Q:

Hello Kerry,

 

Can you give me some examples of what I can pay my corp. for to transfer income as you mention. I am in the roofing and remodeling business and yes I am am working with a tax pro. I need help with ideas to get me thinking in the right direction. 

Is the sample chart of accounts in the industry specific quick books pretty close to what I need to use?

 

Thanks,

A:

As I have discussed on numerous occasions, there are several very easy ways by which to shift income between your corp and yourself.  What is best for your particular situation is something your personal tax pro should be helping you determine.  If your tax pro is unfamiliar with how to do this, you obviously have the wrong tax pro and need to find one who is more well versed in this very common and useful strategy for reducing taxes.  The fact that you feel a need to ask a stranger this question instead of your own personal tax advisor is disconcerting.

The standard chart of accounts that comes with QuickBooks is the best place to start; but then should be modified to suit your needs, as well as those of your professional tax preparer.  My personal style is to make the QB income statements match as closely as possible their tax return schedules, so I do a bit of tweaking to the charts of accounts my clients send me in order to achieve this. 

I realize that I may sound like a shill for QuickBooks, but it is the easiest and fastest accounting program I have ever worked with in regard to making any kinds of modifications to the chart of accounts.  Your personal tax pro should be part of your design process for the chart of accounts that will work best for your particular situation. 

Remember that you will have one company QBW file for your corp and a separate one for your personal info; each coordinated to match up with your tax returns.  An experienced tax pro should have no problem in helping you set both of them up properly.

Good luck.

Kerry Kerstetter

Follow-Up:

Kerry,

Thanks for answering me back so soon. Yes it is disconcerting I have to ask you a net guy, but I've learned a lot from the internet and from your site. I've spent $thousands on accountants/CPA's and lawyers, it's frustrating. You probably know from talking to so many people about this, but there are more bad tax pro's than good one's at least in my experience. But I'm searching for a better tax man/woman now. Another thing where your site and your answers help, is helping educate us to know what to talk to our tax guys about. After sleeping on shifting income idea I came up with a couple ways that are specific to my situation and I'll speak to my current accountant about these.

Thanks again Kerry, keep up the good work.

Labels: preparers

- posted by Kerry M. Kerstetter, MBA~CPA~ATP~ATA @ 11/09/2007 06:10:00 PM Send this post: