A shareholder of an S Corporation is considered an employee of the corporation. As an owner/employee, the shareholder must take a “reasonable” salary and must pay payroll taxes on that salary. The IRS does not defiine “reasonable” and this can be interpreted in different ways. The best thing to do would be to keep track of your time and pay yourself accordingly. The corporation gets to deduct the salary expense as well as any employers payroll tax expense.

Shareholders can also take out distributions of their equity from the business. Payroll taxes are not paid on the distributions. However, it might not be a good idea to take out more in distributions than you actually pay yourself in a salary.

The number one audit risk for S-Corporations is salary and wages paid to officers of the corporation. If there is no “compensation of officers” reported on the S Corporation tax return, that could very well trigger an audit.

Here is the scenario - It is the end of the year and you have not reconciled any of your bank statements yet. So you have the entire year to reconcile in your QuickBooks Online company file. You begin your reconciliations and everything seems to go fine. Then — you get to the month of September and realize that you have made some mistakes back in the month of May and need to correct them. These could be various mistakes. For example: You deleted reconciled transactions and now your cash balance does not equal the reconciled balance in the reconciliation reports.

But how do you “fix” this problem? — If you go to the Online Help screen- you will not see much there. And if you have ever worked in the Desktop version of QuickBooks you know how easy it is to “Un-do” reconciliations. However, QuickBooks Online is a different animal all together. That same fix will not help you here.

Here is what you can do and it really works! I had to do this a few days ago - so you will not get messed up.

1. Go to the Bank Register and select the account that you are reconciling.
2. You will need to Un-do all reconciled items back to the point where you made the Errors. (Ex: If you are currently working in the September reconciliation screen and need to go back to May you will need to Un-Do: September,August, July, June, and May.
3. In the Bank Register, you will need to replace all “R”s in the Reconciled Status column - denoted by a Check Mark - with “C”’s. This means that you are reclassifying all transactions from Reconciled to Cleared but not reconciled.

Once you have done this - you have completed the “Un-Do” Reconciliation and are now ready to fix your errors and reconcile again. It is that easy!

I was not able to find this simple explanation in the QuickBooks Online Help screen. They make it sound much more complicated than it is and explain the concept in very vague terms.

Q: What skills and equipment will get a CPA up and running in the virtual world?
A: Most - if not all - services that a CPA currently provides can be accomplished on a virtual level without ever leaving the office. Telecommuting has been around for a long time - but it has taken the corporate world a bit longer to accept this type of work arrangement. Smaller firms seem a bit more willing to work with virtual providers.

Basic equipment is needed to operate a virtual business and would include: An updated desktop or laptop computer, high speed internet access, and possibly, a second computer monitor . Good backup and recovery tools are also essential in a virtual environment - don’t overlook this step or you could get burned. Then of course you have to decide what type of online collaboration tools you will utilize to work with your clients.

Q: How does a virtual CPA communicate with clients?
A: First of all - the CPA provider of services - has to establish a clear line of communication with their clients. Emails have to be answered within 24 - 36 hours and phone calls need to be returned just as quickly. Responsiveness is the key to building strong and continuing business relationships. If the provider ignores client email and is unwilling to return phone calls - those clients will go elsewhere.

Q: What are some ways to develop a client base base for your virtual CPA services?
A:Once you purchase your domain name and get your web site built - the rest is about marketing. You should start marketing your services to your current local clients by making a case for the efficiency of working in a virtual environment. Other initial sources for projects include elance.com, guru.com, and monster.com. Then of course, you can do web searches on “Business Resources” to find other places to post your web site information. Creativity is the key to getting web site exposure.

Effective for returns required to be filed (including extensions of time) after 12-20-07, the penalty for failing to file an S Corporation return is $85 per month/per owner for a maximum period of 12 months. And the penalty for failing to file a Partnership return is $86 per month/per partner for a maximum period of 12 months.

Therefore, the maximum penalty per shareholder in an S Corporation is $1,020. And the maximum penalty per partner in a partnership is $1,032

These penalties also apply to a failure to provide the information required on the return as well as to a failure to file a return. The penalty does not apply if a failure to file a return or to provide required information is due to reasonable cause.

HIGHLIGHTS OF THE FIRST TIME HOME BUYER TAX CREDIT

WHEN: Qualified “First Time Home Buyers” Who buy a House After April 8, 2008 and Before July 1, 2009

AMOUNT: Lesser of A) $7,500 ($3,750 if you are Married Filing Separately), or B) 10% of the Homes Purchase Price.

AGI LIMIT: $75,000 to $95,000 If Single, $150,000 to $170,000 if Married Filed Jointly.

WHO QUALIFIES:Taxpayer or Spouse Cannot Have Owned a Principal Residence in the U.S. during 3-Year Period Ending on the Date of the Purchase.

HOW DOES THE 15 YEAR PAY BACK WORK?: Taxpayer Must Pay Back the Credit Ratably over 15 Years by Extra Tax on Subsequent Tax Returns. Recapture Accelerated if Property is Sold or No Longer a Principal Residence.

NO ADDITIONAL RECAPTURE AFTER DEATH: There is No Additional Recapture Following Death of Taxpayer.

WHAT IF QUALIFIED HOME IS UNDER CONSTRUCTION?: The Home will Still Qualify for the Tax Credit if the Move In date is After April 8, 2008 and Before July 1, 2009.

If you are contemplating a change in payroll services and want to make the transition as smooth as possible, change payroll providers at the end of a calender year.

Continue with your current service until 12-31-2008. Notify this payroll provider that you plan to start a new service as of 1-1-2009, but would like for them to file your 1099’s, W-2’s and all other year end quarterly payroll tax reports for 2008.

By switching your payroll service provider on the last day of the year, you cut out the headaches of trying to put together two different provider’s payroll information in order to create 1099’s, W-2’s and year end quarterly tax reports.

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† Subscription, Internet access and U.S. billing address required. Federal Employer Identification Number (FEIN) required for use with Direct Deposit. Direct Deposit available for U.S. bank accounts only. E-Pay feature is available for federal and select state taxes. E-File feature is available for Intuit Online Payroll for select federal forms. Please check availability at http://www.payroll.com/support/online/main. You may need to register with tax agencies in order to use E-Pay. Integrates with QuickBooks Pro/Premier 2006 and higher and Enterprise 6.0 or higher; does not integrate with QuickBooks Simple Start, QuickBooks for Mac or QuickBooks Online. Plus sales tax where applicable. Additional fees may apply. Click here for additional terms, conditions and limitations.
(1) Offer valid for a limited time. The first three months (starting from the date of enrollment) of subscription to Intuit Online Payroll are free. Offer is valid for new Intuit Online Payroll customers only. Customers who participate in this offer will automatically be billed at $9.95/month starting with the seventh month of service. Customers will be asked to present a valid credit card account for authorization when they enroll. Cancel at any time by following instructions found within the application. There is no charge to cancel. Offer cannot be combined with any other Intuit Online Payroll offer. Terms, conditions, pricing, features, functionality, service and support are subject to change at anytime without notice
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