Question

Your new client, Barbara, has just formed a new corporation that provides consulting services to couples contemplating marriage. She has learned from her accountant that there will be items in her business that cause her financial accounting income to be different than her taxable income. Barbara wants to know what these income and expense items are and how she will compute her corporation’s taxable income. She also needs guidance on when her corporation will need to file taxes and make estimated payments, if needed.

Answer 1

A business is a separate legal entity from the individual forming the business. Since Barbara has formed a new corporation that provides consulting to couples getting married than the corporation is treated as a different entity and its existence is now legal.

The corporation income will be assessed as corporation income and the taxes are to be paid on the income earned through this corporations.

Barbara should keep this in mind this in mind that the clients that are taking her consultancy are client of the corporations and not the clients of Barbara as the business is a separate legal entity.

The expenses such as cab fees, lodging, airfare that is incurred in connection with giving consultancy services to the clients are the expenses of the corporation now and not the expenses of the Barbara anymore and she could seek reimbursement for this from the corporations.

Similarly the income that is generated from the business is the income of the corporation and not the direct income of Barbara alone. Barbara as a consultant may give an invoice to the corporation for the services that she have given in form of consultancy to the client of the corporations.

The taxes and the estimated payment of taxes are to be filed as per the below deadlines mentioned in the below table.

January 1 – March 31	This is to be filed till April 15
April 1 – May 31	This is to be filed till June 15
June 1 – August 31	This is to be filed till September 15
September 1 – December 31	This can be filed till January 15* of the following year. *