Frequently Asked Questions
Individuals
- I’ve just received a notice that I’m about to be audited. What can I expect?
- I’ve met financial planners who work in investment firms, and they offer financial advice at no cost. Why shouldn’t I ask them for advice, rather than paying a financial planner who works at an accounting firm?
- Is it more beneficial for my spouse and I to file a joint return or separate returns?
- What is the difference between a regular IRA and a ROTH IRA? Which one is better for me?
- I’ve been thinking about taking out a home equity loan. How do I know if it’s the right choice for me?
Business Owners
- I’m thinking about starting a business, and I’m not sure whether to form a Corporation, a Limited Liability Corporation (LLC) or a Sole Proprietorship. How do I know which is best for me?
- I would like to concentrate on running my business more efficiently, but I’m just so business taking care of customers each day, I can’t seem to focus on the big picture. How can you help me?
- My business is running smoothly enough, but I just don’t have as much business as I thought I would. What can I do to bring more customers through my door?
FAQs – Business Owners |
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| Q: | I’ve just received a notice that I’m about to be audited. What can I expect? | ||
| A: | You can expect a close examination of your accounting and financial documents to determine their accuracy, consistency and conformity to legal accounting principles. At Fitzpatrick, Bongiovanni and Kelly PC, we can help you prepare for and survive a complete IRS audit by coordinating your records and representing you throughout the audit process. | ||
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| Q: | I’ve met financial planners who work in investment firms, and they offer financial advice at no cost. Why shouldn’t I ask them for advice, rather than paying a financial planner who works at an accounting firm? | ||
| A: | At Fitzpatrick, Bongiovanni and Kelly, P.C., we work directly for you. Our fee covers the development of a customized financial plan which incorporates your plans, priorities and goals and recommends the strategies that meet your needs. Financial planners who work for a particular investment firm may offer financial advice at no cost, but they are able to do this because they receive commissions based on the financial products they sell to you. As a result, their advice may not be completely objective and impartial. | ||
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| Q: | Is it more beneficial for my spouse and I to file a joint return or separate returns? | ||
| A: | It is usually more beneficial to file a joint tax return, because the tax bracket thresholds for joint filers are higher than for separate filers, and therefore, you would be taxed at a lower rate if you file jointly. However, there may be instances where it would be more advantageous to file separately. At Fitzpatrick, Bongiovanni and Kelly, PC, we can conduct a thorough review of your tax status and make appropriate, money-saving recommendations. | ||
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| Q: | What is the difference between a regular IRA and a ROTH IRA? Which one is better for me? | ||
| A: | Generally, both offer tax advantages. With a traditional IRA, a certain portion of the money you contribute (up to $2000 for most people) is tax-deductible during the year that you contribute the money, but once you retire and withdraw the funds, you will be taxed on the accumulated amount. In the case of a ROTH IRA, you do not receive a tax deduction during the year you contribute to the fund, but your money accumulates tax-free, and you need not pay taxes on the accumulated funds when you retire and withdraw them. Before deciding, you should review your current tax rate, as well as your projected retirement date and your probably tax rate at the time of your retirement. You can speak with one of our IRA specialists who can advise you on the course that’s best for you. | ||
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| Q: | I’ve been thinking about taking out a home equity loan. How do I know if it’s the right choice for me? | ||
| A: | Home equity loans can be a great tool for debt consolidation, especially if interest rates are fairly low. These loans also offer an attractive tax deduction feature. However, there is a cost associated with refinancing, and you’ll need to determine whether the savings and tax benefit you’ll realize will outweigh the cost of refinancing. We can review the details with you, as well as show you some effective ways to manage credit card and other high interest debt. | ||
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FAQs – Business Owners |
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| Q: | I’m thinking about starting a business, and I’m not sure whether to form a Corporation, a Limited Liability Corporation (LLC) or a Sole Proprietorship. How do I know which is best for me? | ||
| A: | These structures can be somewhat complicated, and we can help you navigate through them at Fitzpatrick, Bongiovanni and Kelly, PC Generally, the following advantages and disadvantages apply:
A Corporation offers limited liability for the shareholders, as well as favorable tax treatment for certain benefit plans such as health, disability, and group term life insurance. It is often easier for a Corporation to raise financing for equity purchases or debt structures, and the use of corporate stock can be an incentive to key employees. Corporations also bring with them weighty tax consideration, higher attorney’s fees due to the number of documents that must be filed on behalf of the Corporation, and the need to observe formalities such as annual meetings, the recording of meeting minutes and other corporate records, and the filing of annual reports with the NJ Secretary of State. A Limited Liability Corporation (LLC) also offers its members limited liability for the debts and obligations of the company, but the tax considerations and filing requirements are much less onerous than those of a Corporation. Not all states recognize LLCs, and as a result, if your LLC does business in a state that does not recognize LLCs, then your personal assets will be exposed to creditors’ claims in that state. A Sole Proprietorship is the simplest business structure, in which the owner has absolute authority over all business decisions, as well as freedom from legal formalities and high attorney’s fees. Since the owner of the business is not an employee of the business, unemployment taxes on income from the business do not have to be paid. In addition, money can be moved out of the business account and assets withdrawn from the business, with very few legal imitations, and without paying taxes. On the other hand, a Sole Proprietorship offers no insulation from personal liability for obligations of the business. Additionally, Sole Proprietorships do not qualify for tax breaks like corporations for favorable group insurance plans. |
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| Q: | I would like to concentrate on running my business more efficiently, but I’m just so business taking care of customers each day, I can’t seem to focus on the big picture. How can you help me? | ||
| A: | Often, it is a case of spending some quality time on your business – thinking about what you trying to accomplish and how you are going to get there. We can help you identify your short and long term goals and then develop a customized strategy that focuses on these goals | ||
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| Q: | My business is running smoothly enough, but I just don’t have as much business as I thought I would. What can I do to bring more customers through my door? | ||
| A: | The following 4 Ways To Grow Your Business can apply to any industry:
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Fitzpatrick, Bongiovanni and Kelly, PC will help you find ways to make these principles work for you so your business grows.
