Are provisions or liabilities for income taxes included in All County's financial statements?
All_County Franchise · 2025 FDDAnswer from 2025 FDD Document
lives of 5 to 7 years.
Maintenance and repairs are expensed as incurred. Major renewals and improvements are capitalized. Upon sale or retirement, the cost and related accumulated depreciation are removed from the accounts and the resulting gain or loss is included in operations.
• Income Taxes
The Company, with the consent of the stockholders, has elected to be taxed under the provisions of Subchapter S of the Internal Revenue Code. Under those provisions, the Company does not pay federal or state corporate income taxes on taxable income. Instead, the stockholders are liable for individual federal income taxes for their respective shares of the &oPpDn's income or loss. Therefore, no provision or liability for income taxes has been included in these financial statements.
7Ke &oPpDn's IinDncial statements are prepared under Generally Accepted Accounting Principles which include recognizing revenue as earned and expenses as incurred (accrual method).
Source: Item 22 — Contracts (FDD page 43)
What This Means (2025 FDD)
According to All County's 2025 Franchise Disclosure Document, the company has elected to be taxed under Subchapter S of the Internal Revenue Code. This means that All County itself does not pay federal or state corporate income taxes on its taxable income. Instead, the individual stockholders are responsible for reporting and paying income taxes on their respective shares of the company's income or loss. As a result, All County's financial statements do not include any provision or liability for income taxes.
This Subchapter S election has implications for potential All County franchisees. Because the company's income tax obligations pass through to its stockholders, franchisees should not expect to see corporate income tax expenses reflected in All County's financial statements. This structure can simplify the company's tax reporting and potentially reduce the overall tax burden, as income is only taxed at the individual level.
Furthermore, the FDD notes that All County's financial statements are prepared using Generally Accepted Accounting Principles (GAAP) on an accrual basis. While there may be timing differences between financial reporting and tax reporting due to certain expenditures and asset capitalization, no adjustments are made for deferred income taxes because of the Subchapter S election. This means that the financial statements focus on presenting an accurate picture of the company's financial performance and position without the complexities of deferred tax accounting.