Expertise. Peace of mind. Courtesy of Kelley & Associates, LLC.
Accurate, timely accounting information is vital for any successful business. Our experienced, knowledgeable staff is ready and waiting to provide you with incomparable personalized service, whether you need it on a temporary or ongoing basis.
Here are just some of the specialized services available to Kelley & Associates, LLC clients:
Financial Planning Services
To effectively manage financial affairs, you need three things: extensive knowledge, meticulous organization, and constant vigilance. Kelley & Associates, LLC provides all that and more, thanks to a complete range of consulting and advisory services to help you sort through the complexities of financial planning.
We're proactive in serving each client's needs, providing helpful information and access to a wealth of resources on a regular basis.
Our financial planning services include:
- Investment Consulting
- Financial Planning to Achieve Specific Goals
- Retirement Planning
- Estate and Business Succession Planning
- Insurance Consulting
Tax Planning and Return Preparation Services
We view our relationships with our clients as ongoing partnerships, and we pledge to provide you with quality, up-to-date tax return preparation and advice, whatever your tax planning and preparation needs—whether you're a sole-proprietor business or operate a multi-tiered corporation or partnership.
But our dedication to you doesn't stop after April 15. All through the year, we keep up to date on current tax laws to minimize your tax liabilities and to maximize your future opportunities.
Auditing Services
Third parties who rely on your financial statements often require an audit for assurance. Our detailed audits include:
- Examination of your company's financial statements' adherence to generally accepted auditing standards
- Examination of internal controls
- Complete, substantial testing of the information underlying your financial statements
- Documentation of our opinion as to whether the statements are fairly presented in conformity with generally accepted accounting principles
Payroll Services
In today's hectic business world, it's a challenge to juggle all the daily tasks that keep your business running efficiently. One of the most time-consuming tasks any business owner faces is payroll.
Wouldn't it be helpful to rely on a trusted, accessible business partner to handle your payroll functions, from issuing checks to filing the necessary tax returns? We're here to lend a hand with our payroll services:
- Payroll Service 1
- Payroll Service 2
Business Valuation Services
ESOPs, litigation support, mergers and acquisitions, divorce settlements, buy-sell agreements... In cases like these, you need to know what your business is worth. We're here to guide you through what can sometimes be a difficult process, with a comprehensive analysis that will help you make informed decisions. |
Which Business Structure is Right for you?
This section is designed to help you learn about the different kinds of business structures available. It will define and illustrate the advantages and disadvantages of Sole Proprietorships, Partnerships, LLCs (Limited Liability Company) and Corporations. Keep in mind that these are general overviews. When it comes time for you to decide the exact business structure you need, contact Kelley & Associates for a FREE no obligation consultation.
Sole Proprietorship
Sole proprietorships are often recommended by because of their simplicity. For example, from a tax standpoint, a sole proprietor does not have to file a separate business tax return. A Schedule C is attached to your 1040 and filed with the IRS. Gains and losses from the business are simply combined with other personal taxable items.
However, there are many issues to consider.
- With no legal distinction between yourself and your business, any business liabilities are also your personal liabilities. If you are sued, you may receive a judgment against your personal assets so you are risking everything you have for your business.
- A sole proprietorship can find it difficult to raise capital, since it can only be accomplished if you can qualify for a personal loan.
- Sole proprietorships have been historically limited in their ability to participate in such things as federally qualified pension plans and medical reimbursement plans that are available to other business entities.
- Earnings are subject to the self employment tax, which can and often is more than your income taxes.
Overall, sole proprietorships are risky entities that could cost you and your family all you own, and result in higher taxes. In addition, no other entity is more heavily scrutinized by the IRS. As a result, the sole proprietorship is generally not a long-term business solution.
Advantages
- Ease of Formation
- Pass-Through Tax Treatment (e.g., Simplicity of Reporting)
Disadvantages
- Personal Liability
- Lack of Continuity
- Lack of Investment Flexibility
- All earnings are subject to the Self Employment Tax.
Partnership
General Partnership
This type of entity is formed when two or more people come together for the purpose of conducting a business. In forming a partnership, all partners must agree on which duties they will each take on and what percentage of ownership they will each hold. Typically this is done with a partnership agreement that should be put together by a lawyer.
Similar to sole proprietorships, partnerships have many of the same advantages and disadvantages. Like sole proprietorships, partnerships are easy to form, but they are taxed according to the tax levels of each partner. Additionally, partnerships generally result in earnings being subject to the self employment tax. Likewise, no liability protection is offered. Again, businesses should seriously consider the consequences of litigation without any shield to protect the owners’ personal assets.
Advantages
- Ease of Formation
- Pass-Through Tax Treatment (e.g., Simplicity of Reporting)
Disadvantages
- Personal Liability
- Lack of Continuity
- Lack of Investment Flexibility
- Self Employment Tax
Limited Partnership
Limited partnerships are composed of a minimum of two types of participants: general partners and limited partners. General partners accept the responsibility for and take all the risks involved in managing and conducting the business. Limited partners, on the other hand, are investors who share some risk, depending on the amount invested, but who have no participation in the actual management of the entity. Limited partners simply enjoy the profits and share in the losses on the basis of what is stipulated in the partnership agreement. These provisions provide limited liability protection, but they do not allow any privacy for the parties involved.
Limited partnerships are often used for estate planning purposes. These vehicles allow individuals to control their assets, while still having the ability to pass ownership of those assets along to their heirs.
Advantages
- Pass-Through Tax Treatment (e.g., Simplicity of Reporting)
- Financial Flexibility
- IRS Discounting upon Death (e.g., Lower Estate Taxes)
Disadvantages
- Liability of the General Partner(s)
- Lack of Control for the Limited Partners
- Lack of Investment Flexibility
Limited Liability Company
The LLC structure can be used to hold property and transact any type of business. LLC structures are similar to partnerships, limited partnerships, S corporations, and trusts. An LLC is a flow-through entity. It passes all of the LLC profits and losses directly to the members of the LLC. Individual members are therefore taxed at their personal tax rates.
LLCs are owned by members, which are like shareholders in a corporation. Unlike S corporations, which are limited to 75 shareholders, the LLC can have an unlimited amount of members. A member's ownership interest in the LLC is referred to as a 'membership interest'. It is like stock in a corporation. All members of an LLC can manage the business; management can also be delegated to fewer than all members or to a single manager. A manager can be an individual, a partnership, a corporation, or, in some states, such as Nevada, even another LLC. This offers tremendous flexibility for estate planning and asset protection.
This is not to say that building business credit cannot be accomplished with a sole proprietorship or partnership.
Disadvantages
- Federal Security Limitations: The LLC is only available to privately owned companies. If a company were to go public, it would have to be a C corporation. With merger laws, it would be relatively easy to convert an LLC to a C corporation.
- Loss of Pass-Through Tax Treatment: This occurs when an LLC is viewed as a corporation, which happens when there is an election filed with the IRS and the LLC qualifies for three of the four criteria that define a corporation. If it is taxed as a partnership, pass-through treatment still applies for taxes.
- State Tax Treatment: Some states impose an income or franchise tax on LLCs.
Corporation
One of the most consistently dynamic business structures is the corporation. Offering tremendous flexibility and advantages that generally outweigh all other business structures, the corporation is the most secure entity in business.
Because a corporation is considered a 'person' with rights of its own under the law, a stockholder (owner or partial owner) is a holder of shares of stock in the corporation and is NOT IN LEGAL DANGER for the acts of the corporation. In other words, you, as the owner, are not responsible. You are not the employer of those working for the corporation nor are you the owner of corporate property. In addition, a corporation is a citizen in the state wherein it was created and does not cease to be a citizen of its state of domicile by engaging in business or acquiring property in another state.
The important point to remember is that, when you own a corporation, the corporation exists as a separate entity or person. You can live anywhere you choose because it is the corporation's 'state of residence' that dictates the requirements. You will find that Nevada is the state with the greatest benefits for protecting you and your corporation.
C Corporations
C corporations offer more protection and options for business owners in almost every case.
- In almost every category, C corporations will pay less in tax than an individual. The C corporation tax table is the only one in which the tax rate drops when you start making millions. That's why every Fortune 500 company is a C corporation.
- C corporations have no limitations on shareholders. Shareholders can live anywhere in the world and can be any type of entity.
- There are far fewer criteria for a C corporation, as compared with an S corporation, so you have the options you need to achieve whatever level of privacy and asset protection you desire.
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S Corporations
There are certain qualifications that the corporation must meet in order to elect S corporation status. To elect S corporation status, your corporation must meet all of the following requirements.
- It must be a domestic corporation formed in the U.S.A.
- It may have no more than 75 shareholders.
- It may only have individuals, estates or certain trusts as shareholders.
- It may not have non-resident alien shareholders.
- It may only have one class of stock.
- It must be a small business corporation (financial institutions, such as banks, insurance companies, building and loan associations or mutual savings and loan associations, cannot take advantage of an S corporation election).
- It must conform to state statutory restrictions, which limit the transfer of shares/ownership of the company.
S corporation status is appropriate for:
- Companies expecting start-up losses during the initial years of operation.
- Companies with no intent of going public in the future.
- Companies that do not expect to issue multiple classes of stock.
- Companies that might be subject to the Alternative Minimum Tax.
- Owners live in a state with no personal state income tax.
- Those who wish to minimize the self employment tax.
Comparison of C Corporations & S Corporations
Corporations vary in their structure and organization. A corporation is not just a corporation. You will need to select from various types. The two typical corporations that most CPA's or attorneys will recommend are S and C corporations. In explaining the differences between S and C corporations, one should keep in mind that every state has different laws for corporations. What an accountant may tell someone in California may not be true in Nevada or Florida.
S Corporation
- Allows for limited liability of the owners/officers/directors.
- Typically runs on a calendar year.
- Full disclosure of corporate owners.
- Profits pass through to the individual tax return 1040. No double taxation.
- All profits are taxed even if not distributed.
- State taxes will apply for individuals who are located in a state with an individual state tax.
C Corporation
- Allows for limited liability of the owners/officers/directors.
- Runs on a fiscal year, which may be designated by the board of directors, rather than on a calendar year.
- Possibility of double taxation can occur.
- Profits are taxed at corporate rates on an 1120 return separate from the individual return.
- Profits can be kept as retained earnings.
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