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As the end of the year grows near, it’s time for small business owners to get their tax information in order. While all entrepreneurs should do some level of tax planning, those who used ROBS need to pay extra attention. You’ll need to have all your paperwork prepared in order to remain compliant with IRS guidelines.

Use these general planning tips if your business has been funded with ROBS.

Prepare for corporate taxes

As a small business owner, you will be responsible for filing corporate taxes. These are not the same as your individual income taxes (which you will also need to file). Take time near the end of the year to review your corporate tax planning strategy.

Now is the time to do things that will give your business a tax break, like donating to charity. Since your ROBS-funded business must offer a 401(k) account to all employees, you might also contribute extra to that plan to reduce your tax liability further.

As you prepare your taxes, you’ll also need to make sure you have all documentation gathered and signed to maintain your status as a C-corporation. Every business using ROBS must be a C-corp, so you don’t have the option of changing the business structure. Every state has different rules and paperwork, so check with a CPA to ensure you’re covered.

Remember that you’ll need to file your business’s taxes on your own. Your third-party ROBS administrator will not do this for you!

Prepare for Form 5500

Form 5500 is an informational form designed to determine the value of your ROBS plan’s assets. This form is not officially part of your taxes, but it is an annual requirement for ROBS. You need to submit this form each year to maintain good standing with the IRS. What better time to  prepare it than at the end of the year as you prepare your tax documentation?

When you work with a third-party ROBS administrator (TPA) like Tenet Financial Group, we will help prepared for Form 5500 filing such as employee information and the number of participants in the 401(k) plan, 401(k) contributions per participant, profit and loss statements and balance sheets.

Work with your TPA

Your business’s TPA of the ROBS plan plays an important role is helping your business regarding IRS requirement for your 401(k) plan.

If you have questions about your business’s structure or ROBS plan, your TPA will be the one to ask. Working together will ensure you submit all the tax and ROBS-related documentation required by the IRS and Department of Labor.

Tenet Financial Group helps entrepreneurs install and maintain ROBS plans to kickstart their business ventures. Get in touch today to learn more about our products and how we can help you run your startup smoothly.


*TAX / LEGAL DISCLAIMER: Tenet Financial Group does not provide legal or tax advice and material contained herein should not be construed as such.