Question:
We’ve been incorporated since May 1, 2007 and started renovation & improvement of leasehold property in August 2007. It took more then a year and we are still not open for business. We signed shareholders agreement, minutes and bylaws only in August 2008, 15 months after incorporation. Our fiscal year ends on December 31. Should we file initial report for 2007 ending 12/31/2007 if it has only assets & liabilities and other lines are zero? The second question is some of the fixed assets and leasehold improvements accrued in 2007 when the corporation was not operating . 2008 will be the year when we start operating business and in the 2008 report we will claim to expense fixed assets and leasehold improvement accrued in 2008, and what about 2007s purchases and improvements ?
Answer:
The corporation is required to file a tax return every year.
Filing for 2007, will allow you to memorialize expenses that did occur and can be carried forward into 2008 and beyond.
Follow-up Question:
I’m very satisfied with your answer and I dare to ask you one more time. I’m so called treasure of the company but people don’t obey my requests and that’s what happens sometimes. We have construction going on and have employed incorporated small business companies that have EIN, that they provided. When they bill us for performed work, it has happened to be not me who signs the checks, for example president of the corporation, and he signs checks not to the company name but to John Smith, because that’s how he knows him. So we have bills from the corporations and payments issued for the company owner . And that’s what was going on for a long time. Should I consider that payments were made for corporate business or it was made for persons, request their ss and and file 1099 ?
Follow-up Answer:
The IRS will not allow the business to deduct payments to individuals without a completed 1099.
The IRS will require that you (your business, each individual that has signing authority on a bank account, etc) pay unpaid payroll and income taxes on payments to individuals, if that individual is considered a common-law employee and fails to pay their own taxes.
If the payment was to the individual then it is incumbent upon you to file accordingly.
Penalties are bad.
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