Case Study: Misfiling of business entity

New business owner was referred for CPA services. They owned an S Corporation and was working with an accounting service company to do their bookkeeping. Upon reviewing the tax filings and accounting activity, there was a discrepancy which overstated the business by $96k. This amount was the total payroll which was never reported on the financials nor the business tax return. Additionally, we were unable to verify that the business was established as making an election to be treated as a S-Corporation for income tax purposes.