01
The challenge
The owner lived in Japan and travelled much of the year. No payroll had run in 2025 even though the S corporation needed reasonable compensation, foreign accounts had to be reported, and his Japan return was overdue because it depended on US K-1 figures. He wanted a single, dated list of what remained and a clear payroll position.
02
Our approach
- Books first. US bank, multi-currency and payment-processor accounts were reconciled for 2025, with failed charges reversed and equipment capitalized.
- Social security position. We applied the US–Japan totalization agreement, in force since 2005, and documented the owner's Japanese pension coverage.
- Retroactive payroll. Owner wages were set against a reasonable compensation range and filed through Forms 941, 940 and W-2, with payroll taxes paid directly by the company.
- Foreign account reporting. We listed every foreign account, tested the $10,000 aggregate threshold and filed FinCEN Form 114 with a separate fixed fee.
- Coordinated with Japan. Draft 1120-S and 1040 figures went to the owner's Japanese accountant so both countries' returns used the same numbers.
03
Results delivered
- 2025 books closed and reconciled across every account.
- Payroll filings completed for the year, with workpapers supporting the wage level.
- FBAR filed and an annual foreign-reporting checklist set up.
- Federal returns and K-1 data delivered to the owner's Japanese accountant.
04
Frequently asked questions
Generally yes. An owner who works in the business should receive reasonable compensation through payroll before taking distributions.
It coordinates US and Japanese social security so a worker pays into one system, not both. A certificate of coverage documents which system applies.
A US person whose foreign financial accounts total more than $10,000 at any time in the year files FinCEN Form 114, due April 15 with an automatic extension to October 15.
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