Frequently Asked Questions

I just received an audit letter from the IRS. What do I do now?

Don’t panic. It’s not the end of the world. If you were honest, then you have nothing to worry about—as long as you have proper representation. The best thing you can do is get representation. It’s your most basic right as a taxpayer. There’s a lot at stake, and IRS auditors don’t even speak the same language as the rest of us. Call us and we’ll get you through this.

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I’m being audited by The Illinois Department of Revenue. What do I do?

Don’t panic. It’s not the end of the world. The first thing that you must determine is whether the Department of Revenue wants to undertake a state income tax audit or your sales & use tax audit. Next, you will need adequate representation. Your most basic right as a taxpayer is the right to representation. You don’t have to go through this alone. Most auditors would rather deal with a licensed accountant rather than the taxpayer, because it will take less time and be easier for them.

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I just received a notice from The Illinois Department of Employment Security, on an ex-employee requesting unemployment benefits. How can I defend myself?

Proper documentation is the only way to prevent being charged for baseless claims. If the employee did not work for a total of 30 days, then you are not the responsible last employer. If the employee quit, you are not responsible. You, of course, are required to prove this. Documentation is paramount.

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Do I have independent contractors or employees?

This answer is very complicated. Nine times out of ten, they are employees. Read our article “Employee vs. Independent Contractor Determination” for more information or contact us.

I haven’t filed my income tax returns for years. What should I do?

This is easy. File them. Start living a life in which you’re not afraid. In many ways, not filing your taxes can be a lot more expensive than filing them, even if you have to pay. If your company hasn’t filed its income tax return, how do you get financing? How do you purchase equipment, vehicles, or a building? Day after day, how do you operate, knowing that sooner or later there’s going to be a knock on the door? Get help and get it done.

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I’ve withheld payroll taxes from my employees, but I haven’t filed the returns, let alone made any of the deposits. How screwed am I?

Very. When you withhold payroll taxes from an employee’s check it’s not your money. It doesn’t belong to you. You are the trustee on behalf of the government. Your job is to file the returns and send the money to the government in the allotted time frame. If you do not perform your task, you are personally liable. There is no corporation that can possibly shield you from this liability personally.

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I just got a letter from The Illinois Department of Revenue revoking my Illinois Tax ID Number. What can I do?

First, you need to determine why your Illinois Tax ID Number was revoked. Typically, this is because you are responsible for collecting and remitting sales tax as well as filing sales tax returns. If either you didn’t file the sales tax returns or you haven’t paid them, they will revoke your number. You must comply with the needs of the department.

When you collect sales tax, it’s not your money. You are the trustee on behalf of the government. If you don’t handle their money properly, they will revoke your sales tax number and, effectively, put you out of business.

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How long do I need to keep my company records?

I hate to say this, but generally forever. After the return is filed, at the Federal level, they need to be held for seven years. At the State level, it’s nine years. But if either of the agencies can prove fraud, they can go back as far as they want. Remember, this is only after a return has been filed. If the return hasn’t been filed, the statute time limitation never begins in the first place. The general rule is that if it looks, acts, or smells like an accounting record, keep it.

Please also make sure that it is in a paper rather than paperless or electronic format. Any document that has been scanned into a computer could have been altered by using an image-editing program. In the event of examination, electronic records can be considered as no records at all.

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Can I keep paperless records?

Sure. It’s a free country. But the real question is, are they useful in the event of an audit? The answer is a resounding, no. Any record which has been scanned into a computer could have been altered using an image-editing program. In the event of examination, they are not considered evidence. When we are doing financial statements and tax work, we don’t even accept paperless records in the first place. Our main job is to protect the client. Documentation is paramount. Putting together accurate tax files, so that our clients are not in jeopardy in the first place, is the only way we operate.

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Should I try to do my own Financial Statements?

No. Unless you’re a degreed accountant with several years of practical taxation experience, it's a dangerous idea. Don’t try to police your own actions. Your financial statements are the foundation of your accounting system. If these aren't handled correctly everything else will be off. Hire a professional. It’s worth it.

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Should I try to do my company’s income tax return?

No. Even the most seasoned tax professionals don’t do their own returns. If you were a surgeon, would you operate on yourself? You’re too close to the situation. You will never achieve the objectivity necessary to complete even a competent job, let alone achieve the level necessary to survive an audit. You’re putting your future in jeopardy. Get a professional.

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Can you help get my business to produce a profit?

Yes! The process of doing the books and tax returns for hundreds of companies, over time, provides a wisdom that cannot be found elsewhere. We have seen countless examples of what works and what doesn’t work. Most of this knowledge can be transferred, if you are willing to listen. Call us.

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I just bought Quickbooks and I’m lost. Do you offer Quickbooks help?

Yes. Accounting Solutions, Ltd. has consulted our clients on the use of the Quickbooks program for many years. Call us.

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I need to do some estate planning, but where do I start?

Contact a qualified professional now. Don’t wait until tomorrow. Tomorrow may be too late for us to be of any help.

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How can trusts protect me and my family?

You do not need to own an asset in order to be able to control it or profit from it. If you put a piece of real estate into a trust, then it will not be counted as part of your estate for estate tax purposes. If there is a problem, such as a fire with loss of life, the attorneys in most cases cannot come after your personal assets. They can only go after what is in the trust. In most cases, your insurance would handle this sort of problem.

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It’s time to retire, and I want to leave my business to my kid. How do I do this and not go broke paying taxes?

In most instances, this isn’t easy. Any transaction, such as the sale of a business, must be bona fide. In order for the taxation agencies to consider the transaction valid, it must be handled in the same manner as if some stranger off of the street purchased the business. If not, the agencies have the right to unravel the transaction and impose the appropriate tax.

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I think that I am paying way too much in taxes. Can you help me with tax planning?

Yes. Tax planning is one of our specialties. ↑ back to back

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Will my partnership income end up on my personal income tax return?

Yes. By definition a partnership, whether an LLC, LLP, or regular partnership, is nothing more than two or more sole proprietorships put together for taxation purposes. As such, any income from the partnership is subject to both income and payroll tax. Any losses from the partnership can reduce income at the personal level, if there is a basis for the deductibility of the loss.

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