Why do some 1120-S tax returns take 20+ hours to complete? Seeing claims of 20-100 hours prep time

Wait - I thought S-Corps were supposed to be simpler than C-Corps. Why would anyone choose an S-Corp if the compliance burden is this heavy? Also, do you bill hourly for these monster returns or is it flat fee? I'd have a heart attack if I got billed for 100 hours of tax prep!

S-Corps are simpler in some ways, primarily because the entity itself doesn't pay federal income tax, avoiding the double taxation issue. But the compliance and reporting requirements can still be incredibly complex depending on the business. Most firms use a blend of flat fees with complexity factors built in. Very few clients would accept a straight hourly billing for 100 hours of work. We typically estimated complexity based on prior year returns, number of shareholders, states involved, and special situations like R&D credits or foreign reporting.

Does it actually work with QuickBooks data? My accountant is always complaining about how I categorize things, but I'm not an accountant! I'm trying my best. Would this help bridge the gap between what I'm doing and what my accountant needs?

I'm skeptical. How is this different from just using QuickBooks or Xero reports? They already have built-in reconciliation tools. And what happens if the AI makes mistakes in interpreting your documents? Wouldn't that just create more problems?

Yes, it works great with QuickBooks data! You can upload your QB files directly and it analyzes your categorizations, flagging anything that looks potentially miscategorized for tax purposes. It actually shows you why certain expenses should be in different categories, which helped me learn proper categorization. The difference from regular accounting software is that it's specifically focused on tax preparation, not just bookkeeping. It goes beyond basic reports to identify potential tax issues. And regarding mistakes - it doesn't actually change your data, it just flags potential issues for you to review. Everything gets verified by you or your accountant before any changes are made. It's more of an assistant than a replacement.

How does this actually work? The IRS phone system is literally designed to be impenetrable. Are they using some kind of insider connection or something? Seems too good to be true.

Yeah right. Nobody gets through to the IRS these days. I've tried everything including calling right when they open. If this actually worked, everyone would be using it. Pretty sure this is just another service that takes your money and delivers nothing.

It basically automates the calling process using their system. They keep dialing through the IRS phone tree for you until they get a human, then they call you and connect you. No insider connection - they're just using technology to handle the frustrating part. I was surprised too, but it really does work. They don't actually talk to the IRS for you - they just get you connected to a real person instead of you having to spend hours redialing. Once you're connected, it's just you and the IRS agent discussing your situation directly.

Can you explain what you mean by "specially-allocated items"? I'm a single-member S-Corp so I'm not sure if this applies to me, but I always worry I'm missing something important on my return.

Specially-allocated items are when certain income, deductions, credits, or other tax items are allocated to shareholders in percentages different from their ownership percentages. This is more common in partnerships, but S-Corps can have special allocations in certain situations as long as they have "substantial economic effect" under tax law. As a single-member S-Corp, you wouldn't typically deal with special allocations since you own 100%. However, basis tracking is still important even for single-member S-Corps! You need to track your basis to know if distributions are taxable and to properly report losses. Many single-member S-Corp owners still mess this up, especially if they've taken significant distributions or have company debt.

This is making me feel guilty lol. I definitely handed my accountant a mess last year. How can I be a better client? Should I be doing monthly reconciliations or something? I use QuickBooks but I'm not great at keeping up with it.

@Malik Johnson Don t'feel too guilty - most business owners aren t'trained accountants! Here are some simple things that make a huge difference: 1 Keep) personal and business expenses completely separate - don t'use your business account for personal purchases, 2 Take) photos of receipts immediately and store them digitally even (just in your phone ,)3 Do) a monthly bank reconciliation in QuickBooks - it only takes 15-30 minutes but catches errors early, 4 Set) up automatic rules in QB for recurring transactions like utilities, rent, loan payments, and 5 Send) your accountant a organized summary of any unusual transactions during the year rather than making them guess what things are. Even doing half of these consistently will save your accountant hours and you money!

You're absolutely right that the extreme hour scenarios mainly apply to much more complex situations! At your revenue level with a straightforward consulting business, an S-Corp election could definitely make sense for self-employment tax savings without creating a nightmare compliance burden. For a simple single-member S-Corp like yours would be, you're mainly looking at: filing Form 1120-S (the S-Corp return), issuing yourself a K-1, paying yourself reasonable compensation through payroll, and tracking your basis. The payroll requirement is probably the biggest new compliance piece - you'd need to run payroll for yourself and handle employment taxes. The horror stories in this thread involve multi-member S-Corps, businesses with complex operations across multiple states, poor recordkeeping, or significant asset transactions. Your consulting business shouldn't hit any of those complexity triggers. I'd suggest talking to a CPA about the break-even point for your situation - typically the self-employment tax savings need to exceed the additional compliance costs (payroll processing, additional tax prep fees, etc.). At $150k revenue, you're likely in the sweet spot where it makes financial sense.