Dear Taxguru,

You appear to be an expert on C corporations. Can you please advice me as to what the minimum record-keeping are required for a C-corporation in order for a CPA to prepare my taxes.

I am still looking for a CPA in the Northern NJ area. I am not sure what to take to the CPA, I have no problem on paying CPA for his professional fees, what can you please give me the heads up as to what to expect, estimate the fees for my tax preparation, what kind of questions I need to ask etc..

Tks..

Per IRS rules, you are required to keep an adequate double entry bookkeeping system and records to substantiate the information on the corporate tax return.

As a business owner, you should be concerned with having timely and accurate business information to make sound operational, investment and business decisions to effectively and efficiently run your business.

For a C corporation, you must at least maintain an accounting system that will be able to provide you with monthly financial statements that would include a profit and loss statement and a balance sheet. Furthermore, I would recommend a monthly bank reconciliation for all your bank accounts.

A monthly profit and loss statement is essential to determine whether the monthly trends result in a positive growth or a negative growth in the business. By determining the trend, the business owner would make the necessary adjustments to bring forth a positve change to the business, before the a potential negative trend turns disastrous for the business.

A balance sheet would be essential to keep track of your start up business expenses, assets,liabilities and shareholders equity.

The assets would consist of current and fixed assets that would display a a reconciled bank account, organizational costs, show all your fixed assets additions and related depreciation, intangible assets such as goodwill and other assets such as security deposits.

The Liabities and shareholders equity would list all of the corporate debt. shareholder loans, start up investment capital and cumulative retained earnings.

The IRS is really looking for shareholder loans to the corporations and loans to shareholders to be accurately recorded. Further, they are looking for interest expense or interest income on these loans and consequently our accounting system must keep track of these loans so that a proper "1099-Int" is produced at year end to the Officer's and Shareholder's. Here the IRS is looking at potential abuses by small corporations of granting excessive loans instead of taking officer salaries as a means of avoiding payroll and federal taxes.

In short, I would recommend hiring a CPA to maintain your books and records so that all the IRS complex requirements are met.

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