AMT — we handle it. Common situations:

- W-2 wage earners + standard or itemized deductions
- Self-employed / 1099 contractors — Schedule C + SE tax
- Rental property owners — Schedule E
- Investors — capital gains, qualified dividends, K-1s from partnerships
- Retirees — RMDs, Social Security, pension income
- Multi-state filers — former residents of NY, NJ, CT, CA, other high-tax states
- International — foreign income, FBAR, Form 8938 FATCA

### For businesses

Business returns are where the biggest tax savings (and biggest mistakes) happen. We prepare every entity type:

- Partnership returns (Form 1065) + K-1s to partners
- S-Corporation returns (Form 1120-S) + K-1s
- C-Corporation returns (Form 1120)
- Single-member LLCs (Schedule C on owner's 1040 OR corporate election)
- Non-profit returns (Form 990 series)
- Estate and trust returns (Form 1041)

### What we charge

We quote a flat fee before starting any return — no hourly surprises. Typical ranges for Boca Raton / Fort Lauderdale clients:

- Simple individual W-2 return: $350-$550
- Individual with rental or investment complexity: $550-$1,200
- Self-employed Schedule C: $600-$1,400
- S-Corp or partnership return + K-1s: $1,200-$2,800
- C-Corporation return: $1,800-$4,500
- Consultation-only (review of return prepared elsewhere): $250-$500

### Tax Preparation — Q&A

**Q: When should I send you my tax documents?**

A: Earlier is always better. For individual returns: January and February are ideal. By March, we're triaging. After April 1, we may need to file an extension for new clients to do the work properly. For business returns (March 15 deadline), send materials by late January.

**Q: What happens if the IRS sends a notice after my return is filed?**

A: Routine IRS correspondence (CP2000 income mismatches, math-error notices, identity verification requests) on a return we prepared is handled at no additional charge for one year after filing. If the return is selected for IRS examination, that work is outside our practice scope — we would refer you to a licensed IRS-representation firm and coordinate the records they need. You're never alone navigating IRS mail.

**Q: What if I have several years of unfiled returns?**

A: Common — we file back-year returns every week. We reconstruct records, catch missed deductions, and file in the order that minimizes penalties and interest. In most cases we can also negotiate an installment agreement or Offer in Compromise on any remaining balance.


## Tax Planning

Tax planning at KDM Accounting means meeting with you before year-end (and often quarterly) to identify and execute specific tax-saving moves — entity structure, retirement contributions, timing of income and expenses, capital gains harvesting, charitable strategies, and more. Clients typically save 4-10x the planning fee in the first year.

### Why planning beats preparation

By April 15, the year is locked in. You can't retroactively contribute to a 401(k), convert to an S-Corp for last year, or harvest a loss that already happened. Tax planning moves the decisions to when they can still matter.

### What a planning engagement looks like

Typical annual cadence for a business-owner client:

- January: Review prior year's return for carry-forward items + set strategy for current year
- April-May: Mid-year check-in based on Q1 results
- August-September: Fall planning session — entity optimization, retirement funding, equipment purchases
- November: Year-end session — identify + execute specific moves before Dec 31
- December: Follow-up on execution; preliminary tax estimate

### Core levers we work on

- Entity structure optimization (LLC vs. S-Corp vs. C-Corp — when to convert)
- Retirement plan selection + funding (Solo 401(k), SEP, Defined Benefit)
- Reasonable compensation analysis for S-Corp owners
- QBI (Qualified Business Income) deduction optimization
- Section 179 + bonus depreciation timing
- Income + expense timing (cash vs. accrual accounting)
- Tax-loss harvesting in investment accounts
- Charitable giving strategy (DAFs, bunching, appreciated securities)
- Roth conversion opportunities in low-income years
- Estate + gift tax planning

### For high-earning individuals

High-W-2 earners often believe they have no tax planning options. Not true. The levers are different (you can't change when income is received) but real savings exist:

- Backdoor Roth conversions
- Mega backdoor Roth (if employer 401(k) allows after-tax contributions)
- HSA optimization as a stealth retirement account
- Deferred compensation plans (if offered)
- Charitable giving with appreciated securities vs. cash
- Donor-advised funds for income-concentration years
- Stock option / RSU timing

### For retirees and near-retirees

The retirement transition is the highest-impact tax planning window of most clients' lives:

- Roth conversion sequencing (pre-RMD years)
- Social Security claim timing optimization
- Retirement-account withdrawal order (taxable → tax-deferred → Roth)
- RMD planning starting at age 73
- Qualified Charitable Distributions from IRAs
- Medicare IRMAA surcharge planning
- State residency documentation (Florida advantage)

### Tax Planning — Q&A

**Q: When should I start tax planning?**

A: Ideally before December 31 of the year you want to affect. Planning in January is too late for most moves on the prior year. For business owners, we recommend at least one planning session per year (fall), ideally two (spring + fall).

**Q: How much can tax planning actually save?**

A: Depends on your income, structure, and current position. For a business owner with $200K net income who isn't yet on S-Corp or funding retirement, first-year savings of $15K-$40K are typical. For a high-W-2 earner already doing most things right, marginal improvement of $3K-$10K is common.


## Bookkeeping

Bookkeeping at KDM includes monthly transaction categorization in QuickBooks, bank and credit card reconciliation, accounts payable and receivable management, monthly financial statements, and a month-end review call with your assigned tax specialist. From $325/month for simple owner-operators, scaling with complexity. Smaller corporations can opt for the quarterly tier: $525/quarter plus $750 year-end tax filing. Payroll is a separate engagement.

### What monthly bookkeeping includes

- Bookkeeping — categorize every transaction correctly, every month
- Bank + credit card reconciliation (all business accounts)
- Accounts payable management (review, code, schedule bill payments)
- Accounts receivable (invoicing, aging reports, collection follow-up)
- Sales tax filings (Florida DOR + any other states)
- Monthly financial statements: P&L, balance sheet, cash flow
- Month-end close review call with your assigned tax specialist

### Two engagement models — monthly or quarterly

Two tiers, two cadences, two prices. Most clients land on monthly. Smaller corporations with lower transaction volume often prefer the quarterly tier — same close discipline, less frequent, bundled with the year-end return.

- Monthly bookkeeping ($325/mo) — for owner-operators and S-Corps with ongoing AR/AP and monthly financial reporting needs. Books close every month; clean P&L within 7 business days of month-end.
- Quarterly bookkeeping ($525/quarter) — for smaller corporations with lower transaction volume. We close the books each quarter and prepare the year-end tax return as a bundled offering ($750). Total annual cost: $2,850 (4 × $525 + $750).
- Both tiers exclude payroll (separate engagement, see Payroll Services) and tax preparation beyond the year-end return for quarterly clients.

### Why monthly matters

Annual bookkeeping is like checking your bank balance once a year — you're flying blind and can't act on anything you see. Monthly bookkeeping gives you real-time financial awareness. Clean monthly books also:

- Make tax filing fast and accurate (no March bookkeeping cleanup)
- Keep you compliant (sales tax, payroll tax, estimated tax)
- Qualify you for business loans and lines of credit
- Let you spot problems (declining margins, cash leaks) in month 2 — not month 12
- Build a sale-ready business (buyers require clean books)

### For different business types

The right accounting system depends on your industry, size, and complexity.

- Service businesses (consulting, legal, medical): project/client-level P&L
- Retail/e-commerce: inventory management + COGS tracking
- Real estate: property-level reporting, cost segregation
- Construction: job-costing, percentage-of-completion
- Restaurants: daily sales reporting + food cost ratios
- Professional practices: owner-compensation reporting

### Advisory, not just bookkeeping

Data without interpretation is just numbers. Our monthly close includes a 30-60 minute call where we walk through what the financials mean: what's trending, what's changed, what decision you should make this month based on what the numbers say.

### Books that feed your S-Corp return

For S-Corp owner-operators, the books are the foundation of an accurate 1120-S and a defensible reasonable-compensation memo. We close every month so the K-1 numbers are right the first time, the §199A QBI computation has clean inputs, and the basis schedule stays current. See S-Corporation Tax for how the two engagements fit together.

### Bookkeeping — Q&A

**Q: We already have a bookkeeper. Do we also need you?**

A: Often yes. Many clients keep an in-house bookkeeper for daily data entry and use us for month-end review, advisory, tax planning, and year-end close. That split works well and keeps our fees lower than full monthly accounting.

**Q: What if my books are a mess right now?**

A: Very common. We handle QuickBooks cleanup as a discrete project before monthly accounting begins — usually 1-2 months of work to reconcile prior periods and correct categorization errors, then forward from there.


## Payroll Services

Payroll services include biweekly or semi-monthly processing, direct deposit to employees, quarterly 941 and annual 940 filings, W-2 and 1099-NEC preparation, Florida reemployment tax, new-hire reporting, and integration with QuickBooks or your accounting system. Starting at approximately $65/month for up to 5 employees.

### What payroll processing includes

- Employee setup + tax form collection (W-4, I-9, direct deposit)
- Regular pay runs (weekly, biweekly, semi-monthly, or monthly)
- Direct deposit to employee bank accounts
- Federal tax withholding + deposits to IRS
- Florida reemployment (unemployment) tax
- Quarterly Form 941 filing
- Annual Form 940 (FUTA) filing
- W-2 preparation and distribution (employees + SSA)
- 1099-NEC for contractors ($600+ paid in year)
- New-hire reporting to Florida (required within 20 days)

### What we don't do (and don't want to)

Payroll software is inexpensive and works well. We're not trying to be ADP. Where we add value is:

- Setup + configuration done right the first time
- Handling the weird cases (bonuses, retroactive changes, state changes, garnishments)
- Coordinating payroll tax deposits with your overall tax plan
- Reasonable salary analysis for S-Corp owners
- Year-end integration — W-2s flow straight into tax returns
- Being reachable by phone when something is broken

### S-Corp owner compensation

If you're an S-Corp owner, your "reasonable salary" is one of the most scrutinized items on your return. Too low = IRS challenges the payroll-tax-savings arrangement. Too high = you're overpaying SE tax. We analyze reasonable comp annually based on your role, industry, profit margin, and region.

### 1099 contractors

We also handle 1099-NEC preparation for subcontractors paid $600+ during the year. January is the 1099 crunch — collecting W-9s, validating TINs, mailing recipient copies, and e-filing with the IRS. We handle all of it.

### Payroll Services — Q&A

**Q: Can you work with my existing payroll provider?**

A: Yes. If you're using ADP, Gusto, Paychex, or QuickBooks Payroll and it's working fine, we leave it in place. We integrate with any of them for bookkeeping and tax purposes. We only take over payroll processing if the current setup is broken or expensive.

**Q: I have one employee (myself). Do I really need payroll?**

A: If you're an S-Corporation owner, yes — S-Corp owners MUST run payroll and pay themselves a reasonable salary. LLCs and sole proprietorships don't need formal payroll for owner-compensation. We help you figure out which category you're in.


## IRS Notice Response

IRS notice response at KDM Accounting is scoped strictly to routine correspondence on tax returns we prepared: CP2000 income mismatches, CP14 balance-due notices, CP504 final-notice-before-levy letters, math-error notices, refund-hold notices, and automated underreporter letters. Flat fee per notice. For audit defense, collections, Offers in Compromise, installment agreement negotiation, or levy/lien/wage-garnishment release — those are IRS-representation engagements outside our practice scope, and we refer you to a licensed Enrolled Agent or tax attorney.

### What we handle

Routine IRS correspondence on tax returns we prepared. Most of these notices have a documented response path — the IRS expects an explanation, supporting documentation, or a corrected calculation, and the case closes once we file the response.

- CP2000 — income mismatch between your return and the IRS's third-party data (W-2, 1099, K-1). We reconcile the data and file the response.
- CP14 — first balance-due notice after a return is processed. We verify the assessment and respond with corrections if the balance is wrong.
- CP504 — final notice of intent to levy. We respond before the 30-day window closes.
- Math-error notices — IRS-computed adjustments to your return. We verify and dispute when the adjustment is wrong.
- Refund-hold notices — letters explaining why an expected refund has not arrived.
- Automated underreporter letters — similar to CP2000 but from a different IRS unit; same response approach.
- CP2001, CP504B, and other routine balance-due correspondence in the same family.

### What we do NOT handle

The following are IRS-representation engagements requiring credentials and a practice focus we do not maintain. For these, we refer you to a licensed Enrolled Agent, tax attorney, or IRS-representation firm — and provide the underlying return work and records they need.

- Audit defense (IRS examinations, field audits, correspondence audits requiring formal representation)
- Offers in Compromise (OIC)
- Installment agreement negotiation
- Levy release · lien release · lien subordination · lien withdrawal
- Wage garnishment release
- Innocent-spouse relief filings
- Tax Court representation
- Appeals · collections-due-process hearings · trust-fund-recovery defense
- Criminal tax defense

### Scope: returns we prepared

We respond to notices on tax returns we prepared as your engagement firm. If the notice is on a return prepared by a prior preparer or filed by you directly, we will need to review the underlying return first — we may be able to take it on after that review, or we may refer you to a different firm if the issue is outside our scope. The first 15-minute review of the notice is no charge.

### Process: bring us the notice within 30 days

IRS notices have response deadlines — usually 30 or 60 days from the date on the letter, not the date you received it. The earlier we see the notice, the more options we have. The standard workflow: you forward us the letter; we review it the same business day; we quote a flat fee for the response; we draft the response; you sign; we file. Most routine notices close within 60-90 days of the IRS receiving our response.

### IRS Notice Response — Q&A

**Q: What's a CP2000?**

A: A CP2000 (also called a "notice of underreporter inquiry") is the IRS's most common letter. It is generated when the IRS's third-party data (W-2s, 1099s, K-1s, brokerage statements) does not match what you reported on your return. The notice proposes adjustments to your tax. It is not a bill yet — you have 30 days to respond. Most CP2000 cases close after we file a one-page response with the supporting documentation that explains the discrepancy.

**Q: What if my notice isn't on your list?**

A: Forward it to us — there is no charge to review. Many IRS notices belong to a family of routine correspondence we handle even if the specific notice code is not enumerated above. If the notice is outside our practice scope (audit defense, collections, levy/lien release, etc.), we will tell you within the same business day and refer you to a licensed IRS-representation firm.

**Q: Can you handle a notice for a return I prepared myself?**

A: We do not take notice-response engagements on returns we did not prepare, except in limited circumstances after a paid review of the underlying return. The first 15-minute review of the notice itself is no charge — if it is something we cannot help with, we will say so and refer you out.

**Q: What if the notice turns into an audit, or the IRS escalates to collections?**

A: Audit defense, collections negotiation, OIC, installment agreements, and levy/lien/wage-garnishment release are IRS-representation engagements outside our practice scope. We refer you to a licensed Enrolled Agent or tax attorney we trust, and we provide the underlying return work and records they need to take the case.


## QuickBooks Services

QuickBooks services at KDM include initial setup (company file, chart of accounts, bank feeds, sales tax), one-on-one training (remote or in-person), monthly tune-ups to keep the file clean, and troubleshooting existing QuickBooks problems. Supporting both QuickBooks Online and QuickBooks Desktop.

### Why QuickBooks

QuickBooks is the default small-business accounting software for a reason: it's powerful, widely supported, and integrates with almost everything. The catch is that default setups rarely match how your specific business actually operates. A properly configured QB file saves hours per month. A mis-configured one costs you trust in your own numbers.

### QuickBooks setup

New businesses: we set up QuickBooks right from day one. Established businesses switching software: we migrate data cleanly without losing historical records.

- Create company file with correct entity type and fiscal year
- Build a chart of accounts that matches your business (not generic templates)
- Connect bank + credit card feeds for automatic transaction import
- Set up customers, vendors, products/services, and tax rates
- Configure sales tax for Florida + any other jurisdictions
- Set user permissions (if you have bookkeepers, managers, etc.)
- Train you (or your bookkeeper) on day-to-day workflow

### QuickBooks training

Most QuickBooks pain comes from people using the software without knowing how it's supposed to be used. We provide one-on-one training tailored to YOUR business and YOUR file — not generic classroom material.

- Daily workflow: entering sales, bills, payroll, deposits
- Monthly close: bank reconciliation, review of P&L and balance sheet
- Reports that matter: customer profitability, vendor aging, budget vs. actual
- Advanced topics: inventory, job costing, class tracking, multi-currency
- Mobile app usage for time tracking and on-the-go invoicing
- Integrations: Stripe, Shopify, Amazon, ADP, Gusto, etc.

### QuickBooks cleanup

If your QuickBooks file is a mess — uncategorized transactions, unreconciled bank accounts, negative inventory, incorrect opening balances — we clean it up. Common cleanup engagements:

- Re-categorize mis-coded transactions
- Reconcile historical bank and credit card statements
- Correct opening balances and prior-period adjustments
- Fix accounts receivable / accounts payable mismatches
- Clean up inventory valuation
- Close prior periods and set user controls to prevent re-breakage

### Monthly tune-up

For businesses that do their own day-to-day bookkeeping but want a professional set of eyes monthly: we review the file, flag anything that looks wrong, reconcile any missed accounts, and generate month-end financials. Much cheaper than full monthly accounting, catches problems before they compound.

### Why buy QuickBooks through us

We can provide QuickBooks at a discount vs. retail pricing through our ProAdvisor relationship — and every QuickBooks file we set up starts configured correctly from day one. Call for current pricing.

### QuickBooks Services — Q&A

**Q: Should I use QuickBooks Online or QuickBooks Desktop?**

A: QuickBooks Online for most new businesses — lower cost, accessible anywhere, easier multi-user. QuickBooks Desktop (now called "Enterprise") for businesses with complex inventory, industry-specific editions (contractor, manufacturing), or workflows that rely on Desktop-only features. We help you pick during setup.

**Q: How long does QuickBooks setup take?**

A: New business: 4-8 hours including training. Switching software: 8-20 hours depending on data migration complexity. Cleanup of an existing mess: 10-40 hours, with a fixed scope quoted after initial assessment.


## New Business Formation

New business formation at KDM includes entity-type analysis (LLC vs. S-Corp vs. C-Corp), Florida Division of Corporations filing, EIN registration, S-Corp election (Form 2553) where appropriate, initial accounting system setup, and owner-compensation planning. Typically $950-$2,500 all-in depending on complexity.

### The entity question

Entity selection is the biggest decision you make at formation — and switching later is painful. We analyze your specific situation and recommend the right structure.

- Sole Proprietorship — no formation cost, no liability protection, full SE tax
- Single-Member LLC (disregarded) — liability protection, still full SE tax
- Multi-Member LLC (partnership) — liability protection, flexible allocation
- LLC taxed as S-Corp — SE tax savings above ~$60-70K net income
- S-Corporation — similar to LLC-taxed-as-S-Corp but with more formalities
- C-Corporation — rare for small business; useful for retained earnings, complex equity

### What formation actually involves

- Name availability check with Florida Sunbiz
- File Articles of Organization (LLC) or Articles of Incorporation (corp)
- Obtain Federal EIN from the IRS
- File S-Corp election (Form 2553) if electing S-Corp taxation
- Draft Operating Agreement (LLC) or Bylaws (corp)
- Register for Florida Reemployment Tax if you'll have employees
- Register for Florida Sales Tax if you'll sell taxable goods/services
- Set up business bank account (we write the intro letter)
- Initial QuickBooks configuration
- Reasonable-salary analysis (for S-Corps)

### Florida-specific considerations

Forming in Florida has advantages and requirements distinct from other states:

- No state income tax on individuals — preserves pass-through entity benefits
- Florida corporate income tax (5.5%) applies to C-Corps on Florida-source income
- Annual Sunbiz report + $138.75 fee due by May 1 (LLC) or May 1 (corp)
- Registered Agent required — can be you, the firm, or a commercial RA service
- Foreign-qualification (out-of-state businesses operating in FL) — we handle these too

### After formation — the first 90 days

Formation is the easy part. The first 90 days set up everything that happens after:

- Open separate business bank accounts — no commingling with personal
- Establish accounting system + monthly bookkeeping cadence
- If S-Corp: set up payroll and pay yourself reasonable comp
- Register for any local business tax receipts (varies by Florida city/county)
- Set up retirement plan contributions (Solo 401(k), SEP, etc.)
- Establish contracts + insurance (we recommend attorneys + insurance brokers)

### New Business Formation — Q&A

**Q: Should I form an LLC or an S-Corp?**

A: For most new small businesses: LLC initially, with S-Corp election once net income exceeds ~$60-70K. This combines the simplicity of the LLC filing with the SE tax savings of S-Corp taxation. We revisit the election annually as income grows.

**Q: Can I do the formation myself online?**

A: Yes, and many people do — LegalZoom, Incfile, etc. Filing papers is straightforward. Where people get in trouble is after: choosing the wrong entity type for their situation, missing the S-Corp election deadline, failing to set up proper accounting, or not establishing reasonable owner compensation. The formation filing is 10% of the work; the other 90% is setting up what happens next.


## S-Corporation Tax

S-Corporation tax includes the annual Form 1120-S return, Schedule K-1 issuance to each shareholder, an annual reasonable-compensation memo, and a maintained basis schedule. We handle it as a specialty — not as one of 50 different entity types we sometimes touch. Single-shareholder bundle (1120-S + owner 1040) is $950 — the personal return is included, no upcharge.

### What an S-Corp actually is

An S-Corp is not an entity — it is a tax election. You form a corporation or LLC under state law, then file Form 2553 with the IRS to elect taxation under Subchapter S of the Internal Revenue Code. The deadline is 75 days from formation or from the start of the tax year you want the election to apply to. Once accepted, the entity itself pays no federal income tax. Instead, ordinary income, separately stated items, and credits flow through to shareholders on Schedule K-1 and are taxed on each shareholder's personal 1040. This flow-through structure is what produces the payroll-tax savings most owners associate with the S-Corp — but only when it is set up correctly, the right salary is documented, and the basis math is tracked. Get any of those three wrong and the IRS can disregard the election, recharacterize distributions as wages, or disallow losses. The election is the easy part. Living inside Subchapter S is the work.

### The reasonable compensation question

Reasonable compensation is the single most-litigated issue in S-Corp tax and the #1 reason the IRS challenges closely-held S-Corp returns. The rule: an S-Corp shareholder-employee must be paid a reasonable W-2 salary for the services they perform before any distributions are taken. Pay yourself $0 and take $200K in distributions and the IRS will recharacterize most of it as wages and assess back FICA, Medicare, and penalties. The leading cases — Watson v. Commissioner (8th Cir. 2012), Glass Block Unlimited, and McAlary v. Commissioner — established a nine-factor analysis that looks at training and experience, duties and responsibilities, time and effort devoted, comparable salaries paid for similar services, dividend history, payments to non-shareholder employees, timing and manner of bonuses, what comparable businesses pay, and use of a formula. We write an annual memo for each owner-client documenting these factors, citing comparables from BLS, RCReports, or industry surveys, and arriving at a defensible salary range. The memo is the contemporaneous documentation that defends the salary chosen — the IRS expects to see this kind of analysis when reasonable compensation comes under scrutiny.

### Basis tracking — stock + debt

Basis is the running ledger of how much you have invested in your S-Corp. Stock basis starts with what you paid in and is adjusted every year under IRC §1366 and §1367: increased by income items, decreased by distributions, then decreased by loss and deduction items. Debt basis is created when you personally loan money to the corporation (not when the corporation borrows from a bank). Basis governs two things. First, it determines how much of a loss you can deduct on your 1040 — losses in excess of basis are suspended until basis is restored. Second, it determines how much can be distributed tax-free; distributions in excess of basis are taxed as capital gain. Form 7203 has been required with the owner 1040 since 2021 and must be filed any time there is a loss, distribution, stock disposition, or loan repayment. We maintain stock and debt basis schedules year over year so the numbers are always there when you need to deduct a loss, take a distribution, or sell.

### Your two pay channels — W-2 + distributions

An S-Corp owner-employee receives money two ways, and the tax treatment is sharply different. The W-2 channel: a regular paycheck through formal payroll, subject to federal income tax withholding plus the full FICA (Social Security 12.4% on wages up to the annual base) and Medicare (2.9% with no cap, plus 0.9% Additional Medicare above $200K single / $250K joint). The distribution channel: a cash transfer from the corporation to the shareholder, recorded against basis. Distributions are subject to ordinary income tax via the K-1 flow-through, but they are not subject to self-employment tax, FICA, or Medicare. That gap — roughly 15.3% on the first ~$170K of wages and 3.8% above it — is the legitimate S-Corp savings. It only holds up if the W-2 salary is genuinely reasonable for the work performed. The reasonable-compensation memo is what defends the lever. Without it, the IRS can recharacterize distributions as wages under examination and you lose the savings plus penalties and interest.

### The K-1 and your personal return

The 1120-S does not produce a tax bill at the corporate level. It produces a Schedule K-1 for each shareholder, which then flows onto the shareholder's personal 1040 on Schedule E Part II. The K-1 reports ordinary business income, separately stated items (rental income, interest, dividends, capital gains, §1231 gains, §179 expense, charitable contributions, foreign taxes), the §199A QBI information needed to compute the 20% pass-through deduction, and the shareholder's share of distributions. We prepare the 1120-S and the owner's 1040 together because they are inseparable: the K-1 numbers, the basis worksheet, the §199A computation, and the underpayment-penalty analysis all interlock. Filing them with different preparers is how items get dropped — most commonly the §199A SSTB phaseout, the basis-limited loss carryover, and the QBI aggregation election. One firm, one workflow, one signature.

### Multi-state and PTET elections

Florida has no state income tax, which is one of the reasons S-Corps domicile here. But the analysis does not stop at the FL border. If your S-Corp earns income in another state — a sales rep in Georgia, a job site in North Carolina, a client base in New York — you likely have nexus there and must apportion income, file a non-resident state return, and either prepare a composite return for non-resident shareholders or have each shareholder file personally in that state. Roughly 33 states (per the AICPA/state tracker, current through 2024) now allow a Pass-Through Entity Tax election as a workaround to the federal $10,000 SALT cap: the S-Corp pays the state tax at the entity level (deductible federally as a business expense) and shareholders take a corresponding state credit. The election is annual, irrevocable for the year, and the deadlines and mechanics vary state by state. We run the PTET analysis on every multi-state owner-operator engagement and file the elections where the math works.

### Quarterly estimates on K-1 income

The W-2 portion of your S-Corp comp is covered by payroll withholding. The K-1 distribution portion is not. Federal income tax on flow-through K-1 income, plus the §199A interaction, plus state tax in any nexus state, all need to be paid in via quarterly estimates on Form 1040-ES. The due dates are April 15, June 15, September 15, and January 15 of the following year. Underpay and the IRS assesses the §6654 underpayment-of-estimated-tax penalty, which is computed quarterly using the IRS underpayment interest rate (8% annualized for most of 2024–2025). Safe-harbor protection requires paying in by withholding plus estimates either 90% of the current year liability or 100% of the prior year liability (110% if prior-year AGI exceeded $150K). We compute the estimate in April, June, September, and January based on year-to-date income and adjust the safe-harbor target as the K-1 forecast firms up — so the penalty never accrues and the April surprise never lands.

### When S-Corp doesn't work

An S-Corp election is not always the right answer, and we will tell you when. Four common situations where the math or the rules say no. First, sole proprietors with net SE income below roughly $60,000 — payroll setup, the 1120-S filing fee, reasonable comp memo, and annual basis maintenance often exceed the FICA savings at that income level. Second, rental real estate held directly inside an S-Corp — distributions of appreciated real estate trigger gain recognition under IRC §311(b), and you lose the ability to do a §1031 like-kind exchange of the asset out cleanly; an LLC taxed as a partnership or disregarded is almost always better for rentals. Third, foreign owners — IRC §1361(b)(1)(C) requires every shareholder to be a US citizen or resident alien; a single non-resident-alien owner disqualifies the entire election. Fourth, certain trusts — only specific trust types qualify (grantor trusts, QSSTs, ESBTs, voting trusts, testamentary trusts within the 2-year window); ownership by a non-qualifying trust kills the election immediately. We run the eligibility check before we file Form 2553, not after.

### S-Corporation Tax — Q&A

**Q: What salary do I have to pay myself?**

A: There is no statutory percentage or formula — the IRS standard is "reasonable compensation for services actually performed." In practice, we run a nine-factor analysis under the <strong>Watson</strong> framework using BLS occupational data, RCReports comparables, and industry survey data, then document the result in an annual memo. For most owner-operator service businesses, that lands somewhere between 30% and 60% of net business income, but the right number depends entirely on what you do, how many hours you put in, and what a non-owner employee would be paid for the same work. The memo is what defends the number if the IRS challenges it — see <a href="/services/s-corp-tax/#the-reasonable-compensation-question" class="text-primary font-semibold hover:underline">the reasonable-compensation section above</a>.

**Q: Can my spouse be a shareholder?**

A: Yes — a US-citizen or resident-alien spouse can be a shareholder. For S-Corp eligibility purposes under IRC §1361, a husband and wife (and their estates) count as a single shareholder, which helps you stay under the 100-shareholder ceiling. The practical question is whether they should be. If your spouse genuinely performs services for the business, they should be on payroll with their own W-2 and reasonable comp memo. If they do not perform services, putting them on payroll just to "split income" is exactly the kind of arrangement the IRS unwinds under examination. Adding a spouse as a passive shareholder is fine; paying a passive spouse a salary is not.

**Q: Should each partner have a separate S-Corp?**

A: Usually no, but sometimes yes. A single S-Corp owned by two or three partners issues one K-1 per shareholder and is simpler to administer. The "tiered" structure — where each partner owns a personal S-Corp that then owns an interest in an operating LLC taxed as a partnership — is occasionally useful when partners have very different compensation needs, retirement-plan strategies, or fringe-benefit preferences. But the structure adds two more returns per year, basis tracking at two levels, and complicates the §199A QBI computation considerably. We run the math both ways on a partnership engagement and only recommend the tiered structure when it produces enough savings to justify the added cost and complexity.

**Q: What happens if I miss the S-election deadline?**

A: The normal deadline for Form 2553 is 75 days from formation or from the start of the tax year. Miss it and you can usually still get retroactive relief under <strong>Rev. Proc. 2013-30</strong>, which the IRS routinely grants for entities that meet four conditions: intent to be an S-Corp from day one, failure to be treated as an S-Corp solely because of the untimely 2553, reasonable cause, and proper penalty-of-perjury statements. We file these every quarter and recover up to 3 years and 75 days of S-Corp treatment for clients who missed the original window. See <a href="/services/late-s-election/" class="text-primary font-semibold hover:underline">Late S-Election Relief</a> for the full process and worked example.

**Q: Can I S-Corp my rental properties?**

A: Almost never a good idea. The classic problem: real estate appreciates, and IRC §311(b) treats a distribution of appreciated property from an S-Corp as a sale at fair market value — triggering gain recognition on the appreciation when you try to move the property out. You also lose the ability to do a clean §1031 like-kind exchange of the underlying asset. Rentals belong in an LLC taxed as a partnership (multi-member) or disregarded (single-member), which preserves basis flexibility, allows tax-free distributions of appreciated property, and keeps §1031 on the table. If you already have rentals stuck inside an S-Corp, the unwind is painful — we have done it, but the planning conversation should happen <em>before</em> the election, not after.

**Q: Do I need an LLC first, or can I form a corp directly?**

A: Both work — the S-election is available to either a state-law LLC or a state-law corporation. We default to an LLC in Florida and elect S-Corp treatment via Form 2553, because the LLC structure gives you better operating-agreement flexibility, no required board or annual minutes, and a simpler dissolution path if you ever wind the entity down. If you have specific reasons to use a corporation — outside investors who require corporate stock, plans to convert to C-Corp later, or a state where the corporation form has a tax advantage — we will form a corporation directly. The S-election itself is the same Form 2553 either way.

**Q: What's the difference between an S-Corp and an LLC?**

A: They are not the same kind of thing. An LLC is a state-law entity — it is how the entity exists legally. An S-Corp is a federal tax election — it is how the entity is taxed. A Florida LLC by default is taxed as a sole proprietorship (single-member) or partnership (multi-member). The owner can elect to have that LLC taxed as an S-Corp by filing Form 2553, without changing the legal structure at all. So the real question is not "LLC or S-Corp" — it is "should my LLC be taxed as a sole prop, a partnership, an S-Corp, or a C-Corp." For most owner-operator businesses earning more than ~$60K net, the S-Corp election on top of an LLC is the right answer. See <a href="/services/s-corp-tax/#what-an-s-corp-actually-is" class="text-primary font-semibold hover:underline">section 1 above</a> for the longer explanation.


## Late S-Election Relief

Late S-election relief uses Rev. Proc. 2013-30 to file Form 2553 retroactively, with a reasonable-cause statement, for entities that missed the normal 75-day window. Eligibility is broad — most LLCs and corporations that intended to be S-Corps qualify if the request is filed within 3 years and 75 days of the intended effective date. The IRS approves the vast majority of properly-filed requests. We handle the eligibility analysis, the reasonable-cause statement, Form 2553, and all amended returns end-to-end.

### The deadline you missed

Form 2553 — the IRS election to be taxed as an S-Corporation — has to be filed within 75 days of one of two events: 75 days from the date the entity was formed (for new entities), or 75 days from the start of the tax year you want the election to apply to (for existing entities). Miss that window by even one day and the IRS defaults you back to whatever your prior tax treatment was — sole proprietorship on Schedule C for a single-member LLC, partnership on Form 1065 for a multi-member LLC, or C-Corporation on Form 1120 for a corporation. The 75-day rule is rigid on its face, but most owners we see never knew it existed. They formed an LLC online through LegalZoom or their state's portal, started invoicing clients, and filed a Schedule C the first April that came around — because nobody told them an S-election was a separate filing with its own deadline. By the time they hear about S-Corp savings from a peer or a podcast, the window has long since closed. The good news: the IRS knows this happens. There is a documented procedure for fixing it retroactively, and we file these every quarter.

### What Rev. Proc. 2013-30 actually allows

Revenue Procedure 2013-30 is the IRS's consolidated procedure for granting automatic late-election relief for S-Corps, ESBTs, QSSTs, and Qualified Subchapter S Subsidiaries. It replaced a patchwork of earlier procedures and is now the standard path. The retroactive window is up to 3 years and 75 days after the intended effective date of the election — so if you wanted to be an S-Corp for the 2023 tax year, you have until roughly March 15, 2027 to file under Rev. Proc. 2013-30 and recover that year. Four conditions must be satisfied. (a) The entity must have intended to be classified as an S-Corp as of the intended effective date — not as a tax-saving idea you came up with later. (b) The entity failed to qualify as an S-Corp solely because Form 2553 was not timely filed (not for any other disqualifying reason, like an ineligible shareholder). (c) There is reasonable cause for the failure to file timely and the entity has acted diligently to correct the mistake. (d) The entity and all shareholders sign penalty-of-perjury statements affirming the above and that they have reported all income consistent with S-Corp status for the years in question (or are concurrently amending returns to do so). Properly-filed requests under Rev. Proc. 2013-30 are routinely accepted by the IRS — the procedure is designed to be granted, not denied.

### The math — what you'd save (worked example)

Here is a representative scenario for a solo consultant who formed an LLC in 2022, never elected S-Corp, and has been filing Schedule C. Net self-employment income: $180,000 per year. On Schedule C, that income is subject to self-employment tax of roughly 15.3% on the first ~$168,600 (the 2024 Social Security wage base) plus 2.9% Medicare above that, plus the 0.9% Additional Medicare on income above $200,000 single. Total SE tax on $180K of Schedule C net income: approximately $25,400. Now run the same income through an S-Corp. Owner takes a reasonable W-2 salary of $80,000 — well-supported by BLS comparables for a solo consultant. Payroll FICA on $80K W-2 (employer + employee shares combined): approximately $12,240. The remaining $100,000 is taken as a distribution from the S-Corp, which is not subject to self-employment tax, FICA, or Medicare — it flows through on the K-1 and is taxed only as ordinary income on the 1040. Total payroll/SE tax: $12,240. Annual savings: approximately $13,160. Multiplied by up to 3 recoverable years under Rev. Proc. 2013-30: roughly $39,480. Example only. Actual savings depend on your specific facts — including reasonable-comp determination, state taxes, payroll setup costs, retirement-plan interactions, and §199A QBI changes. We run the real numbers on your books before you sign an engagement letter, not after.

### What we need from you

The intake is light by design — most of what we need already exists in your file. (1) Entity formation documents: Articles of Organization or Articles of Incorporation as filed with the state, the operating agreement or bylaws, and the IRS EIN assignment letter (CP-575 or 147C). These establish the entity's formation date and the date by which Form 2553 was originally due. (2) All filed tax returns for the years we will amend: federal 1040 with Schedule C (or 1065 partnership return) for each year of the requested retroactive window, plus the corresponding state returns. (3) Bank statements and bookkeeping: complete business bank statements for each retroactive year, and the books (QuickBooks file, spreadsheet, or whatever you used). We need a clean P&L for each year to compute the W-2 split and the amended 1120-S. If the books are not close-ready, we scope a separate bookkeeping cleanup before we touch the 2553. (4) A short written narrative — three to five sentences — of why the S-election was not made on time. Not a legal document; just the truth of what happened: you formed the LLC and didn't know about Form 2553, your prior preparer never raised it, the deadline passed before you understood S-Corps existed. We take that narrative and shape it into the reasonable-cause statement under Rev. Proc. 2013-30.

### What we file

A complete Rev. Proc. 2013-30 package has four moving pieces, and all of them have to align. (1) Form 2553, Election by a Small Business Corporation, with "FILED PURSUANT TO REV. PROC. 2013-30" written across the top, the reasonable-cause statement attached, and the penalty-of-perjury declarations signed by the entity and every shareholder. (2) Amended Form 1120-S for each retroactive year — these are the S-Corp returns that should have been filed at the time. Each return reports the year's income through the new W-2/distribution split, computes basis, and produces a K-1 for each shareholder. (3) Amended Schedule K-1 for each shareholder for each retroactive year, reflecting the new flow-through items and §199A QBI computation. (4) Amended Form 1040-X for each shareholder for each year, replacing the previously-filed Schedule C (or partnership K-1) with the new S-Corp K-1, recomputing the SE tax (down to zero on the distribution portion), and triggering the refund. The whole package is mailed — not e-filed — to the IRS service center designated for Rev. Proc. 2013-30 requests (currently Cincinnati or Ogden depending on the entity's state of formation). We track delivery via certified mail and follow up if no acceptance letter arrives within the expected window.

### Timeline

Total engagement-to-refund window is typically 6 to 9 months. Phase 1 — engagement to submission: 30 to 45 days. We need 30-min eligibility call, document intake, books review, reasonable-cause draft, your review, Form 2553 and amended-return preparation, signatures, and certified-mail submission. Phase 2 — IRS acceptance: typically 60 to 120 days after the IRS receives the package. The acceptance arrives as a CP-261 notice ("We have accepted your S-Corporation election") mailed to the entity's address of record. The CP-261 confirms the effective date of the S-election — which should match the date you requested. If the effective date on the CP-261 is wrong, we respond in writing to correct it. Phase 3 — refunds from amended 1040s: 3 to 6 months after the IRS finishes processing the amendments. The amended 1040-X refunds are processed separately from the 2553 acceptance and often arrive in a different order than the years were filed — that is normal. We monitor IRS account transcripts via Tax Pro Account through the engagement so we know when each refund posts and can flag anything that looks like an examination start instead of an acceptance.

### If Rev. Proc. 2013-30 doesn't apply

A small fraction of late-election cases fall outside the Rev. Proc. 2013-30 automatic window — usually because more than 3 years and 75 days have passed since the intended effective date, or because one of the four eligibility conditions is not cleanly satisfied (for example, the entity had an ineligible shareholder during part of the requested period, then converted to all-eligible shareholders later). In those situations the only remaining path is a Private Letter Ruling under IRC §1362(b)(5), requested through the IRS Office of Chief Counsel under the procedures in Rev. Proc. 2025-1 (and its successors). The user fee depends on the taxpayer's gross income tier — currently $3,000 for taxpayers with gross income under $250K, $8,500 between $250K and $1M, and approximately $12,600 for taxpayers above $1M. PLRs are drafted by tax attorneys — the substantive legal argument under §1362(b)(5) goes beyond the scope of a tax-preparation engagement. If your case requires a PLR, we refer you to a tax attorney we trust, coordinate the factual record, and prepare the supporting return work — but the PLR itself is out of our scope.

### Late S-Election Relief — Q&A

**Q: What if my LLC was formed years ago — am I still eligible?**

A: It depends on which year you want the S-election to take effect, not how long ago the LLC was formed. <strong>Rev. Proc. 2013-30</strong> gives you up to 3 years and 75 days <em>from the intended effective date of the election</em>. So an LLC formed in 2015 can still elect S-Corp treatment retroactively to, say, January 1, 2023 — that is well within the 3-year window — and we can amend 2023 and any later years. We cannot reach back to 2015, 2016, or 2017 under the automatic procedure; those would require a Private Letter Ruling under §1362(b)(5), which is a separate (and more expensive) path. The eligibility call is 30 minutes at no charge, and we tell you in writing which years are reachable before you sign anything.

**Q: Can I do this myself with TurboTax?**

A: No — TurboTax does not file Form 2553 at all, and it does not file amended business returns (1120-S, 1120-X). The Rev. Proc. 2013-30 package requires a paper-mailed Form 2553 with a reasonable-cause statement, amended 1120-S returns for each retroactive year, amended K-1s issued to each shareholder, and amended 1040-X returns for each shareholder for each year. The pieces interlock — the SE tax on the 1040-X has to reconcile to the W-2/distribution split on the 1120-S, the K-1 has to match the amended 1040, and the reasonable-cause statement has to satisfy the four Rev. Proc. 2013-30 conditions. Consumer tax software does not do any of that. The IRS rejects incomplete or incorrectly-structured 2553 packages, and rejection is harder to fix than a clean first filing.

**Q: What if I already filed Schedule C for the years I'm amending?**

A: That is the normal starting point — virtually every Rev. Proc. 2013-30 client has filed Schedule C (or a partnership return) for the years they want to recover. The amendment process undoes the Schedule C and replaces it with the K-1 flow-through from an amended 1120-S. Mechanically: we prepare an amended 1120-S for each retroactive year as if the S-election had been in place from day one, issue an amended K-1 to each shareholder, then prepare a Form 1040-X for each shareholder for each year that removes Schedule C, attaches the new K-1 on Schedule E Part II, recomputes self-employment tax (which drops on the distribution portion), and triggers the refund. The penalty-of-perjury statement signed with the 2553 explicitly affirms that all income is being reported consistently with S-Corp status going forward, which is what the amendments accomplish.

**Q: How sure are you the IRS will approve?**

A: Properly-filed Rev. Proc. 2013-30 requests are routinely accepted — the procedure was specifically designed by the IRS to be granted, not denied, because the alternative (litigation over a missed administrative deadline) is bad for everyone. That said, "properly filed" is doing a lot of work in that sentence. The four conditions under §4.03 of the procedure all have to be cleanly satisfied: intent to be an S-Corp from the effective date, failure caused solely by the untimely 2553, reasonable cause for the late filing, and complete penalty-of-perjury declarations. Where requests get rejected, it is almost always because one of those four pieces was missing or contradicted by the record (for example, the books show partnership-style allocations inconsistent with S-Corp distributions). We do the eligibility analysis before we file precisely to surface those issues — and we will tell you in writing if the case has weaknesses, before you spend a dollar.

**Q: Will I have to pay back the SE tax I already paid?**

A: No — you <em>recover</em> SE tax you previously paid. That is the whole point of the amendments. When you filed Schedule C, you paid self-employment tax (roughly 15.3% on the first ~$168K and 2.9-3.8% above) on 100% of net income. After we amend, your income for those years splits into a W-2 portion (which carries FICA, but at a lower base) and a distribution portion (which carries no SE tax at all). The amended 1040-X for each year reflects the new — lower — total of payroll and SE tax, and the IRS refunds the difference. The W-2 piece does require us to file W-2s and 941s for those retroactive years, which the IRS treats as a separate compliance item, and there can be small penalty-and-interest adjustments on the payroll side. The net of all of it is still a substantial refund — the worked example above lands around $13,160 per recovered year for a $180K Schedule C filer.

**Q: What's a "reasonable cause" for being late?**

A: Rev. Proc. 2013-30 does not require a heroic story — the IRS accepts ordinary reasonable causes that map to how small-business owners actually behave. The most common (and successful) narratives we draft fall into a few buckets. (1) <em>You did not know the election existed</em> — formed the LLC yourself or through an online service, never received tax advice that mentioned Form 2553, only learned about S-Corps later from a peer or a new preparer. (2) <em>You relied on a professional who did not advise on the election</em> — your prior CPA, attorney, or preparer never raised S-Corp status, or said they would file the election and did not. (3) <em>You filed it yourself and made a clerical error</em> — wrong form, wrong year, mailed to the wrong service center, signature missing. The reasonable-cause statement has to be specific, signed under penalty of perjury, and consistent with what the rest of the file shows. We draft it from your three-to-five-sentence narrative and walk you through it before you sign.


---

# Industries

We work with four small-to-medium-business audience segments. Each page below covers the audience, the operational reality, the relevant forms, our three-pillar service approach (bookkeeping, tax, IRS notice response), the S-Corp math, FAQ, and pricing.

- **[Owner-Operator Truckers](https://flaccountingservice.com/industries/owner-operator-truckers/)** — Your truck. Your authority. Your books — finally clean. Per-diem tracking, IFTA quarterly, 2290 HVUT, and the S-Corp math for the owner-operator scale.
- **[Service Businesses](https://flaccountingservice.com/industries/service-businesses/)** — Consulting, agencies, professional services — the S-Corp niche we know best. Reasonable comp, K-1s, §199A QBI, multi-state sales tax.
- **[Real Estate Investors](https://flaccountingservice.com/industries/real-estate-investors/)** — Schedule E done right. S-Corp only where it actually helps. REP status, cost seg, §1031, the STR loophole.
- **[Freelancers & Solopreneurs](https://flaccountingservice.com/industries/freelancers-solopreneurs/)** — Schedule C today. S-Corp when the math says yes. Quarterly estimates, §199A QBI, the S-election when net SE income clears ~$60K.

## Owner-Operator Truckers

URL: https://flaccountingservice.com/industries/owner-operator-truckers/

### Your truck. Your authority. Your books — finally clean.

Bookkeeping, tax, and IRS help for owner-operators with their own MC/USDOT — or leased-on contractors. IRS notice response on returns we prepare.

### Who this is for

If you have your own authority (your own MC/USDOT) or you're a leased-on contractor running with someone else's authority — this page is for you. Solo drivers, owner-operators with one truck, small fleets up to a handful of trucks.

### The reality

You're on the road 200+ days a year. The shoebox of receipts shows up in February. Your tax preparer doesn't know what per-diem means or how to file IFTA. We do. We work with owner-operators every quarter — the deadlines, the deductions, and the S-Corp math are not new to us.

### Forms & acronyms

- **Form 2290** — Heavy Highway Vehicle Use Tax (HVUT), due August 31 annually for trucks 55,000+ lbs. The stamped Schedule 1 is what you show DMV at registration.
- **IFTA quarterly** — International Fuel Tax Agreement — quarterly fuel-tax reporting across every state you drove in. Penalties hit fast when a quarter is missed.
- **Per-diem** — $69/day (2024 federal rate) for DOT-regulated transportation workers — fully deductible (not 50%) under IRC §274(n)(3) when on overnight trips away from your tax home.
- **Form 2553** — The S-Corp election. 75-day window from formation or from the start of the tax year. The leverage point most owner-operators leave on the table.
- **Schedule C vs 1120-S** — The decision that often saves $8K–$15K/year for established owner-operators netting $80K+. We model both before you commit.
- **Section 179 / bonus depreciation** — Accelerated write-off strategies for the truck and trailer. Bonus depreciation is phasing down — 60% in 2024, 40% in 2025 — so timing matters.
- **MC/USDOT authority** — Your own authority vs. leased-on changes how income is reported and which expenses are deductible. We get that right on day one.

### How we work with you

- **Bookkeeping** — Per-diem tracking · fuel/maintenance/tolls categorization · road-friendly receipt capture · IFTA-ready quarterly mileage logs by state.
- **Tax** — 1120-S when you've earned the S-Corp · quarterly estimates calibrated to variable freight income · §179 / bonus depreciation on the truck.
- **IRS notice response** — Routine IRS notice response on returns we prepared: CP2000 income mismatches · CP14 balance-due · CP504 final-notice letters · automated underreporter notices · math-error notices.

### The S-Corp angle

Most owner-operators netting $80K+ leave $8K–$15K/year on the table by staying Schedule C. S-Corp + a defensible W-2 salary + distributions is the most legitimate self-employment tax savings the IRS allows. Below ~$60K net, the math doesn't justify the complexity. We model the numbers for your tractor, your lanes, and your year before you commit.

### Owner-Operator Truckers — Q&A

**Q: Should I incorporate or stay sole-prop?**

A: The cleanest answer is: it depends on your net income after truck costs. Below roughly $60K net, staying as a sole-prop on Schedule C is usually fine — the S-Corp's payroll, separate 1120-S return, and reasonable-comp memo cost more than they save. Above $80K net, the math tilts hard the other way: a defensible W-2 salary plus distributions typically saves $8K–$15K/year in self-employment tax. The middle band is judgment. We run your actual numbers — your tractor payment, fuel, maintenance, per-diem days — and show you both columns before you decide.

**Q: What's the per-diem rate and how do I document it?**

A: For DOT-regulated transportation workers in 2024 the federal per-diem rate is $69/day for meals and incidental expenses on overnight trips away from your tax home. Under IRC §274(n)(3), self-employed truckers can deduct 100% of that — not the 50% that applies to most other industries. Documentation is what holds up if the IRS examines the return: a daily log of dates, locations, and overnight status (electronic ELD records work well), plus your trip sheets or settlement statements showing the runs. You don't need a receipt for every meal — the per-diem method substitutes for actual receipts when you log it correctly.

**Q: I missed the S-Corp election deadline — am I stuck?**

A: No. Rev. Proc. 2013-30 allows late S-Corp elections up to 3 years and 75 days retroactively if you meet four conditions: you intended to be an S-Corp from the effective date, your failure was solely because of the late Form 2553, you have reasonable cause, and you submit the required statements under penalty of perjury. For owner-operators, the typical recoverable savings runs $5K–$40K depending on years and net income. We file these every quarter — see our Late S-Election page for what we need from you and how the math works.

**Q: How do I file IFTA if I drive in 5 states?**

A: IFTA is one quarterly return filed with your base-state jurisdiction (where your truck is registered), but it covers every state you drove in. You report miles driven and fuel purchased per state, the system computes net tax owed (or credit) per state, and you settle once with your base state. Penalties for late filing start at $50 plus interest and stack quarter over quarter. Most owner-operators undercollect on mileage by state — we set you up with ELD or trip-sheet workflows that capture state-line crossings cleanly, and we file the IFTA return on a calendar.

**Q: Can I deduct my truck if I financed it?**

A: Yes. Financed or paid cash, the truck is a business asset and depreciable. Section 179 lets you expense up to ~$1.16M in qualifying assets in 2024 (subject to taxable-income limits), and bonus depreciation covers the rest at 60% for 2024 (40% in 2025, 20% in 2026). For a new tractor purchase that mixes §179 and bonus, you can typically write off most of it in year one. The interest portion of your truck-loan payments is also deductible. The principal portion isn't — that's a balance-sheet event, not an expense. Watch the recapture rules if you sell or trade in early.

### Pricing

- Monthly bookkeeping (1 truck): from $325/mo
- Schedule C return: from $750
- 1120-S + owner 1040 (single shareholder): $950
- Tax planning: $250/hr

### Related services

- https://flaccountingservice.com/services/s-corp-tax/
- https://flaccountingservice.com/services/late-s-election/
- https://flaccountingservice.com/services/tax-preparation/
- https://flaccountingservice.com/services/bookkeeping/
- https://flaccountingservice.com/services/irs-problems/


## Service Businesses

URL: https://flaccountingservice.com/industries/service-businesses/

### Consulting, agencies, professional services — the S-Corp niche we know best.

Reasonable comp, K-1s, §199A QBI, multi-state nexus, and the operational tax work consulting and agency owners need every quarter. IRS notice response on returns we prepare.

### Who this is for

Solo consultants, marketing agencies, software dev shops, professional-services firms, coaching businesses, design studios — anyone where the owner is the service and the cost structure is mostly labor and software.

### The reality

You bill $200K–$2M/year. Your clients are scattered across states. You've heard you should be an S-Corp but no one explained what reasonable comp actually means or how K-1s work. The wrong preparer either underpaid the owner W-2 (IRS scrutiny risk) or overpaid it (left tax savings on the table). We get the salary right and we document the reasoning.

### Forms & acronyms

- **Form 1120-S** — The S-Corp's annual return. Reports income, expenses, and the owner's reasonable compensation. K-1s issued to each shareholder. Due March 15 (or extended Sept 15).
- **Schedule K-1** — Each shareholder's share of S-Corp income/loss/deductions. Flows to the owner's personal 1040 via Schedule E. The K-1 and the 1040 are inseparable.
- **Reasonable compensation** — The annual W-2 the IRS expects an owner-shareholder to take. The #1 source of IRS scrutiny on S-Corp returns. Examined under a nine-factor test from Watson, Glass Block, and McAlary case law.
- **§199A QBI** — 20% Qualified Business Income deduction. Consulting/law/health/accounting are "specified service trades" (SSTBs) with phase-out at $191,950 single / $383,900 MFJ in 2024.
- **Solo 401(k) / SEP-IRA** — Owner retirement plans. Solo 401(k) usually wins for the same income because of the employee deferral plus profit-sharing combination.
- **1099-NEC issued/received** — Forms you file for contractors paid $600+ (due Jan 31) and forms you receive from clients. Misclassified-contractor letters are an active IRS focus.
- **Wayfair / multi-state nexus** — Service businesses with multi-state clients can trigger income-tax nexus and sometimes sales-tax nexus. State-by-state thresholds vary; we map yours.

### How we work with you

- **Bookkeeping** — Project-based accounting · contractor tracking · client retainer accounting · clean P&L by service line so you know what's profitable.
- **Tax** — 1120-S + K-1s + annual reasonable-comp memo + basis schedule · §199A QBI optimization · multi-state allocation when clients are out-of-state.
- **IRS notice response** — Routine IRS notice response on returns we prepared: CP2000 income mismatches · §199A QBI clarification letters · misclassified-contractor notices · CP14 / CP504 balance-due correspondence.

### The S-Corp angle

This is the audience S-Corp was made for. The owner is the service. Fixed costs are low. Net income concentrates in one or a few shareholders. We size salary and distribution to be defensible under the nine-factor reasonable-compensation analysis AND maximize the legal self-employment tax savings. We write the comp memo every year so it's already on file if the IRS asks.

### Service Businesses — Q&A

**Q: What salary do I have to pay myself?**

A: There's no IRS table. The standard is "reasonable compensation" — what you'd pay an outside professional to do the same work, given your training, duties, time committed, and the company's revenue. Case law (Watson v. US, Glass Block, McAlary) lays out the nine-factor test the IRS uses. In practice, for a solo consultant netting $200K, a defensible salary is usually $80K–$120K depending on industry, location, and how much of the income reflects your labor vs. capital. We pull comparables from BLS data, RC Reports, and salary surveys, then write a one-page memo defending the number you picked. That memo is the contemporaneous documentation that holds up if the IRS scrutinizes the return.

**Q: Can my spouse be on payroll if she doesn't work in the biz?**

A: No. Wages paid to a spouse who doesn't actually work in the business aren't deductible — they're a gift recharacterized as wages, and the IRS will disallow the deduction and assess back payroll tax. If your spouse does real work (bookkeeping, admin, client communication, social media), you can absolutely put her on payroll at a market wage for the work performed. The bar is: documented duties, hours that match the wage, and a job description on file. A no-show salary is one of the easier issues for the IRS to surface and it undermines the credibility of the whole return.

**Q: Solo 401(k) vs. SEP-IRA — which?**

A: For the same net income, a Solo 401(k) almost always lets you contribute more. The reason: Solo 401(k) stacks an employee deferral ($23,000 in 2024, plus $7,500 catch-up if 50+) on top of a profit-sharing contribution of up to 25% of W-2 compensation. A SEP-IRA only allows the 25%-of-comp piece. For an S-Corp owner with an $80K W-2, that's roughly $43,000 in Solo 401(k) vs. $20,000 in SEP. The trade-off: Solo 401(k) has setup paperwork and a Form 5500-EZ requirement once assets exceed $250,000. We set up and administer either.

**Q: Should each partner have a separate S-Corp?**

A: Often yes — for service businesses with two or more substantive partners, separate "personal service" S-Corps that each invoice the operating partnership is a common and legitimate structure. It lets each partner set their own salary, retirement contributions, and benefits at the level appropriate for their personal situation. The operating partnership (a 1065-filing entity) then passes through the partnership profit via K-1 to each partner's S-Corp. The structure isn't free — three returns instead of one — but for partners with different income levels or retirement-planning goals, the flexibility usually pays for itself.

**Q: What's §199A and do I qualify?**

A: §199A is the 20% Qualified Business Income (QBI) deduction passed in the 2017 TCJA. It lets owners of pass-through businesses (S-Corps, partnerships, sole props) deduct up to 20% of their qualified business income from taxable income. The catch for service businesses: consulting, law, accounting, health, financial services, and "any trade where the principal asset is the reputation or skill of the owner" are Specified Service Trades or Businesses (SSTBs). SSTBs phase out the deduction between $191,950 and $241,950 taxable income (single) or $383,900 and $483,900 (MFJ) in 2024. Below the threshold you get the full 20%; above the top, zero.

### Pricing

- Monthly bookkeeping: from $325/mo
- 1120-S + owner 1040 (single shareholder): $950
- Tax planning: $300/hr

### Related services

- https://flaccountingservice.com/services/s-corp-tax/
- https://flaccountingservice.com/services/tax-planning/
- https://flaccountingservice.com/services/payroll/
- https://flaccountingservice.com/services/bookkeeping/
- https://flaccountingservice.com/services/new-business-formation/


## Real Estate Investors

URL: https://flaccountingservice.com/industries/real-estate-investors/

### Schedule E done right. S-Corp only where it actually helps.

Per-property P&L, cost segregation coordination, §469 passive activity rules, REP status defense, and §1031 like-kind exchanges. IRS notice response on returns we prepare.

### Who this is for

Self-managing rental owners, small-portfolio landlords, short-term rental (STR) operators, house flippers, real-estate professionals (REPs), and investors with syndication K-1s.

### The reality

You buy real estate to build wealth, not to do tax accounting on Saturdays. But the rules — passive activity loss limits, REP status, cost seg, §1031 timing, the STR loophole — actually matter to the return. Most preparers either over-aggressive (S-Corp the rentals — wrong) or never-strategic. We take a contrarian-but-correct stance and document everything.

### Forms & acronyms

- **Schedule E** — Where rental income and expenses live on your 1040. One column per property. Depreciation, mortgage interest, repairs, and management fees all flow through here.
- **§469 passive activity** — Rental losses are passive by default — usable only against passive income. The $25K active-participation exception phases out between $100K and $150K of AGI.
- **Real Estate Professional (REP)** — IRC §469(c)(7). 750+ hours per year in real estate trades or businesses AND more than 50% of personal services. Unlocks active treatment of rental losses. Very hard with a W-2 job.
- **§1031 like-kind exchange** — Defer capital gains on real-property sales by reinvesting in like-kind real property within 45/180-day windows. Post-TCJA, real property only.
- **Cost segregation** — Engineering study that reclassifies portions of a building into 5/7/15-year property for accelerated depreciation. Typically worthwhile on properties $300K+.
- **STR "loophole"** — Short-term rentals with average guest stays ≤7 days are not passive under §469. With material participation, losses offset ordinary income — even with a W-2.
- **Bonus depreciation phase-down** — 60% for property placed in service in 2024, 40% in 2025, 20% in 2026, 0% thereafter. Cost seg planning needs to account for the schedule.

### How we work with you

- **Bookkeeping** — Per-property P&L · capex vs. repair classification · loan-amortization tracking · STR vs. LTR segregation for tax characterization.
- **Tax** — Schedule E + 1040 · K-1s from syndications · cost seg study coordination · REP-status time logs · §1031 exchange tracking.
- **IRS notice response** — Routine IRS notice response on returns we prepared: §469 passive-activity notice clarification · unreported STR income letters · cost-seg substantiation correspondence · CP2000 responses.

### The S-Corp angle

Here's the contrarian-but-correct stance: do NOT put rental real estate in an S-Corp. S-Corps create phantom income when distributions exceed basis, trap depreciation inside the corporation, and complicate (or break) §1031 exchanges. Do S-Corp the management company, the flipping/wholesaling business, or your real-estate agent income — those are services, not rentals. We see clients every month who were S-Corp'd on rentals by a preparer who didn't know the difference. Fixing it is doable but painful.

### Real Estate Investors — Q&A

**Q: Should I put my rentals in an LLC, S-Corp, or my name?**

A: For long-term rentals: an LLC (or a series of single-member LLCs, one per property) for liability protection, taxed as a disregarded entity on Schedule E. Do not S-Corp rentals — it creates phantom income when distributions exceed basis, traps depreciation inside the corporation, and complicates §1031 exchanges. For a flipping business, agent income, or a property-management company providing services, an S-Corp is fine and often beneficial because that income isn't rental income — it's ordinary trade-or-business income subject to SE tax that the S-Corp can mitigate. Holding rentals in your personal name is also legal but exposes other assets to liability. We size the structure to your portfolio and risk tolerance.

**Q: Cost seg — worth it on a $300K property?**

A: $300K is roughly the bottom of the worth-it band, and the answer depends on the building-to-land ratio and how long you'll hold it. Cost segregation reclassifies portions of a building into 5/7/15-year property (carpeting, cabinetry, landscaping, electrical) for accelerated depreciation instead of 27.5- or 39-year straight-line. With 2024 bonus depreciation at 60%, a typical study on a $300K rental might pull $30K–$60K of deductions forward into year one. Study cost runs $2,500–$5,000 for a standalone single-family rental. We coordinate the study, integrate the results into your tax return, and model the recapture if you sell early.

**Q: REP status — do I qualify with a W-2 job?**

A: Almost certainly not. IRC §469(c)(7) requires 750+ hours per year in real estate trades or businesses AND more than 50% of your personal services in real estate. A 40-hour W-2 job means you'd need 2,000+ real-estate hours to satisfy the "more than half" prong — practically impossible. The exceptions: a non-working spouse can be the REP and the couple files jointly to use the losses; quitting the W-2 mid-year and going full-time in real estate; or you're a real-estate agent already. If REP doesn't fit, look at the STR loophole instead — short-term rentals (≤7-day average stays) are not passive activities and can offset W-2 income with material participation.

**Q: 1031 into a DST — yes or no?**

A: Yes, with caveats. A Delaware Statutory Trust (DST) qualifies as like-kind real property under Rev. Proc. 2004-86, so a §1031 exchange into a DST defers the capital gain on your relinquished property. DSTs work well when you want to exit active management, you have a large gain to defer, and you can accept the trade-offs: no operational control, limited liquidity (typically 5–10 year holds), and sponsor fees that drag returns. They don't work when you want to keep refinancing/optimizing the asset or when the DST's structure won't accept your exchange timeline. We coordinate the QI, identify suitable DSTs through licensed sponsors, and integrate the basis carryover.

**Q: What deductions do most investors miss?**

A: The classics: home-office for the real-estate operation (a legitimate deduction even if you self-manage from a desk), mileage to and from properties (67¢/mile in 2024) for inspections and maintenance, the cost of education and certifications, professional fees (us, your attorney, property managers), travel to evaluate out-of-state properties, and the de minimis safe harbor election ($2,500 per item under Reg. §1.263(a)-1(f)) that lets you immediately expense smaller capital purchases instead of depreciating them. Bigger misses: cost segregation on properties where it pencils out, and the partial-asset disposition election when you replace a roof or HVAC instead of capitalizing the new one on top of the old.

### Pricing

- Bookkeeping (per portfolio): from $325/mo
- Schedule E + 1040: from $850
- Cost seg coordination: from $500

### Related services

- https://flaccountingservice.com/services/tax-planning/
- https://flaccountingservice.com/services/tax-preparation/
- https://flaccountingservice.com/services/new-business-formation/
- https://flaccountingservice.com/services/bookkeeping/


## Freelancers & Solopreneurs

URL: https://flaccountingservice.com/industries/freelancers-solopreneurs/

### Schedule C today. S-Corp when the math says yes.

Simple monthly close, quarterly estimates, §199A QBI optimization, and the S-election when your net SE income clears ~$60K. IRS notice response on returns we prepare.

### Who this is for

Solo freelancers, independent contractors, side-hustlers going full-time, creators, single-member LLC owners, and Schedule C filers wondering if they should be an S-Corp yet.

### The reality

You file 1099s, you're your own boss, and TurboTax has been mostly fine. But quarterly estimates keep tripping you up, the home-office question is murky, and someone in a Facebook group told you to S-Corp immediately. The honest answer is: probably not yet. We watch the line with you and pull the trigger when the savings cover the complexity.

### Forms & acronyms

- **Schedule C** — Profit or Loss From Business. Where sole-prop and single-member LLC income lives on your 1040. Reports gross receipts, expenses, and net income subject to SE tax.
- **SE tax (15.3%)** — Self-employment tax — 12.4% Social Security up to $168,600 (2024) plus 2.9% Medicare on all earnings. This is what the S-Corp election eventually mitigates.
- **Form 1040-ES** — Quarterly estimated-tax vouchers. Due April 15, June 15, Sept 15, Jan 15. Penalties under §6654 hit when you underpay.
- **§199A QBI (20%)** — The 20% Qualified Business Income deduction. Available to Schedule C filers below the income thresholds; SSTB phase-outs kick in at $191,950 single / $383,900 MFJ in 2024.
- **Self-employed health-insurance deduction** — Above-the-line deduction for health-insurance premiums paid by the self-employed (not available if you're eligible for a spouse's employer plan).
- **Solo 401(k)** — Owner-only retirement plan. $23,000 employee deferral (2024) + up to 25% of net SE income as profit sharing.
- **Form 2553 / Rev. Proc. 2013-30** — The S-Corp election form and the procedure that allows late S-elections up to 3 years and 75 days retroactively.

### How we work with you

- **Bookkeeping** — Simple monthly close · receipt tracking · biz/personal separation · clean P&L so you actually know what you make.
- **Tax** — 1040 + Schedule C + quarterlies · §199A QBI optimization · home-office and self-employed health-insurance deduction · the S-Corp decision when net clears ~$60K.
- **IRS notice response** — Routine IRS notice response on returns we prepared: CP2000 letters (unreported 1099 income) · estimated-tax penalty notices · math-error notices · CP14 / CP504 balance-due correspondence.

### The S-Corp angle

You're not an S-Corp yet — and that's fine. The math doesn't work below roughly $60K net SE income because the payroll, separate 1120-S return, and reasonable-comp memo cost more than the SE-tax savings. We watch the line with you. When you clear the threshold, we walk through the election (or use Rev. Proc. 2013-30 to elect retroactively if you missed the window) and the savings cover the complexity. No pressure to "incorporate immediately" — that advice is usually wrong.

### Freelancers & Solopreneurs — Q&A

**Q: Do I need an LLC to be a freelancer?**

A: No. You can legally freelance under your own name as a sole proprietor — no formation paperwork, no state filing fees, just a Schedule C on your 1040. An LLC adds two things: liability protection (your personal assets are shielded from business creditors and lawsuits, assuming you maintain the formalities) and a clean business identity. What an LLC does not do is change your taxes. A single-member LLC is a "disregarded entity" by default — same Schedule C as a sole prop. The tax change happens only when the LLC also elects S-Corp treatment via Form 2553. LLC + S-election is the structure that changes the math.

**Q: When should I become an S-Corp?**

A: Roughly when your net SE income reliably clears $60K and you can pay yourself a defensible W-2 salary while still leaving meaningful distributions. Below $60K, the added cost — running payroll, filing the 1120-S, writing the annual reasonable-comp memo, the second tax return — typically outweighs the SE-tax savings. Between $60K and $80K is the judgment zone. Above $80K, the math strongly favors S-Corp. We model your specific number. If you missed the 75-day election window after forming, Rev. Proc. 2013-30 lets us elect retroactively up to 3 years back — see our Late S-Election page.

**Q: What's the difference between an LLC and an S-Corp?**

A: An LLC is a state-law entity — formed by filing articles with your secretary of state, providing liability protection between you and your business. An S-Corp is a federal tax election, not an entity — you elect it via Form 2553 on top of an existing LLC or corporation. The LLC by itself is taxed as a disregarded entity (single-member) or partnership (multi-member). When you S-elect the LLC, the LLC itself doesn't change, but now its income flows through via Form 1120-S and K-1, and the owner takes a W-2 salary plus distributions. The LLC handles liability; the S-election handles tax.

**Q: Quarterly estimates — what happens if I skip them?**

A: IRC §6654 imposes an underpayment-of-estimated-tax penalty. The penalty rate floats with the federal short-term rate plus 3% — currently around 8% annualized in 2024 — and it's computed quarter-by-quarter on the shortfall. Two safe harbors avoid it: pay at least 90% of the current year's tax in estimates/withholding, OR pay 100% of last year's tax (110% if AGI exceeded $150K). Skipping estimates entirely on a year you owe $20K of tax can cost $1,500–$2,000 in penalty plus interest. We compute estimates after each quarter based on your YTD numbers so you're paying the right amount, not just guessing from last year.

**Q: Can I deduct my home office?**

A: Yes, if you use the space regularly and exclusively for business. Two methods: the safe harbor at $5/sq ft up to 300 sq ft (so $1,500 max, no depreciation, no records of utilities required) and the actual-expense method, which allocates a percentage of rent or mortgage interest, utilities, depreciation, insurance, and repairs based on the business-use square footage. The actual-expense method usually saves more if your home is expensive, your office is large, or you own the home (depreciation adds up). The catch on the actual method for owners: depreciation recapture when you eventually sell. We do the math both ways and pick the better one.

### Pricing

- Bookkeeping: from $325/mo
- 1040 + Schedule C: from $450
- "Should I S-Corp?" analysis: $400 flat

### Related services

- https://flaccountingservice.com/services/tax-preparation/
- https://flaccountingservice.com/services/late-s-election/
- https://flaccountingservice.com/services/s-corp-tax/
- https://flaccountingservice.com/services/tax-planning/
- https://flaccountingservice.com/services/bookkeeping/


---

# Resources

## Tax Due Dates

The federal tax calendar. Dates below are the official IRS deadlines for 2026 — if a date falls on a weekend or federal holiday, the deadline moves to the next business day. Florida has no state income tax, so these are what matters for most South Florida filers.

### Individual filers (Form 1040)

Regular filing deadline is April 15. A six-month extension filed by April 15 pushes the filing deadline to October 15 — but the extension does NOT delay payment of tax owed.

| Date | What's due |
| --- | --- |
| Jan 15, 2026 | Q4 2025 estimated tax payment |
| Apr 15, 2026 | 2025 Form 1040 + payment · 2025 IRA/HSA contributions · Q1 2026 estimated tax |
| Jun 16, 2026 | Q2 2026 estimated tax payment |
| Sep 15, 2026 | Q3 2026 estimated tax payment |
| Oct 15, 2026 | 2025 Form 1040 (extended filers) |
| Jan 15, 2027 | Q4 2026 estimated tax payment |

### Partnerships & S-Corporations (Forms 1065 & 1120-S)

Partnerships and S-Corporations file earlier than individuals — March 15 for calendar-year entities. Extensions push filing to September 15.

| Date | What's due |
| --- | --- |
| Mar 16, 2026 | 2025 Form 1065 (partnerships) + K-1s · 2025 Form 1120-S (S-corps) + K-1s |
| Sep 15, 2026 | 2025 Form 1065 / 1120-S (extended filers) |

### C-Corporations (Form 1120)

Calendar-year C-corps file by April 15 — same as individuals. Extensions push filing to October 15, but tax payment is still due April 15.

| Date | What's due |
| --- | --- |
| Apr 15, 2026 | 2025 Form 1120 + payment |
| Apr 15 / Jun 16 / Sep 15 / Dec 15 | Quarterly estimated tax (C-corps) |
| Oct 15, 2026 | 2025 Form 1120 (extended filers) |

### Employer & payroll filings

Employers have separate calendar obligations for withholding, FUTA, and information returns.

| Date | What's due |
| --- | --- |
| Jan 31, 2026 | W-2s to employees · 1099-NEC to contractors · Q4 Form 941 · Annual Form 940 (FUTA) |
| Apr 30 / Jul 31 / Oct 31 | Quarterly Form 941 |
| Feb 28, 2026 | Paper 1099-MISC to IRS (e-file deadline March 31) |


## Tax Rates

Federal income tax is progressive — each bracket taxes only the income within that bracket, not your full income. The rates below are for ordinary income. Capital gains and qualified dividends use different rates.

### 2026 individual ordinary-income brackets

Filing status determines which bracket schedule applies.

| Rate | Single | Married Filing Jointly | Head of Household |
| --- | --- | --- | --- |
| 10% | $0 – $11,925 | $0 – $23,850 | $0 – $17,000 |
| 12% | $11,926 – $48,475 | $23,851 – $96,950 | $17,001 – $64,850 |
| 22% | $48,476 – $103,350 | $96,951 – $206,700 | $64,851 – $103,350 |
| 24% | $103,351 – $197,300 | $206,701 – $394,600 | $103,351 – $197,300 |
| 32% | $197,301 – $250,525 | $394,601 – $501,050 | $197,301 – $250,500 |
| 35% | $250,526 – $626,350 | $501,051 – $751,600 | $250,501 – $626,350 |
| 37% | Over $626,350 | Over $751,600 | Over $626,350 |

### 2026 long-term capital gains & qualified dividends

Assets held more than one year qualify for long-term capital gains treatment. Short-term gains are taxed at ordinary-income rates.

| Rate | Single | Married Filing Jointly |
| --- | --- | --- |
| 0% | Up to $48,350 | Up to $96,700 |
| 15% | $48,351 – $533,400 | $96,701 – $600,050 |
| 20% | Over $533,400 | Over $600,050 |

### Self-employment tax

Self-employed individuals pay both the employer and employee share of Social Security + Medicare on net earnings.

- Social Security: 12.4% on first $176,100 of 2026 net self-employment earnings
- Medicare: 2.9% on all net self-employment earnings (no cap)
- Additional Medicare: 0.9% on earnings above $200K single / $250K MFJ
- Effective combined SE tax rate at the low end: ~15.3%

### Florida state income tax

Florida has NO state income tax on individuals. There is also no state tax on retirement income, pensions, or Social Security benefits. This is a significant planning advantage for high-earners and retirees who relocate to Florida.


## Record Retention Guide

The IRS can examine most returns for three years after filing — but that window extends in several situations. Our general advice: keep tax returns forever, keep supporting records for seven years, and keep some documents (home purchase, investments, major repairs) as long as you own the asset.

### Tax records

Tax records support numbers on your return — if the IRS questions a deduction or income item, you need the backup.

| Document type | How long |
| --- | --- |
| Tax returns (federal & state) | Forever |
| W-2s, 1099s, 1098s | 7 years |
| Receipts for deductible expenses | 7 years |
| Charitable contribution records | 7 years |
| Records of stock / mutual fund purchases | Until 7 years after sold |
| Records of home purchase + improvements | Until 7 years after home sold |
| IRA contribution statements (Form 8606) | Until withdrawn completely |
| Records supporting bad-debt deduction | 7 years |
| Records supporting worthless securities | 7 years |

### Business records

Separate from tax support, business records serve operational + legal purposes.

| Document type | How long |
| --- | --- |
| Articles of incorporation / organization | Forever |
| Corporate minutes + bylaws | Forever |
| Annual reports | Forever |
| Property records (real estate + equipment) | Until 7 years after disposal |
| Accounts payable / receivable ledgers | 7 years |
| Bank statements + canceled checks | 7 years |
| Expense reports + receipts | 7 years |
| Payroll records + timecards | 7 years |
| Retirement plan documents | Forever |
| Employee contracts | 7 years after termination |

### Personal financial records

Outside the tax context, there's still a retention cadence worth following.

| Document type | How long |
| --- | --- |
| Birth / marriage / death certificates | Forever |
| Social Security card | Forever |
| Passport | Until expired + 1 year |
| Property deeds + titles | Until sold + 7 years |
| Mortgage documents | Until paid off + 7 years |
| Insurance policies | Duration of policy + 7 years |
| Medical records | At least 7 years |
| Credit card statements | 1 year (or 7 if tax-relevant) |


## Tax Refund Tracker

The IRS processes most e-filed returns within 21 days and mails most refunds within that window. Paper returns take 6-8 weeks. Here's how to check the status of yours.

### Check your federal refund status

Use the IRS's official "Where's My Refund?" tool. You'll need your Social Security Number, filing status, and exact refund amount from your return.

### When to expect your refund

- E-filed + direct deposit: typically 10-21 days
- E-filed + paper check: typically 3-4 weeks
- Paper return + direct deposit: 6-8 weeks
- Paper return + paper check: 8-10 weeks
- Amended returns (Form 1040-X): up to 16 weeks

### Common reasons for delay

- Math errors or missing information on the return
- Identity verification required (IRS letter 5071C, 4883C)
- EITC or Additional Child Tax Credit claimed — legally held until mid-February
- Return flagged for review (higher scrutiny, no action needed on your part)
- IRS backlog or processing delays (especially after March filings)

### External resources

- [IRS Where's My Refund?](https://www.irs.gov/wheres-my-refund) — Official IRS refund status tool
- [IRS2Go mobile app](https://www.irs.gov/newsroom/irs2goapp) — Same tool on iOS and Android
- [Amended return status](https://www.irs.gov/filing/wheres-my-amended-return) — Track Form 1040-X amended returns


## State Tax Forms

Florida has no individual state income tax — most of our clients only file federal. For clients who moved to Florida or who earn income in other states, here are links to official state tax agency forms.

### Florida businesses

While Florida has no personal income tax, some business entities have separate Florida filings.

- Florida corporate income tax (Form F-1120) — C-corps and certain multi-member LLCs
- Florida sales & use tax — businesses selling taxable goods or services
- Florida reemployment tax — employers (Florida's version of unemployment insurance)
- Florida tangible personal property tax — business equipment

### Part-year residents + multi-state filers

If you moved to Florida mid-year or earn income in another state, you may owe income tax to that other state. Common state tax agency sites:

### External resources

- [Florida Department of Revenue](https://floridarevenue.com/) — Florida business taxes (sales, corporate, reemployment)
- [New York Department of Taxation](https://www.tax.ny.gov/) — New York state income tax forms
- [California Franchise Tax Board](https://www.ftb.ca.gov/) — California state income tax forms
- [Federation of Tax Administrators — State links](https://taxadmin.org/fta-members/) — Directory of all 50 state tax agencies


## IRS Tax Publications

The IRS publishes hundreds of official guides. Most are long and technical — these are the handful that most South Florida individuals and small-business owners will find genuinely useful, with direct links to the current PDFs.

### For individuals

### For small businesses

### For retirees

### External resources

- [Pub. 17 — Your Federal Income Tax](https://www.irs.gov/forms-pubs/about-publication-17) — The complete individual-filing guide
- [Pub. 334 — Tax Guide for Small Business](https://www.irs.gov/forms-pubs/about-publication-334) — Sole proprietors, partnerships, single-member LLCs
- [Pub. 535 — Business Expenses](https://www.irs.gov/forms-pubs/about-publication-535) — What's deductible and what isn't
- [Pub. 463 — Travel, Entertainment, Gift & Car Expenses](https://www.irs.gov/forms-pubs/about-publication-463) — Mileage rates, meal rules, substantiation
- [Pub. 505 — Tax Withholding & Estimated Tax](https://www.irs.gov/forms-pubs/about-publication-505) — Quarterly estimate guidance
- [Pub. 587 — Business Use of Your Home](https://www.irs.gov/forms-pubs/about-publication-587) — Home office deduction
- [Pub. 590-A — IRAs (Contributions)](https://www.irs.gov/forms-pubs/about-publication-590-a) — Traditional & Roth IRA contribution rules
- [Pub. 590-B — IRAs (Distributions)](https://www.irs.gov/forms-pubs/about-publication-590-b) — Withdrawals, RMDs, early-withdrawal penalties
- [Pub. 554 — Tax Guide for Seniors](https://www.irs.gov/forms-pubs/about-publication-554) — Filing for taxpayers 65+
- [Pub. 915 — Social Security Taxability](https://www.irs.gov/forms-pubs/about-publication-915) — How Social Security benefits are taxed
- [Complete IRS publications list](https://www.irs.gov/forms-instructions) — Browse all IRS forms and publications


## Tax Strategies for Business Owners

Most small-business owners pay more tax than they need to. Not because they're cheating — because they didn't set up the right structure, didn't fund the right retirement account, didn't claim the right deductions, and didn't plan in January for what happens in April. Here are the lever points we work on with every business-owner client.

### Pick the right entity from the start

A sole proprietor making $120K net pays self-employment tax on every dollar. An S-Corp owner at the same income pays payroll tax only on their "reasonable salary" and takes the rest as a distribution — often saving $8-12K per year in SE tax alone. Entity choice matters at different income levels and for different goals (liability, succession, retirement funding).

- LLC taxed as sole prop: simplest, but full SE tax on all profit
- LLC taxed as S-Corp: SE tax savings above ~$60-70K net income
- S-Corporation: same benefit as LLC-taxed-as-S-Corp but with more formalities
- C-Corporation: rare for small business; useful for retained earnings, fringe benefits, or future sale

### Max out retirement contributions

Retirement contributions deduct against your business income AND grow tax-deferred. The right plan depends on how many employees you have and how much you want to contribute each year.

- Solo 401(k) — up to $70K/year (2026) for owner-only businesses
- SEP-IRA — simpler than 401(k), contribution limited to 25% of comp
- SIMPLE IRA — for businesses with employees, up to $16,500 employee + employer match
- Defined Benefit Plan — for high-earning older owners; contributions can exceed $200K/year

### Don't miss the QBI deduction

The Qualified Business Income deduction lets many pass-through business owners deduct 20% of qualified business income directly off their taxable income. But the rules around specified service trades, W-2 wages, and income thresholds are complex. Most returns we review have either missed opportunities or incorrectly claimed QBI.

### Strategic fringe benefits

Properly structured, fringe benefits can provide tax-free or tax-deferred value to you and your family while being fully deductible to the business.

- Accountable plans for expense reimbursement (tax-free to you, deductible to business)
- HSA contributions alongside a high-deductible health plan
- Section 125 cafeteria plans
- Health Reimbursement Arrangements (QSEHRA for <50 employees)
- Educational assistance programs

### Section 179 + bonus depreciation

Purchased equipment, vehicles, or software for your business? You may be able to deduct the full cost in the year of purchase rather than depreciating it over 5-7 years. Timing of purchases can matter enormously when one tax year looks different from the next.

### Year-end timing

If you're a cash-basis business (which most small businesses are), you control your taxable income by controlling WHEN you bill and WHEN you pay. Accelerating expenses in a high-income year, deferring expenses in a low-income year, accelerating invoicing when a rate increase is coming — these timing moves can save thousands per year with zero structural change.


## Tax Strategies for Individuals

W-2 earners often assume they have no tax planning options because "everything is withheld." Not true. These are the levers that actually cut tax bills for individuals — from full-time employees to retirees managing their own portfolio.

### Max out tax-advantaged retirement accounts

Contributions reduce your taxable income today (traditional accounts) or grow tax-free for decades (Roth accounts). The 2026 limits:

- 401(k)/403(b): $23,500 regular · $31,000 if age 50+ (catch-up) · $34,750 for ages 60-63
- Traditional or Roth IRA: $7,000 · $8,000 if age 50+
- HSA (with high-deductible health plan): $4,300 single · $8,550 family · +$1,000 if age 55+
- Backdoor Roth: high-earners phased out of direct Roth can contribute via a nondeductible traditional IRA + immediate conversion

### Harvest tax losses (and gains) strategically

Selling losing positions in a taxable account offsets gains elsewhere — up to $3,000/year of losses can offset ordinary income, with unlimited carryforward. At the other end, long-term capital gains up to the 0% bracket ($48,350 single / $96,700 MFJ in 2026) are completely tax-free — sometimes worth deliberately realizing.

### Itemize only if it beats the standard deduction

The 2026 standard deduction is $15,000 single / $30,000 married. Itemize only if your combined deductible items exceed that — typically meaning significant mortgage interest, large charitable contributions, or major medical bills. Use a "bunching" strategy: concentrate two years of charitable giving into one year to clear the standard-deduction hurdle.

### Don't pay penalty-and-interest on underpayment

The IRS charges a quarterly interest penalty if you don't pay enough during the year. Safe harbors that avoid the penalty: pay at least 90% of this year's tax OR 100% of last year's tax (110% if AGI > $150K). If your income spiked this year (bonus, stock vesting, home sale), check your withholding or make an estimated payment.

### Charitable giving with appreciated assets

Donating appreciated stock or mutual funds directly to charity (instead of selling and donating cash) lets you deduct the full market value AND avoid the capital gains tax you would have paid on the sale. For substantial givers, a donor-advised fund can bunch multiple years of giving into one deduction year.

### Roth conversions in low-income years

If you have a year with unusually low income (retirement transition, sabbatical, job change), converting traditional IRA money to Roth at your current low bracket can save tens of thousands in lifetime tax. We model these conversions carefully — the cost is paid now, the payoff is decades out.


## Business Strategies

Running a business is mostly operations — but a handful of financial decisions at each stage have outsized consequences years later. Below is what we've learned helping South Florida businesses through every stage of the lifecycle.

### Starting a business

The decisions you make in month one echo for years. Entity choice, bookkeeping setup, and owner-compensation structure are the three biggest.

- Choose the entity before you open a bank account — switching later costs money and attention
- Open separate business bank accounts and credit cards; never commingle with personal
- Set up bookkeeping from day one — QuickBooks Online or Xero takes an hour and saves months of cleanup
- Register for the right tax IDs (EIN, sales tax, unemployment) — don't skip any
- Establish reasonable-salary documentation from the start if you're an S-Corp owner

### Running a business

Ongoing financial discipline separates businesses that compound wealth from ones that just generate taxable income. The core habits:

- Close the books monthly — not quarterly, not annually
- Maintain a rolling 13-week cash-flow forecast
- Benchmark key ratios (gross margin, labor as % of revenue, inventory turnover) monthly
- Pay estimated taxes quarterly rather than scrambling at April 15
- Fund retirement contributions early in the year, not in the final weeks

### Growing a business

Growth changes the financial game. Hiring employees brings payroll complexity, workers' comp, and benefits decisions. Adding locations or states creates nexus issues. Taking outside investment has tax consequences years later.

### Selling a business

The biggest tax event of most business owners' lives is the sale of the business. Good planning can save six or seven figures in tax. Critical decisions:

- Asset sale vs. stock sale — buyer and seller usually want opposite structures
- Installment sale vs. lump-sum — trades tax spreading for rate risk
- Allocation of purchase price across goodwill, equipment, inventory, non-compete
- Qualified Small Business Stock (Section 1202) exclusion — up to $10M tax-free gain
- Pre-sale restructuring to reduce tax on the above


## Investment Strategies

We're not investment advisors — we're tax preparers. But after-tax investment returns are what actually matter, and most investors leave significant tax efficiency on the table. These are the tax-aware investing moves that show up in every high-net-worth planning conversation.

### Asset location: which account holds what

The same dollar invested in a tax-deferred 401(k) versus a taxable brokerage can produce very different after-tax returns. The general rule: put high-tax-drag assets (REITs, actively traded funds, taxable bonds) in tax-deferred accounts, and put low-tax-drag assets (broad-market index funds, municipal bonds, qualified dividend stocks) in taxable accounts.

### Tax-loss harvesting

Proactively selling positions that are down to realize losses, then reinvesting in a similar-but-not-identical security. The realized loss offsets capital gains; up to $3,000 of excess loss offsets ordinary income. Automated at some brokerages, but often poorly done — beware of the wash-sale rule (30 days either side of the loss sale).

### Dividends: qualified vs. ordinary

Qualified dividends are taxed at long-term capital gains rates (0/15/20%); ordinary dividends are taxed at your marginal rate. To qualify, you must hold the stock through a specific window around the ex-dividend date. Most US-stock index funds produce nearly all qualified dividends; REITs almost never do.

### Municipal bonds for high earners

Interest on municipal bonds is generally federal tax-free and, for in-state bonds, state tax-free. Florida residents don't benefit from the state-tax exemption (Florida has no state income tax), but the federal exemption still matters for high-bracket filers comparing taxable vs. municipal yield.

### Section 1031 for real estate investors

Selling appreciated investment real estate creates a large capital gains event — but a Section 1031 "like-kind exchange" can defer the entire tax bill by rolling the gain into a replacement property. Strict timing rules: 45 days to identify, 180 days to close. Plan before you list.

### Florida residency + capital gains

Florida's lack of state income tax means capital gains realized while domiciled in Florida avoid state tax entirely. Investors who recently relocated from high-tax states should time large gain realizations carefully — and document the domicile change properly.


## Life Events Financial Guide

Every major life event has tax and financial implications that are easy to overlook in the moment. These are the checklists we walk clients through when things change.

### Getting married

Marriage changes your filing status, may change your bracket, and may surface planning opportunities (or penalties).

- Update W-4 withholding at both jobs
- Compare "married filing jointly" vs. "married filing separately" in edge cases
- Update beneficiaries on retirement accounts, life insurance, bank accounts
- Consolidate or separate banking intentionally, not by default
- Review health insurance options — one spouse's plan may beat combining

### Becoming a parent

New parents unlock several tax benefits AND gain new planning obligations.

- Apply for the child's SSN immediately (required for dependent claim)
- Child Tax Credit — up to $2,000 per qualifying child under 17
- Dependent care FSA or Child & Dependent Care Credit — don't choose both without modeling
- 529 college savings plan — start small, start early, compound for 18 years
- Update estate plan: guardianship for minor children, beneficiary designations

### Buying a home

Homeownership creates deductible interest (if you itemize) and a lifetime capital gains exclusion when you sell.

- Mortgage interest deductible if total itemized > standard deduction
- Property tax deductible up to $10K SALT cap
- Keep closing statement + records of major improvements (basis adjusts your gain on sale)
- Section 121 exclusion: $250K/$500K capital gain exclusion on primary-residence sale after 2 years of ownership + use

### Starting or changing jobs

Job transitions are one of the highest-ROI tax-planning moments because withholding + contributions reset.

- Roll over old 401(k) to new employer's plan or to an IRA — don't cash out
- Review new W-4; adjust if you had tax due / large refund last year
- Coordinate new benefits enrollment (health, HSA, FSA, 401(k) match, RSUs)
- Don't miss the 401(k) match — it's an immediate 100% return on your contribution

### Divorce

Divorce is tax-intensive. Poor planning can cost both parties substantially.

- Filing status change year of divorce (must file single/HoH even if divorce was Dec 31)
- Alimony under current rules is NOT deductible to payer / NOT taxable to recipient
- Division of retirement accounts requires QDRO (Qualified Domestic Relations Order)
- Transfer of home — basis follows the transferred spouse; consider timing of sale
- Update beneficiaries, wills, powers of attorney

### Retirement

The retirement transition is the single biggest tax-planning moment of most people's lives. Key timing and structural decisions:

- Social Security timing — claim at 62, 67, or 70? Math varies by health + spousal benefits
- Required Minimum Distributions begin at age 73 (current law)
- Medicare enrollment at 65 — miss the window and face permanent premium surcharges
- Roth conversions in low-income years between retirement and RMDs
- Move from accumulation to distribution — tax efficiency matters more than ever

### Inheritance or large windfall

Inherited assets generally receive a "stepped-up basis" — enormous tax benefit. But decisions about what to sell, what to hold, and how to deploy cash have major downstream consequences.

- Inherited IRAs — distribution rules differ for spouses vs. non-spouses, pre-2020 vs. post-2020
- Step-up in basis erases built-in capital gains on inherited taxable assets
- Estate tax — currently $13.99M federal exemption (2025) per individual
- Florida has no state estate or inheritance tax


## Financial Calculators

A curated list of calculators we actually use or recommend to clients. Where possible, we've linked to authoritative non-commercial sources.

### Taxes

### Retirement

### Home & mortgage

### External resources

- [IRS Tax Withholding Estimator](https://www.irs.gov/individuals/tax-withholding-estimator) — Check your W-4 withholding mid-year
- [IRS Sales Tax Deduction Calculator](https://www.irs.gov/credits-deductions/individuals/sales-tax-deduction-calculator) — For itemizing sales tax in no-income-tax states
- [Social Security Quick Calculator](https://www.ssa.gov/OACT/quickcalc/) — Estimate Social Security benefits at different claim ages
- [SSA Retirement Estimator](https://www.ssa.gov/benefits/retirement/estimator.html) — Uses your actual earnings record
- [Medicare Plan Finder](https://www.medicare.gov/plan-compare/) — Compare Medicare plans in your ZIP code
- [Bankrate Mortgage Calculator](https://www.bankrate.com/mortgages/mortgage-calculator/) — Standard payment + amortization calculator
- [SBA Loan Calculator](https://www.sba.gov/funding-programs/loans) — Small Business Administration loan estimator
- [IRS Interest & Penalty Calculator (informal)](https://www.irs.gov/payments/failure-to-file-penalty) — Estimate late-filing penalties


## Quick Answers

Short answers to the questions we get asked most often. If your situation is more nuanced than these answers account for, call us — the initial consultation is always free.

### How long should I keep my tax records?

Tax returns: forever. Supporting documents (W-2s, 1099s, receipts): 7 years. See our full Record Retention Guide for edge cases.

### I got an IRS letter. What should I do?

Don't ignore it, and don't call the IRS before calling us. Most IRS letters are routine requests for information. A few require fast, specific action. Bring or email the letter and we'll tell you exactly what it means and what to do.

### Should I file an extension?

If you can't file by April 15, yes — file Form 4868 to extend to October 15. But note: an extension is only an extension to FILE, not to PAY. If you owe tax, you still need to pay by April 15 to avoid penalties + interest on the unpaid balance.

### Should I make quarterly estimated payments?

If you're self-employed, have significant investment income, or had a large tax bill last year, probably yes. The IRS charges an underpayment penalty if you don't pay enough during the year. Safe harbor: pay 90% of current-year tax OR 100% of prior-year tax (110% if AGI > $150K).

### My side gig made $5K last year. Do I need to report it?

Yes. Self-employment income is reportable regardless of whether you got a 1099 — the $600 1099 threshold is about the payer's reporting obligation, not yours. Net self-employment income over $400 also triggers self-employment tax.

### Can I deduct my home office?

If you use a specific area of your home regularly and exclusively for business, yes. The simplified method: $5/sq ft up to 300 sq ft ($1,500 max). The actual-expense method: a percentage of actual home costs. For most W-2 employees, the home-office deduction is no longer available (Tax Cuts and Jobs Act rules).

### Is my Social Security taxable?

Depends on your other income. Up to 85% of Social Security benefits can be taxable. Thresholds: for MFJ, no SS is taxable if total income < $32K; up to 50% is taxable between $32K-$44K; up to 85% is taxable above $44K. Florida residents benefit from no state income tax on Social Security either way.

### Should I form an LLC or S-Corp?

Depends on your income and goals. An LLC is simpler but pays SE tax on all profit. An S-Corp can save significant SE tax above ~$60-70K net income but requires payroll and formalities. We run the numbers for your specific situation during new-business-formation engagements.


## Send Us a File Securely

Tax documents contain sensitive information — Social Security numbers, bank accounts, income details. We use a secure client portal (not email) to exchange documents. If you're an existing client, log in below. If you're new, reach out first and we'll set you up.

### For existing clients

Log in to our secure portal to upload documents. The portal is encrypted in transit and at rest, IRS-compliant, and logs every file access for security tracking.

### For new clients

If you haven't worked with us before, please call or email first. We'll set up your portal account within one business day. Don't email tax documents directly — ordinary email isn't secure enough for sensitive data.

### What to send for a tax return

- W-2s from all employers (yourself and spouse if MFJ)
- 1099s for interest, dividends, investment sales, self-employment, retirement distributions
- Mortgage interest statement (Form 1098)
- Charitable contribution receipts (cash + non-cash)
- Medical expense records (if above 7.5% of AGI)
- Self-employment income + expense summary
- K-1s from partnerships / S-corps / trusts
- Last year's tax return (if new to our firm)

### External resources

- [Log in to client portal](https://www.securefirmportal.com/Account/Login/37364) — Existing clients — upload documents here
- [Request portal access](/contact/) — New clients — we'll set you up within one business day


## Monthly Newsletter

We send one email a month. It covers the tax deadlines that affect South Florida taxpayers in the coming weeks, any IRS or Florida rule changes worth knowing about, and one or two practical planning tips. No promotional content, no "new product announcements." Just useful.

### What you get

- Upcoming tax deadlines (quarterly estimates, filing deadlines, extensions)
- Practical planning tips for the coming month
- Summary of any IRS rule changes or Florida regulatory updates
- Links to the month's blog articles
- Never sold, shared, or used for marketing outside this firm

### Sign up

Email us at kdmfinancialsolutions@gmail.com with subject "Newsletter signup" and we'll add you. Unsubscribe any time — one click, no questions.


## Recommended Books

We're asked often what to read. This is the short list — books we actually recommend to clients across different topics. No affiliate links, no commissions.

### Personal finance & investing

- The Psychology of Money — Morgan Housel. The single best book on how people actually think about money (vs. how economic theory says they should).
- A Random Walk Down Wall Street — Burton Malkiel. The case for index-fund investing, now in its 13th edition and still current.
- The Intelligent Investor — Benjamin Graham. Warren Buffett's stated "best investment book ever written." Dense but foundational.
- Your Money or Your Life — Vicki Robin. The original FIRE-movement book; still the best framing of the work-money relationship.

### Retirement

- The Bogleheads' Guide to Retirement Planning — Taylor Larimore. Practical playbook from the community around Vanguard founder Jack Bogle.
- How Much Money Do I Need to Retire? — Todd Tresidder. Best book on the "number" question.
- Retirement Planning Guidebook — Wade Pfau. Academic but readable; the definitive distribution-phase resource.

### Small business & entrepreneurship

- The E-Myth Revisited — Michael Gerber. Essential reading for any small-business owner who wonders why they can't take a vacation.
- Profit First — Mike Michalowicz. Cash-management system that works for small business owners who aren't naturally "numbers people."
- Built to Sell — John Warrillow. How to structure a business that someone would actually buy when you're ready to exit.
- The Hard Thing About Hard Things — Ben Horowitz. Honest account of what startup leadership is actually like.

### Tax & legal

- J.K. Lasser's Your Income Tax (annual edition). The most accessible plain-English guide to the current year's individual return.
- Tax-Free Wealth — Tom Wheelwright. Perspective-shifting view on how the tax code is structured to reward certain behaviors.
- The Total Money Makeover — Dave Ramsey. Not our recommended financial plan, but worth reading if you're starting from debt.


## External Links

Direct links to the government agencies, authoritative sources, and forms we reference most often. All links open the official source — we don't intermediate.

### Federal — tax & retirement

The official agency sites for federal tax filing, retirement benefits, and Medicare. Bookmark these — many third-party "tax help" sites copy these resources and add a fee.

### Employer & new-hire forms

If you're hiring (or being hired by) a Florida business, these are the forms most often needed in the first week on payroll. All are free, official downloads from IRS.gov or USCIS.

### Florida state agencies

Florida-specific agencies for business registration, corporate tax, sales tax, and reemployment tax.

### Consumer & research

Independent consumer-protection and research resources we recommend to clients.

### External resources

- [IRS.gov](https://www.irs.gov/) — Official IRS — forms, publications, tools
- [IRS Where's My Refund?](https://www.irs.gov/wheres-my-refund) — Check federal refund status
- [IRS Payment Portal](https://www.irs.gov/payments) — Make federal tax payments online
- [Social Security Administration](https://www.ssa.gov/) — Benefits, claims, Medicare coordination
- [Medicare.gov](https://www.medicare.gov/) — Enrollment, plans, coverage lookup
- [Form W-4 — Employee's Withholding Certificate](https://www.irs.gov/forms-pubs/about-form-w-4) — Federal income tax withholding setup for new employees
- [Form I-9 — Employment Eligibility Verification](https://www.uscis.gov/i-9) — USCIS — required for every new hire within 3 business days of start
- [Form W-9 — Request for Taxpayer ID](https://www.irs.gov/forms-pubs/about-form-w-9) — For 1099 contractors and vendor onboarding
- [Form 2553 — S-Corporation Election](https://www.irs.gov/forms-pubs/about-form-2553) — Elect S-Corp tax treatment for an LLC or corporation
- [Form SS-4 — Apply for an EIN](https://www.irs.gov/forms-pubs/about-form-ss-4) — Get a federal Employer Identification Number
- [Florida Department of Revenue](https://floridarevenue.com/) — Florida corporate + sales tax
- [Florida Division of Corporations](https://dos.myflorida.com/sunbiz/) — Sunbiz — register a Florida business
- [Florida DEO — Reemployment Tax](https://floridajobs.org/) — Florida's unemployment tax for employers
- [Consumer Financial Protection Bureau](https://www.consumerfinance.gov/) — Federal consumer protection agency
- [FTC Identity Theft Recovery](https://www.identitytheft.gov/) — If your identity or tax info is compromised
- [Federal Reserve Economic Data (FRED)](https://fred.stlouisfed.org/) — Authoritative economic statistics
- [Annual Credit Report](https://www.annualcreditreport.com/) — Free annual credit reports (the one official source)


---

# Frequently Asked Questions

## Working with us

**Q: What makes KDM Accounting different from other accounting firms?**

A: We specialize. We are tax experts for small to medium businesses, with deep S-Corporation specialty — 1120-S returns, K-1s, reasonable-compensation memos, basis tracking, payroll, and IRS notice response for the returns we prepare. We return calls the same business day, you work with the same specialist year after year, and your first consultation is always free. Small enough to know every client by name; deep enough to handle the S-Corp work most generalist preparers avoid.

**Q: Do you work with clients nationwide or just Florida?**

A: Nationwide. Our offices are in Boca Raton and Fort Lauderdale, Florida, but most engagements run fully remote. Federal tax work (1120-S, 1040, payroll) does not care where you live. We currently serve small to medium business clients in dozens of states. Document exchange runs through a secure portal, planning calls happen on video, and finished returns are delivered electronically. Visiting the South Florida offices is always an option but never a requirement.

**Q: How much does a free consultation actually cost?**

A: Nothing. We sit down with you — in person at either office, on the phone, or on a video call — and talk through your situation. No hourly charges, no pressure, no obligation to sign on.

**Q: Do I have to come into the office to work with you?**

A: No. Most clients never visit the office. We exchange documents through a secure portal, do video calls when we need face time, and mail or email finished work. Visiting the Boca Raton or Fort Lauderdale office is always an option — but never a requirement.

**Q: Can you work alongside my existing bookkeeper or payroll provider?**

A: Yes. We regularly pair with in-house bookkeepers and external payroll services. In that arrangement we typically handle tax returns, year-end adjustments, and strategic planning while your existing people continue day-to-day work.

## S-Corporations

**Q: What's the difference between an S-Corp and an LLC?**

A: They're two different things — and confusing them is the most common owner-operator mistake. An LLC is a legal entity formed under state law: it gives you liability protection and a separate legal identity. An S-Corp is a federal tax election (filed on Form 2553) that changes how the IRS treats your entity for income-tax purposes. By default, a single-member LLC is taxed as a sole proprietorship (Schedule C) and a multi-member LLC is taxed as a partnership (Form 1065). When that LLC elects S-Corp tax status, it keeps its legal structure but files an 1120-S instead. So the answer to "LLC or S-Corp?" is usually "LLC that has elected S-Corp tax status" — best of both worlds.

**Q: When should I become an S-Corp?**

A: The math generally doesn't work below roughly $60,000-$80,000 of net self-employment income. The S-Corp savings come from avoiding self-employment tax on the distribution portion of your earnings, but the added complexity — running payroll, filing an 1120-S, documenting reasonable compensation, tracking basis — costs $1,500-$3,000 a year. Below ~$60K, the new costs eat the SE-tax savings. Above $60-80K, savings start to scale meaningfully — typically $3,000-$10,000+ per year at higher income levels. Other factors matter too (state taxes, retirement plan strategy, partner count), so we run the math for your specific situation before recommending the election. We file Form 2553 once you decide to move forward, and we can also file a late S-election (Rev. Proc. 2013-30) if you missed the deadline.

**Q: What's reasonable compensation?**

A: It's the salary you must pay yourself as an S-Corp owner-employee before taking the rest of your profit as a distribution. The IRS standard from §1.162-7 is "reasonable compensation for the services actually performed." There is no fixed percentage and no safe-harbor formula — the IRS uses a nine-factor analysis (training and experience, duties and responsibilities, time devoted, comparable salaries at similar businesses, dividend history, employee compensation, what comparable businesses pay for similar services, compensation agreements, and the use of a formula). Underpaying yourself to dodge payroll tax is the #1 reason the IRS examines S-Corp returns; if the IRS recharacterizes distributions as wages, you owe back payroll tax plus interest and penalties. Every S-Corp client we file gets an annual reasonable-compensation memo — a documented analysis defending the salary chosen, which is the contemporaneous evidence the IRS expects to see if your return is examined.

## Taxes

**Q: When should I start working on my taxes?**

A: Sooner than you think. For individual returns, reaching out in January lets us plan proactively and file early (lower risk of IRS scrutiny, faster refund). For business returns, ongoing monthly contact throughout the year beats a once-a-year scramble in March.

**Q: I got a letter from the IRS. What do I do?**

A: Don't ignore it, and don't call the IRS before talking to us. Bring or email us the letter and we'll read it carefully, tell you what it actually means, and recommend a response. Most IRS letters are routine — but a few require quick, specific action.

**Q: I have several years of unfiled returns. Can you help?**

A: Yes — we file back-year returns regularly. We reconstruct records, catch missed deductions, and file in the order that minimizes penalties and interest. If a balance remains after the returns are filed and you need to negotiate a payment plan or Offer in Compromise, that is IRS-representation work outside our practice scope — we refer you to a licensed Enrolled Agent or tax attorney for that piece.

**Q: Can you help me minimize taxes on the sale of my business?**

A: Yes. Business-sale taxes depend entirely on how the deal is structured (asset vs. stock sale, installment vs. lump sum, entity type) — and the best structuring decisions happen BEFORE the LOI is signed. Bring us in early and we can frequently save six or seven figures of tax.

## IRS notices & scope

**Q: What kind of firm are you?**

A: We are a tax and accounting firm focused on small to medium businesses, with deep specialty in S-Corporation taxation. We are not a CPA firm — financial-statement assurance work is performed by state-licensed CPAs and is outside our practice scope. We are not an IRS-representation firm — for audit defense, collections, appeals, Offers in Compromise, installment agreements, or levy/lien/wage-garnishment release, we refer you to a licensed Enrolled Agent or tax attorney. We do respond to routine IRS notices (CP2000, CP14, CP504, math-error notices, refund-hold notices) on tax returns we prepared.

**Q: I got a routine IRS notice on a return you prepared. What now?**

A: Send us a copy within 30 days of receipt. Most routine notices (CP2000 income mismatches, CP14 balance-due notices, CP504 final-notice-before-levy, automated underreporter letters, math-error notices) have a documented response path. We draft and file the response on a flat fee per notice type. If the notice escalates into an audit, collections action, or appeal, we refer you to a licensed IRS-representation firm — those engagements are outside our practice scope.

**Q: What if I owe money to the IRS or need an installment plan or Offer in Compromise?**

A: These are IRS-representation engagements (audit defense, collections work, OIC negotiation, installment-agreement negotiation, levy or wage-garnishment release) and are outside our practice scope. We refer you to a licensed Enrolled Agent or tax attorney we trust, and we provide the underlying return work and records they need.

## Small business & QuickBooks

**Q: My QuickBooks file is a mess. Can it be fixed?**

A: Yes. QuickBooks cleanup is a significant portion of our QB work — we re-categorize transactions, reconcile historical periods, correct opening balances, and give you a clean file from then on. We can also train your team so it stays clean.

**Q: Do you offer QuickBooks training?**

A: Yes — one-on-one, in person or remotely, for QuickBooks Online and QuickBooks Desktop. Training is always customized to your industry and how you actually use QB (not generic classroom material).

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## How to contact us

A free initial consultation is always offered — in person at either office, on the phone, or by video. Call the firm at (561) 334-4066 or visit https://flaccountingservice.com/contact/ and we will respond within one business day.