There have been new guidelines released by the IRS that may affect C-corporations, S-corporations, LLCs and other small businesses in New York. Keep reading to learn more about these new guidelines and how a LLC CPA in Manhattan can help.
The IRS has issued guidance for accrual basis taxpayers as to when they incur a liability for services or for insurance. If a taxpayer wants to change its treatment of liabilities to comply with this guidance, they must obtain the consent of the IRS.
Under the accrual method of accounting, which you use, a liability is incurred, and is generally taken into account for federal income tax purposes in the tax year in which:
1.    all the events have occurred that establish the fact of the liability,
2.    the amount of the liability can be determined with reasonable accuracy, and
3.    economic performance has occurred with respect to the liability (the “all events test”).
There are exceptions, such as when the amount of the accrual is immaterial, or accrual of the liability in the tax year of payment results in better matching of the liability against the income to which it relates than would result from accrual of the liability in the tax year in which economic performance occurs. This is something that a skilled CPA experienced in handling Manhattan C-corporations will be able to assist you in sorting out.

The IRS specifically addresses two situations in which an accrual basis taxpayer incurred liability for services or for insurance in the year payment was due and paid, not in the year the taxpayer executed the contract for the services or the insurance. The IRS further provides guidance on how a taxpayer can change their method of accounting for services and insurance contracts. This is also something that a CPA versed in LLCs in Manhattan can help you with.

If you have any questions regarding this guidance or compliance with the accrual method of accounting, please call one of our New York City small business CPAs at your convenience.

About us: MEDOWS CPA, PLLC is a boutique New York CPA NY Firm serving the needs of Individuals & Small Businesses in New York City and throughout the nation.  We work with the self-employed, freelancers, LLC, C-Corporations and S-Corporations to help them with their accounting and tax needs.

Jonathan Medows, CPA

MEDOWS CPA, PLLC

http://www.medowscpa.com

http://taxblog.medowscpa.com

info@medowscpa.com

A Unique, Boutique New York CPA Firm Serving the Needs of Individuals & Small Businesses

July 2010 E-News Letter

We hope you are enjoying the warm weather and finding some time to re-charge your batteries.    As a courtesy we would like to remind you about upcoming filing dates and to identify some other issues of interest:

Reminder about Due Dates:

Payroll Taxes: Quarterly Tax Returns are due by July 31, 2010 for the Second Quarter for 2010.

Sales Tax: Sales Tax Returns for Quarterly Filers for June – August 2010 is due by September 20, 2010

Personal and Business Estimated Taxes: Personal and Business estimated Income Tax payments are due by September 15, 2010. The MCTMT (aka the MTA Tax)  for April 1, 2010  -  June 30, 2010 is due by July 31, 2010.

Business Tax Returns on Extension: Business Returns on Extension (Multi-Member LLC returns, S-Corporation Returns, C-Corporation Returns) are due by September 15, 2010.

Personal Tax Returns on Extension: Personal Returns on Extension are due by October 15, 2010

Back Tax Liability? Call us to Help You End Your Nightmare

Do you or a friend or family member have a substantial liability to the IRS?  We have experience negotiating with the IRS to arrange payment plans, to suspend tax payment and to negotiate settlements at amounts below the tax liability.  Depending on the amount of money owed, tax liability type  and financial circumstances we may be able to help deal with a precarious financial situation.  If taxes are keeping you or someone else up at night please call or email and we can advise what we think is a viable option.

Entity Formation:

Have you considered starting your own business? We can assist you in determining the appropriate entity to choose for tax minimization purposes and assist you in the formation of the entity.  We can also provide guidance about going accounting and tax issues for your potential entity as well as tax preparation.  Please contact us today and we would be delighted to assist you.

Blog and Tax Articles

We have recently augmented the content of our blog and tax articles page with more helpful tax advice.   Please visit both sites for some informative and money saving tax articles.

Conference & Vacation Dates:

Our office will be closed on from July 13, 2010 and July 14, 2010 to attend an accounting conference out of town.    We will also be closed for vacation from July 26, 2010 thru July 30, 2010.

Sincerely,

Jonathan Medows, CPA