My lawyer told me to open an LLC!?
Continuing from my prior article- At SRG Advisors, LLC we believe in more than just being tax preparers; we strive to be our clients’ financial quarterback.
Here are two situations that we worked on in the last year alone.
Case B:
Client B started his business a few years ago. He was using his father’s accountant who had been preparing his return since he was a child. When Client B started his company, he opened a bank account, his lawyer filed the LLC paperwork, and the business took off. Each year Client B sent a copy of his books to his accountant and he received his tax returns back. Fast forward four years and Client B is now operating a $2+ million dollar company. While many things changed over the years, Client B continued to send his books to his father’s accountant for tax preparation. However, Client B wanted something more from his business advisors and tax professional; he wanted an accountant that he spoke to more than just once a year, one that could explain how his business and taxes were doing. Client B asked a few friends for a trusted CPA referral.
Fast forward a year of SRG Advisors working with this client. We made many changes to his operations, but the most significant change was the S-Corporation election. One might ask, ‘why is an accountant electing a new entity structure and not a lawyer?’, but it all comes down to tax savings.
Here is the high-level explanation of an S-corporation tax strategy: S-corporation distributions are not subject to social security or Medicare tax. Therefore with a little inquiry, planning & forethought we were able to reclassify distributions & save the client thousands. For most of our clients an S-corporation allows active shareholder distributions to not be subjet to the 3.8% Medicare surtax created by the Affordable Care Act (Obamacare) on business profits.
The tax savings of changing over Client B from an LLC to an S-corporation was upwards of $20,000 per year. I understand I might have confused some readers in the last few sentences; however, it’s important to highlight that an accountant that strives to save their client every dollar will present new strategies and take the time to explain in detail how they work.
How is your accountant looking out for you?
Thoughts or questions? Feel free to comment below or email me at
There are many significant and complex tax deductions and credits for businesses in all industries. However, many businesses and their accountants are unaware of these savings and the tax returns are never given appropriate attention or a second look. Contact SRG Advisors today to have a highly trained and dedicated member of our team review your returns!!! SOS! Second Opinion Services