Corporate Tax

Picking a Good Business Bookkeeping Services in San Francisco Bay Area

In a recent Bookkeeping services review on Yelp, reviewer name Girlie, commented that “If you are ever audited, hire an accountant who is organized, respectful, a good communicator, and a good listener, someone who respects the IRS and treats them seriously.”

Girlie summed up the qualification for good accountant but more importantly of a good bookkeeper.   Good bookkeeper can make an IRS audit as easy as eating a pie.  Having a bookkeeper who works under a direct supervision of certified public accountant or one with number of years experience can be very helpful.   Apparently Girlie didn’t do enough research and further explained the frustration “First of all, he is not a CPA. This is a personable guy who open up a chic office in Noe instead of working at HRBlock.”

So, how do you pick a good Bookkeeping services in San Francisco Bay Area ?  

Not required but strongly recommended that you stick with a CPA firm that also provide bookkeeping services.    Check their reviews on Google, Yelp, Yahoo or other online sites.   Ask for reference letters of their past client or current clients.  You may even ask for client phone number and speak with other business owners to get the understanding of CPA firm and their process.

You don’t have to be super picky but you want to do business with firm you can depend upon.  You want to know the truth before you end up in an Audit or some other serious tax trouble.   You can take advise from Girlie, ” the CPA I finally hired to take over my tax situation had 30 years experience, advanced degrees in accounting and tax law, and charged 30% less than Mark. His financial advice is golden. So if you want to pay for a real accountant, you can find one.”

Before picking your next bookkeeping service provider, make sure to:

  • Check the reviews
  • Check the degree
  • Check the references and
  • Check the fees

What are some of the red signal you can look out for ?

Picking a new bookkeeping services provider can be challenging.  After all you will depend upon this person to be a safe keeper of your financial documents and ensure complete compliance with current tax laws.   There are some things you can look out for that can help you avoid trouble.

Inexpensive or Cheap :   Sure, you want the best deal in town.  But you get what you pay for.   Is it worth paying hundreds of thousand dollars in taxes to save couple hundred dollars of bookkeeping fees.

Office and Staff:  We live in society where companies like Google and Facebook came to life from a garage.  But those are just couple of examples.  Truth is that hundreds of companies are born and die in a similar garage.   If the office and staff of your CPA or Bookkeeper looks unorganized than you are surly heading for trouble.   Look around the office to see if paper work is properly filed. How are the desk of accountants.

Pay attention to phone calls. How is staff answering the client phone calls.   If possible, ask to see the profile of office staff.  Good CPA or bookkeeper will happily share the work experience of their staff.

Office Hours:  Odd office hours or office that is only open during weekends can be troubling.  Make sure that your CPA or bookkeeper will be available when you need them.

We hope that your next bookkeeper is than better than you expectations.  Please share your experience regarding bookkeeper or CPA services.


Non Profit Tax Filing | Due Date is May 15Th 2012

Tax time is over ? Not for everyone.

Exempt Organization need to file their tax return by May 15th 2012.  Non-Profit tax returns are complicated and very tedious.   We strongly recommend that you consult with CPA for the filing for tax return.   Our office can also help with your non profit tax return.

Not-Ready to file your non-profit tax return ?

No problem. Simply file for an extension.  You may incur penalties if you file tax return late without filing for an extension.

What do I need to file:   There are many requirements for filing the tax return but key is Form 990 and its related schedules.  This form and schedules include significant amount of financial reporting.   Here are just some of the thing you will need.

  • Revenue and Income Statement :  This should include categories (e.g. salaries, postage, rental revenue),
  • Balance Sheet:  Once again, this sheet should include categories (e.g. cash, accounts receivable),
  • Statement of Functional Expenses:  Tell how all expenses are allocated to either program services, fundraising, or operations.
  • Expenses Report: This report should have all expenses divided into individual program service (e.g.  mailings, a seminar program).
  • Revenue Report:  This report should include the details of sources of the revenue, with categories.  Basically IRS wants to know how money was raised.

As you can see IRS wants the detail of your operation including income and expenses.  This can be quite tedious specially if this is your first time filing the return.  Also note that IRS provides specific categoires and classes for revenue and expenses.  Your tax return can be quite complicated if are not using these categories.

Our firm can help you set up proper book keeping practice for the non-profit and help you file your tax return.


Legal Zoom Alternative In San Francisco Bay Area

Sanjiv Gupta CPA firm is great alternative to legal zoom business and corporation set up offerings.  We serve clients from Fremont, San Jose, Cupertino, Palo Alto, and entire San Francisco Bay Area.   Our firm set up Corporations, LLC, S-Corporatons, Partnerships and Sole-Proprietorships.  If you are thinking about starting a new business than Sanjiv Gupta CPA firm can be a great choice over Legal Zoom online website.

Why Should You Do Business With Sanjiv Gupta Instead of Legal Zoom ?

Starting a new business requires proper planning both from tax prospective and long term survival of the company.   What kind of corporate structure you set up should depend upon how your business will operate and how you plan to exit your business.  This kind of advise is hard to get from Legal Zoom or other online corporation set up practices.  When you sit down with Sanjiv, you will understand why you should choose one kind of business structure over the other.  You will learn how one structure can save your thousands of dollars in taxes.  You will learn how you can exit out of the business when you are ready to sell or retire.

Online practices like legal zoom do not focus on customized and individual service but firms like Sanjiv Gupta can deliver exceptional value to new business owners in this arena.   In addition to setting up your company, you can also learn about tax saving strategies and how you should handle payroll and other taxes.

Is Legal Zoom Cheep ?

Legal Zoom is only doing the paper processing.  You decide how much paper processing should be worth.  You should still consider consulting with your CPA or attorney even if you started your business using Legal Zoom.

Can you do this yourself ?

Offcourse, you can do the paperwork yourself.   But key is to indentify what makes a long term success.  Saving money on important task as setting your company may not be a wise move. You may end up paying extra taxes just because you picked a wrong structure or timing of setting up your company was wrong.

Is it as easy to set up company with Sanjiv Gupta CPA firm as with Legal Zoom ?

This one is tricky question.  Sanjiv Gupta CPA firm specialize in customized solution that can be good fit for long term.  Therefore, you must set up an appointment with Sanjiv Gupta before we can set up your corporation or LLC.  You may consider it an extra step but this can very useful and save thousands of dollars in taxes.

Ready to set up your business. Give us a call at 510-825-7563 or visit us online at

Discounted Kaiser Insurance for Small Business Owners

Our public accounting firm is focused on Small Business Owners and Individuals and many times new business owners ask us about the health insurance.   Most of us live in Bay Area and prefer  “Kaiser” as a  health care provider and therefore I gathered some basic information about Kaiser health care plans for small business owners.

Kaiser offers many health care plans but one that suites the need of small business owners is called “GROUP POLICY”.  You can buy this group policy in two flavors.  One with annual deductible and one with no annual deductible.

Plan with annual deductibles cost about $250-$300 less than the non-deductible plans.  Both policies cover doctors visit and other services offered by Kaiser.  Both plans have minimum out of pocket doctor’s visit cost but the key difference is that with annual deductible plan you have to pay the minimum deductible ($1500) before your major benefits kick in.   For example,  daily rate for hospital room may be $500/night and you will have to pay for 3 nights before your insurance pays.  However with non-deductible plans you won’t be required to pay for these three days.

So, if you and your employees are in fairly healthy and won’t be needing any major services than you can opt for deductible plan and save a significant amount on monthly basis.

How about Spouse and kids ?

Yes, off course your employees along with officers/owners of the company can also enroll their dependents including kids and spouse.  Most polices don’t allow to include your parents.

What are the requirements of this kind of policy ?

  • You must have a business in good standing.
  • You must have two or more people enrolling in the policy.
  • More than 50% of all eligible person should have an insurance.

Can I get tax deduction for the health policy ?

You can read my post about health care policy deduction for more details.

How much does the policy cost?

I found the group policy of very good value.   Rate very by age but here is a simple example. Female less than 30 years old can get this kind of policy for about $300.  Not Bad ?

How can I enroll for group policy ?

Simply call Kaiser and ask for enrolling in group policy.

Red Flags | Invite For An Audit

One of the common question asked by Tax Payers is “Can I get audited?” or “What can flag my tax return for an audit?”. These questions bug so many tax payers that we are often bombarded with same question via email and phone calls.

Good News | Less than two percent of taxpayers get audited a year. Your chances of getting audited increases with your income. How IRS selects tax returns for audit is “Top Secret” and I would assume that even the IRS employees don’t know the answer to that question. However, experts presume that it is combination of multiple factors that may prompt your tax return for audit. You will need to have multiple flags in order to get audited – but you never know.

1. Making Calculation/Math Error(s): “This is simplest but one of the common flag for an audit,” says Sanjiv Gupta, CPA. Most tax payers use computers these days and this reduces the risk of math error. However, software depends upon the data you enter. So if moved couple of zero’s here and there – you may be called for an audit. Sanjiv pointed out that common math errors typically time pressure. Folks trying to do their tax return at the minute are more prone to making a mistake.

2. Taking Abnormal deductions. How about $100,000 charitable donations from someone making $50,000 year – possible but outrageous. If something is out of ordinary, attach proof with your tax return.

3. Submitting inconsistent information. What happens if you report income of $25K but your employers reports $45K ? Audit, off course. Make sure information going to IRS from all places matches with numbers you put on your tax return. This is especially true if you were paid in cash or have any kind of reported income.

4. Making More Money. Yes – you have a better chance of getting audited if you make $200,000 or more. How much more you may ask ? Recent IRS data shows that audit of tax payers making $200,000 increased by 34& during 2010 tax year. Just imagine, how is it like if you are making over 1 Million dollars.

5. Filing a business return. Most businesses run into losses every now and then. However, if you show loss three out of five years than you are at higher risk of getting audited.

6. Taking home office deductions. This sounds like an easy deduction but big guys at IRS are looking out for home deductions.

7. Handwriting your return. Still filing paper tax return? It is a well known fact that hand written tax returns have more errors than the ones generated by computer. Guess what, IRS knows this too.

Taxes Due Today | Did you file ?

Did you file your taxes ?

Tax returns are due today.  You must get your tax return and tax payment postmarked by today. Unlike previous years post offices are not open late today.  So, get to post office on time.  Most post offices will close at standard 5:00 closing time.

Need to file extension ?

If you are not ready to file than make sure to file an extension for your tax return.  Filing extension will buy you additional time to file the tax return but it won’t buy you time to pay your taxes.  It is a good idea to make an estimated tax payment if you feel you will end up owing taxing.   If you end of owing taxes when you file tax return, you will have to pay penalty and interest.

You can file for extension by visiting IRS site here.  You can file form 4868 to get an automated 6 months extension.

Here are some important pointer you should consider if you are thinking about filing late:

1. File on time even if you can’t pay:   Some customers don’t file tax return because they don’t have enough money to pay for taxes.  This is not good.  You should go ahead and file the taxes.  There is no reason to request an extension.  Pay as much as you. IRS will send you the bill or notice of balance due.  You can also apply for payment agreement by calling IRS at 1-800-829-1040.   You can also apply for payment agreement online from IRS website.
2. Extra time to file An extension will give you extra time to get your paperwork to the IRS, but it does not extend the time you have to pay any tax due. You will owe interest on any amount not paid by the April 18 deadline, plus you may owe penalties.

3. Form to file   As stated earlier, if you do not an extension than make to file by submitting Form 4868, Application for Automatic Extension of Time to File U.S. Individual Income Tax Return, to the IRS by April 18, 2011. You can also make an extension-related electronic credit card payment.

4. E-file extension  You can also get e-file for extension.  You can go to your CPA or using one of the tax software. Don’t worry IRS will   acknowledge receipt of the extension request if you file by computer.

5. Traditional Free File and Free File Fillable Forms   Filing for extension is Free.

6. Electronic funds withdrawal While you are filing for an extension, you can also request for electronic funds withdrawal.


Have a question about filing your taxes ? Give us a call at 510-825-7563 or leave us a comment below.

California Corporation FranchiseTax Due April 17th 2012

Attention California Corporation Owners

Do you have a california corporation with no sales or no income ?  Did you set up your corporation in the last quater of 2011 and planning to start your business in 2012 ?  You operated business in 2011 ?

If you have set up corporation at any time during the year 2011  than you are required to file the California Tax Return for the year 2011.  In case you had no income or have not started your business untill now,  you are still required to file the tax return and pay minimum $800 California Corporation Franchise Tax. This is the minimum tax and all california corporations are required to pay even if they had incurred a loss or had no income for the taxable year.

What if you had LLC, C-Corp or S-Corp ?

Make no mistake – California Corporation Franchise Tax applies to all kinds of coporations.  As long as you were registered in the state of california as corporation during the tax year, you are required to fine the California Corporation Franchise Tax Return and pay the tax.   Failure to file the tax return can incure panalty and intreast.

I didn’t do any business last year, how can I avoid paying minimum $800 tax ?

In most cases you will have to pay the minimum tax but it certain cases you can get releive from this minimum tax.   There are certain rules that need to followed.   We recommend you contact your certified public accountant or give our office a call to discuss your options.

$800 Minimum Tax is only required in 2nd Year of Business:

Good way to look at this is that in California, you are not required to pay the California Corporation Franchise Tax when you incorporate your business or your first year of business.  You pay the tax for next year but you pay in advance when you file the tax return for the previous year.

Office of Sanjiv Gupta CPA can help you file California Corporate Franchise Tax Return and work with you to reduce your tax liabiltiy and improve your bottom line.  If you live or work around Fremont, Palo Alto, Cupertino, Sunnyvale, San Jose or San Francisco Bay Area than we recommend you make an appointment to come into our office for consultation.   We also offer appointments by phone for those who can’t come to the office.  You can reach us at 510-825-7563 to get your California Corporation Franchise Tax questions answerd.

You only got couple more days left to file the 2011 Franchise Tax Return.  Our office is open during weekend to accomodate the last minute filing by San Francisco California Corporations.  You can still make it in time and avoid any late panelties.


LLC Formation | Limited Liability Corporation Set Up| San Francisco Bay Area

LLC Formation | Limited Liability Corporaition

San Francisco Bay Area

We help  setting up LLC (Limited Liability Company) in San Jose, Sunnyvale, Fremont, Santa Clara, Cupertino and enire san Francisco Bay Area.

Planning to set up a new business and considering Limited Liability Corporation in california ?  Office of Sanjiv Gupta CPA can help you get started on right foot.  Before setting up your new company, you need to answer many questions and we can help you find those answers.

  • What kind of business are you setting up?
  • Are you a US citizen or green card holder ?
  • Do you have partners ? If yes, what are their status in US?
  • How do you plan to exit out of your business ?
  • Do you plan on selling your business?

These are just some sample of questions we discuss when setting up your company.   Idea is that you must select a proper legal structure of your company so that you can exit or sell your business in future.

Ready to set up your LLC or Limited Liability Corporation in San Francisco Bay Area ?

Start by setting an appoinment with Sanjiv Gupta CPA.  Sanjiv will sit down with you to understand your business and advise on proper legal structure.  This appointment is very interactive and we recommend you write down your LLC or Company Formation questions on paper.   You will find this appointment very informative and helpful.

I can’t come to your office but can you help me set up my LLC ?

First thing is that you need to make if LLC formation is the right thing to do.  Yes, we can do the LLC formation via mail but we still recommend an appointment.  If you can’t make it in-person than we can do phone appointment.

Ready to make an appointment with Sanjiv Gupta CPA ?

Call our office at 510-825-7563

S-Corp and Tax Benefits: Guide for New Businesses

Sanjiv Gupta CPA explains the benefits of using S-Corp. Rules of taking advantage of certain deductions and credits are bit different. Watch this brief video to get basic idea or call Sanjiv for an appointment for more details.


What You Must Know About 2012 Tax Challenges

What You Must Know About 2012 Tax Challenges

2012 presidential election summons the close of all tax benefits introduced by George Bush. This would usher in an unavoidable clash because of the new tax rules, many deductions and unchanged tax rates.

It is indeed tough to prepare a perfect tax return sheet amidst changing rules and implementation of stringent penalties. Therefore in this article we are to take a look at how to tackle the most common filing challenges

Newly implemented Capital profit rules

Worried about how to calculate taxes on you invested income this year? Heres the key rule: bought stocks after Jan 1, 2011 then you are not eligible to count your cost basis or the tax exempt investment amount. Your broker will help you calculate the amount as per your preferred method. Mostly brokers send notice of FIFO; First-in and First-out which reports your selling off older shares. Before filing or tax return analyze 1099 and ask your broker to mend all errors. Talking about 1099, Roman Ciosek, wealth management assistant at HighTower’s Strata is advising customers to slow down in their tax filing process. According to Ciosek there will be a number of amendments on the 1099s. However if you have sold your earlier shares whether willingly or because your broker advised you then you cannot alter your cost-basis.

$1billion in unclaimed tax refunds

Apart from what is discussed above, everything more or less remains in place. You can jolly well counterbalance your gains with losses. While doing so first take into account the long term (considered over a year) profits on assests that incurred tax at or over 15% and balance them with your long term losses; then balance short term gains taxed as minimum income with short term losses. Having calculated the long term accounts and the short term income separately, now you are required to match your long term records to the short term report.  If your loss margin is high considering deducting a little near to $3000 from your income. This way you will be able to manage all taxable amount the next year as well.

How to plan: when you proceed with tax filing you can choose to toggle between accounting ways. Your common options are “last-in”, “first-out” & “Specific share identification”.

Before using FIFO it is a better idea to select particular stocks / shares that you want to sell. This is more appropriate when you have pitched in at over-time stock selling program and have derived your biggest profit out of the initial batch. On the other hand if you have great many capital losses with which you can counterbalance your capital profits then 2012 is a good year to enjoy good number of tax benefits.

This calculation will be same when accounting for mutual funds, dividend-reinvestment plans, exchange-traded funds and 2013 bonds. If you haven’t received any mails yet from your broker’s company, then wait till you get your options to choose a particular method of calculating your tax amount. Don’t treat the paper work casually.

Retirement plans

Filing challenge: If you have plans to finance Roth IRA for 2011, then better have it done before April 17, 2012. IRA is a tax deductible scheme which will provide you a tax concession on your investment, but will calculate taxes on withdrawal of money from this traditional plan. Roth requires you/other liable people to pay upfront taxes. This is one reason why the Roth is considered good investment idea for long-term by most tax-payers.

The changes were introduced in 2010 that everyone could convert their IRA to Roth irrespective of income group. This is indeed facilitating unless you have an exorbitant tax bill. However to calculate tax-return for 2012 you have to abide by the conversions introduced in 2011.

IRS warns of ‘dirty dozen’ tax scams

To tide over your 2010 tax payments if it took you two years then you are required to clear all due amounts this filing season 2012. The time is ticking already and you have only until the filing day to undo 2011 alterations.

How to plan: open or reinvest in IRA for 2012 and also transfer an existing IRA into Roth. Such conversion will help you trim down higher tax rate during your retirement days (than what you have to pay now). For those that were planning to go ahead with conversion plans this is the right time to take the call. If the conversion is done before the Bush tax laws expire then you won’t be required to pay more than 35% on the upturn, which by the year end can go up much higher than what is anticipated.

Home selling: Not a very good idea

Filing challenge: If you are happy to have earned much after selling off your house then wait, your profit might as well come under taxable charges. For single home sellers anything above $250,000 will be taxable. For married couples the same rule applies on a marginal amount of $500,000.

Wondering what happens if you sell your house at an under-rated price? You will be considered unlucky, simply because you can’t file for tax-return on the initial amount / cost of your residence. However if you lent your house out on a mortgage and the contract period was cut short by reconstruction/ restoration purpose  then you might as well get a tax-break. Such deals are also applicable on conditions such as short-notice sale or when losing your home to foreclosure. This type of tax-breaks means liberation from paying due debts.

Should you buy a home in 2012?

How to plan: This tax-break plan closes this year 2012. So in case you want a tax break, then better not waste time.

Education tax cuts

Filing challenge: the American government though has been lenient with educational grants; however some important scholarships are schemed as tax-cut loans. Sorting these educational tax cuts is difficult. Some of the variety of schemes are the lifetime learning credit taxable over $2,000 per return, the American opportunity credit tax-free till $2,500 per undergraduate student, the tuition and fees deduction $4,000 max for a single student per family. However you can only file one application for education tax cut per year.

Get help to solve your tax doubts

According to Justine Ransome, national tax officer at Grant Thornton the American opportunity credit is the biggest money saver scheme. Taxes are sorted as per income brackets/slabs; but American Opportunity Credit provides the highest tax-cut, $180,000 for married couples and half the amount for singles.

How to plan: Bad luck the American opportunity credit expires this year but well you will have various simpler choices the following year.

Health care write-offs

Filing challenge: health care costs will be deductible at higher rates. This means that you can file for only those that surpasses 7.5% of you Adjusted Gross Income. But it seems likely that increasing medical costs can wrap the matter neat and tidy. Allison Shipley, PricewaterhouseCoopers’ principal of personal financial services opines that if a person’s income is drastically reduced and the medical expenses increases on the other hand, then the individual can produce all medical expense bills and enjoy tax-cuts.

It’s saving time:

Heres what the tax-cut expenses include: general physician and dentist’s bills , doctors prescription, medications, specs, hearing kits, wheel-chairs, patient’s transportation, consultation fees, care-giver charges and a few insurance costs.