Case Study

Challenge: An emerging construction company was reporting its taxes on a Schedule C form and was wondering if that was the most prudent strategy. While preparing the tax return, InConcert Financial Group’s tax team also discovered that the company owed the IRS $15,000 and the owner was not paying himself any wages.

Process: The first thing InConcert Financial Group’s tax team did was conducted an audit profile. The audit produced options for the construction company to significantly reduce the taxes owed. The analysis also revealed that the likelihood of the firm being audited by the IRS were high.

Solution: Our recommendation was to convert the company to a C-Corporation in order to save taxes. Instead of the corporation owing the anticipated $15,000, our team was able to reduce it to only $715. We also created a W-2 for the owner’s income which would be offset by personal deductions. So while the company had to pay a little over $4,000 in payroll taxes due to the W-2, we were able to save the firm almost $10,000 in taxes and prevent it from being audited.