2017 S- Corp Tax Organizer and Engagement of Services

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1 2017 S- Corp Tax Organizer and Engagement of Services Before submitting the documents for your S-Corp (1120-S) Tax Return to be prepared, be sure you have completed the following items for year end, answered the questionnaire and signed the engagement letter. This package consists of five (5) pages, please review, sign and submit to our office with your documents. 1. Ensure Accounts Receivable/Payable balances are correct. 2. All loan interest has been recorded (including any interest on Shareholder Loans) 3. All loan balances and credit card balances have been reconciled and the amounts on the Balance Sheet are correct. 4. All inventory adjustments to physical counts are made. 5. All Capital Equipment Purchases and Sales have been recorded. 6. All business loans have been recorded. 7. All Shareholder loans have been recorded. 8. All bank accounts are reconciled through 12/31, or fiscal year end date. 9. All Distributions to shareholders are recorded correctly. Items needed by Hickman & Hickman, PLLC for tax return preparation Start preparing now for gathering your information. Attach a Profit & Loss and Balance Sheet as of your fiscal year end (i.e. 12/31/17 and correct method of tax reporting-cash or accrual basis) Provide a List of Equipment & Capital Purchases and/or Sales- Include Dates and Amounts. Keep supporting documents for any purchases of equipment, improvements, vehicles, etc. If you traded in a vehicle, please provide copies of each trade in to our office. Provide a copy of your payroll summary; officer wages provide W-2 forms, SUTA, FUTA- Copy of W-3 Do you have any retirement funding for 12/31? If so, please provide the information. Please provide all distributions made to each shareholder, if any. 1

2 If you answer YES to any of the questions, please explain in detail in the space provided or provide documentation. Are there any changes in Address, Phone or ? Yes No Are there any changes in the company ownership percentages? Has the company been notified by the IRS of any changes to the previous year s tax returns? Did the company pay penalties or fines during the tax year? Did the company post any entries to the retained earnings account or to a prior period adjustments account during the year? Does the company provide medical insurance coverage for employees? Does it cover all employees? Does the company pay for and provide medical insurance coverage for shareholders and/or officers? If yes, provide the total annual cost per shareholder Does the company provide vehicles to employees or shareholders for personal use? If yes, has this been included on W-2 s as fringe benefits? Did the company issue Form 1099-MISC for each person to whom they paid at least $ in rents, services (including subcontractors) or attorney fees? Did the company issue Forms 1099-INT, or 1099-MISC for payments paid to a shareholder? Did the company have an interest in or have signing authority on a Foreign Bank Account or Financial Accounts? Did the company enter into any abusive tax shelters per IRS Reg. Sec (c)(4)? If you are unsure if this applies, see below link for details _.pdf 2

3 ARE YOU KEEPING UP WITH IMPORTANT REQUIREMENTS? BE SURE YOU ARE: At year end -Updating each employee file with a current and signed W-4 and I-9. Be sure you have the most current form. At year end -Updating each 1099 recipient file (non-incorporated individuals and businesses that you paid $600 or more) Updating your Corporate Records with shareholder and board of directors minutes and special meetings each year. Keep track of all business miles using a logbook, calendar or other record keeping system. Updating Sales Tax forms for reseller permits or sales tax exemptions. Also remember to keep all proof of purchases, i.e. Receipts, shipping documents, credit card receipts, etc for 6 years, longer if you are behind on your tax return filings. Credit card statements are not proof of deductions, keep all receipts. Remember, the burden of proving tax deductions is on the taxpayer. Keep in mind these rules that must be followed in order to stay compliant with the IRS code for S-Corporation status. Failure to abide by these could result in removal of the S- Corp election. --Individuals must maintain complete separation of Corporate and Individual recordkeeping and accounting. --The Corporation must keep Minutes of Shareholders and Board of Directors annually. --All loans to and from shareholders must have a loan agreement with documented interest and payment plan and must pay interest or receive interest as stipulated in loan document. --If a shareholder performs ANY DUTIES for the corporation, he or she MUST receive reasonable compensation in the form of a paycheck and receive a W-2 at year end. For example, a job that typically would earn $50,000 annually should not be paid $20,000 via a paycheck and then have a large amount taken in distributions. --If there is more than one shareholder, all shareholders MUST receive distributions relative to their % of share ownership (when distributions are taken). 3

4 COMPANY NAME: Tax Year Tax Form 1120S This agreement is written to confirm our understanding of the terms of our engagement and the nature and extent of the income tax services this office will provide. We will prepare your Federal Income Tax Return and necessary State Income Tax Returns for the year We will not audit or verify the data you submit; however, we may ask you to clarify or substantiate some of the information. We will be available to assist and guide you in gathering the necessary information by furnishing you with questionnaires and worksheets, and by answering your questions. We will not be responsible for determining the applicability of any other tax laws to the company, for the compliance with any other tax laws, nor the preparation of any other returns by any taxing authority. It is the responsibility of the company to provide all the information necessary to complete the tax return. It is necessary that the company retain all documents and records to substantiate the items of income and expenses claimed on the corporate tax return. We encourage you to ask questions and discuss items you feel may have a bearing on your returns. This is your return and your signature verifies matters to the IRS. Since you have the final responsibility for the information on the tax return, it is highly recommended that you review the tax return carefully before signing it. All returns are subject to review by the taxing authorities. Any proposed adjustments by the examining agent are subject to certain rights of appeal. In the event of such government tax examination we will be available, upon request, to represent or assist you under a separately signed engagement letter for that purpose; additional fees will be invoiced under the terms of the separately signed engagement letter. We retain selected copies of the records you have supplied to us along with our work papers for your engagement for a period of six years. After six years, our work papers and engagement files are destroyed. Your original records will be returned to you at the end of this engagement. Our working papers and files are not a substitute for your original records, and you should arrange for secure storage of the originals. We are under no obligation to notify you that our records relating to your return are to be destroyed. We reserve the right to modify the retention period without notifying you. Catastrophic events or physical deterioration may result in our firm's records being unavailable before the expiration of the above retention period. Fees for our services will be based upon the amount of required time and knowledge, billed at our standard billings rates, in addition to charges for computer processing services and any out-of-pocket expenses. We reserve the right to increase or decrease our fees based on the value of the services rendered. We may also require a retainer if necessary to start your tax return. Our invoices are due and payable when you receive your returns. Prepared returns will not be released or electronically filed without full payment. 4

5 This agreement also informs you of our privacy policy (our full privacy policy is available on our web page). We value your trust and confidence and want to assure you that we keep information about you secure and confidential. We adhere to the highest level of professional ethical standards and obligations to protect the confidentiality of all client information. We do not disclose any non-public personal information about our clients or former clients to anyone. We restrict access to non-public personal information to those professionals necessary to prepare your income tax return, and maintain physical, electronic and procedural safeguards to protect your non-public information. In recognition of the relative risks and benefits of this agreement to both the client and the accounting firm, the client and the accounting firm have discussed and have agreed on the fair allocation of risk between them. As such, the client agrees, to the fullest extent permitted by law, to limit the liability of the accounting firm to the client for any and all claims, losses, costs, and damages of any nature whatsoever, including any dispute concerning fees, so that the total aggregate liability of the accounting firm to the client shall not exceed two times the accounting firm s total fee for services rendered under this agreement. The client and the accounting firm intend and agree that this limitation apply to any and all liability or cause of action against the accounting firm, however alleged or arising, unless otherwise prohibited by law. If any dispute arises between the parties with respect to the matters covered by this Agreement which leads to a proceeding to resolve such dispute, the non-prevailing party in such proceeding, if any, shall pay the attorneys fees, expert witness fees and out-of-pocket costs incurred by the prevailing party in connection with such proceedings. Thank you for this opportunity to work with you. We are pleased to have you as a client and look forward to a long and mutually beneficial relationship. If the above is in accordance with your understanding, please sign below and return this letter to us with your tax information. If you do not sign and return this engagement letter and we do work for you at your request, the terms and conditions outlined herein will be applicable to the engagement in all respects. We will also deem the terms and conditions enumerated in this letter to be in full force and effect in the event you invite us to begin providing professional services by returning the organizer and/or provide your tax information to us which action constitutes your instruction that we should provide you with such professional services. By signing below, you are acknowledging that you have read, understand, and accept the conditions of this agreement and our privacy policy. Sincerely, Hickman & Hickman, PLLC Signature Date Name and Title 5