Year End Extra $ Help

USA Discussion in 'Businesses / Corporations' started by barbq, Dec 28, 2018.

  1. barbq

    barbq

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    We are a LLC that files taxes as an S Corp. We will have a surplus of cash at the end of the year (2018). How can we handle this so the surplus is not taxed between the two owners? Our accountant usually splits the year end cash between the two owners and it is added to each as "income," I believe. Should we take a distribution each instead of leaving the surplus in the checking account? Thanks for any help.
     
    barbq, Dec 28, 2018
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  2. barbq

    kirby VIP Member

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    Depends on why there is a surplus of cash. If the surplus is there because not all of the year 's income has been distributed to the owners then that could be the reason because 100% of the year's income has to be taxed to the owners. But if the surplus is there due to some non income reason then it is likely the surplus should not be taxed as income .So you need to ask the accountant about this.
     
    kirby, Dec 30, 2018
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  3. barbq

    barbq

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    Thank you for responding. We've paid off all of our vendors and have leftover cash. We wondered if there were some way to keep the cash in the checking account to carry over to next year without it being taxed - or should we write a check to each of the owners since it would be taxed anyway?
     
    barbq, Dec 30, 2018
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  4. barbq

    kirby VIP Member

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    You are going to be taxed on cash that came from income whether it gets distributed to you or left in the S Corps checking account. So you might as well write a check.
     
    kirby, Dec 31, 2018
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  5. barbq

    barbq

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    Thank you. That was exactly what I wondered. Happy New Year!
     
    barbq, Dec 31, 2018
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