Frequently Asked Questions

Yes. An S-corporation must file Form 1120-S for every year its election is in effect, even with zero income and zero expenses — and the late-filing penalty grows for each shareholder, for each month the return is late. Partnerships are similar: unless the partnership truly had no income and not a single deductible expense for the year, Form 1065 is due — and its late-filing penalty is also charged per partner, per month. If you have a dormant entity, filing the return is almost always far cheaper than the penalty for skipping it.

A K-1 is the form an S-corporation or partnership issues to each owner reporting their share of the business's income, deductions, and credits. It isn't a bill and it isn't filed by itself — the numbers flow onto your personal Form 1040, which is why we prepare business and personal returns together. If you receive a K-1 from a business we didn't prepare, bring it; it fits into your return the same way.

An LLC doesn't have its own tax classification — it borrows one. By default, a single-member LLC is reported on your personal return (Schedule C), and a multi-member LLC files as a partnership (Form 1065). An LLC can also elect to be taxed as an S-corporation or C-corporation. Which classification saves you the most depends on your profit level, payroll, and goals — and it's one of the first things we review with a new business client.

Generally once your business consistently earns meaningfully more than a reasonable salary for the work you do — that's when the potential self-employment tax savings start outweighing the added cost of payroll and a separate corporate return. The election also has strict timing rules, with late-election relief available in some situations. It's a numbers decision, not a rule of thumb, so we model it before recommending it.

The tax code's standard is "ordinary and necessary" for your trade or business. Common examples include equipment and depreciation, a qualifying home office, business use of a vehicle, insurance, software, professional services, and business travel. The bigger issue is usually documentation — a deduction you can't substantiate is a deduction you can lose in an exam, so we'll tell you what records to keep, not just what to claim.

If you expect to owe more than a small threshold when you file — which describes most profitable business owners — the IRS expects payments four times a year, and it charges an underpayment penalty when they're skipped or too small. We calculate estimates from what your business is actually earning during the year — using the prior-year safe harbor when it's the smarter floor — so each payment reflects reality, not a blind guess.

Don't panic, and don't ignore it — IRS notices carry deadlines, and most are far more routine than they look. Many are simple matching adjustments or requests for documentation. Send us a copy before you respond to anything: with a signed power of attorney, we can speak to the IRS on your behalf, and in most cases you never have to talk to them directly.

Yes. Enrolled Agents have unlimited practice rights before the IRS, which means we can defend any return — including ones prepared by another firm, by software, or by you. We'll review the return, build the documentation, and handle the correspondence and meetings from there.

Start with the facts: we pull your IRS transcripts to see exactly what's been filed, what's owed, and what the IRS already knows. Then we file what actually needs filing and match you to the resolution the rules support — an installment agreement, penalty abatement, or an offer in compromise where you qualify. It's a process we run regularly, and it works better the earlier it starts. No judgment — just a path out.