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Author Topic: TurboTax for your LLC, S or C Corp?  (Read 13574 times)

Offline jagsterr

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TurboTax for your LLC, S or C Corp?
« on: January 21, 2007, 04:08:31 am »
Just curious if anyone prepares their own taxes for their LLC, S or C Corp using Turbo Tax.  It seems like it would be easy enough since everything is categorized and matched up with the Schedule E.  
Jag

Offline Frank Chin

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Re:TurboTax for your LLC, S or C Corp?
« Reply #1 on: January 21, 2007, 04:58:43 am »
Yes, I done some of my Corp taxes using Turbo tax over the years. As I'm into a number of businesses, I got a C Corp, S Corp & and an LLC.

But I found through the years that I still need a CPA. I did everything on Quickbooks, and simply exported to Turbo Tax. But because I live and operate in NYC, not only do I have to get Turbo Tax, but also purchase the NYC and NYS additions, adding to the cost.

I did the C Corp and S Corp taxes myself for approximately six years. A few years back, the NYS tax department sent a letter to me asking me to pay a fine saying that while my taxes were done correctly, I did not maintain a minimum amount of assets in the Corp entities. While Turbo Tax missed it, it's an issue known to most CPA's and I had to pay my CPA to amend the corporate tax returns going back a few years. HE also wrote the authorities explaining that it was all Turbo Tax's fault, it won't happen again, as I'm now using a CPA. The fine was waived. When it was all said and done, I didn't save anything using Turbo Tax.

Then, for the S Corp, as we prepared those returns ourselves, we since found out we overpaid the minimum state franchsie tax by several hundred dollars a year. I concluded that Turbo Tax may not be that up on local tax issues.

After this he offered to do the Corp returns for for another $100.00 per entity, which is almost the cost of my getting the software with the state and city editions. CPA's in the NYC area charges from $2,000/up to do personal and business tax returns, and he's charging a little more since I operate under three entities..

I found a CPA necessary. I had to get workman's comp for a business I got, and as with many smaller businesses you got guys on the books, part off the books, some are free lance contractors etc. A workman's comp auditor came by and ask about who everyone is and what everyone is doing there. She wanted to know why I only got 3 employees listed, and she can see at least six guys working there.

I told the auditor that I'm new, and my manager who wasn't in had all the info, and if could reschedule the interview.

At the time, I was in the process of getting a new CPA, so I called one I spoke to a week before,  and he explained that a small business guy would simply feign ignorance, say his CPA handled everything, and send the auditor over to the CPA's office for the audit interview since the CPA has all the payroll data. He asked me who the auditor was, I mentioned the name, and his answer was "she's by here almost every week for audits, so just have her come down.

I called the auditor back, told her my CPA said that she should go to his office to do the audit as she does for all other businesses. Her answer was "OK, I'll call Allen up, and see him sometime next week".

I called him later, and asked how the audit went. He said "no problem at all, and she didn't go into the issue about the number of workers". He explained just this alone is worth having a CPA

Because I'm in business full time, a few times a year, I'll need something that an employer normally furnishes. such as "how long have you been on the job". Since I'll in business, a CPA would send a reply "I'm Mr. so and so's CPA, and I can confirm he's been in this that and the other business for so many years.

Turbo Tax can't confirm your employment.

In short, there's issues beyound taxes that a CPA is necessary. The most important being if a government auditor comes around, you can simply say "I got no idea, please see my CPA".

 




Offline jagsterr

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Re:TurboTax for your LLC, S or C Corp?
« Reply #2 on: January 21, 2007, 12:54:08 pm »
That's great insight - thank you for sharing.  I had no idea you had to keep a minimum within your corporation.  The past two CPA's I had in the last 12 years, made me think I might want to try it on my own because I always get a letter months later asking me to pay interest on something for miscalculation.  I just don't get it.  One kept missing things, so I took it to another and the same thing happend.  These are people that are highly touted in the industry out here.  I think sometimes, when they are regarded too high, they have too much work and are spread too thin.  Therefore I thought Turbo Tax might be the answer.  I guess the answer is switch again.  You're right there are nuances that they may know, that Turbo may not.
Thanks, Jag

Offline TMCG

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Re:TurboTax for your LLC, S or C Corp?
« Reply #3 on: January 21, 2007, 09:34:46 pm »
in my opinion - as the investor - it's your job to know what you want to deduct, what you can deduct and how you can write things off and get the absolute best bang for you bucks.

the cpa's job is to file your taxes, do what you want him/her to do - and they tell you how they're going to do it - in basic accounting moronese...

example - if i didn't understand how to document my mileage - and TAKE FULL ADVANTAGE of it - my cpa would not be there to tell me how to do it - NO or very few cpa's will tell you how to do it and even fewer will know how to maximize this awesome deduction.

they'll know how to compute it, but they're not the entrepreneur - they're an accountant.

thus, their mindset doesn't work like yours.  of course there are cpa's who know this, because they're investors themselves BUT EVEN THEN, they don't necessarily take the time to tell you, or any of their clients, how to MAXIMIZE their deductions.

example - i drive to the deli everyday to pick up a sandwich, coffee, and then i drive their for eggs and milk for the wife twice a week - say that's 25 miles per week.  now, as a normal joe - i drive and put that 25 miles on my car and think nothing of it, because i don't have a deduction. now i'm a business owner, i don't understand how to MAXIMIZE mileage deduction nor to i understand the irs - so i do all this driving and never take advantage of this.

now, lets say you DO UNDERSTAND IT...you post a business card on their tack board each time you visit - BANG - now those miles become a deduction. you log them religously - at the end of the year - 25 miles X 52 weeks, give or take a trip here and there -

you have genuine business intent, it is reasonable and it adds up to 1300 miles in deductible expenses for the year...

of course CONSULT YOUR CPA regarding this or any other deduction...
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Offline Frank Chin

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Re:TurboTax for your LLC, S or C Corp?
« Reply #4 on: January 22, 2007, 09:10:40 am »
I went through FOUR CPA's in the last 25 years. You'll have to decide what the functions of the CPA is.

Currently, I use a CPA to bounce ideas off, an adjunct to my business, so if questions arise from authorities, I can say go "to my CPA". But being perfect bookkeepers they're not.

My first CPA lasted a year, and I was employed at the time, and went through a transfer. He was recommened, but I recalled his office was a mess. Gave him all the tax info early on Jan 15, so we can get a nice refund by Feb 15. Called us up on April 15, saying he's all bogged down, and he'll file an extension.

My wife decided to do to the taxes, and computed a refund. When the CPA was done with his, sometime in June, the refund was about $1,200 less. So we took our version of the return down to the CPA, went thru it line by line.

Conclusion??

We both did it corrently, but we used a method that minimized our taxes. We asked the obvious question, "isn't the job of the CPA to know the different ways, and find the one that minimizes taxes"??

His opinion?? It's his job to prepare a correct return, and it's not his job to try ten different methods, for the price he's charging us. Off course, he wanted to get paid for what he did, and we paid him.

We went on to another CPA. Based on our experience with the first one, we became tax savvy, and time to time, got Turbo Tax to double check the work of the CPA. We kept very good books, so we never had a problem with the returns.

Then this young CPA retired a few years after. We were savvy enough to do the taxes ourselves for a number of years, about 5 or 6 years, and even for some relatives using Turbo Tax.

Finally, we owned a number of rentals, businesses, so we decided that we needed a CPA again. Found one, call him Allen, used him for two years, dropped him, and found another one.

We were savvy enough to not only do our own P&L on rentals, but also maintain the depreciation tables, to us, a major undertaking. Allen did our taxes, but after reveiwing the returns, told him the depreciation was all wrong. He asked us what the problem was.

Told him that whoever inputted his data forgot to do the "prior years depreciation", and everything was done starting new. His answer?? Give me the prior depreciation for each asset so I can input it. He then went on vacation.

Spoke to another CPA who told me "Frank, that's the CPA's job, to input the correct data you gave him, and I'll be happy to do it for you".

Then the second CPA told me that I qualified for bonus depreciation, which was in effect that year,  which I was entitled to and not taken by Allen. Long and short of it, the second CPA completed the tax return for me. I paid him the fee, and mailed the return in.

Allen called back  from vacation and wanted the missing info for his tax return. I told him it was too much work for me to spoonfeed his crew the missing info, but the current year's data is also wrong, since they didn't even  know about the bonus depreciation in effect that year. I found it more convenient to have someone just doing it all for me.

His answer??

He refused to correct his return, saying I have an attitude, sent me a bill for the tax return he didn't complete, and dropped me as a client. Which brings me to my current CPA.

When he started with me, he was not that RE savvy. We both learned a few things from each other the last two years. I have no complaints knowing a thing or two more than the CPA in certain areas, but so far, he's been able to give me correct returns on data I gave him.



 

Offline jagsterr

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Re:TurboTax for your LLC, S or C Corp?
« Reply #5 on: January 22, 2007, 01:16:25 pm »
Wow what a story!  Amazing that CPA's don't really stay on top of their game.  Actually I found what you say to be true.  I don't really know a thing about taxes, and I usually just sign them (without reviewing them) and send them in.  One day I decided to try to get familiar with the form, read up on it, got back my return and noticed that they were not depreciating my rental.  Hum - shouldn't this be automatic?  Why was it missed.  I realize they are busy!  Have too much on their plate, and in order to be profitable they have to just churn them out, with a software and inputting data.  Found this out when I married an estate planning attorney who was also a CPA so he did both.  He had 13 apartment buildings when we married.  Anyways I saw that they just take what ever data one gives them and puts it into the appropriate by and hits enter.  And with big firms you can get passed around and round.  Each time someone picks up your file to get familiar with it there is a charge.  I called that CPA firm and asked my accountant (the head partner) what should a form a S, C for LLC.  The conversation was 10 minutes at most.  I got a bill for $150.  Can you believe that.  

Then as a realtor I took an all day seminar for realtor on tax deductions.  What to write off, how to write it off and how to document and what the code section is that will support you.  I stood up and said why do we have to go through all this, we are not CPA's we are realtors.  He said that not all CPA's knows this or will step out of the box to reinterpret your expense and get you a higher write off.  It is our job to know our rights, and to know that we can write off certain things that are traditionally not written off.  The moral to the story is that we have to get in the game and learn other peoples jobs, or at least a good hunk of it so that we can protect ourselves and maximize what is legally ours.  It's a lot of work and work I don't want to do, but hey what are you going to do, use it or lose it.

Offline Frank Chin

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Re:TurboTax for your LLC, S or C Corp?
« Reply #6 on: January 23, 2007, 07:37:23 am »
Great story.

Marrying a real estate investor, and a CPA to boot, is a good way to get started in Real Estate. Too bad I haven't thought of it myself sooner. LOL.

Having graduated with an MBA in finance, and taking several night courses in Real Estate afterwards, including a four credit one in "Real Estate Taxation", I think it unfair to say I'm just a regular fellow knowing a bit more than my CPA. I also took a course required in my state for Real Estate licensing though I never worked as a realtor.

Knowing more than you have to helps a lot. I had the greatest problem hiring handyman on short notice to fix holes in the wall cut by plumbers to fix leaks. I had a property that had a leak a week, and I can now fix any size hole, and when I'm done, you can't tell there was a hole there.

But I learned from my dad as knowledgeable as I may be on any subject, to play dumb with professionals, and let them strut their stuff. I recall going to a plumbing store with my dad as a six year old, he picked up a part, the store owner came over to help. Knowing he installed such a part the week before, he instead played dumb, and let the man explain how to install the part.

When I asked him why he played dumb, he explained he just wanted to know how knowledgeable the man is, so if he asked something next time, he'll have confidence that he can get the right answer.

I pretty much do the same with my CPA's.

In fact, I'm in the process of doing  a deal right now, involving a short term note, and some input from my CPA is needed on imputed interest. I have an idea what's involved, but my attorney said get an opinion from your CPA just to get yourself covered.

Called him yesterday, he hemmed and hawed, and asked "if I really needed a firm answer". I said "yes I need an answer, I can get an anwer elsewhere, but don't you think you should know it yourself if another client ask you about  it??" He said "you're right".

He looked it up, and the answer was just as I thought. I called my attorney up and told him what to do. Why ask my CPA??

If I get audited, I can say my attorney checked with my CPA, and this is the way we did it and why. If it turns out to be not that kosher, I can say "geez, looks like my CPA gave me bad advice." I just correct what's wrong instead of paying fines and penalties.





 



Offline aak5454

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Re:TurboTax for your LLC, S or C Corp?
« Reply #7 on: January 24, 2007, 10:57:27 am »
I have found the software packages to be inadquete for even ScH E type stuff.

If you have tax concerns, you might consider to retain an EA (enrolled agent) which is tax specialists certification.  To quote a CPA friend of mine, "most CPAs talk through their teeth when it comes to taxes as they don't really understand what they are doing".

Even with an EA, I keep myself knowledgeable and bounce lots of questions off my tax lady.

Offline jagsterr

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Re:TurboTax for your LLC, S or C Corp?
« Reply #8 on: January 24, 2007, 09:30:47 pm »
Thank you - I'll check into an EA.  

 




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