This week I had a couple come in to do their personal and business taxes. They bought a Thai Restaurant in 2013 and set it up as an LLC. They did file for an extension on their 2013 taxes, so they had until October 15 to file. They were worried that they waited too long to come in, and were thrilled when I told them that I could do their taxes the day they came in (they called on Monday and made an appointment for Wednesday). They were even more thrilled with their refund. My wife gave me a hard time because I did not charge them enough (it takes a lot of time to set up a new LLC, especially when it involves the purchase of a restaurant). My staff gave me a hard time because I enjoyed doing it so much. I was an economist before I became a lawyer. I had fun going through their spread sheets and figuring out how to characterize their expenses, especially the expenses associated with buying the business, in a manner that was both legal and beneficial. It is amazing how many different ways the same expense can be declared legally, yet have very different tax consequences. For example, on their spread sheet all of their labor costs, including employer payroll taxes were characterized as labor costs, which themselves could be properly characterized as part of costs of goods sold or could be reported as wages and salaries without legal consequence. However, that would have cost them their tax credit for social security tips payments.
