Questions founders ask us

You file an amended return correcting the error. Small arithmetic mistakes are often caught and adjusted by the IRS, which sends a notice rather than requiring an amendment.

Errors that change taxable income need fixing properly. Our Form 1120 page covers what the return requires.

Bookkeeping is recording transactions: categorizing spend, reconciling accounts, keeping the ledger accurate. Accounting is interpreting that record, closing the books, and producing statements and tax filings.

Bookkeeping is the input, accounting is the output. You cannot get useful accounting from bad bookkeeping. We compare the two roles.

No. Sales tax you collect is money held on behalf of the state, not revenue, so it is a liability until remitted rather than an expense.

Sales tax you pay on your own purchases is different and is deductible as part of the cost of what you bought.

Yes, under the mailbox rule, if it is postmarked within the 30-day window. Use certified mail with return receipt so you have dated proof.

The postmark is what matters, not the date the IRS opens it. Keep the receipt permanently, because the IRS does not acknowledge these filings.

Sales tax applies broadly to retail sales and is collected from the buyer at the point of sale. Excise tax applies to specific goods or activities, fuel, air transport, certain insurance premiums, and is usually owed by the seller or producer.

A business can owe excise tax without ever collecting sales tax.

No. Some states accept out-of-state certificates, and others require one issued by their own revenue department.

Multistate forms cover several states at once but not all of them. Check acceptance in each state where you buy for resale.

A board consent approving the issuance, a stock purchase agreement with the vesting terms, proof the founder paid for the shares, the stock ledger entry, and the 83(b) election if vesting applies.

Diligence asks for all five. Reconstructing them two years later is harder than doing them at formation.

The holding structure where each India-resident owner holds US company stock through a personal Indian LLP, with the US entity sitting above an Indian subsidiary.

It exists because FEMA restricts Indian residents from holding control-level stock directly in a foreign company with a step-down subsidiary. More on holding structures.

Form 1065 is the annual federal tax return for partnerships and multi-member LLCs taxed as partnerships. It reports the entity's income, deductions, gains, and losses to the IRS for the year, and it generates the Schedule K-1s that each partner uses when filing their own personal return. The partnership itself does not pay income tax on this return. The income passes through to the individual partners.

Transaction categorisation, bank and card reconciliation, accounts payable and receivable tracking, monthly close, and financial statements. Many also handle payroll coordination and tax filing.

What varies is whether a qualified accountant reviews the output or software alone categorises your ledger. Our bookkeeping guide covers the scope.

Authorized shares are the maximum the charter permits the company to issue. Issued shares are the ones actually held by founders, investors, and employees.

The gap between them is your room to grant equity later. It also drives Delaware franchise tax under the authorized shares method, which is why the default calculation produces such a large number.

It ranges from a few hundred dollars for a simple, inactive company to $3,000–$5,000 or more if you have investors, employees, or multi-state filings. The IRS side is free — Form 966, your final return, and the EIN closure letter all cost nothing.

Only when profits are distributed. The corporation pays tax on its income, and shareholders pay again on dividends they receive.

Most early companies never hit the second layer, because they reinvest rather than distribute. Double taxation is a real cost for profitable, dividend-paying businesses and largely theoretical for a company still growing.

The current and proposed accounting methods, the year of change, the section 481(a) adjustment calculation, and details of the item being changed, such as the depreciation history for an asset.

Automatic changes attach to a timely filed return. Non-automatic ones need advance IRS consent and a user fee.

On Schedule E, which carries income from partnerships and S corporations through to your Form 1040. Specific items on the K-1 may also route to other schedules.

The K-1 itself is not attached to your return, but the figures have to match what the entity filed.