Tax and Accounting
Frequently Asked Questions

The documents needed depend on your sources of income and the events that occurred during the year. Common items include:

Organized, complete records help us prepare an accurate return and reduce the likelihood of processing delays. The IRS recommends gathering all income documents and relevant tax records before filing.

• Forms W-2, 1099 and K-1
• Your prior-year tax return
• Records of estimated tax payments
• Brokerage and digital asset tax documents
• Mortgage interest and property tax statements
• Charitable contribution records
• Education, childcare and healthcare documents
• Business income and expense records
• Rental property records
• Any letters or notices received from a taxing authority

Please submit documents through our secure client portal. Avoid sending Social Security numbers, complete tax returns, banking information or other sensitive records through ordinary, unencrypted email.

Contact us as early as possible, particularly if you own a business, have several income sources or experienced a major financial change during the year. Examples include starting or selling a business, purchasing rental property, receiving an inheritance, exercising stock options, moving to another state, getting married or divorced, or retiring.

Early communication gives us more time to identify missing information, discuss planning opportunities and address potential problems before a deadline.

In many situations, yes. With the appropriate authorization, a CPA may represent a taxpayer before the IRS in matters involving examinations, collections, payment issues and appeals. CPAs, attorneys and enrolled agents have unlimited representation rights before the IRS.

The exact services included will depend on the notice, tax year and scope of our engagement.

No. An extension generally provides additional time to submit the return, but it does not postpone the deadline for paying the estimated tax due. Paying late may result in interest and penalties, even when the return itself is filed within the extension period.

We can help estimate your balance and prepare an extension payment when your return cannot be completed by the regular deadline.

The IRS issues most refunds for complete and accurate electronically filed returns in fewer than 21 days, particularly when the taxpayer selects direct deposit. Returns requiring additional review, corrections or identity verification may take longer.

You can generally begin checking the status of a current-year electronically filed return within 24 hours using the IRS “Where’s My Refund?” service.

File the return on time even when you cannot pay the full amount. Pay as much as reasonably possible by the deadline, since interest and applicable penalties generally continue until the balance is paid.

The IRS offers short-term and monthly payment arrangements for qualifying taxpayers. The available arrangement will depend on the amount owed, filing compliance and other circumstances.

Contact us promptly so we can evaluate the available payment and collection alternatives.

Do not ignore it. Read the entire notice, identify the tax year involved and note any response deadline. The IRS sends notices for many reasons, including balances due, return corrections, refund changes and identity-verification requests.

Keep the original notice and gather the return and supporting records related to it. If a response is required, acting by the stated deadline can help preserve your rights.

Send us a complete copy of every page before contacting the IRS or submitting a response.

It depends on the error. An amended return may be required when there is a change to your income, filing status, deductions, credits, dependents or tax liability. The IRS will often correct simple mathematical errors itself or request a missing form separately.

Do not file an amended return until the original return has been accepted. We can review the issue and determine the appropriate correction.

A three-year retention period is common for many income tax records, but longer periods apply in certain situations. Records involving property should generally be retained for as long as they are needed to establish the property’s cost, improvements, depreciation and gain or loss when it is sold.

Some circumstances call for six or seven years of retention, and copies of filed tax returns should ordinarily be kept permanently for reference.

We can help you develop a retention schedule for your particular records.

You may need estimated payments when sufficient tax is not being withheld from your income. This frequently applies to self-employment income, investment income, capital gains, rental income and other income that is not subject to regular payroll withholding.

Federal taxes are generally paid as income is earned. Paying too little or making payments late may result in an underpayment penalty.

We can calculate recommended payments using your expected income, deductions, credits and withholding.

An Employer Identification Number, or EIN, is a federal tax identification number. Businesses generally need one when they have employees or operate as a partnership, corporation or certain other entities. An EIN may also be requested for banking or state-tax purposes.

The IRS provides EINs directly at no charge. Form your legal entity with the state before requesting an EIN for an LLC, partnership or corporation.

The appropriate structure depends on ownership, liability concerns, expected profit, payroll needs, administrative costs, state law and long-term goals. Common options include a sole proprietorship, partnership, limited liability company, S corporation and C corporation.

Your entity affects the federal returns you file and how certain income and taxes are reported. Legal and tax considerations both matter when selecting a structure.

We can explain the tax consequences and coordinate with your attorney when legal advice or formation documents are needed.

Your records should clearly show the business’s income and expenses and support the amounts reported on its tax returns. Depending on your operations, relevant records may include:

The IRS does not require most small businesses to use one particular bookkeeping system, but the system must produce a clear and accurate record of business activity.

• Bank and credit-card statements
• Sales records and deposit reports
• Customer invoices
• Vendor bills and receipts
• Payroll reports
• Loan and financing documents
• Asset purchase and sale documents
• Mileage and travel records
• Contractor payment records
• Prior tax returns and depreciation schedules

For most active businesses, we recommend updating and reconciling the books at least monthly. High-volume businesses may benefit from weekly or more frequent attention.

Regular bookkeeping makes it easier to monitor cash flow, identify errors, collect receivables, prepare financial statements, calculate estimated taxes and make informed decisions. Waiting until tax season can make errors harder and more expensive to correct.

There is no single retention period for every business document. Records should be kept for as long as they may be needed to support income, expenses, deductions, credits or the basis of business property.

Employment tax records generally must be retained for at least four years. Records related to property should be kept through the period in which the property is sold or otherwise disposed of, plus the applicable limitation period.

Legal, insurance, employment and financing requirements may require longer retention than federal tax rules.

Many sole proprietors, partners, S corporation shareholders and other self-employed individuals need to make estimated payments because taxes are not automatically withheld from business profits.

Estimated payments may cover both income tax and self-employment tax. Corporations can also have estimated-payment requirements.

We can prepare projections and update them during the year when your income changes.

The answer depends on the actual working relationship, not simply the title used in a contract. Relevant considerations include the business’s control over the worker’s activities, the financial relationship and the nature of the parties’ relationship.

A worker who is improperly treated as an independent contractor may create employment-tax, reporting and penalty exposure for the business.

Classification should be reviewed before the worker begins providing services—not after a tax notice arrives.

A business may need to issue an information return for certain payments made in the course of its trade or business. Whether a form is required depends on the type of payment, the recipient, the payment amount and any applicable exceptions.

Reporting thresholds and electronic filing requirements can change, so contractor and vendor payments should be reviewed each year. Collecting a completed Form W-9 before making or finalizing payments can help prevent missing information at filing time.

A business may generally deduct expenses that are ordinary and necessary for carrying on its trade or business. However, personal expenses are not business deductions, and some costs must be capitalized and recovered over time rather than deducted immediately.

Good documentation is essential. A bank or credit-card statement may show that a payment occurred, but additional records may be needed to establish its business purpose.

A self-employed taxpayer may qualify when a specific part of the home is used regularly and exclusively for business. The space may qualify as a principal place of business, a location used to meet clients or customers, or a separate structure used in connection with the business.

Exceptions and special rules apply, and the deduction may be calculated using either an actual-expense method or a simplified method when eligible.

Before running payroll, the business should confirm the worker’s classification and obtain an EIN if it does not already have one. Employers can be responsible for:

Federal employment taxes generally must be withheld, deposited, reported and paid according to the applicable schedule.

Payroll obligations can begin before the first paycheck is issued, so contact us before hiring.

• Federal and state withholding
• Social Security and Medicare taxes
• Federal and state unemployment taxes
• Payroll tax deposits
• Employment tax returns
• Year-end Forms W-2
• New-hire and state payroll registrations
• Payroll and employment-tax recordkeeping

Bookkeeping records and organizes the business’s ongoing financial activity. It includes categorizing transactions, reconciling accounts and producing financial reports.

Tax preparation uses those records to calculate taxable income and complete required returns. Tax planning looks ahead and considers actions that may improve future results.

Accurate, current bookkeeping makes both tax preparation and business planning more reliable.

We strongly recommend using dedicated business bank and credit-card accounts. Separating activity makes bookkeeping more accurate, helps document the business purpose of expenses and reduces the risk that personal transactions will be claimed incorrectly.

It can also make financial reporting, payroll, tax preparation and responding to an examination significantly easier.