Q:

Subject: S corp vs C Corp - HELP

 

Hi Kerry,

 

Thank you for the information.  I had started working with an accountant last year that told me some of this information (about C corp vs S corp), but she was not a CPA and unfortunately she abandoned me during my incorporation (didn't return phone calls).    She recommended I start as an C corp. I was a sole proprietor (chiropractic offices -2 ) and was being eaten alive by Self employment taxes and also owe a significant amount of back taxes that has been compounded since one bad year in 2001 during which I was out of my practice for a couple of months from surgery and recovery and during which ex- stopped paying child support.  Now I keep paying back taxes and never getting caught up with current taxes.

 

The accountant that abandoned me thought that the different fiscal years and the shifting of funds might help me get caught up.  My  new accountant didn't see things this way and changed me to an S corp in November.  He had an entirely different rationale that had  more to do with the double taxation.  Frankly, I'm highly confused and not sure where to turn.   He also said I could pay myself dividends and avoid some of the self employment tax.

 

What is your role?  Would you be able to look over my situation and make recommendations?  and at what cost? 

 

Sincere thanks for any light you can shed

A:

It's not quite right that your accountant can change your corp from a C to an S on his own.  You have to sign the 2553 to request that change. 

It sounds as if you do need some competent assistance with.  I wish I could help you; but I already have too many clients to take care of; so we are not accepting any new ones at this time.

Unfortunately, we don't have anyone else to whom we could refer you. If you haven't already done so, you should check out my tips on how to select the right tax preparer for you. 

Good luck.

Kerry Kerstetter

 

- posted by Kerry M. Kerstetter, MBA~CPA~ATP~ATA @ 3/31/2006 11:10:00 AM Send this post: