S Corp Financial Alarm

What do your numbers say? How viable is your company? Are you positioned for sustainability if your industry takes a downward hit? These are the questions you should be discussing with an accountant. If you have a bookkeeper who manages your transactions, WONDERFUL! But what about the health analysis of your company? You owe it to yourself, your shareholders, and your employees to ensure your company can make it through a bumpy season. Talk to an Accountant.

Consider this - you have certain monthly expenses NO MATTER how much income comes in. If you are basing your company decisions off of cash flow alone from day to day, you may be in trouble. Having a business is so much more than incoming and outgoing money. The monthly transactions need to be reviewed. The percentages of debt and of expenses should be reviewed by someone who understands viability. Now don't get me wrong...having a bookkeeper is a good thing. However, the knowledge presented to the table is not quite enough to analyze your books, or even keep up with IRS requirements for operating your business type.

As an S Corporation, there are requirements you MUST abide by. WHY? Your company structure has strict guidelines in certain areas which affect income tax because you are a pass-through entity. This means that the annual income tax is passed on to it's shareholders (on their 1040 return filings). The IRS is particularly scrutinizing to this company structure because of all the benefits afforded to them. It is vitally important to ensure your operating within the requirements.

One other area to consider is your approach to year end. If your goal is to make as little profit as possible in order to keep your tax low, YOU ARE MISSING OUT. Better yet, you may be also stepping outside the guidelines and could be subject to penalties and/or a revocation of your company, which could cost you! General bookkeepers tasks are to know how to allocate your transactions, process payroll, and possibly know how to file certain tax returns.

If you are shareholder in an S Corporation Company, be sure to discuss your financial set up with a qualified accountant. Some areas which have financial implications not commonly known by bookkeepers is Officer Health Insurance handling, Why is Capital Gains Tax good, what is my monthly Expense percentage rate and is it sustainable?

How is your business trending?