Products purchased for a retailer’s resale may qualify. Supplies purchased for that retailer’s own use require a different analysis.
Customer registration, exemption certificates, products sold, intended use and delivery location.
Official source: dor.georgia.gov/taxes/sales-use-tax
Distributions and wages have different tax treatment. The IRS may reclassify payments when compensation is too low relative to services. Separately, distributions should be tracked against shareholder stock basis.
A sole shareholder operates the company full time, takes $80,000 in distributions and pays no salary. This pattern calls for a reasonable-compensation review and possible payroll correction.
Review work performed, comparable wages, amounts withdrawn, prior payroll returns and shareholder basis.
Official source: www.irs.gov/businesses/small-businesses-self-employed/s-corporation-compensation-and-medical-insurance-issues
Some notices require a response, while others are informational. The IRS instructions on the specific letter explain where to reply and what evidence to provide. Ignoring a deadline can limit options.
If a notice says a payroll deposit is missing, compare the stated quarter with the bank confirmation and tax account transcript before sending a duplicate payment.
Keep the complete notice, mailing date, return copy, payment confirmation and correspondence. Use the reply address or method on that notice.
Official source: www.irs.gov/individuals/understanding-your-irs-notice-or-letter
A U.S. LLC owned by a non-U.S. person is not automatically exempt from U.S. reporting because it is disregarded for income tax. Contributions, distributions and related-party transactions require careful review under the applicable instructions.
A foreign owner forms a wholly owned U.S. LLC and funds its bank account. Before assuming there is no return because sales have not begun, review the entity’s tax classification and Form 5472 rules.
Gather formation documents, ownership chart, related-party transfers, bank activity and records of U.S. operations.
Official source: www.irs.gov/instructions/i5472
Employees, offices, inventory, property and sales can matter. Economic thresholds may apply for some taxes, while other taxes depend on physical activity. Registration with a secretary of state does not by itself answer every tax question.
A Georgia company hires a remote employee in another state. That can trigger payroll withholding and other registration reviews even if the company has no storefront there.
Map people, property, inventory, sales and services by state; review each state’s current thresholds and filing instructions.
Official source: www.irs.gov/businesses/small-businesses-self-employed/state-government-websites
Insurance remittances, patient refunds and merchant settlements can complicate revenue records. Large equipment purchases and practice acquisitions require careful classification and timing. Payroll and benefits can affect both the entity and its owners.
A practice buys equipment with a loan late in the year. The tax result depends on the asset, in-service date, financing and current depreciation rules, not simply the cash down payment.
Bring production and collection reports, bank records, payroll reports, loan agreements, equipment invoices and ownership documents.
Official source: www.irs.gov/publications/p334
Card deposits may be reduced by merchant fees, refunds and paid-out tips. Employee-reported tips affect payroll tax calculations. Larger food or beverage establishments may also have Form 8027 reporting duties.
A $10,000 POS sales report may settle to a lower bank deposit after fees and refunds. The difference needs a clear reconciliation; it is not automatically missing revenue.
Review taxable sales categories, tip pooling, service charges, payroll reports, inventory and deposit timing.
Official source: www.irs.gov/businesses/small-businesses-self-employed/tip-recordkeeping-and-reporting
Georgia’s election is made on the applicable entity return by its due date, including a valid extension, and becomes irrevocable after that deadline. Owners should coordinate the state return with their individual returns and estimated payments.
A partnership considering the election should model the Georgia entity tax and each owner’s return before filing Form 700. An election that helps one owner may have a different effect on another.
Review eligibility, owners’ residency, income allocation, election deadline, estimates and current Georgia instructions.
Official source: dor.georgia.gov/hb-149-pass-through-entity-tax-faq
The corporation must establish the plan in the required manner and coordinate payroll reporting. The wage amount generally is subject to income tax withholding but may be excluded from Social Security and Medicare wages when the applicable conditions are met.
A 100% owner pays personal premiums and asks the company to reimburse them. Before year-end, the company should review payment evidence and W-2 treatment, rather than booking the amount as an ordinary employee benefit without analysis.
Check the shareholder percentage, policy payment or reimbursement, W-2 boxes, other health coverage and the individual deduction requirements.
Official source: www.irs.gov/businesses/small-businesses-self-employed/s-corporation-compensation-and-medical-insurance-issues
Relevant facts can include duties, time devoted, experience, comparable pay, the company’s condition and compensation to other workers. The IRS can reclassify distributions as wages when compensation is unreasonably low.
If the owner manages daily operations and takes distributions but no W-2 pay, the payroll treatment deserves immediate review. A passive shareholder’s circumstances may differ.
Document the owner’s work, comparable compensation, payroll records and distributions; revisit the amount as the business changes.
Official source: www.irs.gov/businesses/small-businesses-self-employed/s-corporation-compensation-and-medical-insurance-issues