Corporate Taxes and Year-End
He does his year end tax returns by giving the accountant all of his company bank statements at the end of the year from which his accountant calculates the income and balance statements. Since his accountant does the company year-end based solely on the bank statements, his corporate profits show as 0 each year and consequently, the retained earnings are also 0 and he has never paid corporate taxes and he claims that most companies operate like this. Do other companies operate their year end statements like this? This is a business that buys, stocks and sells inventory. The inventory amount is increasing by a small amount each year so assuming all of the other numbers remain static, the increase in inventory should equal his current earnings and therefore, he would have to pay corporate tax on that amount correct? Please let me know if my understanding is inaccurate.