Definitions of Accounting terms as used by Minton CPA & Associates in Virginia Beach, VA. 22 terms defined.
Specialized services where a credentialed professional defends a taxpayer during an IRS or state examination. The representative communicates with auditors, organizes documentation, limits the scope of inquiry, and negotiates outcomes to protect the client's financial and legal interests.
The process of correcting, reconciling, and reorganizing historical accounting records that are incomplete or inaccurate. This service typically precedes tax preparation, financial reviews, or business sales and ensures that books accurately reflect transactions, balances, and prior-period adjustments.
A formal analysis to determine the economic value of a business interest using income, market, or asset-based approaches. Valuations are commonly needed for sales, mergers, gift and estate tax filings, divorce, partner buyouts, and SBA loan applications.
An engineering-based tax strategy that reclassifies components of commercial or rental real estate into shorter depreciation lives. This accelerates deductions, improves cash flow, and is especially valuable after property purchases, renovations, or new construction projects.
A tax provision requiring previously deducted depreciation to be taxed as ordinary income or at a special rate when business or rental property is sold. Understanding recapture is critical when planning real estate sales, 1031 exchanges, or equipment dispositions.
The process of choosing the appropriate legal and tax structure for a new business, such as sole proprietorship, LLC, S corporation, or C corporation. The decision impacts liability protection, self-employment taxes, owner compensation rules, and long-term exit planning.
The use of accounting, auditing, and investigative skills to examine financial records for fraud, embezzlement, or disputes. Common applications include divorce proceedings, business litigation, insurance claims, and shareholder disagreements where financial evidence must be analyzed and presented.
An IRS information return used to report payments of $600 or more to non-employee contractors, freelancers, and certain service providers. Businesses must issue these forms by January 31 and file copies with the IRS to avoid penalties for late or missing reporting.
A part-time chief financial officer engagement that provides strategic financial leadership without the cost of a full-time executive. Services often include cash flow forecasting, budgeting, KPI development, and capital planning for growing small and mid-sized businesses.
Professional advocacy provided by a licensed CPA, enrolled agent, or tax attorney on behalf of a taxpayer during audits, collections, or appeals with the IRS. This service includes responding to notices, negotiating settlements, and attending meetings so the taxpayer does not have to communicate directly with revenue officers.
A sufficient connection between a business and a taxing jurisdiction that creates filing and collection obligations. Physical presence, employees, inventory, or exceeding economic thresholds can establish nexus and trigger income tax, sales tax, or payroll tax responsibilities in multiple states.
An IRS program allowing qualifying taxpayers to settle federal tax debt for less than the full amount owed. Eligibility depends on income, expenses, asset equity, and ability to pay, and the application requires detailed financial disclosures on Forms 656 and 433-A.
A business structure such as an LLC, S corporation, or partnership where profits and losses flow directly to the owners' personal tax returns. These entities avoid corporate-level income tax but require careful planning around self-employment tax, basis tracking, and the qualified business income deduction.
The ongoing process of calculating, withholding, depositing, and reporting federal and state employment taxes including Social Security, Medicare, FUTA, and SUTA. Noncompliance can trigger Trust Fund Recovery Penalties, which hold responsible individuals personally liable for unpaid amounts.
The Qualified Business Income deduction allows eligible pass-through business owners to deduct up to 20% of qualified business income on their personal tax return. Phase-outs apply based on taxable income, business type, and W-2 wages paid, making proactive planning essential.
Prepaid income tax installments due in April, June, September, and January for self-employed individuals, business owners, and investors without sufficient withholding. Paying accurate estimates avoids IRS underpayment penalties and prevents large balances due at year-end filing.
The IRS-required salary an S corporation owner must pay themselves before taking distributions. Determining a defensible amount considers industry standards, duties, experience, and location, and is critical to avoid IRS reclassification of distributions as wages subject to payroll taxes.
A tax status filed via IRS Form 2553 that allows a qualifying corporation or LLC to pass income, losses, and deductions directly to shareholders. This election can reduce self-employment taxes for small business owners while avoiding the double taxation associated with C corporations.
A state and local tax imposed on the sale of tangible goods and certain services, with Virginia currently levying a combined rate that varies by locality. Businesses must register, collect, file returns, and remit to the Virginia Department of Taxation based on nexus rules.
The IRS form used by sole proprietors and single-member LLCs to report business income and expenses on their personal Form 1040. Accurate completion affects self-employment tax, the QBI deduction, and audit risk, particularly when reporting losses or home office deductions.
A proactive year-round process of structuring income, deductions, investments, and entity decisions to legally minimize tax liability. Effective planning considers current and future tax brackets, retirement contributions, capital gains timing, and law changes well before filing deadlines.
IRS Form 1041 filed annually for estates and trusts that earn income during the tax year. Preparation requires understanding fiduciary accounting, distributable net income, and beneficiary K-1 allocations, which differ significantly from individual tax reporting.