Posted Monday, December 2, 2024

The quality of your business entity tax return (1065, 1120 and 1120S) and the timeliness of its preparation depend strongly on obtaining all your tax documents and information. Therefore, we have created the following checklist for our worksheets as secure digital forms (also available as non-fillable PDFs) and tax related documents. As more companies move to electronic delivery of their tax documents and statements, this checklist will help ensure you are not missing important tax documentation.

Here is a short checklist to gather the things we need for your business entity tax return. The sections following this checklist expand on the items below and provide additional details. We need-

* If you do not provide copies of 1099s that you filed and sent to vendors and suppliers, we will assume you were not required to do so (unless WCG filed them for you). The button describes when 1099s are required and how to have file them for you.

The IRS, American Institute of Certified Public Accountants (AICPA), ethical guidelines and our professional liability insurance require client engagement agreements. They can be demanding that way. Please click on the button below to electronically review and sign this agreement. It is easy and painless, and needs to be submitted prior to the preparation of your tax returns. Yes, we need one even if you are a Business Advisory, Investor Patrol, or Tax Patrol Services client.

The quality of your business tax return and the timeliness of its preparation depend strongly on obtaining all your tax-related documents and information. Therefore, we have created the following checklist for tax and financial records, including our secure Small Business digital forms (also available as non-fillable PDFs).

Small Business Set Up Worksheet

We have two worksheets; one for set up and another for reporting operations and financial data. The Small Business Set Up Worksheet is used for two scenarios-

• New Client to WCG. If you are new to us then this form allows us to set up your business properly in our systems such as name, IRS activity code, ownership structure etc. Sure, we can use last year’s tax returns, but some things are not available or might not accurately represent today.
• Business Started Operations in 2024.

The Small Business Set Up Worksheet is available here (Yes, it’s long and painful, but absolutely necessary)

Documents needed-

• Copy of your Articles of Organization, Formation or Incorporation (if you can, no biggie otherwise)
• Original EIN Issuance Letter, if you can
• Operating Agreement or Shareholder Agreement, if you have one
• S Corp Election, if you previously submitted to the IRS
• 2023 Tax Returns and all K-1s including State(s), if applicable
• Accountable Plan, As Adopted

Information needed-

• Bank Routing and Account Numbers (some states only accept business tax payments electronically)
• Shareholder or Partner Basis Information, Paid in Capital Amount
• Shareholder or Partner Full Legal Names, SSNs, Mailing Addresses, Emails, Phone Numbers, Ownership Percentages

A couple of options for supplying this information-

• Business Setup Worksheet (secure online form)
• Type up the information in a Word document, and upload to Sharefile

At times, the financial documents that are supplied to us cannot be translated into an accurate business tax return. What the heck does this mean? Good question… if we believe the information is not in good order we will need to have a discussion. We are very sensitive to every business owner’s ability to perform accounting functions so we try to be gentle and put ourselves in your shoes.

We also understand from nearly two decades of working with business owners that they want to do the right thing; however for lack of a better way, business owners will do it their way. As such we can offer some guidance. There several paths we can take after our conversation-

• You add clarity to the information by chatting with us, and we carry on with a nice tax return for your review.
• You synthesize your financial information and documentation into an Excel spreadsheet template (the “SBO”) or a simplified fillable PDF that we’ve created.
• You synthesize your financial information and documentation into an online secure digital form.
• We forward your financial information to our Accounting Services team who will re-work the data into usable financial statements. This option is one that we do not take lightly since it costs additional money above tax preparation. If this option is entertained, the usual retainer is about $1,200 and the accounting services is billed at $150 per hour. This is the high-water mark for most situations.

This option requires extending the tax returns until August or September.

• The last option is extending the tax returns until August or September where we can re-assess what is needed without the pressures of deadlines and other tax season madness. Please remember that an extension is an extension to file tax returns, not an extension to pay. We can advise further is this option seems appealing to everyone.

We don’t expect financial documents to be perfect. We work with a huge variety of formats, from bar napkins to audited financial statements. However, as mentioned before, there are times where the financial documents that are supplied to us cannot be translated into an accurate business tax return. We also fear that you might not be taking advantage of all the allowed deductions (we want to minimize your tax exposure). And… if financial documents are not in good order, it would not properly support the tax return in the event of an IRS audit or challenge.

Sorry to be all gloom and doom, but our goal is to truly be your advocate.

It is not enough to supply a statement from your property manager or online rental management system. These are really good starts, but we need additional information such as historical data, the type of rental (short-term, long-term), your participation in the rental, among other things.

New to WCG

• Prior year depreciation schedules showing cost basis and service dates (this can be a challenge)
• List of improvements, completion dates, values, if depreciated in earlier years
• Form 8582 or similar detailing any disallowed passive losses from prior years on your rental properties

New Rental Setup

• Closing Disclosure / Settlement Statements or HUDs for purchases, refinances and/or sales (if available)
• Acquisition costs (often overlooked)
• List of improvements getting the rental ready for service

Revenue and Expense Data

The first two buttons will help you organize your rental expenses including required questions to ensure we are reporting the activity correctly. The Excel version is called our Simplified Rental Ops, or the SRO.

Rental Property Sale

If you sold a rental property, please review the information below and submit the Property Sale Worksheet to minimize capital gains. If you are performing a 1031 like-kind exchange, let’s chat!

Rental Property Light Reading

WCG has a team of real estate CPAs ready to assist you with your rental property and real estate investments. Very few tax professionals and CPA firms specialize in real estate to provide you solid consultation, tax planning including tax reduction strategies, and tax return preparation. From real estate investors to casual landlords, we can help. Here are some selected excerpts from our new book I Just Got a Rental, What Do I Do?

Here are some important dates and considerations for us to help manage expectations:

Tax Docs – Monday, February 10, 2025

All tax documentation must be received for us to guarantee an on-time filing (we routinely receive business documentation well into April and still complete the tax returns on time- we just can’t promise it).

Efile Auth – Monday, March 10, 2025

All eFile or Extension authorizations must be received.

Filing Day – Monday, March 17, 2025

The filing deadline for Partnerships (Form 1065) and S Corporations (Form 1120S). Note that C Corporations (Form 1120) are Tuesday, April 15, 2025. Tax payments might also be due in some situations.

Our turnaround times vary throughout the year. We will update you with email and text alerts along the way. For real-time information on our turnaround times please visit our Service Level Agreement. We have a soft-close at 4:05PM on Fridays to enjoy a beer, chips and salsa, and to unwind a bit. Apparently having fun before 4:00 is frowned upon in our establishment. Back at it on Saturday!

You might need a tax return “rushed” for various reasons. If we do not have substantially all the required information to prepare an S Corp or a Partnership tax return by our document cutoff date of Monday, February 10, the following minimum rush fees based on complexity may apply:

• After Monday, February 10, $500.
• After Monday, February 17, $1,000.
• After Monday, February 24, Not available.

These fees might be waived or increased depending on your situation. Please note- we are not saying you must pay this rush fee if you miss a cutoff; we only charge it if you want a guaranteed timely filing once we are past the Monday, February 10 cutoff for S Corps and Partnerships. Having said all this, nothing good happens when people are rushed at the last minute. We will accept the rush arrangement on a case-by-case basis.

Here are some important dates and considerations for us to help manage expectations:

Tax Docs – Monday, March 10, 2025

All tax documentation must be received for us to guarantee an on-time filing (we routinely receive business documentation well into April and still complete the tax returns on time- we just can’t promise it).

Efile Auth – Monday, April 7, 2025

All eFile or Extension authorizations must be received.

Filing Day – Tuesday, April 15, 2025

The filing deadline for C Corporations (Form 1120). Note that Partnerships (Form 1065) and S Corporations (Form 1120S) are Monday, March 17, 2025. Tax payments might also be due in some situations.

Our turnaround times vary throughout the year. We will update you with email and text alerts along the way. For real-time information on our turnaround times please visit our Service Level Agreement. We have a soft-close at 4:05PM on Fridays to enjoy a beer, chips and salsa, and to unwind a bit. Apparently having fun before 4:00 is frowned upon in our establishment. Back at it on Saturday!

You might need a tax return “rushed” for various reasons. If we do not have substantially all the required information to prepare a C Corporation tax return by our document cutoff date of Monday, March 10, the following minimum rush fees based on complexity may apply:

• After Monday, March 10, $500.
• After Monday, March 17, $1,000.
• After Monday, March 24, Not available.

These fees might be waived or increased depending on your situation. Please note- we are not saying you must pay this rush fee if you miss a cutoff; we only charge it if you want a guaranteed timely filing once we are past the Monday, March 10 cutoff for C Corps. Having said all this, nothing good happens when people are rushed at the last minute. We will accept the rush arrangement on a case-by-case basis.

Extensions

If you want to extend your tax returns, a few things to keep in mind. First, we must get written approval from you to extend your tax returns. We cannot legally file an extension without permission. So, if we don’t hear from you, an extension will not be filed. Failure to file is a huge penalty (5% per month based on tax due).

Second, an extension to file is NOT an extension to pay. A pass-thru entity such as partnership or S corporation generally does not have a federal tax obligation. However, some states charge a franchise tax or a “pleasure to do business in our state” tax. If this applies, taxes might be due March 17, 2025. Yuck!

Here is quick list of states that have some sort of business entity tax-

California (shocker)	Georgia	Idaho	Illinois
Kentucky	Louisiana	Massachusetts	Mississippi
New Jersey	New Mexico	New York	North Carolina
Oregon	Rhode Island	South Carolina	Tennessee (not kidding)
Texas (limits)	Vermont	Washington (B&O Tax)

Click here to extend your tax returns.

We must receive your tax return extension authorization by Monday, March 10, 2025 for Partnerships and S Corps, and Monday, April 7, 2025 for C Corporations. Also, please don’t believe your produce clerk or the guy you met on the train; while they mean well, tax return extensions do not increase your audit rate risk. That is just gibberish.

Critical Note: To meet the filing requirements for individual tax returns, extended business entity tax returns will be completed in August or September provided we have everything we need from you. If you need them prepared sooner, please contact us. May, June and July are reserved for 2024 tax planning.

As such your individual tax returns will also need to be extended. Our turnaround time increases to 12-15 days during the off-season to accommodate for mental breaks and vacations. Frankly, our motivation wanes slightly after April 15 but we bounce back fast.

Here is the timeline for extended tax returns:

	Individuals / C Corps 1040 / 1120	Partnerships / S Corps 1065 / 1120S
Tax Documents Due	Mon, March 10	Mon, February 10
eFile and Fee Payments Due	Mon, April 7	Mon, March 10
Filing Deadline	Tue, April 15	Mon, March 17

Please note the Monday, February 10 and Monday, March 10 deadlines for tax documents and financial data. This date can creep up on everyone quickly given typical life distractions.

College Interns

WCG gives back to our accounting community by routinely hiring college students to provide seasonal tax support to our Tax Accountants and Tax Managers. We encourage them to communicate directly with you, the wonderful client, to gather necessary information and keep things moving along. Everyone was new at some point in their careers, so please try to extend extra grace and patience as our Tax Support Team interacts with you. If at any time communication is breaking down, please reach out to your Client Manager directly.

K-1s and States, Local or Other Taxing Jurisdictions

K-1s used to be only for the rich and shameless. However, with the rapid rise in various investments beyond mutual funds, ETFs, stocks and bonds, K-1s are becoming very common for the casual investor. typically allocate 30 minutes of “K-1 bucks” as part of your tax return preparation fee. Afterwards, our additional fee is based on an hourly rate of $250. This is the only additional fee that WCG adds based on time spent. We are not an hourly rate time billing sort of firm… our fees are based on value received or impact created. Over the years we’ve seen K-1s and their complexity dramatically increase, but given the variable nature of each investment, a hybrid method of fee range + hourly rate is prudent.

Additional state, local or other taxing jurisdiction income tax returns might be required because of changing residency and / or various business activities including K-1s. It is common for an investment into an entity to create a state income tax return filing obligation for its owners (investors). We expect 1-2 state, local or other taxing jurisdiction tax returns as a normal course of tax return preparation. Should additional tax returns be required or if complex state income apportionment is required, additional tax return preparation fees will be necessary. Generally, this fee is $100 to $250 per state, local or other taxing jurisdiction income tax return.

Security and Privacy Procedures

Your security and privacy are very important to everyone at WCG. Please review the various policies and procedures which are implemented to protect your confidential information.

Tax Deductions and Fringe Benefits

As a small business owner, we want to help you leverage the most out of your business through proper business tax deductions and fringe benefits. Please review-

• The online version of Chapter 11 of our book.
• Our various blog posts
• If you are a Business Advisory Services client, you are familiar with our Periodic Business Reviews (PBRs). Either way, please review our PBR agenda since it might trigger additional comments or concerns:

We provide worldwide tax preparation service and your ability to communicate with us is critical to everyone’s success. And your comfort level in sending sensitive and personal information is our top priority so we have implemented three ways to safely and securely send your tax documents to us:

Sharefile

Since 2007 we have used ShareFile to provides secure, online document exchange. Sharefile will allow you to securely upload your tax documents to our office. As more companies electronically provide year-end tax statements and forms, and as scanners become more user friendly, uploading these files will save you time and resources. In addition, Sharefile will be used to deliver your tax returns for review prior to eFiling.

Note on Scanning: Do what you can, but know that creating and submitting a PDF for each tax document is our selfish preference should you be wondering. We drag each tax document into various folders in your electronic tax binder.

Most operating systems have a PDF printer already installed- if not, please do an internet search for free PDF printers (we use Cute PDF ourselves). This is a very handy tool which installs a PDF printer allowing you to print anything to a PDF file. Screen shots, online activity, Excel spreadsheets; anything you normally print to paper can be saved as a PDF. This is especially useful for bank website or other dynamic websites where you cannot directly save the information.

We understand not everyone will be comfortable using Sharefile and therefore we will accommodate all reasonable requests accompanied with cash or booze for alternative ways of sending your tax documents to us.

Otherwise, you can access Sharefile using this link.

Secure Fax

While super duper rare, if you decide to fax your tax documents our toll-free fax number is 855-345-9700. We will email you and send a text message alerting you that your fax was received. We will also upload your faxed documents to Sharefile should you need this information again in the future. Please provide a cover letter with all faxes. If you want to be a superstar and have our tax support team think you are the best client ever, you should initial and number each page. But that is not required.

Mail

If you do not have access to a fax machine or scanner, you may also mail your information to us. We encourage the use of FedEx or UPS. Send us copies, please! Our mailing address is:

WCG CPAs & Advisors
2393 Flying Horse Club Drive
Colorado Springs, CO 80921

Road Trip

Our Colorado Springs offices are open Tuesday-Thursday during tax season. If making a road trip to our office, tax preparation seems to improve dramatically with donuts. You can also hang out and have some coffee in our social lounge. Fun!

Note: The ability to maintain our competitive fees relies on receiving soft copies (faxes, scans, emails) or hard copies of your originals. If you send us original documents and do not want them returned to you we will maintain them in our office for three years. If you want originals sent back to you, we must charge a $45 fee for the costs of copying and mailing. We do not have extra resources during tax season for this activity- we can only return originals in May.

All tax documents and work papers that you provide as hard copies will be scanned and uploaded to your Sharefile.

Let Us Know

Lastly, you can use any combination of these methods- if you want to upload some documents and fax others, we are flexible. However, it is difficult to know when clients are done sending their tax documents. So, please send an email to [email protected] with a “G2G” or give us a shout at 719-387-9800 to let us know you are done. We love phone calls from our clients- voices, stories, weather updates, the latest disaster your kid created, random tax questions- all good stuff!

Also, if you are waiting on one last tax document such as a rogue K-1 or 1099, please send what you have. We will prepare a preliminary tax return and simply drop in the late document at the last minute.

Appointment

Over 80% of our tax clients live outside of Colorado, therefore we are proficient in preparing your tax return without a face-to-face appointment. However, if Colorado Springs is convenient for you or if you would like to videoconference via Teams, please call or email us to schedule. If an appointment is inconvenient, remember you can always mail, fax or scan your tax documents to us.

Growing Pains

We are a growing company and every year we retool our procedures in the name of improving the client experience. The unfortunate thing about our business is that we don’t know our process is broken or needs improvement until about March 26, and the devil we created is the devil we live with until April 15. Each year we attempt to improve our process for you- the feedback you provide is tremendous, and we appreciate all the comments and suggestions.

Rest assured that anytime you feel your needs are not being met, please contact Jason Watson directly. We will stop, listen and work with you one on one to resolve. If we stink at something, we want to know. We’ll make it right, right away.

Here is a timeline of what to expect. Life is all about managing expectations, and we attempt to do that here:

Assembly

• You send us your tax stuff and we alert you through an email and a text message that it is received.
• Client Support reviews it for obvious missing information or items, and contacts you if necessary.
• Your file is assigned to a two-person team based on legacy for returning clients, or type and complexity for new clients. We also alert you with an email and a text message.

Tax Preparation

• Your Tax Accountant alongside a Tax Manager or Partner prepare your tax returns. Fun!
• If there are questions or clarifications needed, your Tax Accountant contacts you via email or telephone call. You are also alerted with a text message. We try to only have one point of contact (or one throat to choke) so communications are efficient for you.

Tax Return Review and Filing

• If your tax returns are ready for review, we send a summary email highlighting concerns or questions, upload a PDF copy to Sharefile and alert you with a text message. In the homestretch now!
• If you have questions or comments, you can reply to the tax return summary email or we can schedule an appointment. We always want you to understand your tax returns and feel comfortable about the information being filed. For a scheduled tax return review, we typically allocate about 15-20 minutes for individual tax returns (40 minutes if in-person versus telephone), and 30-40 minutes for partnership and corporate tax returns.

We do not have to review your tax returns directly with you. It is highly recommended since you are the most intimate with your business but it is not required.

Warning: We strongly encourage you to schedule your tax return review within 10 business days of receiving the draft copies. If you have had draft copies of your tax returns for more than 10 business days, we might not have availability to review your tax returns prior to the filing deadline. Also, we cannot review your partnership and S corporation tax returns during March; same applies to C corporations and individual tax returns during April. Do not feel rushed! We can simply extend the filing of the tax returns until May or June, and schedule a review for that time.

Please move ‘review tax returns’ ahead of ‘call mom’ on your To-Do List just this one time. Pretty please.

Once you review and approve your business entity tax returns, you need to do two things:

1. Give us permission to eFile your tax returns on your behalf (we will send your authorization similar to DocuSign through Canopy), AND

2. Pay your tax preparation fee (we will send an invoice from Canopy which you can pay here). No tax returns are filed until payment is made.

About 2-3 days after eFiling you will receive emails from our tax software (UltraTax) letting you know that your tax returns have been received.

It is common for states to accept your tax returns before the IRS.

We get the same notifications CCd to us and alert you with a text message. We monitor the acceptance of your tax returns, and follow up with the taxing agencies after 72 hours if an acceptance notification is not received.

Boom! That’s it (at least until next year). Enjoy your spring and summer!

Well, that is not entirely true. May, June and July is our tax planning season. Tax planning is automagically included with our Business Advisory, Investor Patrol and Tax Patrol Services. We will send correspondence to remind you as well.

Investor Patrol is a wonderful tax service for those who don’t need all the business advisory bells and whistles, but desire pro-active tax planning and scenario-based decision making assistance from an experienced tax consultant. Have a quick tax question? Need to know the depreciation rules as you furnish that new short-term rental? Want to kick around Real Estate Professional designation? Wondering what your April tax bill is going to be in August?

Investor Patrol is like ski patrol… you might not use it, but you sleep better knowing you have it. We offer three typical versions aptly labeled Houses, Hotels and Monopoly.

We also have Tax Patrol which is similar, but without the rental property and real estate investment mindset.

Both our Patrol Services, Tax and Investor, are specifically designed to give you the freedom to call, text or email us without the worry of being nickeled and dimed like other outdated CPA firms. And! We also provide a tax planning event (usually around May, June and July) where we gather up your financial records like paystubs, rental activities, stock sales, etc. and we create a mock tax return projecting your annual income and eventual tax obligations. We are not big on surprises… bad news in August is palatable, yet bad news on April 15 is unacceptable.

Our Patrol Services include tax preparation, estimated tax payment calculations, unlimited complimentary quick chats and a tax planning event plus IRS audit defense for any tax return that we prepare.

If you have any questions, please feel free to call us at 719-387-9800 or email [email protected]. Thanks again for your time- We look forward to working with you!!