LLC Tax Reporting When the pages disagree
Steven Palmieri, a Tax CFO and the Entrepreneur's CFO, lines up profit, cash, wages, and the owner page before a return is assembled.
See the mismatchFour figures that are allowed to differ.
The profit in the books, the cash that left the bank, the wages on a payroll report, and the income on an owner page are four numbers. They are not supposed to be copies of each other. A distribution reduces cash and capital. It does not reduce profit. A wage reduces profit and cash, and it belongs on a payroll report. The owner page reports a share of profit, not a share of the bank balance.
When someone says the numbers do not match, the first job is to say which two numbers were compared. If the comparison was the owner page against the bank, the mismatch may be the point. If the comparison was the books against the return, and those two should match, then a closing entry is missing or an account was left off. We do not smooth the difference with a plug.
The rollforward is the referee.
Money in, money out, and the running capital balance have to roll from the prior year. A return that starts from a fresh zero because last year's file was inconvenient will not match this year's page either. We rebuild the rollforward from the last accepted return and from the bank. That is slower than a plug and it is the only version we will put under a report.
An open bank feed, an unreconciled credit card, or a suspense account with a balance stops the return. Those are not cosmetic. They are the reason two preparers can produce two profits from the same year. The month gets closed first. The report follows the closed month.
Names on payments.
An estimate under the wrong name makes the payments look short on the return that actually owes the tax, and long on a return that does not. The tax due and the voucher then disagree in a way no deduction will fix. We read the name on the receipt. The four federal dates tell us which period the payment was trying to cover.
A payroll deposit is not an income estimate. A state payment, if you made one where you operate, is not a federal estimate. This page stays on the federal mismatch. Bring every receipt anyway. Sorting them is faster than defending the wrong one.
What we hand back.
You get the same sheets you sent, in the order we used them, and a short note that says which figures are supposed to differ and which figure is actually wrong. If a figure is wrong, the note says which account. We do not keep a private version of the year that the books do not support.
If the mismatch is that an acceptance is missing, we stop naming a sophisticated report and we name the default. A beautiful rollforward under the wrong classification is still the wrong report. The file picks the report. The numbers have to live inside it.
Ask about the gap
You will be talking to the Steven Palmieri practice.