Bidding on a job

[Skate1968]

Someone asked me how much I'd charge for a 'simple' corporate return-- 'very simple.' It doesn't require"anything more than the 1132 form."

This fellow is appearing to be the classic 'do-it-yourselfer' who winds up costing himself much more money than he was trying to save.

This guy and his wife both started thier own corporations.

It appears as thought this guy took profits from his C corp. In which case he should've done a payroll. In which case he's way late on his payroll taxes.

His wife also started a corp and did the exact same thing.

How would you guys approach this?

I'm thinking
1 don't start anything with out some money from them, up front.
2 Bid kind of high (if he called me sooner i could have cut him a break).
3 File the 2006 payroll returns and pay payroll taxes ASAP (they'll still be late)

I'm not experienced on bidding on jobs, so your advice is welcomed.

[Skate1968]

(And it sounds like these people would have been better off starting their own proprietorships)

[JoshinNC]

Bid double your normal price and get it up front

Then file a late election for S status, and do one payroll check for $1000 on 12/31/06. Then they're only a little late for the payroll taxes. Finally, tell them that if you don't get to do the books, the payroll and everything else throughout the year they need to find someone else because you're practice is already very busy and you don't need headaches every year.

Good luck and go get 'em!

[Skate1968]

Thanks Josh!

Very fast and helpful! I was not aware that the IRS accepted S elections late. From what I've read the IRS usually accepts late 2553s when they are filled out properly by corporations which are elidgeable.

[winnie]

late s election

look under late S election in the tax book. I have the deluxe edition. It gives you the exact steps for requesting the late election. I have had several late elections. If all else fails, one acceptable reason for late S election is that you have filed returns and paid taxes as though your were an S corp.

good luck

[Skate1968]

Thanks Winnie

(but i'm embarrassed to admit that i've already invested in the pruchase of another tax practice guide before i knew about this wonderful place)

[taxmandan]

I'm thinking
1 don't start anything with out some money from them, up front.
2 Bid kind of high (if he called me sooner i could have cut him a break).
3 File the 2006 payroll returns and pay payroll taxes ASAP (they'll still be late)

Those are good ideas, I would also discuss the situation with them and determine if they plan to operate properly going forward, if so then you have a great opportunity to help them. If they don't want to do it right, I decline the engagement and send them out the door.

[dsi]

Your other option is to call it a dividend, in which case you wouldn't have to bother with payroll stuff.

[Skate1968]

thanks taxman

thanks taxman

[Skate1968]

dsi,
you mean pay a dividend and keep the C?

[Skate1968]

Officer's salary of a C Corp?

Forgive me if this is too simple of a question but i haven't done many C corps. And I don't ever remember paying dividends from any of those C corps.

Can the sole owner/officer of a profitable C corp take money out and then not file a 941? Is this even an option? Might the IRS waive the 'reasonable compensation' requirement in this situation? (i know it's not as much of an issue with a C Corp as it is with an S, but still)

(i'm aware that i can call a large portion 'shareholder loan' and recognize interest income)

[Skate1968]

Thanks to everyone who helped me with this.

As i said before this guy chose another accountant (no big loss for me). But he did take my advice to make an S election. And he sent me a 50 gift certificate for dinner as a thank you -- not a ton of money, but a nice gesture. And there's a good chance he'll use me in the future.

[OldJack]

Believe me Skate 1968... this is not a client that you really want. This guy is not ready to pay reasonable fees for professional services. Let him pay some penalties with the use of someone that is cheap and then he might be worth taking as a client.

[Skate1968]

Thanks Jack.
Yeah, it's probably better that i concentrate more on finishing up the returns in front of me for people who pay well.