JAK + CO.

Certified Public Accountants

Call Our Minnesota CPA Firm: 651.641.1099
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Frequently Asked Questions about Tax & Accounting

Frequently Asked Questions | JAK

FAQs

Below is a collection of FAQs about JAK, our team and our business. Take a look and get to know us and our business a little better!

  • Small Business CPA
  • Audit and Assurance Services
  • Trust and Estate Planning
  • Construction
  • Tax Advisors
  • Business Succession Planning
  • Tax Consulting Experts
Google Rating
5.0
John A. Knutson & Co., PLLP
5.0
Paul Harris
19:28 26 Jun 17
Very easy to work with !!!
Duane Luithle
01:13 26 Jun 17
I highly recommend JAK. They have been awesome to work with. Very professional and detailed in explaining specific topics related to our company. Great firm!
Michael Klema
17:38 22 Jun 17
Excellent professional service
Frederico Navarro
18:50 17 Jun 17
Super helpful and understanding. We love working with JKA as they always explain things fully and simply for us. Best around
Kevin Elm
18:50 14 Jun 17
Great firm. Attentive and very customer friendly!
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Individual Tax

What is estate planning?

A comprehensive estate plan ensures your wishes about your property will be honored. By spelling out exactly how your property will be transferred, it gives you peace of mind that your loved ones will be provided for in the years to come. If you own a business, your estate plan should also include any business succession plans.

What is a trust?

A trust is a legal entity that holds assets for the benefit of another. You can place almost any kind of asset into a trust, including cash, stocks, bonds, insurance policies, real estate, and artwork. Learn more.

What is a professional trust planning?

Professional trust planning is a critical component of estate planning. At JAK, we work closely with your attorney to provide you with a trust plan that makes sense for you and your family. JAK’s trust planning professionals and estate trust accountants can also help you evaluate the pros and cons of each type of trust, as well as provide trust tax preparation, tax compliance, and trustee consulting services.

What is tax planning?

Individual tax planning can look like these tasks:

  • Tax preparation
  • Tax planning
  • IRS and state controversy representation
  • Residency issues

Learn more.

What are estimated taxes?

The IRS requires individuals who earn income that is not subject to withholding, such as earnings from sole proprietors, partnerships and S-corps, interest, dividends, rents, and alimony, to pay quarterly estimated tax payments, also known as “estimates.” If these payments are on your to-do list, click here to read a few things you should know.

For 2020 estimates, we recommend paying electronically as the taxing authorities are extremely behind on opening their mail due to COVID-19 and campuses being shut down. Watch this video for tips on how to pay online: What to have ready and how to pay IRS estimates electronically

How long should I hold onto my tax documents?

The IRS recommends the following guideline for keeping tax records:

  • Keep records for 3 years if situations (4), (5), and (6) below do not apply to you.
  • Keep records for 3 years from the date you filed your original return or 2 years from the date you paid the tax, whichever is later, if you file a claim for credit or refund after you file your return.
  • Keep records for 7 years if you file a claim for a loss from worthless securities or bad debt deduction.
  • Keep records for 6 years if you do not report income that you should report, and it is more than 25% of the gross income shown on your return.
  • Keep records indefinitely if you do not file a return.
  • Keep records indefinitely if you file a fraudulent return.
  • Keep employment tax records for at least 4 years after the date that the tax becomes due or is paid, whichever is later.

We’ve created this guide for you to reference as needed – especially if you are moving homes, undergoing renovations or spring cleaning!

How do I pay my taxes online?

The IRS recommends the following for online tax payments for businesses and individuals:

  • Estimated Tax Payments for Individuals. If it’s easier to pay your estimated taxes weekly, bi-weekly, monthly, etc. you can, as long as you’ve paid enough in by the end of the quarter.
    • IRS : HOW TO MAKE ELECTRONIC ESTIMATED TAX PAYMENTS TO THE IRS CLICK HERE.
    • MN: HOW TO MAKE ELECTRONIC ESTIMATED TAX PAYMENTS TO MN DEPARTMENT OF REVENUE CLICK HERE.
  • Federal Taxes: Using the Electronic Federal Tax Payment System (EFTPS) is the easiest way for individuals as well as businesses to pay federal taxes. Make ALL of your federal tax payments including federal tax deposits (FTDs), installment agreement and estimated tax payments using EFTPS. Using EFTPS, you can access a history of your payments.
  • Corporations must deposit the payment using the Electronic Federal Tax Payment System. 

What are the individual tax deadlines I need to know?

The IRS has outlined important individual tax deadlines in this calendar. We recommend setting up an appointment with us to review any questions you may have.

How do I organize my estate?

We have created an online and printable estate organizing booklet for our clients. Click here to access the download. The estate organizing booklet guides you in recording and gathering the important information you need to have peace of mind.

Which trust is right for me?

Many types of trusts exist, and each has a specific purpose. The type you choose—as well as how it’s created—will depend on what you’re trying to accomplish. The three basic types of trusts are revocable, irrevocable and testamentary trusts. Click here to learn more about which each of these is and if they might be a fit for you.

What are the key tax amounts and limits I need to know for individual tax reporting?

A few tax amounts will depend on your filing status, income, and age. However, we’ve outlined the base amounts for 2020 here. We encourage you to reach out with any questions you have about contribution limits.

Business Tax

Could my business Benefit from the R&D Tax Credit?

Yes, your company could benefit from the R&D tax credit if it qualifies. If your company is involved in any of the following activities, you may be able to claim the R&D tax credit:

  • Developing an innovative, new-to-market product
  • Engineering and designing a new product
  • Designing product alternatives
  • Evaluating product alternatives
  • Designing, constructing, and testing preproduction prototypes and models
  • Engineering activity to advance the product’s design to the point of manufacture
  • Experimenting with new technologies
  • Engineering to evaluate new or improved specifications/modifications in terms of performance, reliability, quality, and durability
  • Developing new production processes during prototyping and preproduction phases
  • Conducting research aimed at significantly cutting a product’s time to market

This blog post explains more in detail.

What is Business succession planning?

Business succession planning is more than just taking a step back from your business and setting a retirement date. Business succession planning s the process that helps you identify new leaders who can step in when you vacate your position. By planning in advance, you have more control over this critical transition. Find out more about business succession planning here.

Does JAK help with business succession planning?

Yes! From identifying future leaders to developing a viable succession plan, JAK can help you map out a succession plan that meets your business and retirement needs.

Is an ESOP Right for my Business?

As a business owner, you might consider an ESOP as a way to provide a valuable benefit for your employees. But this isn’t the only reason why an ESOP might make sense. If you already thinking of an exit strategy, you want to retain quality employees, you want to diversify your investment or gain a competitive advantage – then an ESOP might be right for your business. Read this blog post for an in-depth look at why an ESOP could be right for your business.

When should I start business succession planning?

Ideally, you should start planning for the transition three to five years before you want it to happen, as this is how long it takes for someone to learn your job. This should also give you enough time to make any necessary changes to your financial reporting.

Can JAK help with Business Entity Selection?

Yes! Deciding on a business entity type isn’t as glamorous as deciding colors for your logo, but it’s just as important. The entity you choose—whether it’s an “S” corporation, LLC, or sole proprietorship—comes with longstanding tax implications, both good and bad. Our tax consultants can help you evaluate the pros and cons of each one, so you can choose the most advantageous entity type for your business. Click here to learn more about starting your business.

Can you help my business find tax deductions?

Yes, we can. By taking a deep dive into your business and expenses we can help determine which items are deductible. This blog post has more information on determining an expense’s deductibility.

What professionals should someone contact when starting a business?

We suggest contacting and having the following individuals on your team as you start a business:
Attorney – to assist with required business filings and general legal advice.
CPA – to assist with entity type selection, tax planning and preparation, accounting and bookkeeping, and business advising.
Payroll Provider – to assist with payroll deposits and filing requirements on a monthly, quarterly, and annual basis.
Click here to read our blog post on what to do before starting your business.

What is the qualified business income deduction?

The IRS defines the QBI as follows:
Many owners of sole proprietorships, partnerships, S corporations and some trusts and estates may be eligible for a qualified business income (QBI) deduction – also called Section 199A – for tax years beginning after December 31, 2017. The deduction allows eligible taxpayers to deduct up to 20 percent of their qualified business income (QBI), plus 20 percent of qualified real estate investment trust (REIT) dividends and qualified publicly traded partnership (PTP) income. Income earned through a C corporation or by providing services as an employee is not eligible for the deduction. For more information on what qualifies as a trade or business, see Determining your qualified trades or businesses in Publication 535

We suggest meeting with the advisors at JAK if you have any questions about your business tax deductions.

Does JAK have contacts to help in other areas of my business?

The team at JAK not only has great internal resources, but great external resources to help you with your business operation needs. We have worked along side many of these professionals for several years and decades. If you have a need, reach out to your JAK contact and we will put you in touch with the professional we see fit.

What is a financial forecast?

Financial forecasting is a tool that companies use to establish a plan regarding whether it is heading in the right direction. Although budgeting and financial forecasting are often used together, distinct differences exist between the two concepts. Budgeting quantifies the expectation of revenues that a business wants to achieve for a future period, whereas financial forecasting estimates the number of revenues that will be achieved in a future period.

What are the next steps in ESOP planning?

Once you’ve decided you want to establish an ESOP, there are five main steps to follow:

  • Talk to a knowledgeable ESOP consultant
  • Perform an ESOP feasibility analysis
  • Organize your records
  • Prepare projections
  • Create your team

To learn more, click here to read a details blog post on the above steps. Or go here to set up an appointment with a JAK expert.

As a S Corp owner, what do I need to know about health insurance and HSA reporting?

Self-employed taxpayers are allowed an “above the line” deduction (a deduction directly from gross income) for 100% of the cost of providing medical and dental insurance for themselves and their families. S Corporation stockholders who own at least 2% of stock are considered self-employed for these rules.

Please note that the IRS has issued commentary indicating that if these benefits are not treated properly, the greater than 2% shareholder would not be entitled to applicable deductions on their tax return.

We’ve put together information and guidance here.

What are the IRS approved per diem amounts?

We’ve outlined IRS per diem amounts along with reporting guidelines here.

How long should a business retain records?

Guidelines vary based on purpose and jurisdiction. State and Federal statutes of limitations will not lapse if complete reports are not filed (for example sales tax returns). Many of the most common records are identified here.

Audit, Assurance and Accounting

Do I need a bookkeeper or accountant for my business?

The short answer: It depends. If you simply need someone to enter day-to-day transactions into your accounting system, a bookkeeper is likely your best bet. But if you need someone to interpret and analyze your financial data, a business accountant is almost certainly the answer. Still unsure of which financial professional is right for your business? This blog post outlines a few questions to consider when making the call.

How will I know I'm working with the right accounting team?

Finding the right accounting firm is not easy. Here is a list of free resources to help you make the correct decision.

What is a Certified Construction Industry Financial Professional (CCIFP)?

The Certified Construction Industry Financial Professional (CCIFP) is someone who has voluntarily met the required certification criteria with regard to education, experience, and a demonstrated understanding of the industry’s body of knowledge. A CCIFP values and maintains the highest possible standards of knowledge, competence, and ethical behavior – as high as any other profession on which businesses and the public rely. Click here to learn more about how JAK serves the construction industry.

What should I do if my business is facing an audit?

Facing an audit can be daunting. Here are three suggestions:

  • Establish an organized filing system
  • Reconcile accounts soon after year-end
  • Complete your auditor’s checklist

Read this blog post for more details.

What should my business expect during an audit?

An audit can be a scary thing for businesses! In summary keep these things in mind:

  • Expect the audit to happen by mail or in-person
  • Work with and not against the auditor
  • After the audit, relax!

We encourage you to read more about what to expect here.

How do I document automobile allowances?

Understanding automobile allowances is important for accounting as both an employer and employee. Click here for our guidance on automobile allowances.

Do I need a form 1099- MISC?

Likely, yes. The IRS wants to make sure that all individuals and entities are reporting all of their income. We’ve outlined the important guidelines regarding 1099-MISC here

What are the standards of revenue recognition for third party users?

Click here to access a comprehensive JAK presentation on standards for revenue recognition.

About JAK

What industries does JAK work with?

We serve a wide list of clients in these industries:

  • Construction
  • Retail / Wholesale
  • Service Industries
  • Real Estate and Development
  • Manufacturing
  • Business Owners

Learn more.

Do you work with general contractors and /or subcontractors?

Yes. Whether you’re a general contractor and/or subcontractor, you need an accountant who understands the nuances of construction expenses accounting. To provide you with the expertise you need, we turn to our in-house Certified Construction Industry Financial Professional (CCIFP)—the only industry-recognized certification for financial professionals who specialize in the unique business of construction. Learn more.

Do you accept clients outside of the Minneapolis / St. Paul area?

Yes! We work with clients all around the great state of Minnesota. Give us a call to see how we can help you!

What is a CPA?

A CPA (certified public accountant) is a trusted financial adviser who has passed the rigorous CPA Exam and met work experience requirements before being licensed. These requirements for licensure ensure CPAs maintain the highest standard of knowledge and ethics when operating in financial positions. CPAs can be:

  • Auditors
  • Business advisers
  • Tax consultants
  • Accounting consultants
  • CPA can work with both individuals and businesses.

What is a tax organizer and where can I find it?

Our Tax Organizer is a one stop shop for managing your tax documents. You can upload, send and share secure files through our portal and can access an electronic 1040. Click here to get started.

Do you offer retirement planning?

JAK offers estate planning and trust planning. Both of these services can be an important part of your retirement plan. We do however offer specific retirement planning.

Recent News from JAK

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Is Your Company a Good Candidate for an ESOP?

 By Kyla Hansen, CPA, CVA An employee stock ownership plan (ESOP) can be a great way to transition your business and give back to your employees. But it’s not ideal for everyone. Before you move fo...

December 29, 2020
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HOW TO: Making MN Estimated Tax Payments Online

  By Kim Elm With the MN Department of Revenue campuses closed to the public and more people making their Federal estimated tax payments electronically, why not make your state estimated tax paym...

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4 Things You Should Know Before Retiring in Another State

By Matt Mikel, CPA For Upper Midwesterners, the idea of retiring in another state may sound appealing—especially when certain states offer an escape from both winter and income tax. But the process ...

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Call the JAK accounting firm today: 651-641-1099

Contact Us

Filed Under: Consulting, Individual Tax, Matthew Mikel Tagged With: Consulting, retirement, Tax, Tax law, Tax Planning

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1781 Prior Avenue North
Falcon Heights, MN 55113
Main 651.641.1099
Fax 651.647.1099
www.jakcpa.com

John A. Knutson & Co., PLLP

John A. Knutson & Co., PLLP, (JAK) is a Twin Cities-based accounting firm serving clients throughout Minnesota and beyond. A Team Committed to Quality Beyond Expectations

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