Problem

An individual had his business incorporated by his former accounting firm. It was discovered a few years later that the firm did not follow through with the entire procedure and never completed the S-corporation election for the client's business. Due to this issue, the client's company was considered as a C-corporation by the IRS. This classification cost the client an additional 15% in tax liability for every year that his business was not an S corporation.

Solution

When the client switched his services to Krishnan Company, we were able to immediately identify the situation, attend to all his notices and promptly convert his business to the S-corporation as he had intended. This decreased the clients' tax liability by 15%.

Benefit

If the error had not been discovered and resolved, the business' entity classification would have remained a C-corporation. Upon the sale of the business, the client would be subject to pay ordinary income taxes as high as 40%, as opposed to paying 15-20% of the capital gains tax as he initially would have had to under the S-corporation. At Krishnan Company, we follow through with the entire process from start to finish, complete all entity classification forms, obtain the FEIN, as well as order a stock portfolio and corporate seal for you. We ensure that we understand your needs and help you cross the finish line.